SEC Info - Forward Funds - ‘N-CSR’ for 12/31/15

Forward Frontier Strategy Fund

Forward High Yield Bond Fund

Forward Investment Grade Fixed-Income Fund

Forward Total MarketPlus Fund

Forward Balanced Allocation Fund

Forward Growth & Income Allocation Fund

Forward Growth Allocation Fund

Forward Income Builder Fund

Forward Multi-Strategy Fund


FORWARD FUNDS:		Table of Contents



Shareholder Update			2

Fund Commentaries and Performance			5

Investment Glossary			32

Disclosure of Fund Expenses			37

Portfolio of Investments			41

Statement of Assets and Liabilities			53

Statement of Operations			58

Statement of Changes in Net Assets			61

Financial Highlights			79

Notes to Financial Statements			113

Report of Independent Registered Public Accounting Firm			136

Tax Information			137

Additional Company Information			138

Forward Funds Privacy Policy			144

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, 2015

A MESSAGE FROM:

John A. Blaisdell

Chief Executive Officer

LOGO

Dear Shareholder:

The importance of a diversified portfolio has never been more evident after a year of slow growth and high levels of volatility across markets globally. As we enter 2016, we anticipate investors may face many of the same concerns. We believe traditional stock and bond portfolios are generally not adaptive or resilient enough in challenging markets. At Salient, we have assembled portfolio management teams to oversee investment strategies designed to serve as the essential building blocks of efficient and effective portfolios.

A slowdown in growth, namely from China, reverberated through markets during the latter half of the year. Many of the gains in the U.S. equity market were erased by year-end and the falling price of oil was regularly in the headlines. These concerns did not dissuade the Federal Reserve in December from embarking on the first of several outlined interest rate increases. Investors had few safe havens in 2015, and 2016 is expected to generate similarly low returns.

In the second half of 2015, Salient completed the integration of Forward Management, LLC. After the acquisition in June, the combined firm aligned investment teams and strategies. Our platform includes over 50 investment professionals in offices located in Houston, San Francisco and Newport Beach. Products span a range of asset classes, including master limited partnerships (MLPs), real estate, fixed income, credit and managed futures. In November, we announced that the combined organization will operate as Salient and unveiled a new logo and branding that reflects qualities that we believe differentiate our firm. In 2016, we will unveil a redesigned SalientPartners.com website.

In closing, I want to thank you, our shareholders, for the opportunity to be your investment partner. We will strive to keep earning your trust as we continue to advance and evolve our capabilities.

Sincerely,

LOGO

John A. Blaisdell

Chief Executive Officer

Salient

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.

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.

Diversification does not assure profit or protect against risk.

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


December 31, 2015		2


Shareholder Update		December 31, 2015

A MESSAGE FROM:

Lee Partridge, CAIA, CFA

Chief Investment Officer

LOGO

Dear Shareholder:

Markets ended 2015 with low returns across the board as a number of woes plagued investors. Many key data points demonstrate that the market is more pessimistic about growth than what the Federal Reserve’s decision to raise interest rates in December suggests. Growth concerns also plagued China and Europe, and along with the divergence of Central Bank policy, spawned headwinds for investors. As we enter 2016, we are faced with a number of challenges that will likely result in another year of low returns.

2015 Summary

The S&P 500 Index generated a 1.38% return in 2015, marking the worst year of performance since 2008. The gain was driven entirely by dividends paid to investors, which offset a modest price decline of -0.7%. Consumer discretionary stocks led the market, closing up 10.11% for the year, while consumer staple stocks increased 6.60%. Energy stocks were the biggest detractor (-21.12%) followed by materials stocks (-8.38%). Small cap stocks, as represented by the Russell 2000 Index, posted a -4.41% loss for the year.

The dollar advanced 9.26% versus a trade-weighted basket of foreign currencies as the euro lost -10.22% versus the greenback. Japanese equities, as measured by the Tokyo Stock Price Index, gained 12.06% while German stocks, as measured by the German Stock Index (DAX), advanced 9.56% over the course of the year (in their respective currencies). Emerging market stocks continued to fare poorly as the MSCI Emerging Markets Index tumbled -14.60% during the year.

High yield bonds finished the year down -4.47%, as measured by the Barclays U.S. Corporate High-Yield Bond Index, while core fixed income returns were up 0.55%, as measured by Barclays U.S. Aggregate Bond Index. We note that during the third round of the Federal Reserve’s quantitative easing program in 2013, corporate high yield issuance reached current cycle highs. We would typically expect to see a distressed cycle occur three to five years following peak issuance, which would fall into calendar years 2016-2018. 2015 represented the first negative return posted by high yield bonds since the 2008 financial crisis.

The yield on the 10-year U.S. Treasury note rose a modest 0.1% over the course of the year despite the Federal Reserve’s decision to raise short-term interest rates at its December Federal Open Market Committee meeting. We believe the low nominal yields on longer dated U.S. Treasury securities reflect market sentiment with respect to muted growth prospects and nascent inflation concerns for the U.S. specifically and for the global economy more generally.

2016 Outlook

As we approach the eighth year of this current market expansion, we would like to share our thoughts on market positioning, which includes an underweight to risk assets, including stocks and credit-sensitive bonds, in favor of safe haven assets like developed sovereign debt as well as more market neutral strategies.

We believe the headwind of a rising dollar will likely diminish the competitiveness of the U.S. export sector, reduce profits from foreign operations and challenge emerging market companies that externally finance their operations in dollars with principal revenue sources denominated in their home currencies. The Federal Reserve’s tightening of short-term interest rates will likely further strengthen the dollar.

In addition to the currency-related challenges noted above, the continued price decline in natural resources and slowing demand from China represent meaningful challenges for a number of emerging market economies. Furthermore, nearly all emerging market economies have shifted from accumulating to dispersing foreign exchange reserves.

The decline in both nominal and real interest rates continues to paint a troubling picture of global deflationary pressure and low capital market returns.

The sharp decline in energy prices witnessed last year has created stress in both stock and bond markets. Following the peak debt issuance in 2013 and the first half of 2014, many energy companies may be forced to restructure balance sheets and consider strategic options as their asset bases have eroded.

Global debt remains at record highs and exceeds the 2007 levels that resulted in the financial crisis of 2008. The methods for dealing with overindebtedness—increasing taxes, decreasing expenditures, growing out of it, inflating out of it or restructuring it—seem either unpalatable or undoable.

Despite this laundry list of woes, we entered 2016 with the S&P 500 trading at 18.26 times its trailing 12-month earnings while the federal funds target rate hovers between 0.25% and 0.50%, high yield bond yields have crept up to 8.74%, 10-year U.S. Treasurys yield a modest 2.27% and the price of West Texas Intermediate crude oil closed the year out at $37.04 per barrel.

With such little margin of safety from a valuation perspective, we encourage investors to consider the level of risk embedded in their portfolios and the sources of that risk.


		3		December 31, 2015

We are humbled by the trust you have placed with us as investors and remain grateful for the opportunities you have given to us.

Sincerely,

LOGO

Lee Partridge, CAIA, CFA

Chief Investment Officer

Salient

RISKS

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.

Barclays U.S. Aggregate Bond Index represents securities that are U.S. domestic, taxable and dollar denominated. The index covers the U.S. investment-grade, fixed-rate bond market, with index components for government and corporate securities, mortgage pass-through securities and asset-backed securities.

Barclays U.S. Corporate High-Yield Bond Index covers the USD-denominated, noninvestment-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.

Federal funds target rate is the overnight lending rate that the Federal Open Market Committee seeks to obtain through money markets in an effort to achieve the maximum rate of economic growth.

German Stock Index (DAX) is a stock index that represents 30 of the largest and most liquid German companies that trade on the Frankfurt Exchange.

Margin of safety (safety margin) is the difference between the intrinsic value of a stock and its market price.

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.

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

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.

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

Tokyo Stock Price Index (TOPIX) is a capitalization-weighted index that measures stock prices on the Tokyo Stock Exchange.

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

One cannot invest directly in an index.

Lee Partridge has earned the right to use the Chartered Financial Analyst designation. CFA Institute marks are trademarks owned by CFA Institute.

Salient is the trade name for Salient Partners, L.P., which together with its subsidiaries provides asset management and advisory services. This information is being provided solely for educational purposes and is not an offer to sell or solicitation of an offer to buy an interest in any investment fund. Any such offer or solicitation may only be made by means of a confidential private offering memorandum or prospectus relating to a particular fund and only in a manner consistent with federal and applicable state securities laws.

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, 2015		4

Fund Commentary and Performance (Unaudited)

Forward Frontier Strategy Fund

For the year ended December 31, 2015, Forward Frontier Strategy Fund’s Institutional Class shares returned -20.80%, underperforming its benchmark, the MSCI Frontier Markets Index, which returned -14.07%.

In 2015, frontier markets gave back their positive gains from the preceding two years, largely echoing issues in the emerging markets and commodities arenas. To that end, frontier markets were more or less in line with emerging markets, underperforming their more developed counterparts in 2015.

While 2014 was defined by structural changes in the MSCI Frontier Markets Index, as Qatar and UAE graduated to emerging markets, 2015 was defined by the steady decline of commodity prices and challenges in the emerging markets. As developed market indices took a volatile path to mostly flat returns by year-end, frontier and emerging markets were definitive laggards, as countries and regions broadly retreated throughout the year. In the fourth quarter, only a third of the countries in the index generated positive returns. From a regional perspective, Latin America achieved the strongest results, led by Argentina’s 25.65% gain. Countering those gains, African and Middle Eastern regions struggled, headlined by Nigeria and Bahrain, which declined by -9.86% and -16.64%, respectively. Ukraine’s political and economic challenges led to its reclassification to a standalone index, effectively removing it from the MSCI Frontier Markets Index.

For the year, the story was even starker, as only three of 24 countries had positive returns—Estonia, Lebanon and Romania—which accounts for roughly 7.5% of the index. Asian and Latin American regions declined only modestly, while Middle Eastern and African nations contributed heavily to losses in 2015. Kuwait and Nigeria, holding the largest weights in the index, contributed the most to negative returns, although in absolute terms, Kazakhstan and Bulgaria were the worst performers, returning -46.21% and -34.99%, respectively.

The majority of performance in the fund is delivered via investments in total returns swaps on the MSCI Frontier Market Index; therefore, the use of derivatives is the primary source of return for the fund. The fund also invests in short-dated government and corporate bonds, which detracted -0.89% from performance. The underperformance relative to the benchmark was largely due to transactions costs and financing fees.


		5		December 31, 2015

Forward Frontier Strategy 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, 2015		6

Forward Frontier Strategy Fund^(b)


	1 Year		5 Year		Since Inception		Inception Date
Average Annual Total Return for the period ended December 31, 2015
Investor Class		-21.01%		-3.37%		0.67%		12/31/08
Institutional Class		-20.80%		-3.17%		0.84%		12/31/08
Advisor Class^(c)		-20.79%		N/A		-3.29%		05/02/11
Class Z		-20.71%		-3.03%		2.56%		05/05/09

(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, 2011 Forward Frontier Strategy Fund was known as Forward Frontier MarketStrat Fund. Prior to September 20, 2010 Forward Frontier MarketStrat Fund was known as Forward Frontier Markets Fund. Prior to May 1, 2010, Forward Frontier Markets Fund was known as Accessor Frontier Markets Fund.

(c) 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.


		7		December 31, 2015

Fund Commentary and Performance (Unaudited)

Forward High Yield Bond Fund

For the year ended December 31, 2015, Forward High Yield Bond Fund’s Institutional Class shares returned -4.24%. Its benchmark, the BofA Merrill Lynch U.S. High Yield Master II Index, returned -4.64%.

The high-yield market started strong in 2015. The U.S. economy was growing, demand for goods and services was robust, as evidenced by healthy corporate earnings, and the capital markets were thriving. Most high-yield companies continued to take advantage of the low-interest-rate environment through the first half of the year, pricing debt at attractive yields. Proceeds were primarily used for mergers and acquisitions (M&A), share repurchases, dividends and capital expenditures. In the early months of 2015, energy companies were just beginning to deal with the drop in the price of crude oil, which had begun in November 2014.

Beginning in June, however, a number of factors collectively hurt the high-yield asset class, and continued to do so through the remainder of 2015. Energy companies began to suffer and negative pricing pressure on most energy-related bonds became severe. Coal-related companies also experienced weakness in demand and pricing. The economic slowdown in China began to affect other metals and mining credits. The contagion from the energy and metals and mining sectors, in turn, began to pressure other areas of the high-yield market during the second half of the year. Moreover, a series of large M&A transactions, the Moody’s downgrade of Sprint’s credit rating to Caa1, investigations into pharmaceutical drug pricing and brokerage firms’ reluctance to make markets caused a severe repricing of the high-yield asset class. Fund flows turned negative, contributing to a lack of liquidity in high-yield markets.

In this environment, the fund delivered negative absolute returns but outperformed its benchmark. From a sector perspective, the underweighting of the basic industry and energy sectors benefited performance versus the benchmark. Overweight allocations to consumer goods, retail and transportation issues also aided relative performance. Additionally, positive credit selection and the avoidance of severely distressed securities limited the fund’s downside. However, allocations to the energy and telecommunications sectors detracted from fund performance, as falling oil prices and excessive supply negatively impacted the energy sector and leveraged M&A transactions and rating agency downgrades hurt the telecommunications sector.


December 31, 2015		8

Forward High Yield Bond 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


		9		December 31, 2015

Forward High Yield Bond Fund^(b)


	1 Year			5 Year			10 Year			Since Inception			Inception Date
Average Annual Total Return for the period ended December 31, 2015
Investor Class		-4.81	%		3.96	%		5.36	%		5.73	%		05/01/00
Institutional Class		-4.24	%		4.41	%		5.78	%		6.15	%		05/01/00
Class C (with CDSC)^(c)		-6.10	%		3.45	%		4.78	%		6.07	%		12/30/02
Class C (without CDSC)^(d)		-5.20	%		3.45	%		4.78	%		6.07	%		12/30/02
Class Z		-4.24	%		4.50	%		N/A			8.60	%		05/05/09

(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, 2010, Forward High Yield Bond Fund was known as Accessor High Yield Bond Fund.

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

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


December 31, 2015		10

Fund Commentary and Performance (Unaudited)

Forward Investment Grade Fixed-Income Fund

For the year ended December 31, 2015, Forward Investment Grade Fixed-Income Fund’s Institutional Class shares returned -0.76%, slightly underperforming its benchmark, the Barclays U.S. Government/Credit Bond Index, which returned 0.15%.

The market environment might best be characterized by a tone of caution, as investors contended with the end of quantitative easing in the U.S., declining global growth, falling commodity prices, increasing levels of debt and the growing threat of terrorism. These factors culminated in a benign interest-rate environment in which 10-year U.S. Treasury yields ended the year within 1/10th of 1% from where they started the year. By contrast, the spread of credit-sensitive bonds over U.S. Treasurys widened over the course of the year as concerns about energy credits were highlighted as well as more general concerns about the overall credit environment. The spread of the Barclays U.S. Corporate High-Yield Bond Index widened from 4.83% over U.S. Treasurys at the beginning of the year to 6.60% by the end of the year.

In this environment, the fund performed in line with its benchmark. The fund maintained exposure to credit-sensitive bonds, mortgage-backed securities and U.S. Treasury securities over the course of the year. Modest gains in U.S. Treasury securities were offset by modest losses in the credit and mortgage-backed exposures of the fund during the year.

The fund accessed its exposure to corporate bonds and mortgage-backed securities through a combination of exchange-traded funds and credit default swaps. These instruments generated returns that were similar to the underlying instruments they were intended to replicate.


		11		December 31, 2015

Forward Investment Grade Fixed-Income 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, 2015		12

Forward Investment Grade Fixed-Income Fund^(b)


	1 Year		5 Year		10 Year		Since Inception		Inception Date
Average Annual Total Return for the period ended December 31, 2015
Investor Class		-1.47%		2.45%		3.30%		4.12%		07/14/98
Institutional Class		-0.76%		2.99%		3.81%		5.14%		06/15/92
Class Z		-0.67%		3.07%		N/A		5.23%		05/05/09

(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 December 1, 2014, the Trust and Forward Management terminated the sub-advisory agreement with Pacific Investment Management Company LLC (“PIMCO “). The fund is now advised solely by Forward Management. Performance figures shown for periods before December 1, 2014, represent performance of the fund while being sub-advised by PIMCO. Prior to May 1, 2010, Forward Investment Grade Fixed-Income Fund was known as Accessor Investment Grade Fixed-Income Fund.


		13		December 31, 2015

Fund Commentary and Performance (Unaudited)

Forward Total MarketPlus Fund

For the year ended December 31, 2015, Forward Total MarketPlus Fund’s Institutional Class shares returned -0.89%, slightly underperforming its benchmark, the Russell 3000 Index, which returned 0.48%.

U.S. equities experienced their weakest annual performance results since 2008, finishing a volatile year with lackluster returns. Although tepid, domestic equity results outpaced those of international equity markets. Large-capitalization shares continued to outperform their smaller-capitalization counterparts for the year.

Forward Total MarketPlus Fund uses a portable alpha or beta-plus strategy in an attempt to outperform the benchmark. This strategy entails using total return swaps to generate benchmark (beta) exposure, and then collateralizes this exposure with a diversified, low duration, high-quality fixed-income portfolio. The strategy may overlay the beta with low-volatility alpha strategies in an effort to outperform the benchmark. The strategy benefited modestly from positive performance in the fixed-income portfolio in 2015, and it did not seek to engage in alpha strategies during the year.

The fund utilizes total return swaps to achieve the majority of its returns. In this capacity, the index composition favors the larger cap names of the U.S. stock universe; it benefited from the outperformance of those stocks relative their small-cap counterparts. In general, U.S. stocks outperformed all other major equity indices in 2015, adding value to shareholders, especially on a relative basis.

The investment team deployed the cash held as collateral for the fund’s swap contracts into a high-quality, short-duration, fixed-income portfolio to help generate additional return without incurring excessive duration or credit risk. The fixed-income portfolio contributed 0.15% to fund performance in 2015. The underperformance of the fund can be attributed to fund expenses.


December 31, 2015		14

Forward Total MarketPlus 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


		15		December 31, 2015

Forward Total MarketPlus Fund^(b)


	1 Year		5 Year		10 Year		Since Inception		Inception Date
Average Annual Total Return for the period ended December 31, 2015
Investor Class		-1.24%		9.48%		5.36%		5.33%		06/24/98
Institutional Class		-0.89%		9.90%		5.80%		9.53%		08/24/92
Class Z		-0.76%		10.03%		N/A		15.13%		05/05/09

(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, 2013, Forward Total MarketPlus Fund was known as Forward Extended MarketPlus Fund. Prior to May 1, 2011 Forward Extended MarketPlus Fund was known as Forward SMIDPlus Fund. Prior to September 20, 2010 Forward SMIDPlus Fund was known as Forward Small to Mid Cap Fund. Prior to May 1, 2010, Forward Small to Mid Cap Fund was known as Accessor Small to Mid Cap Fund.


December 31, 2015		16

Fund Commentary and Performance (Unaudited)

Forward Balanced Allocation Fund

For the year ended December 31, 2015, Forward Balanced Allocation Fund’s Institutional Class shares returned -6.27%. The fund’s blended benchmark, which consists of 50% Barclays Global Aggregate GDP Weighted Index and 50% MSCI ACWI GDP Weighted Index, returned -4.29%.

Equities provided lackluster returns in 2015. At home, the S&P 500 Index saw domestic equities gain just 1.38%, while international developed equities, as represented by the MSCI EAFE Index, lost -0.81% over the year. Emerging markets sharply underperformed developed equity markets, as evidenced by the MSCI Emerging Markets Index decline of -14.60%. Performance among world fixed-income markets was mixed: the Barclays U.S. Government/Credit Bond Index posted a gain of 0.15%, the Barclays U.S. Corporate High-Yield Bond Index closed the year lower by -4.47%, and the Credit Suisse Emerging Market Corporate Bond Index finished the year 1.02% higher.

Toward the end of the year, monetary policy set the tone and directionality of markets. Developed markets generally advanced as the U.S. Federal Reserve (Fed) provided policy certainty—raising interest rates for the first time in almost a decade after its December meeting. The rate hike signaled a return to a more normalized policy stance, and it showed that the slow-going economic recovery is now self-sustaining.

The Fed’s tightening move was at odds with other central banks around the globe as they either maintained or extended their easing policies during the course of the year. In Europe, while the expansion of the European Central Bank’s (ECB) quantitative easing (QE) program was not forthcoming as broadly expected, the bank remained highly accommodative with its aggressive and open-ended QE program. The Bank of Japan augmented its QE program to push out the duration of bond purchases allowed under current terms. By doing so, it attempted to smooth the decline of the entire yield curve, effectively using its last in a long line of weapons for spurring economic growth and inflation through cheap debt.

The policy certainty provided by the Fed, along with the appearance of a stabilization of China and developed international equities, saw a cessation of the slide in emerging market equities near year-end. China’s third quarter gross domestic product figures revealed a 6.9% growth rate, representing the slowest pace since the first quarter of 2009, but surprisingly exceeding market expectations.

Against this backdrop, the fund underperformed its benchmark, maintaining a 50% equity and 50% fixed-income mixture throughout the year. (The fund allocates its assets between equities and bonds, with an allocation target of 50% equities and 50% bonds.) In terms of equity decisions, the fund experienced a negative allocation effect from overweighting emerging market and U.S. stocks at the beginning of the year when developed international stocks were outperforming. A steady decrease in allocation to emerging markets did help performance throughout the year, as the fund went from strongly overweight at the beginning of 2015 to ending the year underweight. Additionally, an overweight to U.S. stocks in November and December helped performance, as U.S. stocks rallied in those months and preserved a positive year. In fixed income, a steady and increasing overweight to emerging market corporate debt was most additive, while an underweight to high yield also contributed to returns.

Manager selection generally detracted from returns in 2015 as several underlying funds underperformed their stated benchmarks. The largest contributors to returns from a manager selection standpoint were Forward Credit Analysis Long/Short Fund and Forward High Yield Bond Fund. The largest detractors in 2015 were allocations to Forward EM Corporate Debt Fund and Forward Frontier Strategy Fund, as they underperformed their benchmarks by the largest amounts.


		17		December 31, 2015

Forward Balanced Allocation Fund


UNDERLYING FUND AND FUND ADVISOR OR SUB-ADVISOR	# OF ISSUES	ALLOCATION
Forward Investment Grade Fixed-Income Fund—Forward Management, LLC	4		26.33%
Forward International Dividend Fund—Forward Management, LLC	118		19.26%	^(a)
Forward Total MarketPlus Fund—Forward Management, LLC	9		12.03%
Forward EM Corporate Debt Fund—Forward Management, LLC	69		7.96%	^(a)
Forward Commodity Long/Short Strategy Fund—Forward Management, LLC	126		6.72%	^(a)
Forward Select Opportunity Fund—Forward Management, LLC	34		5.09%	^(a)
Forward Dynamic Income Fund—Forward Management, LLC	52		5.06%	^(a)
Forward Emerging Markets Fund—Forward Management, LLC	70		4.70%	^(a)
Forward Credit Analysis Long/Short Fund—Pacific Investment Management Co. LLC	53		3.68%	^(a)
Forward High Yield Bond Fund—First Western Capital Management Co.	58		2.28%
Forward Frontier Strategy Fund—Forward Management, LLC	64		2.05%
Forward International Real Estate Fund—Forward Management, LLC	65		1.82%	^(a)
Forward Real Estate Fund—Forward Management, LLC	61		1.14%	^(a)
Net Other Assets and Liabilities			1.88%
			100.00%

(a) 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 International Dividend Fund, Forward International Real Estate Fund, Forward Real Estate Fund and Forward Select Opportunity Fund’s December 31, 2015 Annual Report may be obtained at www.forwardinvesting.com.

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

Growth of $100,000 Investment in the Fund


December 31, 2015		18

Forward Balanced Allocation Fund^(b)


	1 Year		5 Year		10 Year		Since Inception		Inception Date
Average Annual Total Return for the period ended December 31, 2015
Investor Class		-6.78%		1.05%		1.74%		2.28%		12/27/00
Institutional Class		-6.27%		1.57%		2.26%		2.79%		12/27/00
Class A (with sales load)^(c)		-11.96%		0.02%		1.30%		2.74%		09/29/03
Class A (without sales load)^(d)		-6.60%		1.22%		1.90%		3.24%		09/29/03
Class C (with CDSC)^(e)		-8.17%		0.56%		1.24%		3.24%		12/30/02
Class C (without CDSC)^(f)		-7.25%		0.56%		1.24%		3.24%		12/30/02

(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, 2010, Forward Balanced Allocation Fund was known as Accessor Balanced Allocation 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.


		19		December 31, 2015

Fund Commentary and Performance (Unaudited)

Forward Growth & Income Allocation Fund

For the year ended December 31, 2015, Forward Growth & Income Allocation Fund’s Institutional Class shares returned -6.71%. The fund’s blended benchmark, which consists of 40% Barclays Global Aggregate GDP Weighted Index and 60% MSCI ACWI GDP Weighted Index, returned -4.43%.

Against this backdrop, the fund underperformed its benchmark, maintaining a 60% equity and 40% fixed-income mixture throughout the year. (The fund allocates its assets between equities and bonds, with an allocation target of 60% equities and 40% bonds.) In terms of equity decisions, the fund experienced a negative allocation effect from overweighting emerging markets and U.S. stocks at the beginning of the year when developed international stocks were outperforming. A steady decrease in allocation to emerging markets did help through the year, as the fund went from strongly overweight at the beginning of 2015 to ending the year underweight. Additionally, an overweight to U.S. stocks in November and December helped performance, as U.S. stocks rallied in those months and preserved a positive year. In fixed income, a steady and increasing overweight to emerging market corporate debt was most additive, while an underweight to high yield also contributed to returns.

Manager selection generally detracted from returns in 2015 as several underlying funds underperformed their stated benchmarks. The largest contributors to returns from a manager selection standpoint were Forward Credit Analysis Long/Short Fund and Forward High Yield Bond Fund. The largest detractors in 2015 were allocations to Forward EM Corporate Debt Fund and Forward Frontier Strategy Fund as they underperformed their benchmarks by the largest amounts.


December 31, 2015		20

Forward Growth & Income Allocation Fund


UNDERLYING FUND AND FUND ADVISOR OR SUB-ADVISOR	# OF ISSUES	ALLOCATION
Forward International Dividend Fund—Forward Management, LLC	118		26.99%	^(a)
Forward Investment Grade Fixed-Income Fund—Forward Management, LLC	4		16.49%
Forward Total MarketPlus Fund—Forward Management, LLC	9		16.16%
Forward Emerging Markets Fund—Forward Management, LLC	70		8.60%	^(a)
Forward Commodity Long/Short Strategy Fund—Forward Management, LLC	126		7.07%	^(a)
Forward Select Opportunity Fund—Forward Management, LLC	34		4.97%	^(a)
Forward EM Corporate Debt Fund—Forward Management, LLC	69		4.87%	^(a)
Forward Dynamic Income Fund—Forward Management, LLC	52		4.83%	^(a)
Forward Frontier Strategy Fund—Forward Management, LLC	64		2.76%
Forward Credit Analysis Long/Short Fund—Pacific Investment Management Co. LLC	53		2.35%	^(a)
Forward International Real Estate Fund—Forward Management, LLC	65		1.60%	^(a)
Forward High Yield Bond Fund—First Western Capital Management Co.	58		1.29%
Forward Real Estate Fund—Forward Management, LLC	61		1.17%	^(a)
Net Other Assets and Liabilities			0.85%
			100.00%

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

Growth of $100,000 Investment in the Fund


		21		December 31, 2015

Forward Growth & Income Allocation Fund^(b)


	1 Year		5 Year		10 Year		Since Inception		Inception Date
Average Annual Total Return for the period ended December 31, 2015
Investor Class		-7.22%		1.34%		1.57%		2.06%		12/27/00
Institutional Class		-6.71%		1.87%		2.08%		2.57%		12/27/00
Class A (with sales load)^(c)		-12.39%		0.30%		1.12%		2.83%		09/29/03
Class A (without sales load)^(d)		-7.08%		1.49%		1.72%		3.33%		09/29/03
Class C (with CDSC)^(e)		-8.55%		0.84%		1.06%		3.42%		12/30/02
Class C (without CDSC)^(f)		-7.65%		0.84%		1.06%		3.42%		12/30/02

(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, 2010, Forward Growth & Income Allocation Fund was known as Accessor Growth & Income Allocation 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.


December 31, 2015		22

Fund Commentary and Performance (Unaudited)

Forward Growth Allocation Fund

For the year ended December 31, 2015, Forward Growth Allocation Fund’s Institutional Class shares returned -7.45%. The fund’s blended benchmark, which consists of 20% Barclays Global Aggregate GDP Weighted Index and 80% MSCI ACWI GDP Weighted Index, returned -4.74%.

Against this backdrop, the fund underperformed its benchmark, maintaining an 80% equity and 20% fixed-income mixture throughout the year. (The fund allocates its assets between equities and bonds, with an allocation target of 80% equities and 20% bonds.) In terms of equity decisions, the fund experienced a negative allocation effect from overweighting emerging markets and U.S. stocks at the beginning of the year when developed international stocks were outperforming. A steady decrease in allocation to emerging markets did help through the year, as the fund went from strongly overweight at the beginning of 2015 to ending the year underweight. Additionally, an overweight to U.S. stocks in November and December helped performance in those months, as U.S. stocks rallied and preserved a positive year. In fixed income, a steady and increasing overweight to emerging market corporate debt was most additive, while an underweight to high yield also contributed to returns.

Manager selection generally detracted from returns in 2015 as several underlying funds underperformed their stated benchmarks. The largest contributors to returns from a manager selection standpoint were Forward Credit Analysis Long/Short Fund and Forward High Yield Bond Fund. The largest detractors in 2015 were allocations to Forward EM Corporate Debt Fund and Forward Frontier Strategy Fund as they underperformed their benchmarks by the largest amounts.


		23		December 31, 2015

Forward Growth Allocation Fund


UNDERLYING FUND AND FUND ADVISOR OR SUB-ADVISOR	# OF ISSUES	ALLOCATION
Forward International Dividend Fund—Forward Management, LLC	118		31.59%	^(a)
Forward Total MarketPlus Fund—Forward Management, LLC	9		19.21%
Forward Emerging Markets Fund—Forward Management, LLC	70		10.77%	^(a)
Forward Investment Grade Fixed-Income Fund—Forward Management, LLC	4		10.06%
Forward Dynamic Income Fund—Forward Management, LLC	52		5.17%	^(a)
Forward Select Opportunity Fund—Forward Management, LLC	34		4.69%	^(a)
Forward International Real Estate Fund—Forward Management, LLC	65		4.06%	^(a)
Forward Frontier Strategy Fund—Forward Management, LLC	64		3.27%
Forward EM Corporate Debt Fund—Forward Management, LLC	69		2.93%	^(a)
Forward Real Estate Fund—Forward Management, LLC	61		2.90%	^(a)
Forward Commodity Long/Short Strategy Fund—Forward Management, LLC	126		2.70%	^(a)
Forward Credit Analysis Long/Short Fund—Pacific Investment Management Co. LLC	53		1.58%	^(a)
Forward High Yield Bond Fund—First Western Capital Management Co.	58		0.87%
Net Other Assets and Liabilities			0.20%
			100.00%

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

Growth of $100,000 Investment in the Fund


December 31, 2015		24

Forward Growth Allocation Fund^(b)


	1 Year		5 Year		10 Year		Since Inception		Inception Date
Average Annual Total Return for the period ended December 31, 2015
Investor Class		-7.90%		1.23%		1.08%		1.56%		12/27/00
Institutional Class		-7.45%		1.74%		1.58%		2.07%		12/27/00
Class A (with sales load)^(c)		-13.02%		0.17%		0.63%		2.92%		09/29/03
Class A (without sales load)^(d)		-7.73%		1.37%		1.23%		3.41%		09/29/03
Class C (with CDSC)^(e)		-9.26%		0.73%		0.58%		3.71%		12/30/02
Class C (without CDSC)^(f)		-8.36%		0.73%		0.58%		3.71%		12/30/02

(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, 2010, Forward Growth Allocation Fund was known as Accessor Growth Allocation 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.


		25		December 31, 2015

Fund Commentary and Performance (Unaudited)

Forward Income Builder Fund

For the year ended December 31, 2015, Forward Income Builder Fund’s Institutional Class shares returned -7.27%, and its benchmark, which consists of 85% Barclays Global Aggregate Bond Index and 15% MSCI ACWI, returned -2.85%.

The policy certainty provided by the Fed, along with the appearance of a stabilization of China and developed international equities, saw a cessation of the slide in emerging market equities near year-end. China’s third-quarter gross domestic product figures revealed a 6.9% growth rate, representing the slowest pace since the first quarter of 2009, but surprisingly exceeding market expectations.

2015 presented investors with a wide variety of unique challenges, the most frustrating of which was the poor relative performance of any type of diversified portfolio. U.S. investors who tended to have a home bias felt the cost of diversification in 2015. U.S. stocks led the way once again in terms of performance, but ended the year with only a slight gain.

Forward Income Builder Fund continued to perform in terms of its primary objective, which is to deliver the highest yield for its 6.5% target level of volatility, although it underperformed its benchmark for the year.

The fund was overweight equities for the year, which detracted from performance as equity managers underperformed fixed-income managers. The fund’s largest positions were in preferred stocks, international dividend-paying stocks and emerging market dividend-paying stocks. The allocation to preferred stocks was additive from an allocation perspective, but manager performance served to mitigate that excess return. Allocations to international markets, both developed and emerging, proved challenging as international assets underperformed domestic counterparts. In addition, the underlying funds also underperformed their benchmarks. A modest allocation to U.S. real estate stocks was additive, despite underperformance relative its benchmark.

The fund was underweight fixed income. Its largest positions were in high yield bonds, high yield municipal bonds and emerging market corporate debt. Allocations to high yield bonds accounted for negative performance, although it was somewhat offset by positive manager performance during the year. Allocations to emerging market corporate debt and high yield municipal bonds were both positive contributors from an asset allocation perspective, although manager performance in the emerging market bond fund served as a headwind to performance over the year.


December 31, 2015		26

Forward Income Builder Fund


UNDERLYING FUND AND FUND ADVISOR OR SUB-ADVISOR	# OF ISSUES	ALLOCATION
Forward High Yield Bond Fund—First Western Capital Management Co.	58		24.76%
Forward EM Corporate Debt Fund—Forward Management, LLC	69		24.19%	^(a)
Forward Select Income Fund—Forward Management, LLC	101		13.40%	^(a)
Forward Emerging Markets Fund—Forward Management, LLC	70		10.91%	^(a)
Forward Credit Analysis Long/Short Fund—Pacific Investment Management Co. LLC	53		10.61%	^(a)
Forward International Dividend Fund—Forward Management, LLC	118		7.40%	^(a)
Forward International Real Estate Fund—Forward Management, LLC	65		4.70%	^(a)
Forward Investment Grade Fixed-Income Fund—Forward Management, LLC	4		0.70%
Forward Real Estate Fund—Forward Management, LLC	61		0.59%	^(a)
Net Other Assets and Liabilities			2.74%
			100.00%

(a) Forward Credit Analysis Long/Short Fund, Forward EM Corporate Debt Fund, Forward Emerging Markets Fund, Forward International Dividend Fund, Forward International Real Estate Fund, Forward Real Estate Fund and Forward Select Income Fund’s December 31, 2015 Annual Report may be obtained at www.forwardinvesting.com.

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

Growth of $100,000 Investment in the Fund


		27		December 31, 2015

Forward Income Builder Fund^(b)


	1 Year		5 Year		10 Year		Since Inception		Inception Date
Average Annual Total Return for the period ended December 31, 2015
Investor Class		-7.76%		3.35%		3.58%		3.65%		12/27/00
Institutional Class		-7.27%		3.87%		4.10%		4.16%		12/27/00
Class A (with sales load)^(c)		-10.99%		2.82%		3.45%		3.26%		09/29/03
Class A (without sales load)^(d)		-7.52%		3.61%		3.84%		3.59%		09/29/03
Class C (with CDSC)^(e)		-9.07%		2.84%		3.07%		2.87%		12/30/02
Class C (without CDSC)^(f)		-8.18%		2.84%		3.07%		2.87%		12/30/02

(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, 2012, Forward Income Builder Fund was known as Forward Income Allocation Fund. Prior to May 1, 2010, Forward Income Allocation Fund was known as Accessor Income Allocation Fund.

(c) Includes the effect of the maximum 3.75% sales charge.

(d) Excludes sales charge.

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

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


December 31, 2015		28

Fund Commentary and Performance (Unaudited)

Forward Multi-Strategy Fund

For the year ended December 31, 2015, Forward Multi-Strategy Fund’s Institutional Class shares returned -8.32%, underperforming its benchmarks, the MSCI ACWI and the HFRI Fund of Funds Composite Index, which returned -1.84% and -0.23%, respectively.

Against this backdrop, the fund underperformed its benchmark, with negative impact coming both from manager selection and asset allocation decisions. The fund invests in a number of alternative and long/short funds, which proved to be detrimental to total returns in 2015. The largest single contributor to negative return was Salient Alternative Beta Fund, followed by Forward International Dividend Fund, which reflected a negative allocation effect and negative manager performance. Finally, investments in emerging market and frontier market funds hurt performance during the year, as emerging markets trailed all other assets classes in 2015. On the positive side, Forward Dynamic Income Fund was the largest contributor to positive performance and mitigated some of the fund’s underperformance in 2015. The fund also held Forward Equity Long/Short Fund during the first half of the year, which contributed positively to performance.


		29		December 31, 2015

Forward Multi-Strategy Fund


UNDERLYING FUND AND FUND ADVISOR OR SUB-ADVISOR	# OF ISSUES	ALLOCATION
Salient Trend Fund—Salient Advisors, L.P.	49		29.90%	^(a)
Salient Risk Parity Fund—Salient Advisors, L.P.	48		26.96%	^(a)
Forward Total MarketPlus Fund—Forward Management, LLC	9		19.01%
Forward International Dividend Fund—Forward Management, LLC	118		13.60%	^(a)
Forward Investment Grade Fixed-Income Fund—Forward Management, LLC	4		5.61%
Net Other Assets and Liabilities			4.92%
			100.00%

(a) Forward International Dividend Fund’s December 31, 2015 Annual Report may be obtained at www.forwardinvesting.com. Salient Risk Parity Fund and Salient Trend Fund’s December 31, 2015 Annual Report may be obtained at www.salientfunds.com.

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

Growth of $100,000 Investment in the Fund


December 31, 2015		30

Forward Multi-Strategy Fund^(b)


	1 Year		5 Year		10 Year		Since Inception		Inception Date
Average Annual Total Return for the period ended December 31, 2015
Investor Class		-8.87%		1.31%		0.44%		0.76%		12/27/00
Institutional Class		-8.32%		1.86%		0.97%		1.28%		12/27/00
Class A (with sales load)^(c)		-13.98%		0.29%		0.01%		2.74%		09/29/03
Class A (without sales load)^(d)		-8.72%		1.48%		0.61%		3.23%		09/29/03
Class C (with CDSC)^(e)		-10.21%		0.83%		-0.04%		3.58%		12/30/02
Class C (without CDSC)^(f)		-9.33%		0.83%		-0.04%		3.58%		12/30/02

(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 December 3, 2012, Forward Multi-Strategy Fund was known as Forward Aggressive Growth Allocation Fund. Prior to May 1, 2010, Forward Aggressive Growth Allocation Fund was known as Accessor Aggressive Growth Allocation 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.


		31		December 31, 2015

Investment Glossary

Fund Risk Disclosures

Forward Frontier Strategy Fund

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

Forward High Yield Bond 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 Investment Grade Fixed-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.

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.

Forward Total MarketPlus 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.


December 31, 2015		32

Investment Glossary

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 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 Balanced Allocation Fund

Each allocation fund is a fund of funds that primarily invests in a mix of underlying Forward Funds and related mutual 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.

See the Investment Glossary for underlying fund risk disclosures.

Forward Growth & Income Allocation Fund

See the Investment Glossary for underlying fund risk disclosures.


		33		December 31, 2015

Investment Glossary

Forward Growth Allocation Fund

See the Investment Glossary for underlying fund risk disclosures.

Forward Income Builder 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 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.

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

See the Investment Glossary for underlying fund risk disclosures.

Forward Multi-Strategy Fund


December 31, 2015		34

Investment Glossary

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

See the Investment Glossary for underlying fund risk disclosures.

Fund Benchmark Definitions

Balanced Allocation Blended Index: Balanced Allocation Blended Index is a hypothetical index constructed by Forward Management, which consists of 50% Barclays Global Aggregate GDP Weighted Index and 50% MSCI ACWI GDP Weighted Index.

Barclays Global Aggregate Bond Index: Barclays Global Aggregate Bond Index provides a broad-base measure of the global investment grade fixed-rate debt markets.

Barclays Global Aggregate GDP Weighted Index: Barclays Global Aggregate GDP Weighted Index represents a gross domestic product weighted index of global government, government-related, corporate and securitized fixed-income investments.

Barclays U.S. Government/Credit Bond Index: Barclays U.S. Government/Credit Bond Index is an unmanaged index of fixed-rate government and corporate bonds rated investment grade or higher.

BofA Merrill Lynch U.S. High Yield Master II Index: BofA Merrill Lynch U.S. High Yield Master II Index tracks the performance of below-investment grade U.S. dollar-denominated corporate bonds issued in the U.S. domestic market.

Growth & Income Allocation Blended Index: Growth & Income Allocation Blended Index is a hypothetical index constructed by Forward Management, which consists of 40% Barclays Global Aggregate GDP Weighted Index and 60% MSCI ACWI GDP Weighted Index.

Growth Allocation Blended Index: Growth Allocation Blended Index is a hypothetical index constructed by Forward Management, which consists of 20% Barclays Global Aggregate GDP Weighted Index and 80% MSCI ACWI GDP Weighted Index.

HFRI Fund of Funds Composite Index: HFRI Fund of Funds Composite Index is an equal-weighted index comprised of fund of funds. The index includes over 600 constituents, both domestic and offshore funds.

Income Builder Blended Index: Income Builder Blended Index is a hypothetical index constructed by Forward Management, which consists of 85% Barclays Global Aggregate Bond Index and 15% MSCI ACWI.


		35		December 31, 2015

Investment Glossary

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 GDP Weighted Index: MSCI ACWI GDP Weighted Index is a free float-adjusted market capitalization index that is designed to measure gross domestic product performance in global developed and emerging markets, including the United States.

MSCI Frontier Markets Index: MSCI Frontier Markets Index is a free float-adjusted market capitalization index that is designed to measure equity market performance of frontier markets.

Russell 3000 Index: Russell 3000 Index is a market capitalization weighted equity index maintained by the Russell Investment Group that seeks to be a benchmark of the entire U.S. stock market. The index is composed of the 3,000 largest U.S. companies and represents approximately 98% of the investable U.S. equity market.

One cannot invest directly in an index.

Definition of Terms

Alpha is a coefficient measuring risk-adjusted performance.

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.

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

Caa1 is a Moody’s long-term credit rating given to bond issuers that are judged to be speculative or poor standing and are subject to very high credit risk.

Credit default swap is a type of contract that offers a guarantee against the nonpayment of a loan by transferring the credit exposure of fixed-income products from the holder of the security to the seller of the swap.

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.

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

Derivative is a security whose price is dependent upon or derived from one or more underlying assets.

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.

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

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

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

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.

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, 2015		36

Disclosure of Fund Expenses (Unaudited)

For the Six Months Ended December 31, 2015

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, 2015 through December 31, 2015.

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 Frontier Strategy Fund	Beginning Account Value 07/01/15		Ending Account Value 12/31/15		Expense Ratios^(a)		Expenses Paid During Period^(b) 07/01/15-12/31/15
Investor Class
Actual	$	1,000.00	$	824.10		1.29%	$	5.93

Hypothetical	$	1,000.00	$	1,018.70		1.29%	$	6.56
Institutional Class
Actual	$	1,000.00	$	824.40		0.99%	$	4.55

Hypothetical	$	1,000.00	$	1,020.21		0.99%	$	5.04
Advisor Class
Actual	$	1,000.00	$	825.20		0.99%	$	4.55

Hypothetical	$	1,000.00	$	1,020.21		0.99%	$	5.04
Class Z
Actual	$	1,000.00	$	826.00		0.89%	$	4.10

Hypothetical	$	1,000.00	$	1,020.72		0.89%	$	4.53
Forward High Yield Bond Fund
Investor Class
Actual	$	1,000.00	$	924.80		1.34%	$	6.50

Hypothetical	$	1,000.00	$	1,018.45		1.34%	$	6.82
Institutional Class
Actual	$	1,000.00	$	927.40		0.88%	$	4.28

Hypothetical	$	1,000.00	$	1,020.77		0.88%	$	4.48


		37		December 31, 2015

Disclosure of Fund Expenses (Unaudited)

For the Six Months Ended December 31, 2015


Forward High Yield Bond Fund (continued)	Beginning Account Value 07/01/15		Ending Account Value 12/31/15		Expense Ratios^(a)		Expenses Paid During Period^(b) 07/01/15-12/31/15
Class C
Actual	$	1,000.00	$	922.10		1.84%	$	8.91

Hypothetical	$	1,000.00	$	1,015.93		1.84%	$	9.35
Class Z
Actual	$	1,000.00	$	927.90		0.83%	$	4.03

Hypothetical	$	1,000.00	$	1,021.02		0.83%	$	4.23
Forward Investment Grade Fixed-Income Fund
Investor Class
Actual	$	1,000.00	$	1,001.70		1.15%	$	5.80

Hypothetical	$	1,000.00	$	1,019.41		1.15%	$	5.85
Institutional Class
Actual	$	1,000.00	$	1,006.30		0.75%	$	3.79

Hypothetical	$	1,000.00	$	1,021.42		0.75%	$	3.82
Class Z
Actual	$	1,000.00	$	1,006.80		0.65%	$	3.29

Hypothetical	$	1,000.00	$	1,021.93		0.65%	$	3.31
Forward Total MarketPlus Fund
Investor Class
Actual	$	1,000.00	$	973.10		1.25%	$	6.22

Hypothetical	$	1,000.00	$	1,018.90		1.25%	$	6.36
Institutional Class
Actual	$	1,000.00	$	975.00		0.85%	$	4.23

Hypothetical	$	1,000.00	$	1,020.92		0.85%	$	4.33
Class Z
Actual	$	1,000.00	$	975.60		0.75%	$	3.73

Hypothetical	$	1,000.00	$	1,021.42		0.75%	$	3.82
Forward Balanced Allocation Fund
Investor Class
Actual	$	1,000.00	$	940.40		1.69%	$	8.27

Hypothetical	$	1,000.00	$	1,016.69		1.69%	$	8.59
Institutional Class
Actual	$	1,000.00	$	942.90		1.21%	$	5.93

Hypothetical	$	1,000.00	$	1,019.11		1.21%	$	6.16
Class A
Actual	$	1,000.00	$	941.60		1.56%	$	7.63

Hypothetical	$	1,000.00	$	1,017.34		1.56%	$	7.93


December 31, 2015		38

Disclosure of Fund Expenses (Unaudited)

For the Six Months Ended December 31, 2015


Forward Balanced Allocation Fund (continued)	Beginning Account Value 07/01/15		Ending Account Value 12/31/15		Expense Ratios^(a)		Expenses Paid During Period^(b) 07/01/15-12/31/15
Class C
Actual	$	1,000.00	$	938.20		2.20%	$	10.75

Hypothetical	$	1,000.00	$	1,014.12		2.20%	$	11.17
Forward Growth & Income Allocation Fund
Investor Class
Actual	$	1,000.00	$	930.30		1.26%	$	6.13

Hypothetical	$	1,000.00	$	1,018.85		1.26%	$	6.41
Institutional Class
Actual	$	1,000.00	$	933.10		0.75%	$	3.65

Hypothetical	$	1,000.00	$	1,021.42		0.75%	$	3.82
Class A
Actual	$	1,000.00	$	931.10		1.12%	$	5.45

Hypothetical	$	1,000.00	$	1,019.56		1.12%	$	5.70
Class C
Actual	$	1,000.00	$	927.80		1.77%	$	8.60

Hypothetical	$	1,000.00	$	1,016.28		1.77%	$	9.00
Forward Growth Allocation Fund
Investor Class
Actual	$	1,000.00	$	916.30		1.14%	$	5.51

Hypothetical	$	1,000.00	$	1,019.46		1.14%	$	5.80
Institutional Class
Actual	$	1,000.00	$	918.40		0.67%	$	3.24

Hypothetical	$	1,000.00	$	1,021.83		0.67%	$	3.41
Class A
Actual	$	1,000.00	$	916.60		1.01%	$	4.88

Hypothetical	$	1,000.00	$	1,020.11		1.01%	$	5.14
Class C
Actual	$	1,000.00	$	913.90		1.66%	$	8.01

Hypothetical	$	1,000.00	$	1,016.84		1.66%	$	8.44
Forward Income Builder Fund
Investor Class
Actual	$	1,000.00	$	915.70		0.89%	$	4.30

Hypothetical	$	1,000.00	$	1,020.72		0.89%	$	4.53
Institutional Class
Actual	$	1,000.00	$	918.40		0.39%	$	1.89

Hypothetical	$	1,000.00	$	1,023.24		0.39%	$	1.99


		39		December 31, 2015

Disclosure of Fund Expenses (Unaudited)

For the Six Months Ended December 31, 2015


Forward Income Builder Fund (continued)	Beginning Account Value 07/01/15		Ending Account Value 12/31/15		Expense Ratios^(a)		Expenses Paid During Period^(b) 07/01/15-12/31/15
Class A
Actual	$	1,000.00	$	917.00		0.64%	$	3.09

Hypothetical	$	1,000.00	$	1,021.98		0.64%	$	3.26
Class C
Actual	$	1,000.00	$	913.70		1.39%	$	6.70

Hypothetical	$	1,000.00	$	1,018.20		1.39%	$	7.07
Forward Multi-Strategy Fund
Investor Class
Actual	$	1,000.00	$	919.30		0.89%	$	4.31

Hypothetical	$	1,000.00	$	1,020.72		0.89%	$	4.53
Institutional Class
Actual	$	1,000.00	$	922.90		0.39%	$	1.89

Hypothetical	$	1,000.00	$	1,023.24		0.39%	$	1.99
Class A
Actual	$	1,000.00	$	920.60		0.74%	$	3.58

Hypothetical	$	1,000.00	$	1,021.48		0.74%	$	3.77
Class C
Actual	$	1,000.00	$	917.40		1.39%	$	6.72

Hypothetical	$	1,000.00	$	1,018.20		1.39%	$	7.07

(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.


December 31, 2015		40

Portfolio of Investments (Note 10)

Forward Frontier Strategy Fund


Principal Amount			Value (Note 2)

	Agency Pass-Through Securities: 36.61%
	Federal Home Loan Mortgage Corporation (FHLMC): 1.57%

		FHLMC
	$ 10,940	1.937%, 12/01/30^(a)(b)	$	11,119

	24,889	2.018%, 08/01/17^(a)(b)		24,419

	1,083	2.118%, 03/01/18^(a)(b)		1,078

	41,593	2.496%, 10/01/30^(a)(b)		42,129

	2,481	2.551%, 12/01/18^(a)(b)		2,450

	105,344	4.433%, 11/01/19^(a)(b)		103,358

				184,553

	Federal National Mortgage Association (FNMA): 35.04%

		FNMA
	188,606	1.443%, 09/01/44^(a)(b)		188,493

	79,766	1.443%, 10/01/44^(a)(b)		79,698

	2,280	1.463%, 06/01/21^(a)(b)		2,238

	74,648	1.643%, 06/01/40^(a)(b)		74,760

	4,857	1.643%, 10/01/40^(a)(b)		4,871

	45,867	1.802%, 08/01/34^(a)(b)		46,819

	686,437	1.830%, 01/01/34^(a)(b)		698,459

	19,879	1.889%, 08/01/33^(a)(b)		20,395

	4,337	1.892%, 01/01/20^(a)(b)		4,359

	5,591	1.901%, 05/01/18^(a)(b)		5,547

	106,174	1.915%, 06/01/34^(a)(b)		108,239

	47,357	1.925%, 06/01/29^(a)(b)		48,355

	3,879	1.927%, 12/01/24^(a)(b)		3,920

	233,239	2.010%, 07/01/35^(a)(b)		237,037

	3,651	2.049%, 02/01/37^(a)(b)		3,760

	80,326	2.069%, 08/01/33^(a)(b)		82,752

	5,096	2.098%, 11/01/18^(a)(b)		5,035

	15,823	2.099%, 03/01/18^(a)(b)		15,862

	46,884	2.111%, 11/01/35^(a)(b)		47,934

	7,923	2.185%, 04/01/23^(a)(b)		8,026

	537,328	2.197%, 03/01/36^(a)(b)		550,382

	18,864	2.208%, 01/01/36^(a)(b)		19,271

	33,021	2.219%, 05/01/36^(a)(b)		33,916

	76,426	2.229%, 11/01/35^(a)(b)		78,164

	23,909	2.246%, 11/01/35^(a)(b)		24,493


Principal Amount			Value (Note 2)


	$ 88,658	2.293%, 11/01/37^(a)(b)	$	91,336

	26,064	2.330%, 01/01/35^(a)(b)		26,993

	8,120	2.336%, 08/01/30^(a)(b)		8,184

	54,044	2.369%, 08/01/24^(a)(b)		55,175

	17,485	2.383%, 10/01/34^(a)(b)		17,852

	488,325	2.411%, 12/01/39^(a)(b)		502,336

	25,755	2.418%, 06/01/32^(a)(b)		26,502

	18,066	2.435%, 03/01/19^(a)(b)		17,674

	75,363	2.440%, 07/01/35^(a)(b)		78,266

	13,050	2.472%, 11/01/29^(a)(b)		13,466

	107,580	2.505%, 07/01/41^(a)(b)		111,242

	53,434	2.565%, 06/01/34^(a)(b)		52,439

	36,975	2.576%, 10/01/33^(a)(b)		37,909

	14,831	2.590%, 06/01/34^(a)(b)		15,270

	8,153	2.618%, 09/01/33^(a)(b)		8,396

	82,654	2.756%, 10/01/34^(a)(b)		84,307

	259,873	2.902%, 08/01/35^(a)(b)		269,574

	233,447	2.975%, 11/01/36^(a)(b)		240,738

	15,459	3.232%, 08/01/18^(a)(b)		15,689

	7,303	3.267%, 05/01/19^(a)(b)		7,381

	40,000	4.680%, 09/01/19^(a)		42,563

				4,116,077

		Total Agency Pass-Through Securities (Cost $4,364,344)		4,300,630

	Collateralized Mortgage Obligations: 42.16%
	Collateralized Mortgage Obligations-Other: 10.06%

		Credit Suisse Re-REMIC Mortgage Trust, Series 2010-RR1, Class 3A
	950,435	5.730%, 05/10/17^(a)(b)(c)		947,753

		JP Morgan Mortgage Trust, Series 2004-A5, Class 2A1
	238,832	2.408%, 12/25/34^(a)(b)		234,246

				1,181,999

	Federal Home Loan Mortgage Corporation (FHLMC): 22.18%

		FHLMC

	212,864	1.422%, 05/25/43^(a)(b)		213,020


See Notes to Financial Statements		41		December 31, 2015

Portfolio of Investments (Note 10)

Forward Frontier Strategy Fund


Principal Amount			Value (Note 2)


	Federal Home Loan Mortgage Corporation (FHLMC) (continued): 22.18%

		FHLMC, REMICS
$	323,513	3.000%, 08/15/40^(a)	$	324,643

	121,342	4.500%, 08/15/20^(a)		123,385

		FHLMC, STRIP
	1,651,507	3.500%, 07/15/42^(a)		1,661,891

	280,910	3.500%, 09/15/42^(a)		282,672

				2,605,611

	Government National Mortgage Association (GNMA): 9.92%

		GNMA, REMICS
	433,278	2.250%, 06/20/39^(a)		423,678

	280,477	3.500%, 11/20/39^(a)		284,006


Principal Amount			Value (Note 2)




	$ 331,527	4.500%, 10/20/39^(a)	$	347,082

	108,116	4.750%, 05/20/39^(a)		110,571

				1,165,337

		Total Collateralized Mortgage Obligations (Cost $5,063,426)		4,952,947

		Total Investments: 78.77% (Cost $9,427,770)		9,253,577

		Net Other Assets and Liabilities: 21.23%		2,494,424	^(d)

		Net Assets: 100.00%	$	11,748,001

Percentages are stated as a percent of net assets.

(a) Fair valued security under the procedures approved by the Fund’s Board of Trustees.

(b) Interest rate will change at a future date. Interest rate shown reflects the rate in effect at December 31, 2015.

(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 value of those securities was $947,753, representing 8.07% of net assets.

(d) Includes cash which is being held as collateral for swap contracts.

Total Return Swap Contracts

Counter Party

Reference Obligation

Fund Pays

Fund
Receives

Termination
Date

Notional
Amount

Net
Unrealized
Gain/(Loss)

Goldman Sachs

MSCI Frontier Markets Daily Net Total Return Index

3-month LIBOR plus 127 Bps

Total Return

08/04/16

13,596,495

(1,604,531)

Total of Total Return Swap Contracts

13,596,495

(1,604,531)

Investment Abbreviations:

Bps — Basis Points

LIBOR — London Interbank Offered Rate

MSCI — Morgan Stanley Capital International

REMICS — Real Estate Mortgage Investment Conduit

Re-REMIC — Re-Securitized Real Estate Mortgage Investment Conduits

STRIP — Separate Trading of Registered Interest and Principal of Securities


December 31, 2015		42		See Notes to Financial Statements

Portfolio of Investments (Note 10)

Forward High Yield Bond Fund


Principal Amount			Value (Note 2)

	Corporate Bonds: 85.00%
	Basic Materials: 5.98%

	$1,000,000	Blue Cube Spinco, Inc., Sr. Unsec. Notes 9.750%, 10/15/23^(a)	$	1,083,750

	1,500,000	HIG BBC Intermediate Holdings Llc/HIG BBC Holdings Corp., Sr. Unsec. PIK Notes 10.500% (or 11.250% PIK), 09/15/18^(a)		1,425,000

	1,500,000	INEOS Group Holdings SA, Sr. Unsec. Notes 5.875%, 02/15/19^(a)		1,460,625

	1,475,000	PolyOne Corp., Sr. Unsec. Notes 5.250%, 03/15/23		1,445,500

				5,414,875

	Communications: 16.58%

	1,250,000	Cablevision Systems Corp., Sr. Unsec. Notes 5.875%, 09/15/22		1,065,625

	1,750,000	CCO Holdings Llc/CCO Holdings Capital Corp., Sr. Unsec. Notes 5.125%, 05/01/23^(a)		1,756,562

	1,500,000	CommScope Holding Co. Inc, Sr. Unsec. PIK Notes 6.625% (or 7.375% PIK), 06/01/20^(a)		1,522,500

	1,000,000	Digicel Group, Ltd., Sr. Unsec. Notes 8.250%, 09/30/20^(a)		830,000

		Frontier Communications Corp., Sr. Unsec. Notes
	2,025,000	11.000%, 09/15/25^(a)		2,009,813

		Gray Television, Inc., Sr. Unsec. Notes
	950,000	7.500%, 10/01/20		979,688

		Level 3 Financing, Inc., Sr. Unsec. Notes
	1,500,000	5.375%, 08/15/22		1,528,125

		Netflix, Inc., Sr. Unsec. Notes
	1,000,000	5.875%, 02/15/25^(a)		1,030,000

		Numericable-SFR, First Lien Notes
	1,000,000	4.875%, 05/15/19^(a)		993,750

		Sprint Corp., Sr. Unsec. Notes
	1,000,000	7.125%, 06/15/24		732,500

		T-Mobile USA, Inc., Sr. Unsec. Notes
	1,500,000	6.625%, 04/01/23		1,533,750

		Windstream Services LLc, Sr. Unsec. Notes
	1,000,000	7.875%, 11/01/17		1,028,010

				15,010,323


Principal Amount			Value (Note 2)


	Consumer Cyclical: 11.32%

		Air Canada 2013-1 Class B Pass Through Trust, Second Lien Notes
	$1,707,086	5.375%, 05/15/21^(a)	$	1,722,024

		Air Canada, Second Lien Notes
	1,675,000	8.750%, 04/01/20^(a)		1,798,531

		American Airlines 2013-1 B Pass Through Trust, Second Lien Notes
	884,906	5.625%, 01/15/21^(a)		897,073

		GameStop Corp., Sr. Unsec. Notes
	1,500,000	5.500%, 10/01/19^(a)		1,483,125

		MGM Resorts International, Sr. Unsec. Notes
	1,500,000	6.000%, 03/15/23		1,492,500

		Michaels Stores, Inc., Sr. Unsub. Notes
	1,750,000	5.875%, 12/15/20^(a)		1,811,250

		Rite Aid Corp., Sr. Unsec. Notes
	1,000,000	6.125%, 04/01/23^(a)		1,038,750

				10,243,253

	Consumer Noncyclical: 15.01%

		ACCO Brands Corp., Sr. Unsec. Notes
	1,595,000	6.750%, 04/30/20		1,650,825

		ADT Corp., Sr. Unsec. Notes
	1,000,000	4.125%, 06/15/23		940,000

		Beverages & More, Inc., Sec. Notes
	1,500,000	10.000%, 11/15/18^(a)		1,400,625

		C&S Group Enterprises Llc, Sec. Notes
	2,250,000	5.375%, 07/15/22^(a)		2,036,250

		Cott Beverages, Inc., Sr. Unsec. Notes
	1,000,000	5.375%, 07/01/22		982,500

		Dean Foods Co., Sr. Unsec. Notes
	750,000	6.500%, 03/15/23^(a)		781,875

		DS Services of America, Inc., Second Lien Notes
	1,500,000	10.000%, 09/01/21^(a)		1,710,000

		FAGE Dairy Industry SA/FAGE USA Dairy Industry, Inc., Sr. Unsec. Notes
	750,000	9.875%, 02/01/20^(a)		781,406

		HCA, Inc., Sr. Unsec. Notes
	1,500,000	5.375%, 02/01/25		1,483,125

		Tenet Healthcare Corp., Sr. Unsec. Notes
	2,235,000	6.875%, 11/15/31		1,821,525

				13,588,131


See Notes to Financial Statements		43		December 31, 2015

Portfolio of Investments (Note 10)

Forward High Yield Bond Fund


Principal Amount			Value (Note 2)


	Energy: 4.68%

		Crestwood Midstream Partners LP/Crestwood Midstream Finance Corp., Sr. Unsec. Notes
	$1,500,000	6.000%, 12/15/20	$	1,110,000

		Genesis Energy LP/Genesis Energy Finance Corp., Sr. Unsec. Notes
	1,500,000	6.750%, 08/01/22		1,282,500

		Vanguard Natural Resources Llc/VNR Finance Corp., Sr. Unsec. Notes
	2,352,000	7.875%, 04/01/20^(b)		635,040

		WPX Energy, Inc., Sr. Unsec. Notes
	1,500,000	8.250%, 08/01/23		1,203,750

				4,231,290

	Financials: 15.12%

		Ally Financial, Inc., Sr. Unsec. Notes
	1,000,000	4.625%, 03/30/25		990,000

		CIT Group, Inc., Sr. Unsec. Notes
	1,000,000	5.000%, 08/01/23		1,017,500

		Drawbridge Special Opportunities Fund LP/Drawbridge Special Opportunities Finance, Sr. Unsec. Notes
	1,500,000	5.000%, 08/01/21^(a)		1,458,750

		Equinix, Inc., Sr. Unsec. Notes
	1,500,000	5.750%, 01/01/25		1,541,250

		Hub Holdings Llc/Hub Holdings Finance, Inc., Sr. Unsec. PIK Notes
	1,713,000	8.125% (or 8.875% PIK), 07/15/19^(a)		1,610,220

		Icahn Enterprises LP/Icahn Enterprises Finance Corp., Sr. Unsec. Notes
	1,000,000	5.875%, 02/01/22		981,250

		Kennedy-Wilson, Inc., Sr. Unsec. Notes
	1,520,000	5.875%, 04/01/24		1,470,600

		MPT Operating Partnership LP/MPT Finance Corp., Sr. Unsec. Notes
	1,000,000	6.375%, 02/15/22		1,023,750

		NewStar Financial, Inc., Sr. Unsec. Notes
	1,950,000	7.250%, 05/01/20		1,898,812

		Sabra Health Care LP/Sabra Capital Corp., Sr. Unsec. Notes
	1,635,000	5.500%, 02/01/21		1,692,225

				13,684,357


Principal Amount			Value (Note 2)


	Industrials: 8.53%

		Anixter, Inc., Sr. Unsec. Notes
	$1,000,000	5.500%, 03/01/23^(a)	$	1,007,500

		Ball Corp., Sr. Unsec. Notes
	1,250,000	5.250%, 07/01/25		1,282,812

		Neovia Logistics Intermediate Holdings Llc, Sr. Unsec. PIK Notes
	2,000,000	10.000% (or 10.750% PIK), 02/15/18^(a)		1,930,000

		Owens—Brockway, Sr. Unsec. Notes
	1,000,000	5.375%, 01/15/25^(a)		981,250

		Trinseo Materials Operating SCA/Trinseo Materials Finance, Inc., Sr. Unsec. Notes
	1,500,000	6.750%, 05/01/22^(a)		1,481,250

		US Concrete, Inc., First Lien Notes
	1,000,000	8.500%, 12/01/18		1,040,000

				7,722,812

	Technology: 3.09%

		BCP Singapore VI Cayman Financing Co., Ltd., Sec. Notes
	2,250,000	8.000%, 04/15/21^(a)		1,797,188

		First Data Corp., Sr. Unsec. Notes
	1,000,000	7.000%, 12/01/23^(a)		1,002,500

				2,799,688

	Utilities: 4.69%

		Calpine Corp., Sr. Unsec. Notes
	1,974,000	5.375%, 01/15/23		1,781,535

		NGL Energy Partners LP/NGL Energy Finance Corp., Sr. Unsec. Notes
	2,000,000	5.125%, 07/15/19		1,590,000

		NRG Energy, Inc., Sr. Unsec. Notes
	1,000,000	6.250%, 07/15/22		872,500

				4,244,035

		Total Corporate Bonds (Cost $81,986,143)		76,938,764

		Total Investments: 85.00% (Cost $81,986,143)		76,938,764

		Net Other Assets and Liabilities: 15.00%		13,578,991

		Net Assets: 100.00%	$	90,517,755

Percentages are stated as a percent of net assets.


December 31, 2015		44		See Notes to Financial Statements

Portfolio of Investments (Note 10)

Forward High Yield Bond Fund

(a) 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 value of those securities was $38,841,567, representing 42.91% 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
03/30/12-06/18/15	Vanguard Natural Resources Llc/VNR Finance Corp., Sr. Unsec. Notes 7.875%, 04/01/20^(b)	$	2,294,940	$	635,040		0.70%
		$	2,294,940	$	635,040		0.70%

Investment Abbreviations:

PIK — Payment in-kind

Sec. — Secured

Sr. — Senior

Unsec. — Unsecured

Unsub. — Unsubordinated


See Notes to Financial Statements		45		December 31, 2015

Portfolio of Investments (Note 10)

Forward Investment Grade Fixed-Income Fund


Principal Amount			Value (Note 2)

	U.S. Treasury Bonds & Notes: 96.29%
	$1,950,000	U.S. Treasury Bonds 6.250%, 05/15/30	$	2,828,346

	4,500,000	U.S. Treasury Notes 1.625%, 11/30/20		4,474,940

	1,300,000	2.125%, 08/15/21		1,316,004

		Total U.S. Treasury Bonds & Notes (Cost $8,654,349)		8,619,290

		Total Investments: 96.29% (Cost $8,654,349)		8,619,290

		Net Other Assets and Liabilities: 3.71%		331,829	^(a)

		Net Assets: 100.00%	$	8,951,119

Percentages are stated as a percent of net assets.

(a) Includes cash which is being held as collateral for swap contracts.

Centrally Cleared Credit Default Swap Contracts - Sell Protection ^(b)


Reference Obligation	Notional Amount^(c)	Implied Credit Spread at December 31, 2015^(d)	Rate Received by Fund		Termination Date		Swap Premiums Paid		Unrealized Gain/(Loss)
CDX North American Investment
Grade Index Series 25	$ 4,000,000	0.88%		1.00%		12/20/20	$	(33,108)	$	(11,312)
Total of Credit Default Swap Contracts							$	(33,108)	$	(11,312)

(b) 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.

(c) 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.

(d) 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.


December 31, 2015		46		See Notes to Financial Statements

Portfolio of Investments (Note 10)

Forward Total MarketPlus Fund


Shares			Value (Note 2)

	Exchange-Traded Funds: 68.05%
	2,959	Consumer Discretionary Select Sector SPDR^® Fund	$	231,246

	4,681	Consumer Staples Select Sector SPDR^® Fund		236,344

	3,357	Health Care Select Sector SPDR^® Fund		241,872

	15,435	iShares^® Russell 3000^® ETF		1,856,985

	5,447	Technology Select Sector SPDR^® Fund		233,295

	10,470	Vanguard Mortgage-Backed Securities ETF		551,245

	47,750	Vanguard Short-Term Corporate Bond ETF		3,771,772

	125,750	Vanguard Short-Term Government Bond ETF		7,640,570

		Total Exchange-Traded Funds (Cost $14,765,419)		14,763,329

		Total Investments: 68.05% (Cost $14,765,419)		14,763,329

		Net Other Assets and Liabilities: 31.95%		6,933,051

		Net Assets: 100.00%	$	21,696,380

Percentages are stated as a percent of net assets.

Total Return Swap Contracts

Counter Party

Reference Obligation

Fund Pays

Fund

Receives

Termination
Date

Notional
Amount

Net
Unrealized
Gain/(Loss)

Merrill Lynch Financial Markets, Inc.

Russell 3000^® Total Return Index

1-month LIBOR plus 9 Bps

Total Return

10/31/16

17,798,697

1,115,924

Total of Total Return Swap Contracts

17,798,697

1,115,924

Investment Abbreviations:

Bps — Basis Points

ETF — Exchange-Traded Fund

LIBOR — London Interbank Offered Rate

SPDR — Standard & Poor’s Depository Receipt


See Notes to Financial Statements		47		December 31, 2015

Portfolio of Investments (Note 10)

Forward Balanced Allocation Fund


Shares			Allocation			Value (Note 2)

	Affiliated Investment Companies: 98.12%

	26,005	Forward Commodity Long/Short Strategy Fund — Class Z^(a)(b)		6.72	%	$	491,502

	35,580	Forward Credit Analysis Long/Short Fund — Institutional Class^(a)		3.68	%		268,986

	15,504	Forward Dynamic Income Fund — Institutional Class^(a)		5.06	%		370,540

	77,170	Forward EM Corporate Debt Fund — Institutional Class^(a)		7.96	%		582,632

	40,698	Forward Emerging Markets Fund — Institutional Class^(a)		4.70	%		344,302

	19,084	Forward Frontier Strategy Fund — Class Z		2.05	%		150,003

	19,275	Forward High Yield Bond Fund — Class Z		2.28	%		167,113

	216,197	Forward International Dividend Fund — Institutional Class^(a)		19.26	%		1,409,605

	9,873	Forward International Real Estate Fund — Institutional Class^(a)		1.82	%		133,391

	176,952	Forward Investment Grade Fixed-Income Fund — Class Z		26.33	%		1,927,012

	6,898	Forward Real Estate Fund — Institutional Class^(a)		1.14	%		83,186

	17,413	Forward Select Opportunity Fund — Institutional Class^(a)		5.09	%		372,297

	25,061	Forward Total MarketPlus Fund — Class Z		12.03	%		880,397

		Total Affiliated Investment Companies (Cost $7,366,917)					7,180,966

		Total Investments: 98.12% (Cost $7,366,917)					7,180,966

		Net Other Assets and Liabilities: 1.88%					137,220

		Net Assets: 100.00%				$	7,318,186

Percentages are stated as a percent of net assets.

(b) Non-income producing security.


December 31, 2015		48		See Notes to Financial Statements

Portfolio of Investments (Note 10)

Forward Growth & Income Allocation Fund


Shares			Allocation			Value (Note 2)

	Affiliated Investment Companies: 99.15%

	63,990	Forward Commodity Long/Short Strategy Fund — Class Z^(a)(b)		7.07	%	$	1,209,404

	53,134	Forward Credit Analysis Long/Short Fund — Institutional Class^(a)		2.35	%		401,691

	34,595	Forward Dynamic Income Fund — Institutional Class^(a)		4.83	%		826,812

	110,414	Forward EM Corporate Debt Fund — Institutional Class^(a)		4.87	%		833,627

	173,837	Forward Emerging Markets Fund — Institutional Class^(a)		8.60	%		1,470,663

	59,986	Forward Frontier Strategy Fund — Class Z		2.76	%		471,492

	25,464	Forward High Yield Bond Fund — Class Z		1.29	%		220,771

	708,102	Forward International Dividend Fund — Institutional Class^(a)		26.99	%		4,616,825

	20,303	Forward International Real Estate Fund — Institutional Class^(a)		1.60	%		274,291

	259,094	Forward Investment Grade Fixed-Income Fund — Class Z		16.49	%		2,821,529

	16,625	Forward Real Estate Fund — Institutional Class^(a)		1.17	%		200,494

	39,796	Forward Select Opportunity Fund — Institutional Class^(a)		4.97	%		850,840

	78,689	Forward Total MarketPlus Fund — Class Z		16.16	%		2,764,343

		Total Affiliated Investment Companies (Cost $17,795,619)					16,962,782

		Total Investments: 99.15% (Cost $17,795,619)					16,962,782

		Net Other Assets and Liabilities: 0.85%					145,122

		Net Assets: 100.00%				$	17,107,904

Percentages are stated as a percent of net assets.

(b) Non-income producing security.


See Notes to Financial Statements		49		December 31, 2015

Portfolio of Investments (Note 10)

Forward Growth Allocation Fund


Shares			Allocation			Value (Note 2)

	Affiliated Investment Companies: 99.80%

	31,037	Forward Commodity Long/Short Strategy Fund — Class Z^(a)(b)		2.70	%	$	586,600

	45,392	Forward Credit Analysis Long/Short Fund — Institutional Class^(a)		1.58	%		343,166

	47,082	Forward Dynamic Income Fund — Institutional Class^(a)		5.17	%		1,125,250

	84,261	Forward EM Corporate Debt Fund — Institutional Class^(a)		2.93	%		636,173

	276,970	Forward Emerging Markets Fund — Institutional Class^(a)		10.77	%		2,343,164

	90,608	Forward Frontier Strategy Fund — Class Z		3.27	%		712,171

	21,724	Forward High Yield Bond Fund — Class Z		0.87	%		188,349

	1,053,860	Forward International Dividend Fund — Institutional Class^(a)		31.59	%		6,871,166

	65,349	Forward International Real Estate Fund — Institutional Class^(a)		4.06	%		882,860

	200,910	Forward Investment Grade Fixed -Income Fund — Class Z		10.06	%		2,187,907

	52,290	Forward Real Estate Fund — Institutional Class^(a)		2.90	%		630,621

	47,739	Forward Select Opportunity Fund — Institutional Class^(a)		4.69	%		1,020,653

	118,943	Forward Total MarketPlus Fund — Class Z		19.21	%		4,178,462

		Total Affiliated Investment Companies (Cost $23,232,204)					21,706,542

		Total Investments: 99.80% (Cost $23,232,204)					21,706,542

		Net Other Assets and Liabilities: 0.20%					43,867

		Net Assets: 100.00%				$	21,750,409

Percentages are stated as a percent of net assets.

(b) Non-income producing security.


December 31, 2015		50		See Notes to Financial Statements

Portfolio of Investments (Note 10)

Forward Income Builder Fund


Shares			Allocation			Value (Note 2)

	Affiliated Investment Companies: 97.26%

	139,716	Forward Credit Analysis Long/Short Fund — Institutional Class^(a)		10.61	%	$	1,056,253

	319,065	Forward EM Corporate Debt Fund — Institutional Class^(a)		24.19	%		2,408,943

	128,445	Forward Emerging Markets Fund — Institutional Class^(a)		10.91	%		1,086,646

	284,479	Forward High Yield Bond Fund — Class Z		24.76	%		2,466,436

	112,971	Forward International Dividend Fund — Institutional Class^(a)		7.40	%		736,574

	34,655	Forward International Real Estate Fund — Institutional Class^(a)		4.70	%		468,190

	6,439	Forward Investment Grade Fixed-Income Fund — Class Z		0.70	%		70,131

	4,848	Forward Real Estate Fund — Institutional Class^(a)		0.59	%		58,464

	59,695	Forward Select Income Fund — Institutional Class^(a)		13.40	%		1,334,770

		Total Affiliated Investment Companies (Cost $10,666,776)					9,686,407

		Total Investments: 97.26% (Cost $10,666,776)					9,686,407

		Net Other Assets and Liabilities: 2.74%					272,942

		Net Assets: 100.00%				$	9,959,349

Percentages are stated as a percent of net assets.


See Notes to Financial Statements		51		December 31, 2015

Portfolio of Investments (Note 10)

Forward Multi-Strategy Fund


Shares			Allocation			Value (Note 2)

	Affiliated Investment Companies: 95.08%

	104,123	Forward International Dividend Fund — Institutional Class^(a)		13.60	%	$	678,880

	25,707	Forward Investment Grade Fixed-Income Fund — Class Z		5.61	%		279,945

	27,017	Forward Total MarketPlus Fund — Class Z		19.01	%		949,117

	188,564	Salient Risk Parity Fund — Class I^(a)		26.96	%		1,346,349

	132,607	Salient Trend Fund — Class I^(a)		29.90	%		1,493,158

		Total Affiliated Investment Companies (Cost $5,172,934)					4,747,449

		Total Investments: 95.08% (Cost $5,172,934)					4,747,449

		Net Other Assets and Liabilities: 4.92%					245,757

		Net Assets: 100.00%				$	4,993,206

Percentages are stated as a percent of net assets.


December 31, 2015		52		See Notes to Financial Statements

Statement of Assets and Liabilities


	Forward Frontier Strategy Fund			Forward High Yield Bond Fund			Forward Investment Grade Fixed- Income Fund
Assets:
Investments, at value	$	9,253,577		$	76,938,764		$	8,619,290
Cash		2,108,836			11,929,407			432,858
Deposit with broker for swap contracts		1,830,000			—			64,401
Swap premiums paid		—			—			33,108
Variation margin receivable for swap contracts		—			—			271
Receivable for swap contract payments		—			—			1,222
Receivable for investments sold		341,535			—			—
Receivable for shares sold		281			488,233			—
Receivable due from advisor		—			—			2,902
Interest and dividends receivable		23,823			1,581,448			32,564
Other assets		8,821			12,443			8,972

Total Assets		13,566,873			90,950,295			9,195,588

Liabilities:
Unrealized loss on swap contracts		1,604,531			—			—
Payable for swap contract payments		108,396			—			—
Payable for shares redeemed		49,726			327,595			227,132
Payable to advisor		1,629			37,280			—
Payable for distribution and service fees		2,613			30,105			570
Payable to trustees		—			—			87
Payable for chief compliance officer fee		115			755			81
Payable for legal and audit fees		17,464			10,554			13,238
Accrued expenses and other liabilities		34,398			26,251			3,361

Total Liabilities		1,818,872			432,540			244,469

Net Assets	$	11,748,001		$	90,517,755		$	8,951,119

Net Assets Consist of:
Paid-in capital	$	42,586,461		$	107,241,466		$	24,624,981
Accumulated net investment income		17,931			14,613			4,009
Accumulated net realized loss on investments, written options contracts, futures contracts and swap contracts		(29,077,667	)		(11,690,945	)		(15,631,500	)
Net unrealized depreciation on investments and swap contracts		(1,778,724	)		(5,047,379	)		(46,371	)

Total Net Assets	$	11,748,001		$	90,517,755		$	8,951,119

Investments, At Cost	$	9,427,770		$	81,986,143		$	8,654,349

Pricing of Shares
Investor Class:
Net Asset Value, offering and redemption price per share		$7.81			$8.71			$10.91
Net Assets	$	5,336,721		$	65,897,935		$	836,743
Shares of beneficial interest outstanding		683,535			7,563,154			76,664
Institutional Class:
Net Asset Value, offering and redemption price per share		$7.61			$8.69			$10.91
Net Assets	$	4,927,580		$	20,819,260		$	830,379
Shares of beneficial interest outstanding		647,717			2,396,495			76,136


See Notes to Financial Statements		53		December 31, 2015

Statement of Assets and Liabilities


	Forward Frontier Strategy Fund (continued)		Forward High Yield Bond Fund (continued)		Forward Investment Grade Fixed- Income Fund (continued)
Class C:
Net Asset Value, offering and redemption price per share		—		$8.68		—
Net Assets		—	$	758,690		—
Shares of beneficial interest outstanding		—		87,370		—
Advisor Class:
Net Asset Value, offering and redemption price per share		$7.76		—		—
Net Assets	$	150,319		—		—
Shares of beneficial interest outstanding		19,368		—		—
Class Z:
Net Asset Value, offering and redemption price per share		$7.86		$8.67		$10.89
Net Assets	$	1,333,381	$	3,041,870	$	7,283,997
Shares of beneficial interest outstanding		169,678		350,942		669,102


December 31, 2015		54		See Notes to Financial Statements

Statement of Assets and Liabilities


	Forward Total MarketPlus Fund			Forward Balanced Allocation Fund			Forward Growth & Income Allocation Fund
Assets:
Investments in affiliates, at value	$	—		$	7,180,966		$	16,962,782
Investments, at value		14,763,329			—			—
Cash		5,745,204			144,503			192,652
Unrealized gain on swap contracts		1,115,924			—			—
Receivable for investments sold		114,495			—			—
Receivable for shares sold		161			94			1,984
Interest and dividends receivable		3,944			—			—
Other assets		8,370			9,904			9,777

Total Assets		21,751,427			7,335,467			17,167,195

Liabilities:
Payable for swap contract payments		17,603			—			—
Payable for shares redeemed		—			4,409			40,980
Payable to advisor		1,330			—			—
Payable for distribution and service fees		2,267			4,266			8,861
Payable to trustees		53			—			—
Payable for chief compliance officer fee		196			66			154
Payable for legal and audit fees		17,106			6,170			5,528
Accrued expenses and other liabilities		16,492			2,370			3,768

Total Liabilities		55,047			17,281			59,291

Net Assets	$	21,696,380		$	7,318,186		$	17,107,904

Net Assets Consist of:
Paid-in capital	$	20,681,302		$	10,260,491		$	23,792,060
Accumulated net investment income		22,892			5,282			13,752
Accumulated net realized loss on investments and swap contracts		(121,648	)		(2,761,636	)		(5,865,071	)
Net unrealized appreciation/(depreciation) on investments and swap contracts		1,113,834			(185,951	)		(832,837	)

Total Net Assets	$	21,696,380		$	7,318,186		$	17,107,904

Investments in Affiliates, At Cost	$	—		$	7,366,917		$	17,795,619
Investments, At Cost	$	14,765,419		$	—		$	—

Pricing of Shares
Investor Class:
Net Asset Value, offering and redemption price per share		$32.02			$13.70			$13.80
Net Assets	$	2,056,180		$	899,996		$	2,616,067
Shares of beneficial interest outstanding		64,213			65,685			189,504
Institutional Class:
Net Asset Value, offering and redemption price per share		$34.92			$13.74			$13.82
Net Assets	$	10,867,804		$	936,481		$	2,551,290
Shares of beneficial interest outstanding		311,210			68,168			184,648
Class A:
Net Asset Value, offering and redemption price per share		—			$13.71			$13.77
Net Assets		—		$	2,767,505		$	6,209,329
Shares of beneficial interest outstanding		—			201,919			450,797
Maximum offering price per share (NAV/0.9425, based on maximum sales charge of 5.75% of the offering price)		—			$14.55			$14.61


See Notes to Financial Statements		55		December 31, 2015

Statement of Assets and Liabilities


	Forward Total MarketPlus Fund (continued)		Forward Balanced Allocation Fund (continued)		Forward Growth & Income Allocation Fund (continued)
Class C:
Net Asset Value, offering and redemption price per share		—		$13.65		$13.78
Net Assets		—	$	2,714,204	$	5,731,218
Shares of beneficial interest outstanding		—		198,851		415,931
Class Z:
Net Asset Value, offering and redemption price per share		$35.13		—		—
Net Assets	$	8,772,396		—		—
Shares of beneficial interest outstanding		249,710		—		—


December 31, 2015		56		See Notes to Financial Statements

Statement of Assets and Liabilities


	Forward Growth Allocation Fund			Forward Income Builder Fund			Forward Multi- Strategy Fund
Assets:
Investments in affiliates, at value	$	21,706,542		$	9,686,407		$	4,747,449
Cash		59,915			241,385			264,313
Receivable for shares sold		756			24,431			3,629
Receivable due from advisor		—			17,501			14,694
Other assets		9,622			13,441			10,982

Total Assets		21,776,835			9,983,165			5,041,067

Liabilities:
Payable for shares redeemed		8,310			11,738			35,614
Payable for distribution and service fees		8,252			4,969			3,184
Payable for chief compliance officer fee		193			91			45
Payable for legal and audit fees		5,193			3,181			6,140
Accrued expenses and other liabilities		4,478			3,837			2,878

Total Liabilities		26,426			23,816			47,861

Net Assets	$	21,750,409		$	9,959,349		$	4,993,206

Net Assets Consist of:
Paid-in capital	$	30,942,826		$	12,095,823		$	9,610,652
Accumulated net investment income		26,045			12,635			19,729
Accumulated net realized loss on investments		(7,692,800	)		(1,168,740	)		(4,211,690	)
Net unrealized depreciation on investments		(1,525,662	)		(980,369	)		(425,485	)

Total Net Assets	$	21,750,409		$	9,959,349		$	4,993,206

Investments in Affiliates, At Cost	$	23,232,204		$	10,666,776		$	5,172,934

Pricing of Shares
Investor Class:
Net Asset Value, offering and redemption price per share		$12.88			$12.94			$12.70
Net Assets	$	1,606,862		$	1,414,377		$	663,440
Shares of beneficial interest outstanding		124,784			109,301			52,238
Institutional Class:
Net Asset Value, offering and redemption price per share		$12.87			$12.96			$13.20
Net Assets	$	9,541,091		$	2,893,158		$	1,118,989
Shares of beneficial interest outstanding		741,282			223,218			84,752
Class A:
Net Asset Value, offering and redemption price per share		$12.87			$12.95			$12.98
Net Assets	$	5,364,846		$	1,601,893		$	2,078,824
Shares of beneficial interest outstanding		416,932			123,681			160,191
Maximum offering price per share		$13.66	^(b)		$13.45	^(a)		$13.77	^(b)
Class C:
Net Asset Value, offering and redemption price per share		$12.76			$12.89			$12.32
Net Assets	$	5,237,610		$	4,049,921		$	1,131,953
Shares of beneficial interest outstanding		410,564			314,301			91,915

(a) Maximum offering price per share (NAV/0.9625, based on maximum sales charge of 3.75% of the offering price)

(b) Maximum offering price per share (NAV/0.9425, based on maximum sales charge of 5.75% of the offering price)


See Notes to Financial Statements		57		December 31, 2015

Statement of Operations

For the Year Ended December 31, 2015


	Forward Frontier Strategy Fund			Forward High Yield Bond Fund			Forward Investment Grade Fixed- Income Fund
Investment Income:
Interest	$	1,031,739		$	8,944,287		$	67,878
Dividends		90,977			—			281,374

Total Investment Income		1,122,716			8,944,287			349,252

Expenses:
Investment advisory fee		828,311			516,616			41,146
Investment sub-advisory fee		—			145,267			—
Administration fee		79,171			90,149			14,164
Custodian fee		2,492			6,312			37
Legal and audit fees		60,623			91,053			36,763
Transfer agent fee		74,752			39,701			6,397
Trustees’ fees and expenses		12,290			19,169			1,831
Registration/filing fees		41,387			46,799			26,451
Reports to shareholder and printing fees		32,888			33,461			11,109
Distribution and service fees
Investor Class		42,892			321,826			31,794
Institutional Class		83,605			63,441			959
Class C		—			8,432			—
Advisor Class		1,071			—			—
Chief compliance officer fee		7,392			10,482			1,255
Other		16,068			12,576			2,142

Total expenses before waiver		1,282,942			1,405,284			174,048
Less fees waived/reimbursed by investment advisor (Note 3)		(288,084	)		—			(38,671	)

Total Net Expenses		994,858			1,405,284			135,377

Net Investment Income:		127,858			7,539,003			213,875

Net realized loss on investments		(957,626	)		(10,855,125	)		(340,327	)
Net realized gain/(loss) on swap contracts		(22,092,106	)		—			3,093
Capital gain distributions from other investment companies		—			—			6,133
Net change in unrealized appreciation/(depreciation) on investments		(339,033	)		(973,048	)		3,191
Net change in unrealized appreciation/(depreciation) on swap contracts		5,432,573			—			(11,312	)

Net Realized and Unrealized Loss on Investments and Swap Contracts		(17,956,192	)		(11,828,173	)		(339,222	)

Net Decrease in Net Assets Resulting From Operations	$	(17,828,334	)	$	(4,289,170	)	$	(125,347	)


December 31, 2015		58		See Notes to Financial Statements

Statement of Operations

For the Year Ended December 31, 2015


	Forward Total MarketPlus Fund			Forward Balanced Allocation Fund			Forward Growth & Income Allocation Fund
Investment Income:
Interest	$	55,004		$	8		$	—
Dividends		180,022			—			—
Dividends from affiliated investment company shares		—			275,343			642,210

Total Investment Income		235,026			275,351			642,210

Expenses:
Investment advisory fee		118,271			9,176			21,002
Administration fee		37,646			9,279			11,927
Custodian fee		565			577			680
Legal and audit fees		43,038			30,422			42,230
Transfer agent fee		14,845			7,209			16,995
Trustees’ fees and expenses		3,432			—			—
Registration/filing fees		25,115			38,224			39,321
Reports to shareholder and printing fees		11,378			6,902			11,484
Distribution and service fees
Investor Class		9,813			5,753			17,376
Institutional Class		13,269			—			—
Class A		—			11,459			24,911
Class C		—			34,909			69,583
Chief compliance officer fee		1,902			730			1,672
Other		2,971			1,781			3,389

Total expenses before waivers		282,245			156,421			260,570
Less fees waived/reimbursed by investment advisor (Note 3)		(81,756	)		(9,176	)		(21,002	)

Total Net Expenses		200,489			147,245			239,568

Net Investment Income:		34,537			128,106			402,642

Net realized loss on affiliated investments		—			(240,716	)		(1,128,878	)
Net realized loss on investments		(118,267	)		—			—
Net realized gain on swap contracts		2,283,277			—			—
Capital gain distributions from other investment companies		8,539			—			—
Capital gain distributions from affiliated investment companies		—			128,756			392,951
Net change in unrealized depreciation on affiliated investments		—			(607,788	)		(1,085,712	)
Net change in unrealized depreciation on investments		(58,178	)		—			—
Net change in unrealized depreciation on swap contracts		(2,165,742	)		—			—

Net Realized and Unrealized Loss on Investments and Swap Contracts		(50,371	)		(719,748	)		(1,821,639	)

Net Decrease in Net Assets Resulting From Operations	$	(15,834	)	$	(591,642	)	$	(1,418,997	)


See Notes to Financial Statements		59		December 31, 2015

Statement of Operations

For the Year Ended December 31, 2015


	Forward Growth Allocation Fund			Forward Income Builder Fund			Forward Multi-Strategy Fund
Investment Income:
Interest	$	—		$	229		$	22
Dividends from affiliated investment company shares		832,398			671,604			220,572

Total Investment Income		832,398			671,833			220,594

Expenses:
Investment advisory fee		26,182			14,031			11,446
Administration fee		13,083			10,063			9,831
Custodian fee		931			1,027			425
Legal and audit fees		47,391			33,609			27,057
Transfer agent fee		17,990			9,738			9,315
Registration/filing fees		38,383			44,302			41,554
Reports to shareholder and printing fees		12,082			8,665			8,771
Distribution and service fees
Investor Class		12,281			9,623			4,329
Class A		23,272			4,501			9,407
Class C		64,741			64,733			15,311
Chief compliance officer fee		2,085			1,106			875
Other		3,745			2,874			2,900

Total expenses before waivers		262,166			204,272			141,221
Less fees waived/reimbursed by investment advisor (Note 3)		(26,182	)		(70,692	)		(67,536	)

Total Net Expenses		235,984			133,580			73,685

Net Investment Income:		596,414			538,253			146,909

Net realized loss on affiliated investments		(1,652,037	)		(1,128,808	)		(1,210,538	)
Capital gain distributions from affiliated investment companies		676,850			163,042			457,022
Net change in unrealized depreciation on affiliated investments		(1,504,461	)		(581,252	)		(495,582	)

Net Realized and Unrealized Loss on Investments		(2,479,648	)		(1,547,018	)		(1,249,098	)

Net Decrease in Net Assets Resulting From Operations	$	(1,883,234	)	$	(1,008,765	)	$	(1,102,189	)


December 31, 2015		60		See Notes to Financial Statements

Statement of Changes in Net Assets


	Forward Frontier Strategy Fund
	Year Ended December 31, 2015^(a)			Year Ended December 31, 2014
Operations:
Net investment income/(loss)	$	127,858		$	(174,898	)
Net realized gain/(loss) on investments		(957,626	)		65,059
Net realized gain/(loss) on swap contracts		(22,092,106	)		16,483,885
Net change in unrealized appreciation/(depreciation) on investments and swap contracts		5,093,540			(16,975,729	)

Net decrease in net assets resulting from operations		(17,828,334	)		(601,683	)

Distributions to Shareholders:
From net investment income
Investor Class		(30,787	)		—
Institutional Class		(199,774	)		—
Advisor Class		(3,131	)		—
Class Z		(16,307	)		—
From net realized gains on investments
Investor Class		(108,803	)		(4,016,832	)
Institutional Class		(123,129	)		(18,344,061	)
Advisor Class		(2,396	)		(375,391	)
Class Z		(25,919	)		(513,928	)

Total distributions		(510,246	)		(23,250,212	)

Share Transactions:
Investor Class
Proceeds from sale of shares		4,484,774			76,771,153
Issued to shareholders in reinvestment of distributions		138,590			3,977,409
Cost of shares redeemed		(15,281,689	)		(61,322,865	)

Net increase/(decrease) from share transactions		(10,658,325	)		19,425,697

Institutional Class
Proceeds from sale of shares		30,757,345			39,116,991
Issued to shareholders in reinvestment of distributions		247,683			12,627,163
Cost of shares redeemed		(95,830,889	)		(42,127,401	)

Net increase/(decrease) from share transactions		(64,825,861	)		9,616,753

Advisor Class
Proceeds from sale of shares		288,738			1,823,948
Issued to shareholders in reinvestment of distributions		5,527			373,429
Cost of shares redeemed		(2,012,844	)		(717,298	)

Net increase/(decrease) from share transactions		(1,718,579	)		1,480,079

Class Z
Proceeds from sale of shares		975,009			2,895,000
Issued to shareholders in reinvestment of distributions		42,226			513,925
Cost of shares redeemed		(2,048,752	)		(6,958,000	)

Net decrease from share transactions		(1,031,517	)		(3,549,075	)

Net increase/(decrease) in net assets	$	(96,572,862	)	$	3,121,559

Net Assets:
Beginning of period		108,320,863			105,199,304

End of period (including accumulated net investment income of $17,931 and $0, respectively)	$	11,748,001		$	108,320,863


See Notes to Financial Statements		61		December 31, 2015

Statement of Changes in Net Assets


	Forward Frontier Strategy Fund (continued)
	Year Ended December 31, 2015^(a)			Year Ended December 31, 2014
Changes in Shares Outstanding:
Investor Class
Sold		459,679			5,595,238
Distributions reinvested		17,426			373,631
Redeemed		(1,589,178	)		(4,725,296	)

Net increase/(decrease) in shares outstanding		(1,112,073	)		1,243,573

Institutional Class
Sold		3,169,812			3,225,686
Distributions reinvested		31,761			1,187,280
Redeemed		(10,920,276	)		(3,690,142	)

Net increase/(decrease) in shares outstanding		(7,718,703	)		722,824

Advisor Class
Sold		31,552			129,563
Distributions reinvested		698			35,213
Redeemed		(215,806	)		(54,399	)

Net increase/(decrease) in shares outstanding		(183,556	)		110,377

Class Z
Sold		95,856			217,682
Distributions reinvested		5,267			47,552
Redeemed		(210,290	)		(509,692	)

Net decrease in shares outstanding		(109,167	)		(244,458	)

(a) The information for the fiscal year ended December 31, 2015 has been audited by KPMG LLP, independent registered public accounting firm. The information for prior periods has been audited by the predecessor independent registered public accounting firm.


December 31, 2015		62		See Notes to Financial Statements

Statement of Changes in Net Assets


	Forward High Yield Bond Fund
	Year Ended December 31, 2015^(a)			Year Ended December 31, 2014
Operations:
Net investment income	$	7,539,003		$	6,707,382
Net realized gain/(loss) on investments		(10,855,125	)		3,449,195
Net change in unrealized depreciation on investments		(973,048	)		(7,828,872	)

Net increase/(decrease) in net assets resulting from operations		(4,289,170	)		2,327,705

Distributions to Shareholders:
From net investment income
Investor Class		(3,584,561	)		(2,502,858	)
Institutional Class		(3,672,487	)		(3,961,537	)
Class C		(42,563	)		(51,152	)
Class Z		(224,760	)		(263,772	)
From net realized gains on investments
Investor Class		(232,835	)		(1,563,757	)
Institutional Class		(80,223	)		(1,771,255	)
Class C		(2,858	)		(26,274	)
Class Z		(12,056	)		(73,891	)

Total distributions		(7,852,343	)		10,214,496

Share Transactions:
Investor Class
Proceeds from sale of shares		83,555,000			56,696,218
Issued to shareholders in reinvestment of distributions		2,480,865			2,037,836
Cost of shares redeemed		(69,581,751	)		(60,760,603	)

Net increase/(decrease) from share transactions		16,454,114			(2,026,549	)

Institutional Class
Proceeds from sale of shares		69,931,491			69,409,114
Issued to shareholders in reinvestment of distributions		2,775,923			4,377,392
Cost of shares redeemed		(111,234,680	)		(84,734,981	)

Net decrease from share transactions		(38,527,266	)		(10,948,475	)

Class C
Proceeds from sale of shares		7,649			140,632
Issued to shareholders in reinvestment of distributions		43,774			69,972
Cost of shares redeemed		(100,583	)		(516,928	)

Net decrease from share transactions		(49,160	)		(306,324	)

Class Z
Proceeds from sale of shares		4,060,000			6,065,000
Cost of shares redeemed		(3,179,301	)		(15,261,387	)

Net increase/(decrease) from share transactions		880,699			(9,196,387	)

Net decrease in net assets	$	(33,383,126	)	$	(30,364,526	)

Net Assets:
Beginning of period		123,900,881			154,265,407

End of period (including accumulated net investment income of $14,613 and $0, respectively)	$	90,517,755		$	123,900,881


See Notes to Financial Statements		63		December 31, 2015

Statement of Changes in Net Assets


	Forward High Yield Bond Fund (continued)
	Year Ended December 31, 2015^(a)			Year Ended December 31, 2014
Changes in Shares Outstanding:
Investor Class
Sold		8,790,811			5,472,825
Distributions reinvested		268,918			205,209
Redeemed		(7,299,305	)		(5,855,006	)

Net increase/(decrease) in shares outstanding		1,760,424			(176,972	)

Institutional Class
Sold		7,303,951			6,712,199
Distributions reinvested		292,254			430,146
Redeemed		(11,832,642	)		(8,189,766	)

Net decrease in shares outstanding		(4,236,437	)		(1,047,421	)

Class C
Sold		783			13,387
Distributions reinvested		4,655			6,903
Redeemed		(10,447	)		(49,786	)

Net decrease in shares outstanding		(5,009	)		(29,496	)

Class Z
Sold		422,041			580,803
Redeemed		(331,348	)		(1,467,226	)

Net increase/(decrease) in shares outstanding		90,693			(886,423	)


December 31, 2015		64		See Notes to Financial Statements

Statement of Changes in Net Assets


	Forward Investment Grade Fixed-Income Fund
	Year Ended December 31, 2015^(a)			Year Ended December 31, 2014
Operations:
Net investment income	$	213,875		$	370,521
Net realized loss on investments		(340,327	)		(6,388,136	)
Net realized loss on written option contracts		—			(5,814	)
Net realized gain on futures contracts		—			62,561
Net realized gain on swap contracts		3,093			—
Capital gain distributions from other investment companies		6,133			—
Net change in unrealized appreciation/(depreciation) on investments, written option contracts, futures contracts and swap contracts		(8,121	)		6,981,315

Net increase/(decrease) in net assets resulting from operations		(125,347	)		1,020,447

Distributions to Shareholders:
From net investment income
Investor Class		(30,604	)		(18,427	)
Institutional Class		(16,148	)		(62,719	)
Class Z		(160,363	)		(319,294	)

Total distributions		(207,115	)		(400,440	)

Share Transactions:
Investor Class
Proceeds from sale of shares		35,432,039			6,465
Issued to shareholders in reinvestment of distributions		10,395			18,379
Cost of shares redeemed		(35,606,196	)		(279,439	)

Net decrease from share transactions		(163,762	)		(254,595	)

Institutional Class
Proceeds from sale of shares		206,056			106,711
Issued to shareholders in reinvestment of distributions		14,602			59,779
Cost of shares redeemed		(655,493	)		(5,829,817	)

Net decrease from share transactions		(434,835	)		(5,663,327	)

Class Z
Proceeds from sale of shares		1,762,200			7,542,000
Cost of shares redeemed		(4,323,184	)		(15,883,000	)

Net decrease from share transactions		(2,560,984	)		(8,341,000	)

Net decrease in net assets	$	(3,492,043	)	$	(13,638,915	)

Net Assets:
Beginning of period		12,443,162			26,082,077

End of period (including accumulated net investment income of $4,009 and $20,140, respectively)	$	8,951,119		$	12,443,162


See Notes to Financial Statements		65		December 31, 2015

Statement of Changes in Net Assets


	Forward Investment Grade Fixed-Income Fund (continued)
	Year Ended December 31, 2015^(a)			Year Ended December 31, 2014
Changes in Shares Outstanding:
Investor Class
Sold		3,155,388			584
Distributions reinvested		932			1,662
Redeemed		(3,176,275	)		(25,223	)

Net decrease in shares outstanding		(19,955	)		(22,977	)

Institutional Class
Sold		18,803			9,602
Distributions reinvested		1,323			5,396
Redeemed		(59,239	)		(525,250	)

Net decrease in shares outstanding		(39,113	)		(510,252	)

Class Z
Sold		158,820			679,312
Redeemed		(393,154	)		(1,434,988	)

Net decrease in shares outstanding		(234,334	)		(755,676	)


December 31, 2015		66		See Notes to Financial Statements

Statement of Changes in Net Assets


	Forward Total MarketPlus Fund
	Year Ended December 31, 2015^(a)			Year Ended December 31, 2014
Operations:
Net investment income/(loss)	$	34,537		$	(22,185	)
Net realized loss on investments		(118,267	)		(13,872	)
Net realized gain on swap contracts		2,283,277			7,094,911
Capital gain distributions from other investment companies		8,539			11,282
Net change in unrealized depreciation on investments and swap contracts		(2,223,920	)		(4,046,802	)

Net increase/(decrease) in net assets resulting from operations		(15,834	)		3,023,334

Distributions to Shareholders:
From net investment income
Institutional Class		(13,558	)		—
Class Z		(13,942	)		—
From net realized gains on investments
Investor Class		(263,191	)		(93,262	)
Institutional Class		(1,344,163	)		(667,762	)
Class Z		(1,058,199	)		(510,702	)

Total distributions		(2,693,053	)		(1,271,726	)

Share Transactions:
Investor Class
Proceeds from sale of shares		717,903			549,393
Issued to shareholders in reinvestment of distributions		255,894			88,333
Cost of shares redeemed		(608,772	)		(575,261	)

Net increase from share transactions		365,025			62,465

Institutional Class
Proceeds from sale of shares		546,107			176,717
Issued to shareholders in reinvestment of distributions		1,129,312			468,645
Cost of shares redeemed		(4,506,416	)		(8,384,097	)

Net decrease from share transactions		(2,830,997	)		(7,738,735	)

Class Z
Proceeds from sale of shares		4,574,295			9,950,000
Issued to shareholders in reinvestment of distributions		1,072,141			510,702
Cost of shares redeemed		(7,621,713	)		(16,665,000	)

Net decrease from share transactions		(1,975,277	)		(6,204,298	)

Net decrease in net assets	$	(7,150,136	)	$	(12,128,960	)

Net Assets:
Beginning of period		28,846,516			40,975,476

End of period (including accumulated net investment income of $22,892 and $0, respectively)	$	21,696,380		$	28,846,516


See Notes to Financial Statements		67		December 31, 2015

Statement of Changes in Net Assets


	Forward Total MarketPlus Fund (continued)
	Year Ended December 31, 2015^(a)			Year Ended December 31, 2014
Changes in Shares Outstanding:
Investor Class
Sold		19,210			14,610
Distributions reinvested		7,862			2,391
Redeemed		(16,169	)		(15,971	)

Net increase in shares outstanding		10,903			1,030

Institutional Class
Sold		13,632			4,547
Distributions reinvested		31,789			11,790
Redeemed		(113,148	)		(216,070	)

Net decrease in shares outstanding		(67,727	)		(199,733	)

Class Z
Sold		115,365			245,670
Distributions reinvested		29,995			12,793
Redeemed		(188,803	)		(432,263	)

Net decrease in shares outstanding		(43,443	)		(173,800	)


December 31, 2015		68		See Notes to Financial Statements

Statement of Changes in Net Assets


	Forward Balanced Allocation Fund
	Year Ended December 31, 2015^(a)			Year Ended December 31, 2014
Operations:
Net investment income	$	128,106		$	612,260
Net realized gain/(loss) on affiliated investments		(240,716	)		779,767
Capital gain distributions from affiliated investments		128,756			130,099
Net change in unrealized depreciation on affiliated investments		(607,788	)		(1,049,168	)

Net increase/(decrease) in net assets resulting from operations		(591,642	)		472,958

Distributions to Shareholders:
From net investment income
Investor Class		(19,500	)		(64,894	)
Institutional Class		(25,735	)		(266,190	)
Class A		(60,672	)		(139,604	)
Class C		(49,347	)		(137,069	)

Total distributions		(155,254	)		(607,757	)

Share Transactions:
Investor Class
Proceeds from sale of shares		127,350			138,194
Issued to shareholders in reinvestment of distributions		19,487			64,823
Cost of shares redeemed		(569,098	)		(1,380,929	)

Net decrease from share transactions		(422,261	)		(1,177,912	)

Institutional Class
Proceeds from sale of shares		83,533			472,576
Issued to shareholders in reinvestment of distributions		25,731			261,732
Cost of shares redeemed		(1,142,013	)		(14,722,770	)

Net decrease from share transactions		(1,032,749	)		(13,988,462	)

Class A
Proceeds from sale of shares		41,948			162,182
Issued to shareholders in reinvestment of distributions		58,540			135,496
Cost of shares redeemed		(830,643	)		(1,328,015	)

Net decrease from share transactions		(730,155	)		(1,030,337	)

Class C
Proceeds from sale of shares		121,120			246,206
Issued to shareholders in reinvestment of distributions		47,771			121,812
Cost of shares redeemed		(1,266,553	)		(2,837,097	)

Net decrease from share transactions		(1,097,662	)		(2,469,079	)

Net decrease in net assets	$	(4,029,723	)	$	(18,800,589	)

Net Assets:
Beginning of period		11,347,909			30,148,498

End of period (including accumulated net investment income of $5,282 and $26,000, respectively)	$	7,318,186		$	11,347,909


See Notes to Financial Statements		69		December 31, 2015

Statement of Changes in Net Assets


	Forward Balanced Allocation Fund (continued)
	Year Ended December 31, 2015^(a)			Year Ended December 31, 2014
Changes in Shares Outstanding:
Investor Class
Sold		8,696			8,901
Distributions reinvested		1,332			4,230
Redeemed		(39,056	)		(88,705	)

Net decrease in shares outstanding		(29,028	)		(75,574	)

Institutional Class
Sold		5,668			30,593
Distributions reinvested		1,757			17,027
Redeemed		(77,511	)		(953,224	)

Net decrease in shares outstanding		(70,086	)		(905,604	)

Class A
Sold		2,848			10,550
Distributions reinvested		3,999			8,858
Redeemed		(56,843	)		(86,387	)

Net decrease in shares outstanding		(49,996	)		(66,979	)

Class C
Sold		8,332			15,985
Distributions reinvested		3,267			7,983
Redeemed		(87,296	)		(183,301	)

Net decrease in shares outstanding		(75,697	)		(159,333	)


December 31, 2015		70		See Notes to Financial Statements

Statement of Changes in Net Assets


	Forward Growth & Income Allocation Fund
	Year Ended December 31, 2015^(a)			Year Ended December 31, 2014
Operations:
Net investment income	$	402,642		$	1,024,603
Net realized gain/(loss) on affiliated investments		(1,128,878	)		457,275
Capital gain distributions from affiliated investments		392,951			334,532
Net change in unrealized depreciation on affiliated investments		(1,085,712	)		(1,487,749	)

Net increase/(decrease) in net assets resulting from operations		(1,418,997	)		328,661

Distributions to Shareholders:
From net investment income
Investor Class		(72,017	)		(144,051	)
Institutional Class		(89,187	)		(280,228	)
Class A		(159,596	)		(326,359	)
Class C		(111,418	)		(288,053	)

Total distributions		(432,218	)		(1,038,691	)

Share Transactions:
Investor Class
Proceeds from sale of shares		338,968			519,821
Issued to shareholders in reinvestment of distributions		71,772			143,886
Cost of shares redeemed		(1,181,246	)		(712,800	)

Net decrease from share transactions		(770,506	)		(49,093	)

Institutional Class
Proceeds from sale of shares		249,660			204,406
Issued to shareholders in reinvestment of distributions		89,187			268,829
Cost of shares redeemed		(1,873,805	)		(7,502,946	)

Net decrease from share transactions		(1,534,958	)		(7,029,711	)

Class A
Proceeds from sale of shares		309,239			490,788
Issued to shareholders in reinvestment of distributions		159,122			325,512
Cost of shares redeemed		(1,344,974	)		(2,084,157	)

Net decrease from share transactions		(876,613	)		(1,267,857	)

Class C
Proceeds from sale of shares		201,383			426,805
Issued to shareholders in reinvestment of distributions		110,754			282,626
Cost of shares redeemed		(2,024,552	)		(2,784,158	)

Net decrease from share transactions		(1,712,415	)		(2,074,727	)

Net decrease in net assets	$	(6,745,707	)	$	(11,131,418	)

Net Assets:
Beginning of period		23,853,611			34,985,029

End of period (including accumulated net investment income of $13,752 and $27,830, respectively)	$	17,107,904		$	23,853,611


See Notes to Financial Statements		71		December 31, 2015

Statement of Changes in Net Assets


	Forward Growth & Income Allocation Fund (continued)
	Year Ended December 31, 2015^(a)			Year Ended December 31, 2014
Changes in Shares Outstanding:
Investor Class
Sold		22,313			32,496
Distributions reinvested		4,883			9,227
Redeemed		(81,009	)		(44,984	)

Net decrease in shares outstanding		(53,813	)		(3,261	)

Institutional Class
Sold		16,414			12,805
Distributions reinvested		6,068			17,157
Redeemed		(125,454	)		(469,538	)

Net decrease in shares outstanding		(102,972	)		(439,576	)

Class A
Sold		20,799			31,015
Distributions reinvested		10,871			20,904
Redeemed		(90,734	)		(131,649	)

Net decrease in shares outstanding		(59,064	)		(79,730	)

Class C
Sold		13,704			26,747
Distributions reinvested		7,510			18,177
Redeemed		(136,214	)		(175,160	)

Net decrease in shares outstanding		(115,000	)		(130,236	)


December 31, 2015		72		See Notes to Financial Statements

Statement of Changes in Net Assets


	Forward Growth Allocation Fund
	Year Ended December 31, 2015^(a)			Year Ended December 31, 2014
Operations:
Net investment income	$	596,414		$	1,484,097
Net realized gain/(loss) on affiliated investments		(1,652,037	)		650,991
Capital gain distributions from affiliated investments		676,850			490,808
Net change in unrealized depreciation on affiliated investments		(1,504,461	)		(2,153,517	)

Net increase/(decrease) in net assets resulting from operations		(1,883,234	)		472,379

Distributions to Shareholders:
From net investment income
Investor Class		(57,340	)		(125,802	)
Institutional Class		(312,609	)		(655,327	)
Class A		(169,516	)		(379,977	)
Class C		(127,067	)		(323,367	)

Total distributions		(666,532	)		(1,484,473	)

Share Transactions:
Investor Class
Proceeds from sale of shares		474,891			320,405
Issued to shareholders in reinvestment of distributions		57,111			125,358
Cost of shares redeemed		(1,510,284	)		(847,312	)

Net decrease from share transactions		(978,282	)		(401,549	)

Institutional Class
Proceeds from sale of shares		235,136			863,573
Issued to shareholders in reinvestment of distributions		306,273			469,641
Cost of shares redeemed		(1,079,824	)		(8,015,489	)

Net decrease from share transactions		(538,415	)		(6,682,275	)

Class A
Proceeds from sale of shares		177,577			477,194
Issued to shareholders in reinvestment of distributions		168,958			378,590
Cost of shares redeemed		(2,304,644	)		(2,671,566	)

Net decrease from share transactions		(1,958,109	)		(1,815,782	)

Class C
Proceeds from sale of shares		182,562			249,081
Issued to shareholders in reinvestment of distributions		125,598			302,187
Cost of shares redeemed		(2,039,803	)		(3,598,567	)

Net decrease from share transactions		(1,731,643	)		(3,047,299	)

Net decrease in net assets	$	(7,756,215	)	$	(12,958,999	)

Net Assets:
Beginning of period		29,506,624			42,465,623

End of period (including accumulated net investment income of $26,045 and $47,415, respectively)	$	21,750,409		$	29,506,624


See Notes to Financial Statements		73		December 31, 2015

Statement of Changes in Net Assets


	Forward Growth Allocation Fund (continued)
	Year Ended December 31, 2015^(a)			Year Ended December 31, 2014
Changes in Shares Outstanding:
Investor Class
Sold		33,671			21,751
Distributions reinvested		4,114			8,496
Redeemed		(110,329	)		(55,844	)

Net decrease in shares outstanding		(72,544	)		(25,597	)

Institutional Class
Sold		16,218			56,643
Distributions reinvested		22,214			31,907
Redeemed		(76,623	)		(529,739	)

Net decrease in shares outstanding		(38,191	)		(441,189	)

Class A
Sold		12,537			31,535
Distributions reinvested		12,212			25,628
Redeemed		(161,681	)		(178,173	)

Net decrease in shares outstanding		(136,932	)		(121,010	)

Class C
Sold		12,962			16,784
Distributions reinvested		9,100			20,677
Redeemed		(145,032	)		(240,262	)

Net decrease in shares outstanding		(122,970	)		(202,801	)


December 31, 2015		74		See Notes to Financial Statements

Statement of Changes in Net Assets


	Forward Income Builder Fund
	Year Ended December 31, 2015^(a)			Year Ended December 31, 2014
Operations:
Net investment income	$	538,253		$	846,479
Net realized gain/(loss) on affiliated investments		(1,128,808	)		378,010
Capital gain distributions from affiliated investments		163,042			212,179
Net change in unrealized depreciation on affiliated investments		(581,252	)		(713,941	)

Net increase/(decrease) in net assets resulting from operations		(1,008,765	)		722,727

Distributions to Shareholders:
From net investment income
Investor Class		(75,142	)		(98,866	)
Institutional Class		(167,069	)		(311,239	)
Class A		(74,744	)		(93,398	)
Class C		(216,282	)		(342,976	)
From net realized gains on investments
Investor Class		—			(92,356	)
Institutional Class		—			(228,207	)
Class A		—			(94,572	)
Class C		—			(337,501	)

Total distributions		(533,237	)		(1,599,115	)

Share Transactions:
Investor Class
Proceeds from sale of shares		428,793			1,231,518
Issued to shareholders in reinvestment of distributions		74,579			190,323
Cost of shares redeemed		(1,217,773	)		(848,175	)

Net increase/(decrease) from share transactions		(714,401	)		573,666

Institutional Class
Proceeds from sale of shares		1,062,643			5,110,391
Issued to shareholders in reinvestment of distributions		166,998			535,866
Cost of shares redeemed		(2,286,129	)		(9,619,932	)

Net decrease from share transactions		(1,056,488	)		(3,973,675	)

Class A
Proceeds from sale of shares		330,092			1,255,180
Issued to shareholders in reinvestment of distributions		56,028			170,596
Cost of shares redeemed		(533,567	)		(2,168,738	)

Net decrease from share transactions		(147,447	)		(742,962	)

Class C
Proceeds from sale of shares		417,404			1,935,159
Issued to shareholders in reinvestment of distributions		180,273			580,227
Cost of shares redeemed		(3,606,089	)		(1,291,133	)

Net increase/(decrease) from share transactions		(3,008,412	)		1,224,253

Net decrease in net assets	$	(6,468,750	)	$	(3,795,106	)

Net Assets:
Beginning of period		16,428,099			20,223,205

End of period (including accumulated net investment income of $12,635 and $0, respectively)	$	9,959,349		$	16,428,099


See Notes to Financial Statements		75		December 31, 2015

Statement of Changes in Net Assets


	Forward Income Builder Fund (continued)
	Year Ended December 31, 2015^(a)			Year Ended December 31, 2014
Changes in Shares Outstanding:
Investor Class
Sold		29,226			79,427
Distributions reinvested		5,308			12,604
Redeemed		(84,566	)		(54,433	)

Net increase/(decrease) in shares outstanding		(50,032	)		37,598

Institutional Class
Sold		73,311			321,284
Distributions reinvested		11,915			35,238
Redeemed		(161,208	)		(615,278	)

Net decrease in shares outstanding		(75,982	)		(258,756	)

Class A
Sold		23,241			80,376
Distributions reinvested		4,002			11,278
Redeemed		(37,549	)		(141,202	)

Net decrease in shares outstanding		(10,306	)		(49,548	)

Class C
Sold		28,564			123,830
Distributions reinvested		12,888			38,632
Redeemed		(261,402	)		(84,044	)

Net increase/(decrease) in shares outstanding		(219,950	)		78,418


December 31, 2015		76		See Notes to Financial Statements

Statement of Changes in Net Assets


	Forward Multi-Strategy Fund
	Year Ended December 31, 2015^(a)			Year Ended December 31, 2014
Operations:
Net investment income	$	146,909		$	731,708
Net realized gain/(loss) on affiliated investments		(1,210,538	)		289,187
Capital gain distributions from affiliated investments		457,022			230,985
Net change in unrealized depreciation on affiliated investments		(495,582	)		(378,182	)

Net increase/(decrease) in net assets resulting from operations		(1,102,189	)		873,698

Distributions to Shareholders:
From net investment income
Investor Class		(26,481	)		(51,681	)
Institutional Class		(177,060	)		(458,944	)
Class A		(83,604	)		(142,917	)
Class C		(40,689	)		(81,925	)

Total distributions		(327,834	)		(735,467	)

Share Transactions:
Investor Class
Proceeds from sale of shares		117,213			91,205
Issued to shareholders in reinvestment of distributions		26,383			51,466
Cost of shares redeemed		(321,608	)		(1,192,375	)

Net decrease from share transactions		(178,012	)		(1,049,704	)

Institutional Class
Proceeds from sale of shares		72,013			618,795
Issued to shareholders in reinvestment of distributions		175,344			366,659
Cost of shares redeemed		(7,575,411	)		(2,224,227	)

Net decrease from share transactions		(7,328,054	)		(1,238,773	)

Class A
Proceeds from sale of shares		147,262			99,192
Issued to shareholders in reinvestment of distributions		82,921			142,917
Cost of shares redeemed		(946,314	)		(676,123	)

Net decrease from share transactions		(716,131	)		(434,014	)

Class C
Proceeds from sale of shares		86,835			63,593
Issued to shareholders in reinvestment of distributions		40,470			81,421
Cost of shares redeemed		(812,734	)		(594,592	)

Net decrease from share transactions		(685,429	)		(449,578	)

Net decrease in net assets	$	(10,337,649	)	$	(3,033,838	)

Net Assets:
Beginning of period		15,330,855			18,364,693

End of period (including accumulated net investment income of $19,729 and $30,595, respectively)	$	4,993,206		$	15,330,855


See Notes to Financial Statements		77		December 31, 2015

Statement of Changes in Net Assets


	Forward Multi-Strategy Fund (continued)
	Year Ended December 31, 2015^(a)			Year Ended December 31, 2014
Changes in Shares Outstanding:
Investor Class
Sold		8,968			6,184
Distributions reinvested		1,954			3,518
Redeemed		(24,028	)		(77,795	)

Net decrease in shares outstanding		(13,106	)		(68,093	)

Institutional Class
Sold		4,877			39,589
Distributions reinvested		12,026			24,325
Redeemed		(554,418	)		(142,846	)

Net decrease in shares outstanding		(537,515	)		(78,932	)

Class A
Sold		10,365			6,483
Distributions reinvested		6,006			9,598
Redeemed		(66,991	)		(43,906	)

Net decrease in shares outstanding		(50,620	)		(27,825	)

Class C
Sold		6,302			4,371
Distributions reinvested		3,092			5,760
Redeemed		(59,018	)		(41,292	)

Net decrease in shares outstanding		(49,624	)		(31,161	)


December 31, 2015		78		See Notes to Financial Statements

Financial Highlights

For a share outstanding throughout the periods presented.

Forward Frontier Strategy Fund


	Investor Class
	Year Ended December 31, 2015^(a)			Year Ended December 31, 2014			Year Ended December 31, 2013			Year Ended December 31, 2012			Year Ended December 31, 2011^(b)
Net Asset Value, Beginning of Period	$	10.14		$	11.91		$	9.80		$	9.87		$	12.43
Income/(Loss) from Operations:
Net investment income/(loss)^(c)		(0.01	)^(d)		(0.04	)		(0.06	)		(0.06	)		0.03
Net realized and unrealized gain/(loss) on investments		(2.12	)		0.48			2.28			0.65			(2.57	)

Total from Investment Operations		(2.13	)		0.44			2.22			0.59			(2.54	)

Less Distributions:
From investment income		(0.04	)		—			(0.11	)		(0.66	)		—
From capital gains		(0.16	)		(2.21	)		(0.00	)^(e)		—			(0.02	)

Total Distributions		(0.20	)		(2.21	)		(0.11	)		(0.66	)		(0.02	)

Net Increase/(Decrease) in Net Asset Value		(2.33	)		(1.77	)		2.11			(0.07	)		(2.56	)

Net Asset Value, End of Period	$	7.81		$	10.14		$	11.91		$	9.80		$	9.87

Total Return		(21.01	)%		3.07	%		22.64	%		5.98	%		(20.40	)%
Ratios/Supplemental Data:
Net assets, End of Period (in 000s)	$	5,337		$	18,201		$	6,576		$	2,829		$	3,021
Ratios to Average Net Assets:
Net investment income/(loss) including reimbursement/waiver		(0.07	)%		(0.33	)%		(0.56	)%		(0.55	)%		0.23	%
Operating expenses including reimbursement/waiver		1.29	%		1.29	%		1.34	%^(f)		1.56	%^(g)		n/a
Operating expenses excluding reimbursement/waiver		1.61	%		1.50	%		1.54	%		1.57	%		1.54	%
Portfolio Turnover Rate		66	%		133	%		57	%		69	%		116	%

(b) Prior to May 1, 2011, the Forward Frontier Strategy Fund was known as the Forward Frontier MarketStrat Fund.

(c) Per share amounts are based upon average shares outstanding.

(d) The amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and redemptions of Fund shares in relation to income earned and/or fluctuating market value of the investments of the Fund.

(e) Amount represents less than $0.01 per share.

(f) Effective May 1, 2013, the annual expense limitation rate changed from 1.49% to 1.29%.

(g) Effective June 8, 2012, the Advisor agreed to limit expenses at 1.49%.


See Notes to Financial Statements		79		December 31, 2015

Financial Highlights

For a share outstanding throughout the periods presented.

Forward Frontier Strategy Fund


	Institutional Class
	Year Ended December 31, 2015^(a)			Year Ended December 31, 2014			Year Ended December 31, 2013			Year Ended December 31, 2012			Year Ended December 31, 2011^(b)
Net Asset Value, Beginning of Period	$	10.18		$	11.94		$	9.82		$	9.90		$	12.43
Income/(Loss) from Operations:
Net investment income/(loss)^(c)		0.01			(0.01	)		(0.04	)		(0.03	)		0.06
Net realized and unrealized gain/(loss) on investments		(2.12	)		0.46			2.29			0.64			(2.57	)

Total from Investment Operations		(2.11	)		0.45			2.25			0.61			(2.51	)

Less Distributions:
From investment income		(0.30	)		—			(0.13	)		(0.69	)		—
From capital gains		(0.16	)		(2.21	)		(0.00	)^(d)		—			(0.02	)

Total Distributions		(0.46	)		(2.21	)		(0.13	)		(0.69	)		(0.02	)

Net Increase/(Decrease) in Net Asset Value		(2.57	)		(1.76	)		2.12			(0.08	)		(2.53	)

Net Asset Value, End of Period	$	7.61		$	10.18		$	11.94		$	9.82		$	9.90

Total Return		(20.80	)%		3.14	%		22.94	%		6.15	%		(20.16	)%
Ratios/Supplemental Data:
Net assets, End of Period (in 000s)	$	4,928		$	85,199		$	91,259		$	56,305		$	56,664
Ratios to Average Net Assets:
Net investment income/(loss) including reimbursement/waiver		0.15	%		(0.06	)%		(0.34	)%		(0.26	)%		0.51	%
Operating expenses including reimbursement/waiver		0.99	%		0.99	%		1.05	%^(e)		1.25	%^(f)		n/a
Operating expenses excluding reimbursement/waiver		1.28	%		1.20	%		1.24	%		1.27	%		1.24	%
Portfolio Turnover Rate		66	%		133	%		57	%		69	%		116	%

(b) Prior to May 1, 2011, the Forward Frontier Strategy Fund was known as the Forward Frontier MarketStrat Fund.

(c) Per share amounts are based upon average shares outstanding.

(d) Amount represents less than $0.01 per share.

(e) Effective May 1, 2013, the annual expense limitation rate changed from 1.19% to 0.99%.

(f) Effective June 8, 2012, the Advisor agreed to limit expenses at 1.19%.


December 31, 2015		80		See Notes to Financial Statements

Financial Highlights

For a share outstanding throughout the periods presented.

Forward Frontier Strategy Fund


	Advisor Class
	Year Ended December 31, 2015^(a)			Year Ended December 31, 2014			Year Ended December 31, 2013^(b)			Year Ended December 31, 2012			Period Ended December 31, 2011^(c)
Net Asset Value, Beginning of Period	$	10.20		$	11.94		$	9.82		$	9.90		$	12.39
Income/(Loss) from Operations:
Net investment income/(loss)^(d)		0.02			(0.00	)^(e)		0.02	^(f)		(0.02	)		0.02
Net realized and unrealized gain/(loss) on investments		(2.13	)		0.47			2.23			0.63			(2.49	)

Total from Investment Operations		(2.11	)		0.47			2.25			0.61			(2.47	)

Less Distributions:
From investment income		(0.17	)		—			(0.13	)		(0.69	)		—
From capital gains		(0.16	)		(2.21	)		(0.00	)^(e)		—			(0.02	)

Total Distributions		(0.33	)		(2.21	)		(0.13	)		(0.69	)		(0.02	)

Net Increase/(Decrease) in Net Asset Value		(2.44	)		(1.74	)		2.12			(0.08	)		(2.49	)

Net Asset Value, End of Period	$	7.76		$	10.20		$	11.94		$	9.82		$	9.90

Total Return		(20.79	)%		3.32	%		22.93	%		6.16	%		(19.90	)%^(g)
Ratios/Supplemental Data:
Net assets, End of Period (in 000s)	$	150		$	2,069		$	1,105		$	9		$	9
Ratios to Average Net Assets:
Net investment income/(loss) including reimbursement/waiver		0.16	%		(0.03	)%		0.18	%		(0.25	)%		0.30	%^(h)
Operating expenses including reimbursement/waiver		0.99	%		0.99	%		0.99	%⁽ⁱ⁾		1.25	%^(j)		n/a
Operating expenses excluding reimbursement/waiver		1.28	%		1.21	%		1.24	%		1.26	%		1.25	%^(h)
Portfolio Turnover Rate		66	%		133	%		57	%		69	%		116	%^(k)

(b) Prior to May 1, 2013, the Forward Frontier Strategy Fund Advisor Class was known as the Forward Frontier Strategy Fund Class M.

(c) The Fund began offering Advisor Class shares on May 2, 2011.

(d) Per share amounts are based upon average shares outstanding.

(e) Amount represents less than $0.01 per share.

(f) The amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and redemptions of Fund shares in relation to income earned and/or fluctuating market value of the investments of the Fund.

(g) Not Annualized.

(h) Annualized.

(i) Effective May 1, 2013, the annual expense limitation rate changed from 1.19% to 0.99%.

(j) Effective June 8, 2012, the Advisor agreed to limit expenses at 1.19%.

(k) Portfolio turnover rate is calculated at the Fund level and represents the year ended December 31, 2011.


See Notes to Financial Statements		81		December 31, 2015

Financial Highlights

For a share outstanding throughout the periods presented.

Forward Frontier Strategy Fund


	Class Z
	Year Ended December 31, 2015^(a)			Year Ended December 31, 2014			Year Ended December 31, 2013			Year Ended December 31, 2012			Year Ended December 31, 2011^(b)
Net Asset Value, Beginning of Period	$	10.23		$	11.96		$	9.84		$	9.92		$	12.43
Income/(Loss) from Operations:
Net investment income/(loss)^(c)		0.03			0.00	^(d)(e)		(0.04	)		(0.01	)		0.06
Net realized and unrealized gain/(loss) on investments		(2.14	)		0.48			2.30			0.63			(2.55	)

Total from Investment Operations		(2.11	)		0.48			2.26			0.62			(2.49	)

Less Distributions:
From investment income		(0.10	)		—			(0.14	)		(0.70	)		—
From capital gains		(0.16	)		(2.21	)		(0.00	)^(d)		—			(0.02	)

Total Distributions		(0.26	)		(2.21	)		(0.14	)		(0.70	)		(0.02	)

Net Increase/(Decrease) in Net Asset Value		(2.37	)		(1.73	)		2.12			(0.08	)		(2.51	)

Net Asset Value, End of Period	$	7.86		$	10.23		$	11.96		$	9.84		$	9.92

Total Return		(20.71	)%		3.40	%		23.03	%		6.25	%		(20.00	)%
Ratios/Supplemental Data:
Net assets, End of Period (in 000s)	$	1,333		$	2,852		$	6,259		$	5,586		$	13,569
Ratios to Average Net Assets:
Net investment income/(loss) including reimbursement/waiver		0.36	%		0.01	%		(0.34	)%		(0.10	)%		0.51	%
Operating expenses including reimbursement/waiver		0.89	%		0.89	%		0.96	%^(f)		1.18	%^(g)		n/a
Operating expenses excluding reimbursement/waiver		1.21	%		1.10	%		1.13	%		1.19	%		1.13	%
Portfolio Turnover Rate		66	%		133	%		57	%		69	%		116	%

(b) Prior to May 1, 2011, the Forward Frontier Strategy Fund was known as the Forward Frontier MarketStrat Fund.

(c) Per share amounts are based upon average shares outstanding.

(d) Amount represents less than $0.01 per share.

(e) The amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and redemptions of Fund shares in relation to income earned and/or fluctuating market value of the investments of the Fund.

(f) Effective May 1, 2013, the annual expense limitation rate changed from 1.09% to 0.89%.

(g) Effective June 8, 2012, the Advisor agreed to limit expenses at 1.09%.


December 31, 2015		82		See Notes to Financial Statements

Financial Highlights

For a share outstanding throughout the periods presented.

Forward High Yield Bond Fund


	Investor Class
	Year Ended December 31, 2015^(a)			Year Ended December 31, 2014			Year Ended December 31, 2013			Year Ended December 31, 2012			Year Ended December 31, 2011
Net Asset Value, Beginning of Period	$	9.71		$	10.35		$	10.41		$	9.73		$	10.04
Income/(Loss) from Operations:
Net investment income^(b)		0.52			0.52			0.56			0.63			0.69
Net realized and unrealized gain/(loss) on investments		(0.96	)		(0.35	)		0.07			0.72			(0.33	)

Total from Investment Operations		(0.44	)		0.17			0.63			1.35			0.36

Less Distributions:
From investment income		(0.53	)		(0.53	)		(0.56	)		(0.67	)		(0.67	)
From capital gains		(0.03	)		(0.28	)		(0.13	)		—			—

Total Distributions		(0.56	)		(0.81	)		(0.69	)		(0.67	)		(0.67	)

Net Increase/(Decrease) in Net Asset Value		(1.00	)		(0.64	)		(0.06	)		0.68			(0.31	)

Net Asset Value, End of Period	$	8.71		$	9.71		$	10.35		$	10.41		$	9.73

Total Return		(4.81	)%		1.50	%		6.19	%		14.24	%		3.61	%
Ratios/Supplemental Data:
Net assets, End of Period (in 000s)	$	65,898		$	56,326		$	61,903		$	25,482		$	1,925
Ratios to Average Net Assets:
Net investment income		5.44	%		5.02	%		5.35	%		6.15	%		6.90	%
Operating expenses		1.28	%		1.23	%		1.21	%		1.22	%		1.28	%
Portfolio Turnover Rate		178	%		206	%		198	%		210	%		320	%

(b) Per share amounts are based upon average shares outstanding.


See Notes to Financial Statements		83		December 31, 2015

Financial Highlights

For a share outstanding throughout the periods presented.

Forward High Yield Bond Fund


	Institutional Class
	Year Ended December 31, 2015^(a)			Year Ended December 31, 2014			Year Ended December 31, 2013			Year Ended December 31, 2012			Year Ended December 31, 2011
Net Asset Value, Beginning of Period	$	9.67		$	10.32		$	10.38		$	9.70		$	10.03
Income/(Loss) from Operations:
Net investment income^(b)		0.57			0.56			0.60			0.70			0.73
Net realized and unrealized gain/(loss) on investments		(0.95	)		(0.36	)		0.07			0.68			(0.33	)

Total from Investment Operations		(0.38	)		0.20			0.67			1.38			0.40

Less Distributions:
From investment income		(0.57	)		(0.57	)		(0.60	)		(0.70	)		(0.73	)
From capital gains		(0.03	)		(0.28	)		(0.13	)		—			—

Total Distributions		(0.60	)		(0.85	)		(0.73	)		(0.70	)		(0.73	)

Net Increase/(Decrease) in Net Asset Value		(0.98	)		(0.65	)		(0.06	)		0.68			(0.33	)

Net Asset Value, End of Period	$	8.69		$	9.67		$	10.32		$	10.38		$	9.70

Total Return		(4.24	)%		1.81	%		6.62	%		14.71	%		4.06	%
Ratios/Supplemental Data:
Net assets, End of Period (in 000s)	$	20,819		$	64,168		$	79,283		$	95,212		$	97,719
Ratios to Average Net Assets:
Net investment income		5.95	%		5.41	%		5.76	%		6.88	%		7.30	%
Operating expenses		0.85	%		0.83	%		0.81	%		0.83	%		0.85	%
Portfolio Turnover Rate		178	%		206	%		198	%		210	%		320	%

(b) Per share amounts are based upon average shares outstanding.


December 31, 2015		84		See Notes to Financial Statements

Financial Highlights

For a share outstanding throughout the periods presented.

Forward High Yield Bond Fund


	Class C
	Year Ended December 31, 2015^(a)			Year Ended December 31, 2014			Year Ended December 31, 2013			Year Ended December 31, 2012			Year Ended December 31, 2011
Net Asset Value, Beginning of Period	$	9.67		$	10.32		$	10.38		$	9.70		$	10.03
Income/(Loss) from Operations:
Net investment income^(b)		0.47			0.47			0.51			0.60			0.64
Net realized and unrealized gain/(loss) on investments		(0.95	)		(0.36	)		0.06			0.69			(0.33	)

Total from Investment Operations		(0.48	)		0.11			0.57			1.29			0.31

Less Distributions:
From investment income		(0.48	)		(0.48	)		(0.50	)		(0.61	)		(0.64	)
From capital gains		(0.03	)		(0.28	)		(0.13	)		—			—

Total Distributions		(0.51	)		(0.76	)		(0.63	)		(0.61	)		(0.64	)

Net Increase/(Decrease) in Net Asset Value		(0.99	)		(0.65	)		(0.06	)		0.68			(0.33	)

Net Asset Value, End of Period	$	8.68		$	9.67		$	10.32		$	10.38		$	9.70

Total Return^(c)		(5.20	)%		0.89	%		5.67	%		13.69	%		3.13	%
Ratios/Supplemental Data:
Net assets, End of Period (in 000s)	$	759		$	894		$	1,258		$	1,241		$	1,029
Ratios to Average Net Assets:
Net investment income		4.95	%		4.51	%		4.85	%		5.96	%		6.40	%
Operating expenses		1.78	%		1.73	%		1.71	%		1.73	%		1.76	%
Portfolio Turnover Rate		178	%		206	%		198	%		210	%		320	%

(b) Per share amounts are based upon average shares outstanding.

(c) Total return does not reflect the effect of sales charges.


See Notes to Financial Statements		85		December 31, 2015

Financial Highlights

For a share outstanding throughout the periods presented.

Forward High Yield Bond Fund


	Class Z
	Year Ended December 31, 2015^(a)			Year Ended December 31, 2014			Year Ended December 31, 2013			Year Ended December 31, 2012			Year Ended December 31, 2011
Net Asset Value, Beginning of Period	$	9.66		$	10.31		$	10.37		$	9.69		$	10.02
Income/(Loss) from Operations:
Net investment income^(b)		0.56			0.58			0.62			0.71			0.74
Net realized and unrealized gain/(loss) on investments		(0.94	)		(0.37	)		0.06			0.69			(0.33	)

Total from Investment Operations		(0.38	)		0.21			0.68			1.40			0.41

Less Distributions:
From investment income		(0.58	)		(0.58	)		(0.61	)		(0.72	)		(0.74	)
From capital gains		(0.03	)		(0.28	)		(0.13	)		—			—

Total Distributions		(0.61	)		(0.86	)		(0.74	)		(0.72	)		(0.74	)

Net Increase/(Decrease) in Net Asset Value		(0.99	)		(0.65	)		(0.06	)		0.68			(0.33	)

Net Asset Value, End of Period	$	8.67		$	9.66		$	10.31		$	10.37		$	9.69

Total Return		(4.24	)%		1.92	%		6.74	%		14.84	%		4.16	%
Ratios/Supplemental Data:
Net assets, End of Period (in 000s)	$	3,042		$	2,513		$	11,821		$	15,184		$	46,138
Ratios to Average Net Assets:
Net investment income		5.95	%		5.53	%		5.90	%		7.07	%		7.37	%
Operating expenses		0.77	%		0.73	%		0.71	%		0.73	%		0.75	%
Portfolio Turnover Rate		178	%		206	%		198	%		210	%		320	%

(b) Per share amounts are based upon average shares outstanding.


December 31, 2015		86		See Notes to Financial Statements

Financial Highlights

For a share outstanding throughout the periods presented.

Forward Investment Grade Fixed-Income Fund


	Investor Class
	Year Ended December 31, 2015^(a)			Year Ended December 31, 2014			Year Ended December 31, 2013			Year Ended December 31, 2012			Year Ended December 31, 2011
Net Asset Value, Beginning of Period	$	11.14		$	10.85		$	11.70		$	11.30		$	10.80
Income/(Loss) from Operations:
Net investment income/(loss)^(b)		0.12			0.14			(0.05	)^(c)		0.17			0.38
Net realized and unrealized gain/(loss) on investments		(0.29	)		0.32			(0.50	)		0.53			0.52

Total from Investment Operations		(0.17	)		0.46			(0.55	)		0.70			0.90

Less Distributions:
From investment income		(0.06	)		(0.17	)		(0.30	)		(0.30	)		(0.40	)

Total Distributions		(0.06	)		(0.17	)		(0.30	)		(0.30	)		(0.40	)

Net Increase/(Decrease) in Net Asset Value		(0.23	)		0.29			(0.85	)		0.40			0.50

Net Asset Value, End of Period	$	10.91		$	11.14		$	10.85	^(d)	$	11.70		$	11.30

Total Return		(1.47	)%		2.97	%		(4.75	)%^(d)		6.21	%		8.55	%
Ratios/Supplemental Data:
Net assets, End of Period (in 000s)	$	837		$	1,077		$	1,298		$	2,781		$	3,082
Ratios to Average Net Assets:
Net investment income/(loss) including reimbursement/waiver		1.04	%		1.27	%		(0.46	)%		1.48	%		3.41	%
Operating expenses including reimbursement/waiver		1.08	%		1.83	%^(e)		n/a			n/a			n/a
Operating expenses excluding reimbursement/waiver		1.09	%		1.99	%		1.47	%		1.23	%		1.28	%
Portfolio Turnover Rate		308	%		314	%		222	%		149	%		157	%

(b) Per share amounts are based upon average shares outstanding.

(c) The amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to the timing of sales and redemptions of Fund shares in relation to income earned and/or fluctuating market value of the investments of the Fund.

(d) Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the total return based on the net asset value may differ from the net asset value and total return for shareholder transactions.

(e) Effective December 1, 2014, the Advisor agreed to limit expenses at 1.15%.


See Notes to Financial Statements		87		December 31, 2015

Financial Highlights

For a share outstanding throughout the periods presented.

Forward Investment Grade Fixed-Income Fund


	Institutional Class
	Year Ended December 31, 2015^(a)			Year Ended December 31, 2014			Year Ended December 31, 2013			Year Ended December 31, 2012			Year Ended December 31, 2011
Net Asset Value, Beginning of Period	$	11.18		$	10.86		$	11.70		$	11.30		$	10.80
Income/(Loss) from Operations:
Net investment income^(b)		0.15			0.24			0.03			0.22			0.40
Net realized and unrealized gain/(loss) on investments		(0.23	)		0.28			(0.51	)		0.52			0.55

Total from Investment Operations		(0.08	)		0.52			(0.48	)		0.74			0.95

Less Distributions:
From investment income		(0.19	)		(0.20	)		(0.36	)		(0.34	)		(0.45	)

Total Distributions		(0.19	)		(0.20	)		(0.36	)		(0.34	)		(0.45	)

Net Increase/(Decrease) in Net Asset Value		(0.27	)		0.32			(0.84	)		0.40			0.50

Net Asset Value, End of Period	$	10.91		$	11.18		$	10.86	^(c)	$	11.70		$	11.30

Total Return		(0.76	)%		3.51	%		(4.19	)%^(c)		6.64	%		8.98	%
Ratios/Supplemental Data:
Net assets, End of Period (in 000s)	$	830		$	1,288		$	6,794		$	9,563		$	17,316
Ratios to Average Net Assets:
Net investment income including reimbursement/waiver		1.34	%		2.13	%		0.30	%		1.86	%		3.66	%
Operating expenses including reimbursement/waiver		0.75	%		1.33	%^(d)		n/a			n/a			n/a
Operating expenses excluding reimbursement/waiver		1.12	%		1.41	%		1.06	%		0.83	%		0.88	%
Portfolio Turnover Rate		308	%		314	%		222	%		149	%		157	%

(b) Per share amounts are based upon average shares outstanding.

(c) Includes adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the total return based on the net asset value may differ from the net asset value and total return for shareholder transactions.

(d) Effective December 1, 2014, the Advisor agreed to limit expenses at 0.75%.


December 31, 2015		88		See Notes to Financial Statements

Financial Highlights

For a share outstanding throughout the periods presented.

Forward Investment Grade Fixed-Income Fund


	Class Z
	Year Ended December 31, 2015^(a)			Year Ended December 31, 2014			Year Ended December 31, 2013			Year Ended December 31, 2012			Year Ended December 31, 2011
Net Asset Value, Beginning of Period	$	11.16		$	10.84		$	11.68		$	11.29		$	10.79
Income/(Loss) from Operations:
Net investment income^(b)		0.16			0.22			0.04			0.22			0.42
Net realized and unrealized gain/(loss) on investments		(0.23	)		0.31			(0.51	)		0.52			0.54

Total from Investment Operations		(0.07	)		0.53			(0.47	)		0.74			0.96

Less Distributions:
From investment income		(0.20	)		(0.21	)		(0.37	)		(0.35	)		(0.46	)

Total Distributions		(0.20	)		(0.21	)		(0.37	)		(0.35	)		(0.46	)

Net Increase/(Decrease) in Net Asset Value		(0.27	)		0.32			(0.84	)		0.39			0.50

Net Asset Value, End of Period	$	10.89		$	11.16		$	10.84	^(c)	$	11.68		$	11.29

Total Return		(0.67	)%		3.59	%		(4.10	)%^(c)		6.67	%		9.10	%
Ratios/Supplemental Data:
Net assets, End of Period (in 000s)	$	7,284		$	10,078		$	17,990		$	35,860		$	59,371
Ratios to Average Net Assets:
Net investment income including reimbursement/waiver		1.48	%		1.97	%		0.39	%		1.93	%		3.84	%
Operating expenses including reimbursement/waiver		0.65	%		1.31	%^(d)		n/a			n/a			n/a
Operating expenses excluding reimbursement/waiver		1.03	%		1.42	%		0.96	%		0.73	%		0.77	%
Portfolio Turnover Rate		308	%		314	%		222	%		149	%		157	%

(b) Per share amounts are based upon average shares outstanding.

(d) Effective December 1, 2014, the Advisor agreed to limit expenses at 0.65%.


See Notes to Financial Statements		89		December 31, 2015

Financial Highlights

For a share outstanding throughout the periods presented.

Forward Total MarketPlus Fund


	Investor Class
	Year Ended December 31, 2015^(a)			Year Ended December 31, 2014			Year Ended December 31, 2013^(b)			Year Ended December 31, 2012			Year Ended December 31, 2011^(c)
Net Asset Value, Beginning of Period	$	37.07		$	34.98		$	26.74		$	23.09		$	24.50
Income/(Loss) from Operations:
Net investment income/(loss)^(d)		(0.08	)^(e)		(0.16	)		(0.13	)		(0.14	)		0.05
Net realized and unrealized gain/(loss) on investments		(0.30	)		4.04			8.37			3.79			(1.35	)

Total from Investment Operations		(0.38	)		3.88			8.24			3.65			(1.30	)

Less Distributions:
From capital gains		(4.67	)		(1.79	)		—			—			—
From return of capital		—			—			—			—			(0.11	)

Total Distributions		(4.67	)		(1.79	)		—			—			(0.11	)

Net Increase/(Decrease) in Net Asset Value		(5.05	)		2.09			8.24			3.65			(1.41	)

Net Asset Value, End of Period	$	32.02		$	37.07		$	34.98		$	26.74		$	23.09

Total Return		(1.24	)%		11.14	%		30.88	%		15.72	%		(5.37	)%
Ratios/Supplemental Data:
Net assets, End of Period (in 000s)	$	2,056		$	1,976		$	1,828		$	1,950		$	2,217
Ratios to Average Net Assets:
Net investment income/(loss)		(0.22	)%		(0.45	)%		(0.43	)%		(0.56	)%		0.21	%
Operating expenses including reimbursement/waiver		1.25	%		1.25	%		1.25	%		1.38	%^(f)(g)		n/a
Operating expenses excluding reimbursement/waiver		1.60	%		1.50	%		1.42	%		1.38	%		1.34	%
Portfolio Turnover Rate		42	%		53	%		218	%		154	%		40	%

(b) Prior to May 1, 2013, the Forward Total MarketPlus Fund was known as the Forward Extended MarketPlus Fund.

(c) Prior to May 1, 2011, the Forward Extended MarketPlus Fund was known as the Forward SMIDPlus Fund.

(d) Per share amounts are based upon average shares outstanding.

(f) Affiliated management fee waiver represents less than 0.005%.

(g) Effective November 1, 2012, the Advisor agreed to limit expenses at 1.25%.


December 31, 2015		90		See Notes to Financial Statements

Financial Highlights

For a share outstanding throughout the periods presented.

Forward Total MarketPlus Fund


	Institutional Class
	Year Ended December 31, 2015^(a)			Year Ended December 31, 2014			Year Ended December 31, 2013^(b)			Year Ended December 31, 2012			Year Ended December 31, 2011^(c)
Net Asset Value, Beginning of Period	$	39.91		$	37.39		$	28.47		$	24.51		$	25.93
Income/(Loss) from Operations:
Net investment income/(loss)^(d)		0.05			(0.04	)		(0.04	)		(0.04	)		0.16
Net realized and unrealized gain/(loss) on investments		(0.33	)		4.35			8.96			4.00			(1.42	)

Total from Investment Operations		(0.28	)		4.31			8.92			3.96			(1.26	)

Less Distributions:
From investment income		(0.04	)		—			—			—			—
From capital gains		(4.67	)		(1.79	)		—			—			—
From return of capital		—			—			—			—			(0.16	)

Total Distributions		(4.71	)		(1.79	)		—			—			(0.16	)

Net Increase/(Decrease) in Net Asset Value		(4.99	)		2.52			8.92			3.96			(1.42	)

Net Asset Value, End of Period	$	34.92		$	39.91		$	37.39		$	28.47		$	24.51

Total Return		(0.89	)%		11.55	%		31.33	%		16.16	%		(4.94	)%
Ratios/Supplemental Data:
Net assets, End of Period (in 000s)	$	10,868		$	15,122		$	21,636		$	25,416		$	98,153
Ratios to Average Net Assets:
Net investment income/(loss)		0.13	%		(0.09	)%		(0.11	)%		(0.15	)%		0.62	%
Operating expenses including reimbursement/waiver		0.85	%		0.85	%		0.85	%		0.99	%^(e)(f)		n/a
Operating expenses excluding reimbursement/waiver		1.19	%		1.09	%		1.02	%		0.99	%		0.94	%
Portfolio Turnover Rate		42	%		53	%		218	%		154	%		40	%

(b) Prior to May 1, 2013, the Forward Total MarketPlus Fund was known as the Forward Extended MarketPlus Fund.

(c) Prior to May 1, 2011, the Forward Extended MarketPlus Fund was known as the Forward SMIDPlus Fund.

(d) Per share amounts are based upon average shares outstanding.

(e) Affiliated management fee waiver represents less than 0.005%.

(f) Effective November 1, 2012, the Advisor agreed to limit expenses at 0.85%.


See Notes to Financial Statements		91		December 31, 2015

Financial Highlights

For a share outstanding throughout the periods presented.

Forward Total MarketPlus Fund


	Class Z
	Year Ended December 31, 2015^(a)			Year Ended December 31, 2014			Year Ended December 31, 2013^(b)			Year Ended December 31, 2012			Year Ended December 31, 2011^(c)
Net Asset Value, Beginning of Period	$	40.08		$	37.50		$	28.53		$	24.52		$	25.93
Income/(Loss) from Operations:
Net investment income/(loss)^(d)		0.11			0.01	^(e)		(0.03	)		(0.01	)		0.22
Net realized and unrealized gain/(loss) on investments		(0.33	)		4.36			9.00			4.02			(1.46	)

Total from Investment Operations		(0.22	)		4.37			8.97			4.01			(1.24	)

Less Distributions:
From investment income		(0.06	)		—			—			—			—
From capital gains		(4.67	)		(1.79	)		—			—			—
From return of capital		—			—			—			—			(0.17	)

Total Distributions		(4.73	)		(1.79	)		—			—			(0.17	)

Net Increase/(Decrease) in Net Asset Value		(4.95	)		2.58			8.97			4.01			(1.41	)

Net Asset Value, End of Period	$	35.13		$	40.08		$	37.50		$	28.53		$	24.52

Total Return		(0.76	)%		11.67	%		31.53	%		16.27	%		(4.85	)%
Ratios/Supplemental Data:
Net assets, End of Period (in 000s)	$	8,772		$	11,749		$	17,511		$	2,068		$	10,416
Ratios to Average Net Assets:
Net investment income/(loss)		0.26	%		0.02	%		(0.10	)%		(0.03	)%		0.82	%
Operating expenses including reimbursement/waiver		0.75	%		0.75	%		0.75	%		0.89	%^(f)(g)		n/a
Operating expenses excluding reimbursement/waiver		1.10	%		0.98	%		0.90	%		0.90	%		0.83	%
Portfolio Turnover Rate		42	%		53	%		218	%		154	%		40	%

(b) Prior to May 1, 2013, the Forward Total MarketPlus Fund was known as the Forward Extended MarketPlus Fund.

(c) Prior to May 1, 2011, the Forward Extended MarketPlus Fund was known as the Forward SMIDPlus Fund.

(d) Per share amounts are based upon average shares outstanding.

(f) Affiliated management fee waiver represents less than 0.005%.

(g) Effective November 1, 2012, the Advisor agreed to limit expenses at 0.75%.


December 31, 2015		92		See Notes to Financial Statements

Financial Highlights

For a share outstanding throughout the periods presented.

Forward Balanced Allocation Fund


	Investor Class
	Year Ended December 31, 2015^(a)			Year Ended December 31, 2014			Year Ended December 31, 2013			Year Ended December 31, 2012			Year Ended December 31, 2011
Net Asset Value, Beginning of Period	$	14.95		$	15.33		$	14.94		$	13.96		$	15.18
Income/(Loss) from Operations:
Net investment income^(b)		0.21			0.51			0.44			0.33			0.33
Net realized and unrealized gain/(loss) on investments		(1.21	)		(0.40	)		0.42			1.02			(0.83	)

Total from Investment Operations		(1.00	)		0.11			0.86			1.35			(0.50	)

Less Distributions:
From investment income		(0.25	)		(0.49	)		(0.47	)		(0.37	)		(0.34	)
From capital gains		—			—			—			—			(0.38	)

Total Distributions		(0.25	)		(0.49	)		(0.47	)		(0.37	)		(0.72	)

Net Increase/(Decrease) in Net Asset Value		(1.25	)		(0.38	)		0.39			0.98			(1.22	)

Net Asset Value, End of Period	$	13.70		$	14.95		$	15.33		$	14.94		$	13.96

Total Return		(6.78	)%		0.69	%		5.83	%		9.71	%		(3.34	)%
Ratios/Supplemental Data:
Net assets, End of Period (in 000s)	$	900		$	1,416		$	2,610		$	4,146		$	8,503
Ratios to Average Net Assets:
Net investment income including expense paid directly by the advisor		1.43	%		3.32	%		2.87	%		2.23	%		2.15	%
Operating expenses including expense paid directly by the advisor^(c)		1.53	%		1.00	%		0.77	%		0.75	%		0.68	%
Net investment income excluding expense paid directly by the advisor		1.33	%		3.22	%		2.77	%		2.12	%		2.04	%
Operating expenses excluding expense paid directly by the advisor^(c)		1.63	%		1.10	%		0.87	%		0.86	%		0.79	%
Portfolio Turnover Rate		36	%		57	%		46	%		81	%		78	%

(b) Per share amounts are based upon average shares outstanding.

(c) Excludes expenses of the affiliated funds in which the Fund invests.


See Notes to Financial Statements		93		December 31, 2015

Financial Highlights

For a share outstanding throughout the periods presented.

Forward Balanced Allocation Fund


	Institutional Class
	Year Ended December 31, 2015^(a)			Year Ended December 31, 2014			Year Ended December 31, 2013			Year Ended December 31, 2012			Year Ended December 31, 2011
Net Asset Value, Beginning of Period	$	14.97		$	15.34		$	14.95		$	13.97		$	15.19
Income/(Loss) from Operations:
Net investment income^(b)		0.29			0.45			0.52			0.41			0.39
Net realized and unrealized gain/(loss) on investments		(1.21	)		(0.26	)		0.42			1.01			(0.81	)

Total from Investment Operations		(0.92	)		0.19			0.94			1.42			(0.42	)

Less Distributions:
From investment income		(0.31	)		(0.56	)		(0.55	)		(0.44	)		(0.42	)
From capital gains		—			—			—			—			(0.38	)

Total Distributions		(0.31	)		(0.56	)		(0.55	)		(0.44	)		(0.80	)

Net Increase/(Decrease) in Net Asset Value		(1.23	)		(0.37	)		0.39			0.98			(1.22	)

Net Asset Value, End of Period	$	13.74		$	14.97		$	15.34		$	14.95		$	13.97

Total Return		(6.27	)%		1.21	%		6.37	%		10.26	%		(2.84	)%
Ratios/Supplemental Data:
Net assets, End of Period (in 000s)	$	936		$	2,070		$	16,014		$	24,207		$	35,935
Ratios to Average Net Assets:
Net investment income including expense paid directly by the advisor		1.95	%		2.87	%		3.40	%		2.78	%		2.55	%
Operating expenses including expense paid directly by the advisor^(c)		1.04	%		0.45	%		0.27	%		0.25	%		0.17	%
Net investment income excluding expense paid directly by the advisor		1.85	%		2.77	%		3.30	%		2.67	%		2.44	%
Operating expenses excluding expense paid directly by the advisor^(c)		1.14	%		0.55	%		0.37	%		0.36	%		0.28	%
Portfolio Turnover Rate		36	%		57	%		46	%		81	%		78	%

(b) Per share amounts are based upon average shares outstanding.

(c) Excludes expenses of the affiliated funds in which the Fund invests.


December 31, 2015		94		See Notes to Financial Statements

Financial Highlights

For a share outstanding throughout the periods presented.

Forward Balanced Allocation Fund


	Class A
	Year Ended December 31, 2015^(a)			Year Ended December 31, 2014			Year Ended December 31, 2013			Year Ended December 31, 2012			Year Ended December 31, 2011
Net Asset Value, Beginning of Period	$	14.95		$	15.32		$	14.93		$	13.95		$	15.17
Income/(Loss) from Operations:
Net investment income^(b)		0.24			0.57			0.48			0.38			0.30
Net realized and unrealized gain/(loss) on investments		(1.21	)		(0.43	)		0.41			0.99			(0.78	)

Total from Investment Operations		(0.97	)		0.14			0.89			1.37			(0.48	)

Less Distributions:
From investment income		(0.27	)		(0.51	)		(0.50	)		(0.39	)		(0.36	)
From capital gains		—			—			—			—			(0.38	)

Total Distributions		(0.27	)		(0.51	)		(0.50	)		(0.39	)		(0.74	)

Net Increase/(Decrease) in Net Asset Value		(1.24	)		(0.37	)		0.39			0.98			(1.22	)

Net Asset Value, End of Period	$	13.71		$	14.95		$	15.32		$	14.93		$	13.95

Total Return^(c)		(6.60	)%		0.89	%		6.00	%		9.89	%		(3.21	)%
Ratios/Supplemental Data:
Net assets, End of Period (in 000s)	$	2,768		$	3,766		$	4,886		$	5,904		$	6,230
Ratios to Average Net Assets:
Net investment income including expense paid directly by the advisor		1.68	%		3.67	%		3.16	%		2.60	%		1.93	%
Operating expenses including expense paid directly by the advisor^(d)		1.39	%		0.87	%		0.62	%		0.60	%		0.51	%
Net investment income excluding expense paid directly by the advisor		1.58	%		3.57	%		3.06	%		2.50	%		1.82	%
Operating expenses excluding expense paid directly by the advisor^(d)		1.49	%		0.97	%		0.72	%		0.70	%		0.62	%
Portfolio Turnover Rate		36	%		57	%		46	%		81	%		78	%

(b) Per share amounts are based upon average shares outstanding.

(c) Total return does not reflect the effect of sales charges.

(d) Excludes expenses of the affiliated funds in which the Fund invests.


See Notes to Financial Statements		95		December 31, 2015

Financial Highlights

For a share outstanding throughout the periods presented.

Forward Balanced Allocation Fund


	Class C
	Year Ended December 31, 2015^(a)			Year Ended December 31, 2014			Year Ended December 31, 2013			Year Ended December 31, 2012			Year Ended December 31, 2011
Net Asset Value, Beginning of Period	$	14.92		$	15.30		$	14.91		$	13.93		$	15.15
Income/(Loss) from Operations:
Net investment income^(b)		0.13			0.45			0.37			0.28			0.25
Net realized and unrealized gain/(loss) on investments		(1.20	)		(0.41	)		0.41			0.99			(0.83	)

Total from Investment Operations		(1.07	)		0.04			0.78			1.27			(0.58	)

Less Distributions:
From investment income		(0.20	)		(0.42	)		(0.39	)		(0.29	)		(0.26	)
From capital gains		—			—			—			—			(0.38	)

Total Distributions		(0.20	)		(0.42	)		(0.39	)		(0.29	)		(0.64	)

Net Increase/(Decrease) in Net Asset Value		(1.27	)		(0.38	)		0.39			0.98			(1.22	)

Net Asset Value, End of Period	$	13.65		$	14.92		$	15.30		$	14.91		$	13.93

Total Return^(c)		(7.25	)%		0.26	%		5.30	%		9.18	%		(3.84	)%
Ratios/Supplemental Data:
Net assets, End of Period (in 000s)	$	2,714		$	4,096		$	6,639		$	9,884		$	11,984
Ratios to Average Net Assets:
Net investment income including expense paid directly by the advisor		0.92	%		2.90	%		2.41	%		1.89	%		1.68	%
Operating expenses including expense paid directly by the advisor^(d)		2.03	%		1.50	%		1.27	%		1.25	%		1.18	%
Net investment income excluding expense paid directly by the advisor		0.82	%		2.80	%		2.31	%		1.79	%		1.57	%
Operating expenses excluding expense paid directly by the advisor^(d)		2.13	%		1.60	%		1.37	%		1.35	%		1.29	%
Portfolio Turnover Rate		36	%		57	%		46	%		81	%		78	%

(b) Per share amounts are based upon average shares outstanding.

(c) Total return does not reflect the effect of sales charges.

(d) Excludes expenses of the affiliated funds in which the Fund invests.


December 31, 2015		96		See Notes to Financial Statements

Financial Highlights

For a share outstanding throughout the periods presented.

Forward Growth & Income Allocation Fund


	Investor Class
	Year Ended December 31, 2015^(a)			Year Ended December 31, 2014			Year Ended December 31, 2013			Year Ended December 31, 2012			Year Ended December 31, 2011
Net Asset Value, Beginning of Period	$	15.19		$	15.74		$	15.02		$	13.94		$	14.82
Income/(Loss) from Operations:
Net investment income^(b)		0.29			0.59			0.46			0.30			0.24
Net realized and unrealized gain/(loss) on investments		(1.37	)		(0.54	)		0.74			1.15			(0.79	)

Total from Investment Operations		(1.08	)		0.05			1.20			1.45			(0.55	)

Less Distributions:
From investment income		(0.31	)		(0.60	)		(0.48	)		(0.37	)		(0.27	)
From capital gains		—			—			—			—			(0.06	)

Total Distributions		(0.31	)		(0.60	)		(0.48	)		(0.37	)		(0.33	)

Net Increase/(Decrease) in Net Asset Value		(1.39	)		(0.55	)		0.72			1.08			(0.88	)

Net Asset Value, End of Period	$	13.80		$	15.19		$	15.74		$	15.02		$	13.94

Total Return		(7.22	)%		0.24	%		8.06	%		10.46	%		(3.74	)%
Ratios/Supplemental Data:
Net assets, End of Period (in 000s)	$	2,616		$	3,697		$	3,881		$	4,540		$	7,527
Ratios to Average Net Assets:
Net investment income including expense paid directly by the advisor		1.95	%		3.74	%		2.97	%		2.04	%		1.63	%
Operating expenses including expense paid directly by the advisor^(c)		1.11	%		0.89	%		0.78	%		0.75	%		0.71	%
Net investment income excluding expense paid directly by the advisor		1.85	%		3.64	%		2.87	%		1.92	%		1.50	%
Operating expenses excluding expense paid directly by the advisor^(c)		1.21	%		0.99	%		0.88	%		0.87	%		0.84	%
Portfolio Turnover Rate		45	%		61	%		62	%		84	%		79	%

(b) Per share amounts are based upon average shares outstanding.

(c) Excludes expenses of the affiliated funds in which the Fund invests.


See Notes to Financial Statements		97		December 31, 2015

Financial Highlights

For a share outstanding throughout the periods presented.

Forward Growth & Income Allocation Fund


	Institutional Class
	Year Ended December 31, 2015^(a)			Year Ended December 31, 2014			Year Ended December 31, 2013			Year Ended December 31, 2012			Year Ended December 31, 2011
Net Asset Value, Beginning of Period	$	15.21		$	15.76		$	15.04		$	13.96		$	14.84
Income/(Loss) from Operations:
Net investment income^(b)		0.35			0.56			0.52			0.39			0.31
Net realized and unrealized gain/(loss) on investments		(1.35	)		(0.43	)		0.76			1.14			(0.78	)

Total from Investment Operations		(1.00	)		0.13			1.28			1.53			(0.47	)

Less Distributions:
From investment income		(0.39	)		(0.68	)		(0.56	)		(0.45	)		(0.35	)
From capital gains		—			—			—			—			(0.06	)

Total Distributions		(0.39	)		(0.68	)		(0.56	)		(0.45	)		(0.41	)

Net Increase/(Decrease) in Net Asset Value		(1.39	)		(0.55	)		0.72			1.08			(0.88	)

Net Asset Value, End of Period	$	13.82		$	15.21		$	15.76		$	15.04		$	13.96

Total Return		(6.71	)%		0.75	%		8.61	%		11.05	%		(3.22	)%
Ratios/Supplemental Data:
Net assets, End of Period (in 000s)	$	2,551		$	4,375		$	11,458		$	16,273		$	24,909
Ratios to Average Net Assets:
Net investment income including expense paid directly by the advisor		2.36	%		3.51	%		3.33	%		2.65	%		2.08	%
Operating expenses including expense paid directly by the advisor^(c)		0.60	%		0.38	%		0.28	%		0.25	%		0.21	%
Net investment income excluding expense paid directly by the advisor		2.26	%		3.41	%		3.23	%		2.53	%		1.95	%
Operating expenses excluding expense paid directly by the advisor^(c)		0.70	%		0.48	%		0.38	%		0.37	%		0.34	%
Portfolio Turnover Rate		45	%		61	%		62	%		84	%		79	%

(b) Per share amounts are based upon average shares outstanding.

(c) Excludes expenses of the affiliated funds in which the Fund invests.


December 31, 2015		98		See Notes to Financial Statements

Financial Highlights

For a share outstanding throughout the periods presented.

Forward Growth & Income Allocation Fund


	Class A
	Year Ended December 31, 2015^(a)			Year Ended December 31, 2014			Year Ended December 31, 2013			Year Ended December 31, 2012			Year Ended December 31, 2011
Net Asset Value, Beginning of Period	$	15.16		$	15.71		$	14.99		$	13.92		$	14.80
Income/(Loss) from Operations:
Net investment income^(b)		0.32			0.61			0.47			0.37			0.28
Net realized and unrealized gain/(loss) on investments		(1.38	)		(0.54	)		0.75			1.10			(0.81	)

Total from Investment Operations		(1.06	)		0.07			1.22			1.47			(0.53	)

Less Distributions:
From investment income		(0.33	)		(0.62	)		(0.50	)		(0.40	)		(0.29	)
From capital gains		—			—			—			—			(0.06	)

Total Distributions		(0.33	)		(0.62	)		(0.50	)		(0.40	)		(0.35	)

Net Increase/(Decrease) in Net Asset Value		(1.39	)		(0.55	)		0.72			1.07			(0.88	)

Net Asset Value, End of Period	$	13.77		$	15.16		$	15.71		$	14.99		$	13.92

Total Return^(c)		(7.08	)%		0.39	%		8.23	%		10.62	%		(3.59	)%
Ratios/Supplemental Data:
Net assets, End of Period (in 000s)	$	6,209		$	7,731		$	9,262		$	12,222		$	12,691
Ratios to Average Net Assets:
Net investment income including expense paid directly by the advisor		2.18	%		3.84	%		3.00	%		2.53	%		1.87	%
Operating expenses including expense paid directly by the advisor^(d)		0.97	%		0.74	%		0.63	%		0.60	%		0.56	%
Net investment income excluding expense paid directly by the advisor		2.08	%		3.74	%		2.90	%		2.42	%		1.74	%
Operating expenses excluding expense paid directly by the advisor^(d)		1.07	%		0.84	%		0.73	%		0.71	%		0.69	%
Portfolio Turnover Rate		45	%		61	%		62	%		84	%		79	%

(b) Per share amounts are based upon average shares outstanding.

(c) Total return does not reflect the effect of sales charges.

(d) Excludes expenses of the affiliated funds in which the Fund invests.


See Notes to Financial Statements		99		December 31, 2015

Financial Highlights

For a share outstanding throughout the periods presented.

Forward Growth & Income Allocation Fund


	Class C
	Year Ended December 31, 2015^(a)			Year Ended December 31, 2014			Year Ended December 31, 2013			Year Ended December 31, 2012			Year Ended December 31, 2011
Net Asset Value, Beginning of Period	$	15.16		$	15.71		$	14.99		$	13.90		$	14.77
Income/(Loss) from Operations:
Net investment income^(b)		0.21			0.50			0.36			0.23			0.17
Net realized and unrealized gain/(loss) on investments		(1.36	)		(0.54	)		0.75			1.15			(0.79	)

Total from Investment Operations		(1.15	)		(0.04	)		1.11			1.38			(0.62	)

Less Distributions:
From investment income		(0.23	)		(0.51	)		(0.39	)		(0.29	)		(0.19	)
From capital gains		—			—			—			—			(0.06	)

Total Distributions		(0.23	)		(0.51	)		(0.39	)		(0.29	)		(0.25	)

Net Increase/(Decrease) in Net Asset Value		(1.38	)		(0.55	)		0.72			1.09			(0.87	)

Net Asset Value, End of Period	$	13.78		$	15.16		$	15.71		$	14.99		$	13.90

Total Return^(c)		(7.65	)%		(0.28	)%		7.56	%		9.89	%		(4.19	)%
Ratios/Supplemental Data:
Net assets, End of Period (in 000s)	$	5,731		$	8,051		$	10,385		$	14,466		$	22,529
Ratios to Average Net Assets:
Net investment income including expense paid directly by the advisor		1.41	%		3.13	%		2.35	%		1.57	%		1.18	%
Operating expenses including expense paid directly by the advisor^(d)		1.61	%		1.39	%		1.28	%		1.25	%		1.21	%
Net investment income excluding expense paid directly by the advisor		1.31	%		3.03	%		2.25	%		1.45	%		1.05	%
Operating expenses excluding expense paid directly by the advisor^(d)		1.71	%		1.49	%		1.38	%		1.37	%		1.34	%
Portfolio Turnover Rate		45	%		61	%		62	%		84	%		79	%

(b) Per share amounts are based upon average shares outstanding.

(c) Total return does not reflect the effect of sales charges.

(d) Excludes expenses of the affiliated funds in which the Fund invests.


December 31, 2015		100		See Notes to Financial Statements

Financial Highlights

For a share outstanding throughout the periods presented.

Forward Growth Allocation Fund


	Investor Class
	Year Ended December 31, 2015^(a)			Year Ended December 31, 2014			Year Ended December 31, 2013			Year Ended December 31, 2012			Year Ended December 31, 2011
Net Asset Value, Beginning of Period	$	14.33		$	14.91		$	14.09		$	12.94		$	14.71
Income/(Loss) from Operations:
Net investment income^(b)		0.29			0.63			0.42			0.33			0.12
Net realized and unrealized gain/(loss) on investments		(1.40	)		(0.58	)		0.83			1.22			(0.98	)

Total from Investment Operations		(1.11	)		0.05			1.25			1.55			(0.86	)

Less Distributions:
From investment income		(0.34	)		(0.63	)		(0.43	)		(0.40	)		(0.13	)
From capital gains		—			—			—			—			(0.78	)

Total Distributions		(0.34	)		(0.63	)		(0.43	)		(0.40	)		(0.91	)

Net Increase/(Decrease) in Net Asset Value		(1.45	)		(0.58	)		0.82			1.15			(1.77	)

Net Asset Value, End of Period	$	12.88		$	14.33		$	14.91		$	14.09		$	12.94

Total Return		(7.90	)%		0.29	%		8.98	%		12.09	%		(5.82	)%
Ratios/Supplemental Data:
Net assets, End of Period (in 000s)	$	1,607		$	2,827		$	3,323		$	4,408		$	7,853
Ratios to Average Net Assets:
Net investment income including expense paid directly by the advisor		2.07	%		4.18	%		2.82	%		2.37	%		0.86	%
Operating expenses including expense paid directly by the advisor^(c)		1.01	%		0.82	%		0.79	%		0.76	%		0.71	%
Net investment income excluding expense paid directly by the advisor		1.97	%		4.08	%		2.72	%		2.26	%		0.72	%
Operating expenses excluding expense paid directly by the advisor^(c)		1.11	%		0.92	%		0.89	%		0.87	%		0.85	%
Portfolio Turnover Rate		52	%		62	%		83	%		89	%		84	%

(b) Per share amounts are based upon average shares outstanding.

(c) Excludes expenses of the affiliated funds in which the Fund invests.


See Notes to Financial Statements		101		December 31, 2015

Financial Highlights

For a share outstanding throughout the periods presented.

Forward Growth Allocation Fund


	Institutional Class
	Year Ended December 31, 2015^(a)			Year Ended December 31, 2014			Year Ended December 31, 2013			Year Ended December 31, 2012			Year Ended December 31, 2011
Net Asset Value, Beginning of Period	$	14.33		$	14.91		$	14.09		$	12.94		$	14.72
Income/(Loss) from Operations:
Net investment income^(b)		0.40			0.64			0.56			0.39			0.19
Net realized and unrealized gain/(loss) on investments		(1.45	)		(0.51	)		0.77			1.24			(0.98	)

Total from Investment Operations		(1.05	)		0.13			1.33			1.63			(0.79	)

Less Distributions:
From investment income		(0.41	)		(0.71	)		(0.51	)		(0.48	)		(0.21	)
From capital gains		—			—			—			—			(0.78	)

Total Distributions		(0.41	)		(0.71	)		(0.51	)		(0.48	)		(0.99	)

Net Increase/(Decrease) in Net Asset Value		(1.46	)		(0.58	)		0.82			1.15			(1.78	)

Net Asset Value, End of Period	$	12.87		$	14.33		$	14.91		$	14.09		$	12.94

Total Return		(7.45	)%		0.80	%		9.54	%		12.73	%		(5.39	)%
Ratios/Supplemental Data:
Net assets, End of Period (in 000s)	$	9,541		$	11,170		$	18,203		$	13,631		$	24,550
Ratios to Average Net Assets:
Net investment income including expense paid directly by the advisor		2.83	%		4.21	%		3.78	%		2.85	%		1.28	%
Operating expenses including expense paid directly by the advisor^(c)		0.53	%		0.32	%		0.28	%		0.26	%		0.21	%
Net investment income excluding expense paid directly by the advisor		2.73	%		4.11	%		3.68	%		2.73	%		1.14	%
Operating expenses excluding expense paid directly by the advisor^(c)		0.63	%		0.42	%		0.38	%		0.38	%		0.35	%
Portfolio Turnover Rate		52	%		62	%		83	%		89	%		84	%

(b) Per share amounts are based upon average shares outstanding.

(c) Excludes expenses of the affiliated funds in which the Fund invests.


December 31, 2015		102		See Notes to Financial Statements

Financial Highlights

For a share outstanding throughout the periods presented.

Forward Growth Allocation Fund


	Class A
	Year Ended December 31, 2015^(a)			Year Ended December 31, 2014			Year Ended December 31, 2013			Year Ended December 31, 2012			Year Ended December 31, 2011
Net Asset Value, Beginning of Period	$	14.32		$	14.90		$	14.08		$	12.94		$	14.72
Income/(Loss) from Operations:
Net investment income^(b)		0.31			0.65			0.46			0.38			0.17
Net realized and unrealized gain/(loss) on investments		(1.40	)		(0.57	)		0.81			1.19			(1.01	)

Total from Investment Operations		(1.09	)		0.08			1.27			1.57			(0.84	)

Less Distributions:
From investment income		(0.36	)		(0.66	)		(0.45	)		(0.43	)		(0.16	)
From capital gains		—			—			—			—			(0.78	)

Total Distributions		(0.36	)		(0.66	)		(0.45	)		(0.43	)		(0.94	)

Net Increase/(Decrease) in Net Asset Value		(1.45	)		(0.58	)		0.82			1.14			(1.78	)

Net Asset Value, End of Period	$	12.87		$	14.32		$	14.90		$	14.08		$	12.94

Total Return^(c)		(7.73	)%		0.44	%		9.15	%		12.25	%		(5.73	)%
Ratios/Supplemental Data:
Net assets, End of Period (in 000s)	$	5,365		$	7,933		$	10,058		$	10,553		$	12,709
Ratios to Average Net Assets:
Net investment income including expense paid directly by the advisor		2.18	%		4.28	%		3.12	%		2.78	%		1.14	%
Operating expenses including expense paid directly by the advisor^(d)		0.86	%		0.67	%		0.64	%		0.61	%		0.56	%
Net investment income excluding expense paid directly by the advisor		2.08	%		4.18	%		3.02	%		2.67	%		1.00	%
Operating expenses excluding expense paid directly by the advisor^(d)		0.96	%		0.77	%		0.74	%		0.72	%		0.70	%
Portfolio Turnover Rate		52	%		62	%		83	%		89	%		84	%

(b) Per share amounts are based upon average shares outstanding.

(c) Total return does not reflect the effect of sales charges.

(d) Excludes expenses of the affiliated funds in which the Fund invests.


See Notes to Financial Statements		103		December 31, 2015

Financial Highlights

For a share outstanding throughout the periods presented.

Forward Growth Allocation Fund


	Class C
	Year Ended December 31, 2015^(a)			Year Ended December 31, 2014			Year Ended December 31, 2013			Year Ended December 31, 2012			Year Ended December 31, 2011
Net Asset Value, Beginning of Period	$	14.20		$	14.78		$	13.96		$	12.83		$	14.63
Income/(Loss) from Operations:
Net investment income^(b)		0.22			0.53			0.34			0.27			0.07
Net realized and unrealized gain/(loss) on investments		(1.39	)		(0.56	)		0.84			1.21			(0.99	)

Total from Investment Operations		(1.17	)		(0.03	)		1.18			1.48			(0.92	)

Less Distributions:
From investment income		(0.27	)		(0.55	)		(0.36	)		(0.35	)		(0.10	)
From capital gains		—			—			—			—			(0.78	)

Total Distributions		(0.27	)		(0.55	)		(0.36	)		(0.35	)		(0.88	)

Net Increase/(Decrease) in Net Asset Value		(1.44	)		(0.58	)		0.82			1.13			(1.80	)

Net Asset Value, End of Period	$	12.76		$	14.20		$	14.78		$	13.96		$	12.83

Total Return^(c)		(8.36	)%		(0.23	)%		8.49	%		11.57	%		(6.31	)%
Ratios/Supplemental Data:
Net assets, End of Period (in 000s)	$	5,238		$	7,576		$	10,881		$	14,018		$	20,321
Ratios to Average Net Assets:
Net investment income including expense paid directly by the advisor		1.56	%		3.53	%		2.30	%		2.00	%		0.50	%
Operating expenses including expense paid directly by the advisor^(d)		1.51	%		1.32	%		1.29	%		1.26	%		1.21	%
Net investment income excluding expense paid directly by the advisor		1.46	%		3.43	%		2.20	%		1.89	%		0.36	%
Operating expenses excluding expense paid directly by the advisor^(d)		1.61	%		1.42	%		1.39	%		1.37	%		1.35	%
Portfolio Turnover Rate		52	%		62	%		83	%		89	%		84	%

(b) Per share amounts are based upon average shares outstanding.

(c) Total return does not reflect the effect of sales charges.

(d) Excludes expenses of the affiliated funds in which the Fund invests.


December 31, 2015		104		See Notes to Financial Statements

Financial Highlights

For a share outstanding throughout the periods presented.

Forward Income Builder Fund


	Investor Class
	Year Ended December 31, 2015^(a)			Year Ended December 31, 2014			Year Ended December 31, 2013			Year Ended December 31, 2012^(b)			Year Ended December 31, 2011
Net Asset Value, Beginning of Period	$	14.60		$	15.34		$	15.33		$	14.50		$	14.39
Income/(Loss) from Operations:
Net investment income^(c)		0.56			0.77			0.70			0.67			0.62
Net realized and unrealized gain/(loss) on investments		(1.66	)		(0.10	)		0.03			0.88			0.12

Total from Investment Operations		(1.10	)		0.67			0.73			1.55			0.74

Less Distributions:
From investment income		(0.56	)		(0.76	)		(0.67	)		(0.72	)		(0.63	)
From capital gains		—			(0.65	)		(0.05	)		—			—

Total Distributions		(0.56	)		(1.41	)		(0.72	)		(0.72	)		(0.63	)

Net Increase/(Decrease) in Net Asset Value		(1.66	)		(0.74	)		0.01			0.83			0.11

Net Asset Value, End of Period	$	12.94		$	14.60		$	15.34		$	15.33		$	14.50

Total Return		(7.76	)%		4.34	%		4.80	%		11.04	%		5.26	%
Ratios/Supplemental Data:
Net assets, End of Period (in 000s)	$	1,414		$	2,326		$	1,867		$	1,381		$	2,289
Ratios to Average Net Assets:
Net investment income including waiver and expense paid directly by the advisor		3.94	%		4.94	%		4.50	%		4.53	%		4.30	%
Operating expenses including waiver and expense paid directly by the advisor^(d)		0.89	%		0.96	%^(e)		0.99	%^(f)		1.07	%		0.97	%
Net investment income excluding waiver and expense paid directly by the advisor		3.44	%		4.72	%		4.43	%		4.43	%		4.19	%
Operating expenses excluding waiver and expense paid directly by the advisor^(d)		1.39	%		1.18	%		1.06	%		1.17	%		1.08	%
Portfolio Turnover Rate		212	%		191	%		95	%		135	%		38	%

(b) Prior to May 1, 2012, the Forward Income Builder Fund was known as the Forward Income Allocation Fund.

(c) Per share amounts are based upon average shares outstanding.

(d) Excludes expenses of the affiliated funds in which the Fund invests.

(e) Effective October 1, 2014, the annual expense limitation rate changed from 0.99% to 0.89%.

(f) Effective May 1, 2013, the Advisor agreed to limit expenses at 0.99%.


See Notes to Financial Statements		105		December 31, 2015

Financial Highlights

For a share outstanding throughout the periods presented.

Forward Income Builder Fund


	Institutional Class
	Year Ended December 31, 2015^(a)			Year Ended December 31, 2014			Year Ended December 31, 2013			Year Ended December 31, 2012^(b)			Year Ended December 31, 2011
Net Asset Value, Beginning of Period	$	14.62		$	15.36		$	15.35		$	14.51		$	14.40
Income/(Loss) from Operations:
Net investment income^(c)		0.64			0.73			0.72			0.75			0.70
Net realized and unrealized gain/(loss) on investments		(1.67	)		0.01			0.08			0.89			0.12

Total from Investment Operations		(1.03	)		0.74			0.80			1.64			0.82

Less Distributions:
From investment income		(0.63	)		(0.83	)		(0.74	)		(0.80	)		(0.71	)
From capital gains		—			(0.65	)		(0.05	)		—			—

Total Distributions		(0.63	)		(1.48	)		(0.79	)		(0.80	)		(0.71	)

Net Increase/(Decrease) in Net Asset Value		(1.66	)		(0.74	)		0.01			0.84			0.11

Net Asset Value, End of Period	$	12.96		$	14.62		$	15.36		$	15.35		$	14.51

Total Return		(7.27	)%		4.83	%		5.34	%		11.59	%		5.79	%
Ratios/Supplemental Data:
Net assets, End of Period (in 000s)	$	2,893		$	4,376		$	8,568		$	9,497		$	11,545
Ratios to Average Net Assets:
Net investment income including waiver and expense paid directly by the advisor		4.51	%		4.63	%		4.62	%		5.06	%		4.81	%
Operating expenses including waiver and expense paid directly by the advisor^(d)		0.39	%		0.47	%^(e)		0.49	%^(f)		0.57	%		0.47	%
Net investment income excluding waiver and expense paid directly by the advisor		4.00	%		4.44	%		4.55	%		4.96	%		4.69	%
Operating expenses excluding waiver and expense paid directly by the advisor^(d)		0.90	%		0.66	%		0.56	%		0.67	%		0.59	%
Portfolio Turnover Rate		212	%		191	%		95	%		135	%		38	%

(b) Prior to May 1, 2012, the Forward Income Builder Fund was known as the Forward Income Allocation Fund.

(c) Per share amounts are based upon average shares outstanding.

(d) Excludes expenses of the affiliated funds in which the Fund invests.

(e) Effective October 1, 2014, the annual expense limitation rate changed from 0.49% to 0.39%.

(f) Effective May 1, 2013, the Advisor agreed to limit expenses at 0.49%.


December 31, 2015		106		See Notes to Financial Statements

Financial Highlights

For a share outstanding throughout the periods presented.

Forward Income Builder Fund


	Class A
	Year Ended December 31, 2015^(a)			Year Ended December 31, 2014			Year Ended December 31, 2013			Year Ended December 31, 2012^(b)			Year Ended December 31, 2011
Net Asset Value, Beginning of Period	$	14.61		$	15.35		$	15.34		$	14.51		$	14.39
Income/(Loss) from Operations:
Net investment income^(c)		0.63			0.82			0.84			0.85			0.66
Net realized and unrealized gain/(loss) on investments		(1.70	)		(0.11	)		(0.07	)		0.74			0.13

Total from Investment Operations		(1.07	)		0.71			0.77			1.59			0.79

Less Distributions:
From investment income		(0.59	)		(0.80	)		(0.71	)		(0.76	)		(0.67	)
From capital gains		—			(0.65	)		(0.05	)		—			—

Total Distributions		(0.59	)		(1.45	)		(0.76	)		(0.76	)		(0.67	)

Net Increase/(Decrease) in Net Asset Value		(1.66	)		(0.74	)		0.01			0.83			0.12

Net Asset Value, End of Period	$	12.95		$	14.61		$	15.35		$	15.34		$	14.51

Total Return^(d)		(7.52	)%		4.58	%		5.10	%		11.25	%		5.59	%
Ratios/Supplemental Data:
Net assets, End of Period (in 000s)	$	1,602		$	1,958		$	2,817		$	693		$	274
Ratios to Average Net Assets:
Net investment income including waiver and expense paid directly by the advisor		4.44	%		5.26	%		5.42	%		5.73	%		4.50	%
Operating expenses including waiver and expense paid directly by the advisor^(e)		0.64	%		0.71	%^(f)		0.74	%^(g)		0.77	%		0.70	%
Net investment income excluding waiver and expense paid directly by the advisor		3.91	%		5.04	%		5.35	%		5.62	%		4.38	%
Operating expenses excluding waiver and expense paid directly by the advisor^(e)		1.17	%		0.93	%		0.81	%		0.88	%		0.82	%
Portfolio Turnover Rate		212	%		191	%		95	%		135	%		38	%

(b) Prior to May 1, 2012, the Forward Income Builder Fund was known as the Forward Income Allocation Fund.

(c) Per share amounts are based upon average shares outstanding.

(d) Total return does not reflect the effect of sales charges.

(e) Excludes expenses of the affiliated funds in which the Fund invests.

(f) Effective October 1, 2014, the annual expense limitation rate changed from 0.74% to 0.64%.

(g) Effective May 1, 2013, the Advisor agreed to limit expenses at 0.74%.


See Notes to Financial Statements		107		December 31, 2015

Financial Highlights

For a share outstanding throughout the periods presented.

Forward Income Builder Fund


	Class C
	Year Ended December 31, 2015^(a)			Year Ended December 31, 2014			Year Ended December 31, 2013			Year Ended December 31, 2012^(b)			Year Ended December 31, 2011
Net Asset Value, Beginning of Period	$	14.54		$	15.29		$	15.30		$	14.47		$	14.36
Income/(Loss) from Operations:
Net investment income^(c)		0.46			0.71			0.62			0.62			0.57
Net realized and unrealized gain/(loss) on investments		(1.62	)		(0.11	)		0.02			0.86			0.10

Total from Investment Operations		(1.16	)		0.60			0.64			1.48			0.67

Less Distributions:
From investment income		(0.49	)		(0.70	)		(0.60	)		(0.65	)		(0.56	)
From capital gains		—			(0.65	)		(0.05	)		—			—

Total Distributions		(0.49	)		(1.35	)		(0.65	)		(0.65	)		(0.56	)

Net Increase/(Decrease) in Net Asset Value		(1.65	)		(0.75	)		(0.01	)		0.83			0.11

Net Asset Value, End of Period	$	12.89		$	14.54		$	15.29		$	15.30		$	14.47

Total Return^(d)		(8.18	)%		3.86	%		4.28	%		10.45	%		4.76	%
Ratios/Supplemental Data:
Net assets, End of Period (in 000s)	$	4,050		$	7,768		$	6,971		$	5,775		$	5,354
Ratios to Average Net Assets:
Net investment income including waiver and expense paid directly by the advisor		3.24	%		4.54	%		4.04	%		4.22	%		3.95	%
Operating expenses including waiver and expense paid directly by the advisor^(e)		1.39	%		1.46	%^(f)		1.48	%^(g)		1.56	%		1.48	%
Net investment income excluding waiver and expense paid directly by the advisor		2.75	%		4.32	%		3.96	%		4.12	%		3.83	%
Operating expenses excluding waiver and expense paid directly by the advisor^(e)		1.88	%		1.68	%		1.56	%		1.66	%		1.60	%
Portfolio Turnover Rate		212	%		191	%		95	%		135	%		38	%

(b) Prior to May 1, 2012, the Forward Income Builder Fund was known as the Forward Income Allocation Fund.

(c) Per share amounts are based upon average shares outstanding.

(d) Total return does not reflect the effect of sales charges.

(e) Excludes expenses of the affiliated funds in which the Fund invests.

(f) Effective October 1, 2014, the annual expense limitation rate changed from 1.49% to 1.39%.

(g) Effective May 1, 2013, the Advisor agreed to limit expenses at 1.49%.


December 31, 2015		108		See Notes to Financial Statements

Financial Highlights

For a share outstanding throughout the periods presented.

Forward Multi-Strategy Fund


	Investor Class
	Year Ended December 31, 2015^(a)			Year Ended December 31, 2014			Year Ended December 31, 2013			Year Ended December 31, 2012^(b)			Year Ended December 31, 2011
Net Asset Value, Beginning of Period	$	14.42		$	14.45		$	13.95		$	12.54		$	14.01
Income/(Loss) from Operations:
Net investment income^(c)		0.50			0.42			0.28			0.37			0.03
Net realized and unrealized gain/(loss) on investments		(1.76	)		0.20			0.53			1.49			(1.12	)

Total from Investment Operations		(1.26	)		0.62			0.81			1.86			(1.09	)

Less Distributions:
From investment income		(0.46	)		(0.65	)		(0.31	)		(0.45	)		(0.05	)
From capital gains		—			—			—			—			(0.33	)

Total Distributions		(0.46	)		(0.65	)		(0.31	)		(0.45	)		(0.38	)

Net Increase/(Decrease) in Net Asset Value		(1.72	)		(0.03	)		0.50			1.41			(1.47	)

Net Asset Value, End of Period	$	12.70		$	14.42		$	14.45		$	13.95		$	12.54

Total Return		(8.87	)%		4.28	%		5.78	%		15.05	%		(7.72	)%
Ratios/Supplemental Data:
Net assets, End of Period (in 000s)	$	663		$	942		$	1,928		$	3,009		$	4,800
Ratios to Average Net Assets:
Net investment income including waiver and expense paid directly by the advisor		3.62	%		2.83	%		1.93	%		2.74	%		0.20	%
Operating expenses including waiver and expense paid directly by the advisor^(d)		0.89	%		0.98	%^(e)		1.12	%		1.00	%		0.85	%
Net investment income excluding waiver and expense paid directly by the advisor		2.80	%		2.69	%		1.83	%		2.62	%		0.06	%
Operating expenses excluding expense paid directly by the advisor^(d)		1.71	%		1.12	%		1.22	%		1.12	%		0.99	%
Portfolio Turnover Rate		84	%		6	%		109	%		93	%		104	%

(b) Prior to December 3, 2012, the Forward Multi-Strategy Fund was known as the Forward Aggressive Growth Allocation Fund.

(c) Per share amounts are based upon average shares outstanding.

(d) Excludes expenses of the affiliated funds in which the Fund invests.

(e) Effective May 1, 2014, the Advisor agreed to limit expenses at 0.99% and effective October 1, 2014, the annual expense limitation rate changed from 0.99% to 0.89%.


See Notes to Financial Statements		109		December 31, 2015

Financial Highlights

For a share outstanding throughout the periods presented.

Forward Multi-Strategy Fund


	Institutional Class
	Year Ended December 31, 2015^(a)			Year Ended December 31, 2014			Year Ended December 31, 2013			Year Ended December 31, 2012^(b)			Year Ended December 31, 2011
Net Asset Value, Beginning of Period	$	14.95		$	14.96		$	14.43		$	12.94		$	14.39
Income/(Loss) from Operations:
Net investment income^(c)		(0.06	)^(d)		0.68			0.52			0.42			0.06
Net realized and unrealized gain/(loss) on investments		(1.16	)		0.04			0.40			1.58			(1.10	)

Total from Investment Operations		(1.22	)		0.72			0.92			2.00			(1.04	)

Less Distributions:
From investment income		(0.53	)		(0.73	)		(0.39	)		(0.51	)		(0.08	)
From capital gains		—			—			—			—			(0.33	)

Total Distributions		(0.53	)		(0.73	)		(0.39	)		(0.51	)		(0.41	)

Net Increase/(Decrease) in Net Asset Value		(1.75	)		(0.01	)		0.53			1.49			(1.45	)

Net Asset Value, End of Period	$	13.20		$	14.95		$	14.96		$	14.43		$	12.94

Total Return		(8.32	)%		4.81	%		6.39	%		15.59	%		(7.21	)%
Ratios/Supplemental Data:
Net assets, End of Period (in 000s)	$	1,119		$	9,302		$	10,490		$	6,562		$	11,518
Ratios to Average Net Assets:
Net investment income including waiver and expense paid directly by the advisor		(0.37	)%		4.38	%		3.48	%		3.03	%		0.42	%
Operating expenses including waiver and expense paid directly by the advisor^(e)		0.39	%		0.47	%^(f)		0.55	%		0.50	%		0.33	%
Net investment income excluding waiver and expense paid directly by the advisor		(0.80	)%		4.21	%		3.38	%		2.91	%		0.27	%
Operating expenses excluding waiver and expense paid directly by the advisor^(e)		0.82	%		0.64	%		0.65	%		0.62	%		0.48	%
Portfolio Turnover Rate		84	%		6	%		109	%		93	%		104	%

(b) Prior to December 3, 2012, the Forward Multi-Strategy Fund was known as the Forward Aggressive Growth Allocation Fund.

(c) Per share amounts are based upon average shares outstanding.

(d) The amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations for the period due to timing of sales and redemptions of Fund shares in relation to income earned and/or fluctuating market value of the investments of the Fund.

(e) Excludes expenses of the affiliated funds in which the Fund invests.

(f) Effective May 1, 2014, the Advisor agreed to limit expenses at 0.49% and effective October 1, 2014, the annual expense limitation rate changed from 0.49% to 0.39%.


December 31, 2015		110		See Notes to Financial Statements

Financial Highlights

For a share outstanding throughout the periods presented.

Forward Multi-Strategy Fund


	Class A
	Year Ended December 31, 2015^(a)			Year Ended December 31, 2014			Year Ended December 31, 2013			Year Ended December 31, 2012^(b)			Year Ended December 31, 2011
Net Asset Value, Beginning of Period	$	14.72		$	14.74		$	14.22		$	12.77		$	14.23
Income/(Loss) from Operations:
Net investment income^(c)		0.52			0.64			0.33			0.44			0.07
Net realized and unrealized gain/(loss) on investments		(1.78	)		0.01			0.52			1.48			(1.14	)

Total from Investment Operations		(1.26	)		0.65			0.85			1.92			(1.07	)

Less Distributions:
From investment income		(0.48	)		(0.67	)		(0.33	)		(0.47	)		(0.06	)
From capital gains		—			—			—			—			(0.33	)

Total Distributions		(0.48	)		(0.67	)		(0.33	)		(0.47	)		(0.39	)

Net Increase/(Decrease) in Net Asset Value		(1.74	)		(0.02	)		0.52			1.45			(1.46	)

Net Asset Value, End of Period	$	12.98		$	14.72		$	14.74		$	14.22		$	12.77

Total Return^(d)		(8.72	)%		4.43	%		6.03	%		15.17	%		(7.54	)%
Ratios/Supplemental Data:
Net assets, End of Period (in 000s)	$	2,079		$	3,103		$	3,518		$	4,150		$	4,777
Ratios to Average Net Assets:
Net investment income including waiver and expense paid directly by the advisor		3.63	%		4.15	%		2.22	%		3.18	%		0.48	%
Operating expenses including waiver and expense paid directly by the advisor^(e)		0.74	%		0.83	%^(f)		0.96	%		0.85	%		0.70	%
Net investment income excluding waiver and expense paid directly by the advisor		2.82	%		3.98	%		2.12	%		3.06	%		0.34	%
Operating expenses excluding waiver and expense paid directly by the advisor^(e)		1.55	%		1.00	%		1.06	%		0.97	%		0.84	%
Portfolio Turnover Rate		84	%		6	%		109	%		93	%		104	%

(b) Prior to December 3, 2012, the Forward Multi-Strategy Fund was known as the Forward Aggressive Growth Allocation Fund.

(c) Per share amounts are based upon average shares outstanding.

(d) Total return does not reflect the effect of sales charges.

(e) Excludes expenses of the affiliated funds in which the Fund invests.

(f) Effective May 1, 2014, the Advisor agreed to limit expenses at 0.84% and effective October 1, 2014, the annual expense limitation rate changed from 0.84% to 0.74%.


See Notes to Financial Statements		111		December 31, 2015

Financial Highlights

For a share outstanding throughout the periods presented.

Forward Multi-Strategy Fund


	Class C
	Year Ended December 31, 2015^(a)			Year Ended December 31, 2014			Year Ended December 31, 2013			Year Ended December 31, 2012^(b)			Year Ended December 31, 2011
Net Asset Value, Beginning of Period	$	14.01		$	14.06		$	13.58		$	12.23		$	13.71
Income/(Loss) from Operations:
Net investment income/(loss)^(c)		0.37			0.52			0.19			0.32			(0.00	)^(d)
Net realized and unrealized gain/(loss) on investments		(1.66	)		0.01			0.53			1.44			(1.11	)

Total from Investment Operations		(1.29	)		0.53			0.72			1.76			(1.11	)

Less Distributions:
From investment income		(0.40	)		(0.58	)		(0.24	)		(0.41	)		(0.04	)
From capital gains		—			—			—			—			(0.33	)

Total Distributions		(0.40	)		(0.58	)		(0.24	)		(0.41	)		(0.37	)

Net Increase/(Decrease) in Net Asset Value		(1.69	)		(0.05	)		0.48			1.35			(1.48	)

Net Asset Value, End of Period	$	12.32		$	14.01		$	14.06		$	13.58		$	12.23

Total Return^(e)		(9.33	)%		3.79	%		5.29	%		14.48	%		(8.13	)%
Ratios/Supplemental Data:
Net assets, End of Period (in 000s)	$	1,132		$	1,983		$	2,428		$	3,554		$	4,394
Ratios to Average Net Assets:
Net investment income including waiver and expense paid directly by the advisor		2.72	%		3.55	%		1.38	%		2.43	%		(0.00	)%^(f)
Operating expenses including waiver and expense paid directly by the advisor^(g)		1.39	%		1.47	%^(h)		1.62	%		1.50	%		1.36	%
Net investment income/(loss) excluding waiver and expense paid directly by the advisor		1.96	%		3.37	%		1.28	%		2.31	%		(0.14	)%
Operating expenses excluding waiver and expense paid directly by the advisor^(g)		2.15	%		1.65	%		1.72	%		1.62	%		1.50	%
Portfolio Turnover Rate		84	%		6	%		109	%		93	%		104	%

(b) Prior to December 3, 2012, the Forward Multi-Strategy Fund was known as the Forward Aggressive Growth Allocation Fund.

(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) Amount represents less than 0.01%.

(g) Excludes expenses of the affiliated funds in which the Fund invests.

(h) Effective May 1, 2014, the Advisor agreed to limit expenses at 1.49% and effective October 1, 2014, the annual expense limitation rate changed from 1.49% to 1.39%.


December 31, 2015		112		See Notes to Financial Statements

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, 2015, the Trust has 23 registered funds. This annual report describes 9 funds offered by the Trust (each a “Fund” and collectively, the “Funds”). The accompanying financial statements and financial highlights relate to the Forward Frontier Strategy Fund (“Frontier Strategy Fund”), the Forward High Yield Bond Fund (“High Yield Bond Fund”), the Forward Investment Grade Fixed-Income Fund (“Investment Grade Fixed-Income Fund”), and the Forward Total MarketPlus Fund (“Total MarketPlus Fund”). The Forward Balanced Allocation Fund (“Balanced Allocation Fund”), the Forward Growth & Income Allocation Fund (“Growth & Income Allocation Fund”), the Forward Growth Allocation Fund (“Growth Allocation Fund”), the Forward Income Builder Fund (“Income Builder Fund”), and the Forward Multi-Strategy Fund (“Multi-Strategy Fund”) (collectively, the “Allocation Funds”) are also included in the accompanying financial statements and financial highlights.

The Frontier Strategy Fund seeks capital growth and invests primarily in investments that provide exposure to the returns of frontier markets (i.e., markets of smaller, less accessible, but still investable, countries of the developing world). The High Yield Bond Fund seeks high current income and invests primarily in lower-rated bonds. The Investment Grade Fixed-Income Fund seeks generation of current income and invests primarily in investment grade debt securities or synthetic or other instruments that have similar economic characteristics to investment grade debt securities. The Total MarketPlus Fund seeks capital growth and invests primarily in derivative instruments such as swaps, structured notes, futures and options that have similar economic characteristics to common stocks of companies with a range of large, mid and small market capitalization, such as those in the Fund’s benchmark, the Russell 3000 Index. The Balanced Allocation Fund is a “fund of funds” that seeks moderate current income and some potential capital appreciation and invests primarily in a combination of other Forward Funds and certain of the related investment companies managed by subsidiaries of Salient Partners, L.P. (together, the “Underlying Funds”), which may invest in the following types of asset classes: U.S. equity, frontier and emerging market, international equity, U.S. fixed-income, international fixed-income, and money market. The Growth & Income Allocation Fund is a “fund of funds” that seeks moderate potential capital appreciation and invests primarily in a combination of other Underlying Funds, which may invest in the following types of asset classes: U.S. equity, frontier and emerging market, international equity, U.S. fixed-income, international fixed-income, and money market. The Growth Allocation Fund is a “fund of

funds” that seeks high potential capital appreciation and invests primarily in a combination of other Underlying Funds, which may invest in the following types of asset classes: U.S. equity, frontier and emerging market, international equity, U.S. fixed-income, international fixed-income, and money market. The Income Builder Fund is a “fund of funds” that seeks high current income and some stability of principal and invests primarily in a combination of other Underlying Funds, which may invest in the following types of asset classes: U.S. fixed-income, international fixed-income, money market, U.S. equity, frontier and emerging market, global real estate, infrastructure, dividend-oriented strategies, preferred securities, and international equity. The Multi- Strategy Fund is a “fund of funds” that seeks high potential capital appreciation and invests primarily in a combination of other Underlying Funds, which may invest in the following types of strategies and asset classes: long/ short strategies, momentum strategies, tactical strategies, U.S. equity, frontier and emerging market, international equity, U.S. fixed-income, international fixed-income, and money market.

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. The Frontier Strategy Fund is classified as a non-diversified fund under the 1940 Act. The Allocation Funds are “funds of funds” that primarily invest in a combination of other Underlying Funds to gain exposure to a particular portion of the market rather than purchasing securities directly. Investments in the Underlying Funds expose the Allocation Funds to all of the risks of the Underlying Funds and, in general, indirectly subject the Allocation Funds to a pro rata portion of the Underlying Funds’ fees and expenses.

2. Significant Accounting Policies

The following is a summary of significant accounting policies followed by the Funds and affiliated investment companies held by the Allocation Funds. These policies are in conformity with U.S. generally accepted accounting principles (“GAAP”). The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that


		113		December 31, 2015

Notes to Financial Statements

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, 2015.

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 prices 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 prices. 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 prices; and (b) maturity of 60 days or less, at amortized cost.

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.

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.

Bank loans are primarily valued by using a composite loan price from an independent pricing vendor (approved by the Board of Trustees). The methodology used by the Funds’ independent pricing vendor for composite loan prices is to value loans at the mean of the bid and ask prices from one or more brokers or dealers.

Portfolio securities that are traded on foreign securities exchanges are generally valued at the last reported sale or closing price of such securities on


December 31, 2015		114

Notes to Financial Statements

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, normally 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 currency exchange rates and foreign currency exchange forward 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 products 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: For financial statement purposes, securities transactions are accounted for on a trade date basis.

Accordingly, differences between the net asset values for financial statement purposes and for executing shareholders transactions may arise. 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.

Short Sales: Certain Funds may sell securities short. Short sales are transactions in which a Fund sells a security that it does not own in anticipation of a decline in the value of that security. To complete such a transaction, a Fund must borrow the security to deliver to the buyer. The Fund is then obligated to replace the security borrowed by purchasing it in the open market at some later date. The Fund bears the risk of a loss if the market 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 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. As of December 31, 2015, the Funds held no securities sold short.


		115		December 31, 2015

Notes to Financial Statements

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 meas-

urement date. Investments in the Underlying Funds are valued at their NAV daily and are classified as Level 1 prices.

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.

The following tables summarize the Fund’s investments and derivative financial instruments categorized in the disclosure hierarchy as of December 31, 2015:


Investments in Securities	Level 1		Level 2		Level 3		Total
Frontier Strategy Fund
Agency Pass-Through Securities^(a)		—	$	4,300,630		—	$	4,300,630
Collateralized Mortgage Obligations^(a)		—		4,952,947		—		4,952,947

Total		—	$	9,253,577		—	$	9,253,577


High Yield Bond Fund
Corporate Bonds^(a)		—	$	76,938,764		—	$	76,938,764

Total		—	$	76,938,764		—	$	76,938,764


Investment Grade Fixed-Income Fund
U.S. Treasury Bonds & Notes		—	$	8,619,290		—	$	8,619,290

Total		—	$	8,619,290		—	$	8,619,290


Total MarketPlus Fund
Exchange-Traded Funds	$	14,763,329		—		—	$	14,763,329

Total	$	14,763,329		—		—	$	14,763,329


Balanced Allocation Fund
Affiliated Investment Companies	$	7,180,966		—		—	$	7,180,966

Total	$	7,180,966		—		—	$	7,180,966


Growth & Income Allocation Fund
Affiliated Investment Companies	$	16,962,782		—		—	$	16,962,782

Total	$	16,962,782		—		—	$	16,962,782


December 31, 2015		116

Notes to Financial Statements


Investments in Securities	Level 1		Level 2		Level 3		Total
Growth Allocation Fund
Affiliated Investment Companies	$	21,706,542		—		—	$	21,706,542

Total	$	21,706,542		—		—	$	21,706,542


Income Builder Fund
Affiliated Investment Companies	$	9,686,407		—		—	$	9,686,407

Total	$	9,686,407		—		—	$	9,686,407


Multi-Strategy Fund
Affiliated Investment Companies	$	4,747,449		—		—	$	4,747,449

Total	$	4,747,449		—		—	$	4,747,449

(a) For detailed descriptions of industry or sector, see the accompanying Portfolio of Investments.


Other Financial Instruments^(a)	Level 1		Level 2			Level 3		Total
Frontier Strategy Fund
Liabilities
Total Return Swap Contracts		—	$	(1,604,531	)		—	$	(1,604,531	)

Total		—	$	(1,604,531	)		—	$	(1,604,531	)


Investment Grade Fixed-Income Fund
Liabilities
Credit Default Swap Contracts		—	$	(11,312	)		—	$	(11,312	)

Total		—	$	(11,312	)		—	$	(11,312	)


Total MarketPlus Fund
Assets
Total Return Swap Contracts		—	$	1,115,924			—	$	1,115,924

Total		—	$	1,115,924			—	$	1,115,924

(a) Other financial instruments are derivative instruments reflected in the schedules to the Portfolio of Investments, such as swap contracts.

The Funds recognize transfers between levels as of the beginning of the annual period in which the transfer occurred. As of December 31, 2015 there were no transfers between Level 1 and Level 2 securities. As of December 31, 2015, 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.


		117		December 31, 2015

Notes to Financial Statements

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.

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.


December 31, 2015		118

Notes to Financial Statements

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. The Funds held no futures contracts during the year ended December 31, 2015.

Option Writing/Purchasing: Certain Funds may write or purchase option contracts to adjust the risk and return of their overall investment positions. When a Fund writes or purchases an option, an amount equal to the premium received or paid by the Fund is recorded as a liability or an asset and is subsequently adjusted to the current market value of the option written or purchased. Premiums received or paid from writing or purchasing options 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. The Funds held no purchased or written options during the year ended December 31, 2015.

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 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


		119		December 31, 2015

Notes to Financial Statements

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 cor-

rectly 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 Internal Revenue Code of 1986 (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, 2015, the Frontier Strategy Fund, the Investment Grade Fixed-Income Fund and the Total MarketPlus Fund invested in swap agreements consistent with the Funds’ investment strategies to gain exposure to certain markets or indices. As of December 31, 2015, the Frontier Strategy Fund, Investment Grade Fixed-Income Fund and Total MarketPlus Fund held swap agreements and have disclosed the details in the Portfolio of Investments. No other Funds held swap agreements at December 31, 2015.

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.


December 31, 2015		120

Notes to Financial Statements

Balance Sheet – Fair Value of Derivative Instruments as of December 31, 2015^(a):


Derivatives not Accounted for as Hedging Instruments	Asset Derivatives Balance Sheet Location	Fair Value		Liabilities Derivatives Balance Sheet Location	Fair Value
Frontier Strategy Fund
Equity Contracts (Total Return Swaps)			—	Unrealized loss on swap contracts	$	1,604,531

Total			—		$	1,604,531

Investment Grade Fixed-Income Fund
Credit Contracts (Credit Default Swaps)			—	Unrealized loss on swap contracts	$	11,312	^(b)

Total			—		$	11,312

Total MarketPlus Fund
Equity Contracts (Total Return Swaps)	Unrealized gain on swap contracts	$	1,115,924			—

Total		$	1,115,924			—

(a) For open derivative instruments as of December 31, 2015, see the Portfolio of Investments. At December 31, 2015, the percentage of the fair value of derivatives to net assets (“derivative activity”) for the Frontier Strategy Fund (Swaps) was 2.86% higher than the Fund’s average month-end derivative activity during the year. The Portfolio of Investments is representative of the derivative activity for the year ended December 31, 2015 for the other Funds included in the table above.

(b) Includes the cumulative appreciation/depreciation of credit default swap 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.

The Effect of Derivative Instruments on the Statement of Operations for the year ended December 31, 2015:


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
Frontier Strategy Fund
Equity Contracts (Total Return Swaps)	Net realized gain/(loss) on swap contracts/Net change in unrealized appreciation/(depreciation) on swap contracts	$	(22,092,106	)	$	5,432,573

Total		$	(22,092,106	)	$	5,432,573

Investment Grade Fixed-Income Fund
Credit Contracts (Credit Default Swaps)	Net realized gain/(loss) on swap contracts/Net change in unrealized appreciation/(depreciation) on swap contracts	$	3,093		$	(11,312	)

Total		$	3,093		$	(11,312	)

Total MarketPlus Fund
Equity Contracts (Total Return Swaps)	Net realized gain on swap contracts/Net change in unrealized depreciation on swap contracts	$	2,283,277		$	(2,165,742	)

Total		$	2,283,277		$	(2,165,742	)

Certain derivative contracts are executed under either standardized netting agreements or for exchange-traded derivatives, the relevant contracts for a particular exchange that contain enforceable netting provisions. A derivative netting arrangement creates an enforceable right of setoff 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.


		121		December 31, 2015

Notes to Financial Statements

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.

The following table presents financial instruments that are subject to enforceable netting arrangements or other similar agreements as of December 31, 2015:

Offsetting of Financial Assets and Derivative Assets^(a)


Description	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
Description	Gross Amounts of Recognized Assets						Financial Instruments ^(b)		Cash Collateral Received^(b)		Net Amount
Total MarketPlus Fund
Equity Contracts (Total Return Swaps)	$	1,115,924	$	—	$	1,115,924	$	—	$	—	$	1,115,924

Total	$	1,115,924	$	—	$	1,115,924	$	—	$	—	$	1,115,924

Offsetting of Financial Liabilities and Derivative Liabilities^(a)


Description	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
Description	Gross Amounts of Recognized Assets						Financial Instruments ^(b)		Cash Collateral Pledged^(b)			Net Amount
Frontier Strategy Fund
Equity Contracts (Total Return Swaps)	$	1,604,531	$	—	$	1,604,531	$	—	$	(1,604,531	)	$	—

Total	$	1,604,531	$	—	$	1,604,531	$	—	$	(1,604,531	)	$	—

(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.

The leveraging effect enables the investor to gain exposure to the underlying security with a relatively low capital investment. This leveraging increases an investor’s risk, as a complete loss of the amount invested in the warrant may result in the event of a decline in the value of the underlying security. In addition, the price of a warrant tends to be more volatile than, and may not correlate exactly to, the price of the underlying security. If the market price of the underlying security is below the exercise price of the warrant on its expiration date, the warrant will generally expire without value. The value of a warrant may decline because of a decline in the value of the underlying security, the passage of time, changes in interest rates or 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, 2015, the Funds held no warrants.


December 31, 2015		122

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 Frontier Strategy Fund, the Total MarketPlus Fund, the Balanced Allocation Fund, the Growth & Income Allocation Fund, the Growth Allocation Fund, and the Multi-Strategy Fund are each subject to regulation as a commodity pool under the Commodity Exchange Act pursuant to rules enacted 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 are in effect with respect to these seven Funds. Compliance with the CFTC’s ongoing regulatory compliance requirements could increase each of these six Fund’s expenses, adversely affecting its total return.

Distributions to Shareholders: Dividends from net investment income, if any, are declared and paid annually for the Frontier Strategy Fund and the Total MarketPlus Fund; quarterly for the Growth & Income Allocation Fund, the Growth Allocation Fund and the Multi-Strategy Fund; monthly for the Balanced Allocation Fund, the High Yield Bond Fund, the Income Builder Fund and the Investment Grade Fixed- Income Fund. For all Funds, net realized capital gains, if any, are normally distributed annually in December, and a spillover capital gain distribution, if any, is distributed in the year after which a Fund elects to treat the distribution as paid for Federal income tax purposes. 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 Real Estate Investment Trusts (“REITs”), the Funds recharacterize distributions received from REIT invest-

ments 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 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.


		123		December 31, 2015

Notes to Financial Statements

expense in the Statement of Operations. During the period, the Funds did not incur any interest or penalties. The Funds file U.S. federal, state, and local tax returns as required. The Fund’s tax returns are subject to examination by the relevant tax authorities until expiration of the applicable statute of limitations, which is generally three years after the filing of the tax return for federal purposes and four years for most state returns. 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), shareholder services and/or administrative 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 experi-

encing 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. 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, 2015 are recorded in the Statement of Operations, if applicable.

3. Investment Management Services

On June 9, 2015, Forward Management was acquired by Salient Partners, L.P. (“Salient”), an asset manager headquartered in Houston, Texas advising across a broad spectrum of traditional and alternative investments. Subsequent to the acquisition, Forward Management continues to act as the investment advisor of the Funds as a wholly owned subsidiary of Salient pursuant to a new investment management contract, which is substantially identical to the terms of the Funds’ previous investment management agreement, approved by the shareholders of each Fund and the Board of Trustees. Pursuant to this new investment management agreement, 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, 2015, based on each Fund’s average daily net assets:


Fund	Advisory Fee	Fund	Advisory Fee
Frontier Strategy Fund	0.85%	Balanced Allocation Fund	0.10%^(a)

High Yield Bond Fund	0.50%	Growth & Income Allocation Fund	0.10%^(a)

Investment Grade Fixed-Income Fund	0.25%	Growth Allocation Fund	0.10%^(a)

Total MarketPlus Fund	0.50%	Income Builder Fund	0.10%

		Multi-Strategy Fund	0.10%

(a) Forward Management has contractually agreed to waive its investment management fee until April 30, 2017. The waivers for the investment management fees are reflected in the Statement of Operations.

The Trust has obtained an exemptive order from the Securities and Exchange Commission (“SEC”) that allows the Allocation Funds to enter into a special servicing agreement with the Underlying Funds under which the Underlying Funds will pay the expenses of the Allocation Funds (other than the Allocation Funds’ direct management fees, distribution and service fees, and administrative services fees) to the extent that the Underlying Funds derive additional financial and


December 31, 2015		124

Notes to Financial Statements

other benefits as a result of investments from the Allocation Funds. None of the expenses incurred by the Allocation Funds for the year ended December 31, 2015 were paid by the Underlying Funds.

The Trust and Forward Management have entered into an investment sub-advisory agreement with First Western Capital Management Company (“First Western”) for the High Yield Bond Fund. Pursuant to the agreement for the High Yield Bond Fund, First Western provides investment sub-advisory services to the Fund and is entitled to receive a fee from Forward Management calculated daily and payable monthly at the annual rate of 0.25% of the Fund’s average daily net assets. Prior to June 9, 2015, Forward Management and First Western were each entitled to receive a fee from the High Yield Bond Fund calculated daily and payable monthly at the annual rate of 0.25% of the Fund’s average daily net assets.

Expense Limitations: Forward Management has entered into Expense Limitation Agreements with certain Funds, which limit the total expenses (exclusive of brokerage costs, interest, taxes, dividends, acquired fund fees and expenses, 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			Class Z			End Date
Frontier Strategy Fund		1.29	%		0.99	%		N/A			N/A			0.99	%		0.89	%		April 30, 2017
Investment Grade Fixed-Income Fund		1.15	%		0.75	%		N/A			N/A			N/A			0.65	%		April 30, 2017
Total MarketPlus Fund		1.25	%		0.85	%		N/A			N/A			N/A			0.75	%		April 30, 2017
Income Builder Fund		0.89	%		0.39	%		0.64	%		1.39	%		N/A			N/A			April 30, 2017
Multi-Strategy Fund		0.89	%		0.39	%		0.74	%		1.39	%		N/A			N/A			April 30, 2017

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.

For the year ended December 31, 2015, the fee waivers and/or reimbursements were as follows:


Fund	Fees Waived/ Reimbursed By Advisor		Recoupment Of Past Waived Fees By Advisor		Total
Frontier Strategy Fund
Investor Class	$	33,814	$	—	$	33,814
Institutional Class		244,578		—		244,578
Advisor Class		3,117		—		3,117
Class Z		6,575		—		6,575
Investment Grade Fixed-Income Fund
Investor Class		320		—		320
Institutional Class		3,593		—		3,593
Class Z		34,758		—		34,758
Total MarketPlus Fund
Investor Class		6,905		—		6,905
Institutional Class		45,647		—		45,647
Class Z		29,204		—		29,204
Income Builder Fund
Investor Class		9,680		—		9,680
Institutional Class		19,736		—		19,736
Class A		9,463		—		9,463
Class C		31,813		—		31,813


		125		December 31, 2015

Notes to Financial Statements


Fund	Fees Waived/ Reimbursed By Advisor		Recoupment Of Past Waived Fees By Advisor		Total
Multi-Strategy Fund
Investor Class	$	7,120	$	—	$	7,120
Institutional Class		27,041		—		27,041
Class A		21,726		—		21,726
Class C		11,649		—		11,649

As of December 31, 2015, the balances of recoupable expenses for each Fund were waived in the following years:


Fund	2013		2014		2015		Total
Frontier Strategy Fund
Investor Class	$	8,390	$	69,872	$	33,814	$	112,076
Institutional Class		145,042		232,382		244,578		622,002
Advisor Class		1,199		3,956		3,117		8,272
Class Z		11,156		10,669		6,575		28,400
Investment Grade Fixed-Income Fund
Investor Class		N/A		1,823		320		2,143
Institutional Class		N/A		2,203		3,593		5,796
Class Z		N/A		17,371		34,758		52,129
Total MarketPlus Fund
Investor Class		2,810		4,324		6,905		14,039
Institutional Class		37,337		42,192		45,647		125,176
Class Z		23,390		24,460		29,204		77,054
Income Builder Fund
Investor Class		763		4,395		9,680		14,838
Institutional Class		4,079		12,375		19,736		36,190
Class A		1,263		4,243		9,463		14,969
Class C		2,617		16,175		31,813		50,605
Multi-Strategy Fund
Investor Class		N/A		1,642		7,120		8,762
Institutional Class		N/A		15,006		27,041		42,047
Class A		N/A		4,825		21,726		26,551
Class C		N/A		3,046		11,649		14,695

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
Frontier Strategy Fund		0.25	%		N/A			N/A
High Yield Bond Fund		0.25	%		N/A			0.75	%
Investment Grade Fixed-Income Fund		0.25	%		N/A			N/A
Total MarketPlus Fund		0.25	%		N/A			N/A
Balanced Allocation Fund		0.25	%		0.35	%		0.75	%
Growth & Income Allocation Fund		0.25	%		0.35	%		0.75	%
Growth Allocation Fund		0.25	%		0.35	%		0.75	%
Income Builder Fund		0.25	%		0.35	%^(a)		0.75	%
Multi-Strategy Fund		0.25	%		0.35	%		0.75	%

(a) The Fund is currently authorized to pay 0.25% with respect to Class A shares.


December 31, 2015		126

Notes to Financial Statements

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 C			Advisor Class
Frontier Strategy Fund		0.15	%		0.10	%		N/A			0.10	%
High Yield Bond Fund		0.25	%		0.10	%		0.25	%		N/A
Investment Grade Fixed-Income Fund		0.25	%		0.10	%		N/A			N/A
Total MarketPlus Fund		0.25	%		0.10	%		N/A			N/A
Balanced Allocation Fund		0.25	%		None			0.25	%		N/A
Growth & Income Allocation Fund		0.25	%		None			0.25	%		N/A
Growth Allocation Fund		0.25	%		None			0.25	%		N/A
Income Builder Fund		0.25	%		None			0.25	%		N/A
Multi-Strategy Fund		0.25	%		None			0.25	%		N/A

The expenses of the Funds’ Distribution Plans and Shareholder Services Plan are reflected as distribution and shareholder 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 serves as the Funds’ custodian.

Forward Securities, LLC, a wholly owned subsidiary of Forward Management, (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, 2015, there were twelve Trustees, ten of whom are not “interested persons” of the Trust within the meaning of that term under the 1940 Act (each, an “Independent Trustee”), and no Advisory Board Members. The Funds pay Independent Trustees and Advisory Board Members a retainer fee in the amount of $35,000 per year. The Funds pay Independent Trustees and Advisory Board Members 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 and $3,000 for attendance by telephone at a special meeting that is not held in conjunction with a regular meeting; and $1,500 per day for participation in Trust-related meetings not held in conjunction with a meeting. The Chairman of the

Board of Trustees, the Chairman of the Audit Committee and the Chairman of the Nominating Committee receive a special retainer fee in the amount of $25,000, $12,500 and $7,500, respectively per year (prior to April 1, 2015, the Chairman of the Board of Trustees received a special retainer fee in the amount of $15,000). The interested Trustee receives no compensation from the Funds. In addition, Independent Trustees and Advisory Board Members receive reimbursements for reasonable out-of-pocket expenses incurred for their services as a Trustee or an Advisory Board Member, including for the transportation and other expenses that they incur in attending meetings.

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, Trustees and Advisory Board Members 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.


		127		December 31, 2015

Notes to Financial Statements

7. Purchases and Sales of Investments

Investment transactions for the year ended December 31, 2015, excluding U.S. Government Obligations, short-term investments and short sales, were as follows:


Fund	Cost of Investments Purchased		Proceeds From Investments Sold
Frontier Strategy Fund	$	28,060,529	$	71,592,884
High Yield Bond Fund		219,549,660		251,391,916
Investment Grade Fixed-Income Fund		32,149,114		43,435,817
Total MarketPlus Fund		7,604,537		13,229,939
Balanced Allocation Fund		3,252,392		6,469,630
Growth & Income Allocation Fund		9,387,024		14,139,074
Growth Allocation Fund		13,438,065		17,802,297
Income Builder Fund		28,875,415		33,583,183
Multi-Strategy Fund		9,190,181		17,557,807

Investment transactions in U.S. Government Obligations for the year ended December 31, 2015 were as follows:


Fund	Cost of Investments Purchased		Proceeds From Investments Sold
Frontier Strategy Fund	$	18,689,999	$	48,631,651
Investment Grade Fixed-Income Fund		15,157,303		6,469,051

8. Tax Basis Information

Reclassifications: At December 31, 2015, 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 book to tax treatment of certain 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)
Frontier Strategy Fund	$	—	$	140,072		$	(140,072	)
High Yield Bond Fund		—		(19	)		19
Investment Grade Fixed-Income Fund		—		(22,891	)		22,891
Total MarketPlus Fund		—		15,855			(15,855	)
Balanced Allocation Fund		—		6,430			(6,430	)
Growth & Income Allocation Fund		—		15,498			(15,498	)
Growth Allocation Fund		—		48,748			(48,748	)
Income Builder Fund		—		7,619			(7,619	)
Multi-Strategy Fund		—		170,059			(170,059	)


December 31, 2015		128

Notes to Financial Statements

Tax Basis of Investments: Differences in book and tax accounting for cost basis of investments are primarily attributable to the deferral of losses on wash sales. As of December 31, 2015, 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)
Frontier Strategy Fund	$	9,583,261	$	2,824	$	(332,508	)	$	(329,684	)
High Yield Bond Fund		82,338,593		479,540		(5,879,369	)		(5,399,829	)
Investment Grade Fixed-Income Fund		8,654,349		—		(35,059	)		(35,059	)
Total MarketPlus Fund		14,820,198		57,667		(114,536	)		(56,869	)
Balanced Allocation Fund		7,444,388		327,892		(591,314	)		(263,422	)
Growth & Income Allocation Fund		17,955,268		475,858		(1,468,344	)		(992,486	)
Growth Allocation Fund		23,377,900		459,903		(2,131,261	)		(1,671,358	)
Income Builder Fund		10,954,560		18,451		(1,286,604	)		(1,268,153	)
Multi-Strategy Fund		5,192,130		—		(444,681	)		(444,681	)

Capital Losses: Under the Regulated Investment Company Modernization Act of 2010 (the “Act”), capital losses incurred after December 31, 2010 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. As of December 31, 2015, the following Funds had available for Federal income tax purposes unused capital losses that may be used to offset future realized capital gains as follows:


Fund	Expiring in 2016^(a)		Expiring in 2017^(a)		Expiring in 2018^(a)		Short- Term^(b)		Long- Term^(b)
Frontier Strategy Fund	$	—	$	—	$	—	$	7,199,517	$	8,671,719
High Yield Bond Fund		—		—		—		3,029,565		2,142,277
Investment Grade Fixed-Income Fund		1,479,849		—		7,106,398		281,424		6,704,372
Balanced Allocation Fund		—		—		—		718,755		1,965,410
Growth & Income Allocation Fund		—		—		—		807,281		4,898,141
Growth Allocation Fund		—		—		—		1,153,955		6,260,744
Income Builder Fund		—		—		—		744,646		10,198
Multi-Strategy Fund^(c)		—		—		—		997,742		3,194,752

(a) Capital losses incurred prior to December 31, 2010 under pre-enactment law.

(b) Capital losses incurred after December 31, 2010 under the Act and not subject to expiration.

(c) Subject to limitations under §382 of the Code.

The Funds elect to defer to the period ending December 31, 2016 capital losses recognized during the period November 1, 2015 to December 31, 2015 in the amount of:


Fund	Capital Losses Total
Frontier Strategy Fund	$	13,050,940
High Yield Bond Fund		6,166,653
Investment Grade Fixed-Income Fund		59,457
Total MarketPlus Fund		66,869
Growth Allocation Fund		132,405
Income Builder Fund		126,112


		129		December 31, 2015

Notes to Financial Statements

Tax Basis of Distributable Earnings: At December 31, 2015 the following components of accumulated earnings on a tax basis were as follows:


	Frontier Strategy Fund			High Yield Bond Fund			Investment Grade Fixed-Income Fund			Total MarketPlus Fund
Post-October losses	$	(13,050,940	)	$	(6,166,653	)	$	(59,457	)	$	(66,869	)
Accumulated capital loss carryforwards		(15,871,236	)		(5,171,842	)		(15,572,043	)		—
Undistributed ordinary income		17,931			14,613			4,009			22,892
Net unrealized appreciation/(depreciation) on swap contracts		(1,604,531	)		—			(11,312	)		1,115,924
Net unrealized depreciation on investments		(329,684	)		(5,399,829	)		(35,059	)		(56,869	)

Total distributable earnings	$	(30,838,460	)	$	(16,723,711	)	$	(15,673,862	)	$	1,015,078


	Balanced Allocation Fund			Growth & Income Allocation Fund			Growth Allocation Fund
Post-October losses	$	—		$	—		$	(132,405	)
Accumulated capital loss carryforwards		(2,684,165	)		(5,705,422	)		(7,414,699	)
Undistributed ordinary income		5,282			13,752			26,045
Net unrealized depreciation on investments		(263,422	)		(992,486	)		(1,671,358	)

Total distributable earnings	$	(2,942,305	)	$	(6,684,156	)	$	(9,192,417	)


	Income Builder Fund			Multi- Strategy Fund
Post-October losses	$	(126,112	)	$	—
Accumulated capital loss carryforwards		(754,844	)		(4,192,494	)
Undistributed ordinary income		12,635			19,729
Net unrealized depreciation on investments		(1,268,153	)		(444,681	)

Total distributable earnings	$	(2,136,474	)	$	(4,617,446	)

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, 2015 were as follows:


Fund	Ordinary Income Total		Long-Term Capital Gain Total		Return of Capital Total
Frontier Strategy Fund	$	250,001	$	260,245	$	—
High Yield Bond Fund		7,524,390		327,953		—
Investment Grade Fixed-Income Fund		207,115		—		—
Total MarketPlus Fund		27,502		2,665,551		—
Balanced Allocation Fund		155,254		—		—
Growth & Income Allocation Fund		432,218		—		—
Growth Allocation Fund		666,532		—		—
Income Builder Fund		533,237		—		—
Multi-Strategy Fund		327,834		—		—


December 31, 2015		130

Notes to Financial Statements

The tax character of distributions paid for the year ended December 31, 2014, were as follows:


Fund	Ordinary Income Total		Long-Term Capital Total		Return Of Capital Total
Frontier Strategy Fund	$	—	$	23,250,212	$	—
High Yield Bond Fund		8,079,373		2,135,123		—
Investment Grade Fixed-Income Fund		400,440		—		—
Total MarketPlus Fund		—		1,271,726		—
Balanced Allocation Fund		607,757		—		—
Growth & Income Allocation Fund		1,038,691		—		—
Growth Allocation Fund		1,484,473		—		—
Income Builder Fund		858,495		740,620		—
Multi-Strategy Fund		735,467		—		—

9. Affiliated Companies

As defined by the 1940 Act, an affiliated company is one in which a Fund owns 5% or more of the outstanding voting securities or a company that is under common ownership or control. Each Allocation Fund may invest in certain securities that are considered affiliated companies as they share the same Board of Trustees and/or are managed by subsidiaries of Salient Partners, L.P. and are “related companies” for purposes of applicable fund-of-fund rules. The purchases, sales, dividend income, capital gains, return of capital distributions received, shares and value of investment of each Allocation Fund in affiliated companies for the year ended December 31, 2015 were as follows:


Balanced Allocation Fund
	Beginning Shares		Gross Purchases		Gross Sales			Ending Shares		Value 12/31/15		Dividend Income		Realized Gain/(Loss)^(a)
INVESTMENT COMPANIES
Forward Funds—Class Z shares
Forward Commodity Long/Short Strategy Fund^(b)		36,096		6,513		(16,604	)		26,005	$	491,502	$	—	$	(27,055	)
Forward Frontier Strategy Fund		24,163		12,417		(17,496	)		19,084		150,003		1,834		(6,513	)
Forward High Yield Bond Fund		25,998		3,600		(10,323	)		19,275		167,113		11,421		1,690
Forward Investment Grade Fixed-Income Fund		239,223		15,591		(77,862	)		176,952		1,927,012		41,833		59,699
Forward Total MarketPlus Fund		36,420		12,353		(23,712	)		25,061		880,397		1,383		184,676
Forward Funds—Institutional Class shares
Forward Credit Analysis Long/Short Fund^(b)		93,320		—		(57,740	)		35,580		268,986		11,730		4,279
Forward Dynamic Income Fund^(b)		20,522		960		(5,978	)		15,504		370,540		25,544		(4,864	)
Forward EM Corporate Debt Fund^(b)		102,144		22,989		(47,963	)		77,170		582,632		48,079		(37,976	)
Forward Emerging Markets Fund^(b)		—		40,698		—			40,698		344,302		2,232		—
Forward International Dividend Fund^(b)		222,869		121,299		(127,971	)		216,197		1,409,605		88,719		(35,288	)
Forward International Real Estate Fund^(b)		10,822		5,540		(6,489	)		9,873		133,391		6,450		(10,480	)
Forward Real Estate Fund^(b)		8,802		14,828		(16,732	)		6,898		83,186		1,451		39,263
Forward Select EM Dividend Fund^(c)		65,495		23,498		(88,993	)		—		—		22,652		(281,387	)
Forward Select Opportunity Fund^(b)		21,078		2,057		(5,722	)		17,413		372,297		12,015		1,996

Total										$	7,180,966	$	275,343	$	(111,960	)


		131		December 31, 2015

Notes to Financial Statements


Growth & Income Allocation Fund
	Beginning Shares		Gross Purchases		Gross Sales			Ending Shares		Value 12/31/15		Dividend Income		Realized Gain/(Loss)^(a)
INVESTMENT COMPANIES
Forward Funds—Class Z shares
Forward Commodity Long/Short Strategy Fund^(b)		83,953		16,930		(36,893	)		63,990	$	1,209,404	$	—	$	(46,241	)
Forward Frontier Strategy Fund		64,533		30,364		(34,911	)		59,986		471,492		5,765		(11,063	)
Forward High Yield Bond Fund		29,005		5,166		(8,707	)		25,464		220,771		15,671		856
Forward Investment Grade Fixed-Income Fund		318,011		42,511		(101,428	)		259,094		2,821,529		60,035		(9,229	)
Forward Total MarketPlus Fund		103,760		38,569		(63,640	)		78,689		2,764,343		4,423		308,330
Forward Funds—Institutional Class shares
Forward Credit Analysis Long/Short Fund^(b)		123,320		3,661		(73,847	)		53,134		401,691		17,338		4,689
Forward Dynamic Income Fund^(b)		45,153		2,503		(13,061	)		34,595		826,812		58,994		(18,973	)
Forward EM Corporate Debt Fund^(b)		135,231		31,059		(55,876	)		110,414		833,627		69,061		(47,600	)
Forward Emerging Markets Fund^(b)		—		173,837		—			173,837		1,470,663		9,534		—
Forward International Dividend Fund^(b)		642,102		380,486		(314,486	)		708,102		4,616,825		283,350		(91,546	)
Forward International Real Estate Fund^(b)		26,161		4,962		(10,820	)		20,303		274,291		13,481		(19,809	)
Forward Real Estate Fund^(b)		22,015		10,011		(15,401	)		16,625		200,494		3,832		65,609
Forward Select EM Dividend Fund^(c)		188,970		85,176		(274,146	)		—		—		72,897		(873,527	)
Forward Select Opportunity Fund^(b)		44,385		4,115		(8,704	)		39,796		850,840		27,829		2,577

Total										$	16,962,782	$	642,210	$	(735,927	)


Growth Allocation Fund
	Beginning Shares		Gross Purchases		Gross Sales			Ending Shares		Value 12/31/15		Dividend Income		Realized Gain/(Loss)^(a)
INVESTMENT COMPANIES
Forward Funds—Class Z shares
Forward Commodity Long/Short Strategy Fund^(b)		34,653		4,298		(7,914	)		31,037	$	586,600	$	—	$	(15,430	)
Forward Frontier Strategy Fund		107,175		53,445		(70,012	)		90,608		712,171		8,708		(13,517	)
Forward High Yield Bond Fund		24,829		5,120		(8,225	)		21,724		188,349		12,655		1,551
Forward Investment Grade Fixed-Income Fund		235,300		54,040		(88,430	)		200,910		2,187,907		44,600		(21,992	)
Forward Total MarketPlus Fund		146,187		55,960		(83,204	)		118,943		4,178,462		6,644		536,757
Forward Funds—Institutional Class shares
Forward Credit Analysis Long/Short Fund^(b)		88,393		13,374		(56,375	)		45,392		343,166		12,859		2,651
Forward Dynamic Income Fund^(b)		54,112		2,687		(9,717	)		47,082		1,125,250		72,593		(9,766	)
Forward EM Corporate Debt Fund^(b)		102,579		28,218		(46,536	)		84,261		636,173		50,993		(34,757	)
Forward Emerging Markets Fund^(b)		—		293,847		(16,877	)		276,970		2,343,164		15,190		(326	)
Forward International Dividend Fund^(b)		929,359		552,672		(428,171	)		1,053,860		6,871,166		417,068		(160,198	)
Forward International Real Estate Fund^(b)		75,865		6,757		(17,273	)		65,349		882,860		43,065		(36,102	)
Forward Real Estate Fund^(b)		63,594		16,567		(27,871	)		52,290		630,621		12,061		199,094
Forward Select EM Dividend Fund^(c)		274,069		125,473		(399,542	)		—		—		100,542		(1,425,675	)
Forward Select Opportunity Fund^(b)		58,647		981		(11,889	)		47,739		1,020,653		35,420		2,523

Total										$	21,706,542	$	832,398	$	(975,187	)


December 31, 2015		132

Notes to Financial Statements


Income Builder Fund
	Beginning Shares		Gross Purchases		Gross Sales			Ending Shares		Value 12/31/15		Dividend Income		Realized Gain/(Loss)^(a)
INVESTMENT COMPANIES
Forward Funds—Class Z shares
Forward High Yield Bond Fund		169,240		403,039		(287,800	)		284,479	$	2,466,436	$	182,088	$	(127,531	)
Forward Investment Grade Fixed-Income Fund		—		10,968		(4,529	)		6,439		70,131		508		453
Forward Funds—Institutional Class shares
Forward Credit Analysis Long/Short Fund^(b)		216,654		1,141,691		(1,218,629	)		139,716		1,056,253		15,651		23,048
Forward EM Corporate Debt Fund^(b)		449,678		27,144		(157,757	)		319,065		2,408,943		237,606		(218,625	)
Forward Emerging Markets Fund^(b)		—		173,284		(44,839	)		128,445		1,086,646		7,949		(21,905	)
Forward Global Dividend Fund^(d)		—		7,239		(7,239	)		—		—		213		298
Forward Global Infrastructure Fund^(b)		76,457				(76,457	)		—		—		—		(68,047	)
Forward International Dividend Fund^(b)		221,138		944,549		(1,052,716	)		112,971		736,574		126,137		(439,753	)
Forward International Real Estate Fund^(b)		—		34,655		—			34,655		468,190		3,920		—
Forward Real Estate Fund^(b)		102,723		12,467		(110,342	)		4,848		58,464		1,080		124,518
Forward Select EM Dividend Fund^(c)		—		271,987		(271,987	)		—		—		11,175		(406,420	)
Forward Select Income Fund^(b)		157,773		75,838		(173,916	)		59,695		1,334,770		85,277		168,198

Total										$	9,686,407	$	671,604	$	(965,766	)


Multi-Strategy Fund
	Beginning Shares		Gross Purchases		Gross Sales			Ending Shares		Value 12/31/15		Dividend Income		Realized Gain/(Loss)^(a)
INVESTMENT COMPANIES
Forward Funds—Class Z shares
Forward Commodity Long/Short Strategy Fund^(b)		19,495		—		(19,495	)		—	$	—	$	—	$	(8,261	)
Forward Investment Grade Fixed-Income Fund		—		28,968		(3,261	)		25,707		279,945		2,150		(98	)
Forward Frontier Strategy Fund		76,421		—		(76,421	)		—		—		—		(33,245	)
Forward Total MarketPlus Fund		—		37,269		(10,252	)		27,017		949,117		1,492		127,068
Forward Funds—Institutional Class shares
Forward Credit Analysis Long/Short Fund^(b)		20,188		—		(20,188	)		—		—		1,018		(404	)
Forward Dynamic Income Fund^(b)		67,321		17,136		(84,457	)		—		—		70,013		(24,943	)
Forward EM Corporate Debt Fund^(b)		10,834		46,458		(57,292	)		—		—		17,249		(31,353	)
Forward Emerging Markets Fund^(b)		257,118		—		(257,118	)		—		—		—		(535,201	)
Forward Equity Long/Short Fund^(e)		37,331		—		(37,331	)		—		—		—		(43,247	)
Forward Global Infrastructure Fund^(b)		19,678		—		(19,678	)		—		—		4,062		(7,018	)
Forward International Dividend Fund^(b)		231,514		8,346		(135,737	)		104,123		678,880		72,838		(87,723	)
Forward International Real Estate Fund^(b)		25,919		—		(25,919	)		—		—		7,907		(56,395	)
Forward Real Estate Long/Short Fund^(b)		54,205		—		(54,205	)		—		—		5,610		191,647
Forward Select Income Fund^(b)		31,086		—		(31,086	)		—		—		14,609		(40,658	)
Forward Select Opportunity Fund^(b)		34,050		—		(34,050	)		—		—		9,590		(45,651	)
Forward Tactical Enhanced Fund^(f)		80,513		—		(80,513	)		—		—		—		(311,682	)
Forward Tactical Growth Fund^(b)		—		17,117		(17,117	)		—		—		—		(29,612	)
Salient Funds—Class I shares
Salient Alternative Beta Fund^(g)		—		267,161		(267,161	)		—		—		—		(78,312	)
Salient Risk Parity Fund^(h)		—		258,271		(69,707	)		188,564		1,346,349		—		185,953
Salient Trend Fund^(h)		—		170,488		(37,881	)		132,607		1,493,158		14,034		75,619

Total										$	4,747,449	$	220,572	$	(753,516	)

(a) Includes net realized gain/(loss) on affiliated investments and capital gain distributions received from the affiliated underlying funds.


		133		December 31, 2015

Notes to Financial Statements

(b) 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 Global Infrastructure Fund, Forward International Dividend Fund, Forward International Real Estate Fund, Forward Real Estate Fund, Forward Real Estate Long/Short Fund, Forward Select Income Fund, Forward Select Opportunity Fund and Forward Tactical Growth Fund’s December 31, 2015 Annual Report may be obtained at www.forwardinvesting.com.

(c) Effective close of business on December 15, 2015, the Forward Select EM Dividend Fund was liquidated per the terms of the Board approved plan of liquidation.

(d) Effective close of business on November 17, 2015, the Forward Global Dividend Fund was liquidated per the terms of the Board approved plan of liquidation.

(e) Effective close of business on April 24, 2015, the Forward Equity Long/Short Fund was liquidated per the terms of the Board approved plan of liquidation.

(f) Effective close of business on December 23, 2015, the Forward Tactical Enhanced Fund was liquidated per the terms of the Board approved plan of liquidation.

(g) Effective close of business on September 3, 2015, the Salient Alternative Beta Fund was liquidated per the terms of the Board approved plan of liquidation.

(h) Salient Risk Parity Fund and Salient Trend Fund’s December 31, 2015 Annual Report may be obtained at www.salientpartners.com.

10. 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.

11. 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, 2015. However, the following are details relating to the subsequent events through the date the financial statements were issued.

The following Trustee and Officers Fees’ information applies to all Funds:

At a meeting of the Board of Trustees of the Trust held on January 26, 2016, the Trustees, including all of the Trusteed who are not “interested person” of the Trust (as that term is defined in the 1940 Act), approved on behalf of the Trust an updated structure of compensation that will be effective for the fiscal year ending December 31, 2016. The Funds pay Independent Trustees and Advisory Board Members a retainer fee in the amount of $60,000 per year. The Funds pay Independent Trustees and Advisory Board Members the amount of: $6,250 for attendance in person at a regular meeting and $2,500 for attendance by telephone at a regular meeting; $3,750 for attendance in person or by video conference at a special meeting that is not held in conjunction with a regular meeting and $1,500 for attendance by telephone at a special meeting that is not held in conjunction with a regular meeting; and $1,500 per day for participation in Trust-related meetings not held in conjunction with a meeting. The Chairman of the Board of Trustees, the Chairman of the Audit Committee, the Chairman of the Nominating Committee

and the Chairman of the Compliance Committee receive a special retainer fee in the amount of $25,000, $12,500, $7,500 and $7,500, respectively per year In addition, each member of the Audit Committee, Nominating Committee and Compliance Committee receive $1,000, respectively per year.

The following information applies to the High Yield Bond Fund only:

At a meeting of the Board of Trustees of the Trust held on September 22-23, 2015, the Trustees, including all of the Trustees who are not “interested persons” of the Trust (as that term is defined in the 1940 Act), approved, on behalf of the High Yield Bond Fund the following changes that were effective on January 4, 2016: (i) the termination of the Investment Sub-Advisory Agreement among Forward Management, the Trust and First Western; (ii) changes to the principal investment strategies and principal risks of the High Yield Bond Fund; and (iii) the removal of certain nonfundamental investment restrictions of the High Yield Bond Fund. Accordingly, effective January 4, 2016, the High Yield Bond Fund is solely advised by Forward Management.

The following information applies to the Total MarketPlus Fund only:

At a meeting of the Board of Trustees of the Trust held on September 22-23, 2015, the Trustees, including all of the Trustees who are not “interested persons” of the Trust (as that term is defined in the 1940 Act), approved, on behalf of the Total MarketPlus Fund the following changes that were effective on January 4, 2016: (i) changes to the principal investment strategies and principal risks of the Total MarketPlus Fund; (ii) a change to the benchmark index of the Fund, replacing the Russell 3000 Index with the S&P 500 Index; and (iii) a change to the Total MarketPlus Fund’s portfolio management team.


December 31, 2015		134

Notes to Financial Statements

The following information applies to the Growth & Income Allocation Fund, Multi-Strategy Fund and Growth Allocation Builder Fund only:

At the September 22-23, 2015 meeting of the Board of Trustees of the Trust, the Trustees, including all of the Independent Trustees, approved a form of Agreement and Plan of Reorganization (“Reorganization Agreement”) that provides for the reorganization of the Growth & Income Allocation Fund and the Multi-Strategy Fund, each a series of the Trust, with and into the Growth Allocation Fund, another series of the Trust (the “Reorganization”). The Reorganization did not require shareholder approval and occurred on January 22, 2016 (the “Reorganization Date”). As of the close of business on the Reorganization Date, pursuant to the Reorganization Agreement, each shareholder of Investor Class, Institutional Class, Class A and Class C shares of the Growth & Income Allocation Fund and/or the Multi-Strategy Fund became the owner of the number of corresponding full and fractional shares of the Growth Allocation Fund, having an equal aggregate net asset value.

The following information applies to the Balanced Allocation Fund and Income Builder Fund only:

At the September 22-23, 2015 meeting of the Board of Trustees of the Trust, the Trustees, including all of the Independent Trustees, approved a form of Agreement and Plan of Reorganization that provides for the reorganization of the Balanced Allocation Fund, a series of the Trust, with and into the Income Builder Fund, another series of the Trust. The Reorganization did not require shareholder approval and occurred on January 22, 2016 (the “Reorganization Date”). As of the close of business on the Reorganization Date, pursuant to the Reorganization Agreement, each shareholder of Investor Class, Institutional Class, Class A and Class C shares of the Balanced Allocation Fund became the owner of the number of corresponding full and fractional shares of the Income Builder Fund, having an equal aggregate net asset value.

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, 2015. 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, 2015 are available (i) without charge, upon request, by calling 1-800-999-6809 and (ii) on the SEC’s website at www.sec.gov.


		135		December 31, 2015

Report of Independent Registered Public Accounting Firm

To the Board of Trustees and Shareholders of Forward Funds:

We have audited the accompanying statements of assets and liabilities of Forward Frontier Strategy Fund, Forward High Yield Bond Fund, Forward Investment Grade Fixed-Income Fund, Forward Total MarketPlus Fund, Forward Balanced Allocation Fund, Forward Growth & Income Allocation Fund, Forward Growth Allocation Fund, Forward Income Builder Fund and Forward Multi-Strategy Fund (collectively, the “Funds”), including the portfolios of investments, as of December 31, 2015, and the related statements of operations, changes in net assets and the financial highlights for the year then ended. These financial statements and financial highlights are the responsibility of the Funds’ management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. The accompanying statements of changes in net assets and financial highlights for the periods ended December 31, 2014 and prior were audited by other auditors whose report thereon dated February 24, 2015, expressed an unqualified opinion on those financial statements and financial highlights.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights. Our procedures included confirmation of securities owned as of December 31, 2015, by correspondence with the custodian and brokers or by other appropriate auditing procedures. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of the Funds as of December 31, 2015, the results of their operations, the changes in their net assets, and their financial highlights for the year then ended, in conformity with U.S. generally accepted accounting principles.

/s/ KPMG LLP

Columbus, Ohio

February 24, 2016


December 31, 2015		136

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:


Frontier Strategy Fund	$	260,245
High Yield Bond Fund		327,953
Total MarketPlus Fund		2,665,551

The following Funds designate the percentages listed below of the income dividends distributed between January 1, 2015 and December 31, 2015, as qualified dividend income (QDI) as defined in Section 1(h)(11) of the Internal Revenue Code:


Total MarketPlus Fund	82.48	%
Balanced Allocation Fund	55.81	%
Growth & Income Allocation Fund	61.64	%
Growth Allocation Fund	60.34	%
Income Builder Fund	15.83	%
Multi-Strategy Fund	23.44	%

The following Funds designate the percentages listed below of the income dividends distributed between January 1, 2015 and December 31, 2015, as qualifying for the corporate dividends received deduction (DRD) as defined in Section 854(b)(2) of the Internal Revenue Code:


Balanced Allocation Fund	6.38	%
Growth & Income Allocation Fund	5.29	%
Growth Allocation Fund	4.27	%
Income Builder Fund	1.21	%
Multi-Strategy Fund	6.90	%


		137		December 31, 2015

Additional Company Information (Unaudited)

Management of Funds

Each Fund’s operations are managed under the direction and oversight of the Board of Trustees (the “Board”). The Board appoints officers of the Trust who are responsible for the Funds’ day-to-day business decisions based on policies set by the Board. The officers serve at the pleasure of the Board.

The Trustees and officers of the Trust also may be directors or officers of some or all of the other registered investment companies, including the Salient MF Trust (together, with the Forward Funds, the “Trusts”), managed by Salient and its affiliates (hereafter, Salient and Forward Management, both jointly and individually, are referred to as the “Advisor”). Each Trustee holds office for an indefinite term until his/her successor is duly elected and qualified or until he/she dies, retires, resigns, is removed or becomes disqualified. The table below shows, for each Trustee and executive officer, his/her full name, and year of birth, the position held with the Trusts, the length of time served in that position, his/her principal occupation during the last five years, and other directorships held by such Trustee. The address of each Trustee and officer is c/o Salient MF Trust, 4265 San Felipe, Suite 800, Houston, Texas 77027 or c/o Forward Funds, 101 California Street, 16th Floor, San Francisco, California 94111. 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.

Interested Trustees*


Name and Year of Birth	Position(s) with the Trusts	Principal Occupation(s) Directorships During Past 5 Years	Number of Portfolios in Fund Complex Overseen by Trustee⁽¹⁾	Other Directorships During Past 5 Years**
John A. Blaisdell* Year of Birth: 1960	Salient MF Trust Trustee, President and Principal Executive Officer (since 2012); Chairman of the Board (2012 to 2015) Forward Funds Trustee, President and Principal Executive Officer (since 2015)+	Managing Director of Salient (since 2002).	30	The Endowment Funds (investment companies) (five funds) (since 2004); The Endowment PMF Funds (investment companies) (three funds) (since 2014).

Jeremy L. Radcliffe* Year of Birth: 1974	Salient MF Trust Trustee, Secretary (since 2012) Forward Funds Trustee, Secretary (since 2015)+	President, Forward Securities, since 2015; Managing Director of Salient (since 2002).	30	None.


December 31, 2015		138

Additional Company Information (Unaudited)

Independent Trustees***


Name and Year of Birth	Position(s) with the Trusts	Principal Occupation(s) Directorships During Past 5 Years	Number of Portfolios in Fund Complex Overseen by Trustee⁽¹⁾	Other Directorships During Past 5 Years**
Julie Allecta Year of Birth: 1946	Salient MF Trust Trustee (since 2015); Audit Committee Chairperson (since 2016) Forward Funds Trustee (since 2012), Audit Committee Chairperson (since 2012)+	Retired Partner, Paul Hastings, Janofsky & Walker LLP (1999 to 2009); Member of Governing Council, Independent Directors Council (since 2014); Vice President and Director, WildCare Bay Area (since 2007); Director, Audubon Canyon Ranch, Inc. (2009 to 2012); Parliamentarian and Director, American Society of Botanical Artists, Northern California Chapter (2014).	27	Trustee, Litman Gregory Funds Trust (since 2013).

Karin B. Bonding, CFA Year of Birth: 1939	Salient MF Trust Trustee (since 2012) Forward Funds Trustee (since 2015)+	Lecturer, University of Virginia (1996 to 2015); President of Capital Markets Institute, Inc. (fee-only financial planner and investment advisor) (since 1996).	29	The Endowment Funds (investment companies) (five funds) (since 2010); Brandes Investment Trust (investment companies) (four funds) (2006 to 2012); Credit Suisse Alternative Capital Funds (investment companies) (six funds), (2005 to 2010).

Jonathan P. Carroll Year of Birth: 1961	Salient MF Trust Trustee (since 2012) Forward Funds Trustee (since 2015)+	President, Lazarus Capital LLC (Investment company) (since 2006); President, Lazarus Energy Holdings, LLC (Investment holding company) (since 2006); President and CEO of Blue Dolphin Energy Company (since 2012); private investor (since 1988).	30	The Endowment Funds (investment companies) (five funds) (since 2004); The Endowment PMF Funds (investment companies) (three funds) (since 2014); LRR Energy, L.P. (LRE) (energy company) (2014 to 2015); Blue Dolphin Energy Company (BDCO) (energy company) (since 2014).

A. John Gambs Year of Birth: 1945	Salient MF Trust Trustee (since 2015) Forward Funds 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).	27	None.


		139		December 31, 2015

Additional Company Information (Unaudited)


Name and Year of Birth	Position(s) with the Trusts	Principal Occupation(s) Directorships During Past 5 Years	Number of Portfolios in Fund Complex Overseen by Trustee⁽¹⁾	Other Directorships During Past 5 Years**
Dr. Bernard A. Harris, Jr. Year of Birth: 1956	Salient MF Trust Trustee (since 2012) Forward Funds Trustee (since 2015)+	Chief Executive Officer and Managing Partner, Vesalius Ventures, Inc. (venture investing) (since 2002); President of The Space Agency (marketing) (since 1999); President of The Harris Foundation (non-profit) (since 1998); clinical scientist, flight surgeon and astronaut for NASA (1986 to 1996).	29	The Endowment Funds (investment companies) (five funds) (since 2009); Babson Funds (eleven funds) (since 2011); Greater Houston Community Foundation (2004 to 2009); Monebo Technologies Inc. (since 2009); The National Math and Science Initiative, and Space Agency (since 2008); Communities in Schools (since 2007); American Telemedicine Association, (2007 to 2014); U.S. Physical Therapy, Inc. (since 2005); Houston Technology Center (since 2004); Houston Angel Network (since 2004); The Harris Foundation, Inc. (since 1998).

Cecilia H. Herbert Year of Birth: 1949	Salient MF Trust Trustee (since 2015), Nominating Committee Chairperson (since 2016) Forward Funds Trustee (since 2009), Nominating Committee Chairperson (since 2010)+	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).	27	Director, iShares Inc. (since 2005); Trustee, iShares Trust (since 2005); Trustee, Pacific Select Funds (2004 to 2005); Trustee, The Montgomery Funds (1992 to 2003).

Richard C. Johnson Year of Birth: 1937	Salient MF Trust Trustee (since 2012) Compliance Committee Chairperson (since 2012) Forward Funds Trustee (since 2015); Compliance Committee Chairperson (since 2016)+	Former Senior Partner (retired), Baker Botts LLP (law firm); Managing Partner, Baker Botts (1998 to 2002); practiced law at Baker Botts (1966 to 2002) (1972 to 2002 as a partner).	30	The Endowment Funds (investment companies) (five funds) (since 2004); The Endowment PMF Funds (investment companies) (three funds) (since 2014).


December 31, 2015		140

Additional Company Information (Unaudited)


Name and Year of Birth	Position(s) with the Trusts	Principal Occupation(s) Directorships During Past 5 Years	Number of Portfolios in Fund Complex Overseen by Trustee⁽¹⁾	Other Directorships During Past 5 Years**
Haig G. Mardikian Year of Birth: 1947	Salient MF Trust Trustee (since 2015), Chairman of the Board (since 2015) Forward Funds Trustee (since 1998), Chairman of the Board (since 2005)+	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 (2010 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).	27	Chairman and Director of SIFE Trust Fund (1978 to 2001).

G. Edward Powell Year of Birth: 1936	Salient MF Trust Trustee (since 2012) Forward Funds Trustee (since 2015)+	Principal of Mills & Stowell (private equity) (2002 to 2010); Managing Partner, PriceWaterhouse & Co. (Houston office, 1982 to 1994).	30	The Endowment Funds (investment companies) (five funds) (since 2004); The Endowment PMF Funds (investment companies) (three funds) (since 2014); Therapy Track, LLC (2009 to 2012); Global Water Technologies, Inc.; Datavox Holdings, Inc.; Energy Services International, Inc. (2004 to 2013).


		141		December 31, 2015

Additional Company Information (Unaudited)

Name and
Year of Birth

Position(s) with the
Trusts

Principal Occupation(s)
Directorships During Past 5 Years

Number of
Portfolios in
Fund Complex

Overseen by
Trustee⁽¹⁾

Other Directorships
During Past 5 Years**

Scott E. Schwinger

Year of Birth: 1965

Salient MF Trust

Trustee (since 2012)

Forward Funds

Trustee (since 2015)+

President, The McNair Group (management), (since 2006); Senior Vice President and Chief Financial Officer, the Houston Texans (professional football team) (1999).

The Endowment Funds (investment companies) (five funds) (since 2004); The Endowment PMF Funds (investment companies) (three funds) (since 2014); Houston Technology Center (since 2013); The Make-A-Wish Foundation (since 2008).

*	This person’s status as an “interested”* Trustee arises from his affiliation with the Advisor.*

**	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.

***

Donald O’Connor and DeWitt F. Bowman served as Independent Trustees of the Forward Funds during the fiscal year ended December 31, 2015. Mr. O’Connor served from January 1, 2015 through his resignation on September 30, 2015. Mr. Bowman served from January 1, 2015 through June 9, 2015, from which date he continued to serve on the Board as an independent Advisory Trustee until his retirement on December 31, 2015.

Mr. Mardikian has served as Trustee to the Forward Funds since May 1, 2005. However, beginning on the date indicated in the chart, Mr. Mardikian served as a director for the nine series of Forward Funds, Inc., which were reorganized as series of the Forward Trust effective July 1, 2005. Ms. Herbert was appointed as a Trustee effective November 9, 2009. Ms. Allecta was appointed as a Trustee effective January 1, 2012 and elected by shareholders of the Trust as a Trustee effective June 9, 2015. Mr. Gambs was appointed as a Trustee effective December 31, 2012 and elected by shareholders of the Forward Funds as a Trustee effective June 9, 2015. Messrs. Blaisdell, Carroll, Harris, Johnson, and Schwinger and Ms. Bonding were each elected by shareholders of the Forward Funds as a Trustee effective June 9, 2015. Messrs. Powell and Radcliffe were each appointed as a Trustee effective September 22, 2015.

⁽¹⁾	As of December 31, 2015, the Fund Complex consisted of all open-end funds in the Trusts (27) and all public closed-end funds for which the Advisor or an affiliate of the Advisor serves as investment advisor (3).


December 31, 2015		142

Additional Company Information (Unaudited)

Officers of the Funds Who Are Not Trustees


Name and Year of Birth*	Position(s) with the Trusts	Principal Occupation(s) During Past 5 Years
Paul A. Bachtold Year of Birth: 1973	Salient MF Trust Chief Compliance Officer (Since 2012) Forward Funds Chief Compliance Officer (since 2016)	Chief Compliance Officer and Secretary, Forward Securities; Chief Compliance Officer, Forward Management (since 2015) Chief Compliance Officer, Salient (since 2010); Consultant, Chicago Investment Group (compliance consulting), 2009 to 2010; US Compliance Manager, Barclays Global Investors (2005 to 2008).

Christopher R. Arnold Year of Birth: 1977	Salient MF Trust Treasurer and Principal Financial Officer (since 2015) Forward Funds Deputy Treasurer (since 2016)	Director of Fund Accounting, Salient (since 2010); Audit Manager, PricewaterhouseCoopers, LLP (2002 to 2009).

Robert S. Naka Year of Birth: 1963	Salient MF Trust Vice President (since 2015) Forward Funds Vice President (since 2009)	Chief Operating Officer, Salient and Forward Management (since 2015); President, Forward Funds (2015); Secretary, Forward Funds, 2012 to 2015; Chief Operating Officer, Forward Management, LLC (since 2009); Interim Chief Executive Officer, Forward Management, LLC (2015); Principal & Chief Operating Officer, Anew Capital Management LLC (2007 to 2009); Executive Vice President & Chief Operating Officer, ING Funds & Predecessors (1989 to 2007).

Barbara H. Tolle Year of Birth: 1949	Forward Funds Treasurer and Principal Financial Officer (Since 2006)	Vice President, Director of Fund Accounting and Operations, Forward Management, LLC (since 2006); Vice President and Director, Fund Accounting and Administration, PFPC Inc. (1998 to 2006).

Kathryn A. Burns Year of Birth: 1976	Forward Funds Assistant Treasurer (Since 2014)	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 until the next annual meeting of the Forward Funds or until his or her successor is duly elected and qualified, or until he or she dies, resigns, is removed or becomes disqualified.


		143		December 31, 2015

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:

^•

Information we receive from you on applications or other forms; and

^•

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, 2015		144

Investment Advisor

Forward Management, LLC

Administrator

ALPS Fund Services, Inc.

Distributor

Forward Securities, LLC

Counsel

K&L Gates LLP

Independent Registered Public Accounting Firm

KPMG 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 Frontier Strategy 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 Income Fund

Forward Select Opportunity Fund

Forward Tactical Growth Fund

Forward Total MarketPlus Fund

Allocation Funds

Forward Balanced Allocation Fund

Forward Growth & Income Allocation Fund

Forward Growth Allocation Fund

Forward Income Builder Fund

Forward Multi-Strategy Fund

LOGO


Printed on paper containing recycled content using soy-based inks.			FSD001952 031017

FORWARD FUNDS

Annual Report

Forward Credit Analysis Long/Short Fund

Forward Dynamic Income Fund

Forward EM Corporate Debt Fund

Forward Emerging Markets Fund

Forward International Dividend Fund

Forward International Small Companies Fund

Forward Tactical Growth Fund

Forward Commodity Long/Short Strategy Fund


FORWARD FUNDS:		Table of Contents



Shareholder Update			2

Fund Commentaries and Performance			6

Investment Glossary			30

Disclosure of Fund Expenses			35

Portfolio of Investments			39

Statement of Assets and Liabilities			64

Statement of Operations			70

Statement of Changes in Net Assets			74

Financial Highlights			90

Notes to Financial Statements			123

Report of Independent Registered Public Accounting Firm			146

Tax Information			147

Additional Company Information			148

Forward Funds Privacy Policy			154

Forward Funds are distributed by Forward Securities, LLC.

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