FORWARD FUNDS
Supplement dated October 30, 2013
to the
Summary Prospectus for Investor Class and Institutional Class Shares
of the Forward Credit Analysis
Long/Short Fund
(“No-Load
Summary Prospectus”),
Summary Prospectus for Class A, Class C and
Advisor Class Shares of the Forward Credit Analysis Long/Short Fund
(“Load Summary Prospectus”),
Forward Funds Investor Class and Institutional Class Prospectus
(“No-Load
Prospectus”) and Forward
Funds Class A, Class B, Class C and
Advisor Class Prospectus (“Load Prospectus”)
each dated May 1, 2013, as supplemented
IMPORTANT NOTICE REGARDING THE
FORWARD CREDIT ANALYSIS LONG/SHORT FUND
The following information applies to the Forward Credit Analysis Long/Short Fund (the “Fund”) only:
Appointment of a New Sub-Advisor
Effective November 13, 2013, Pacific Investment Management Company LLC (“PIMCO”) shall replace Cedar Ridge Partners, LLC (“Cedar Ridge”) as
the
sub-advisor
to the Fund. Forward Management, LLC (“Forward Management”), the Fund’s advisor, will oversee and coordinate the transition from Cedar Ridge to PIMCO. Accordingly, effective
November 13, 2013, all references to Cedar Ridge in each of the prospectuses shall be deleted and the following changes shall be made:
The section titled “Principal Investment Strategies” in the Fund’s “Fund Summary” section in the
No-Load
Summary Prospectus, the Load Summary Prospectus, the
No-Load
Prospectus and the Load Prospectus shall be replaced in its entirety to read as follows:
The Fund seeks to take advantage of relative value,
cross-over trading opportunities and market anomalies and inefficiencies across a wide array of the credit markets. Pacific Investment Management Company LLC (“PIMCO” or the
“Sub-Advisor”)
uses an absolute return-oriented and tax-efficient investment strategy that seeks to identify attractive long and short investment opportunities in the municipal and other credit markets. The
Sub-Advisor’s
investment process involves analysis of both fundamental and relative-value characteristics of potential investments across a wide array of fixed income securities. The
Sub-Advisor
typically focuses its investments in tax-exempt municipal bonds and derivatives, but may also invest in the other types of tax-exempt or taxable fixed income securities. The
Sub-Advisor
may invest in fixed income instruments of any quality or maturity, including junk bonds and securities that are moral obligations of issuers or subject to appropriations. The
Sub-Advisor
may also engage in transactions that seek to hedge portfolio risk.
The Fund invests primarily in a portfolio of municipal bonds, corporate bonds, notes and other debentures, U.S. Treasury and
Agency securities, sovereign debt, emerging markets debt, variable rate demand notes including tender option bonds, floating rate or zero coupon securities and nonconvertible preferred securities that are actively traded in the public markets. The
Fund may also invest a substantial portion of its assets in interest rate swaps, credit default swaps, total return swaps, futures, options, credit index derivatives, forward currency contracts and other derivative instruments. The Fund may invest
in derivatives to seek to achieve investment returns consistent with the Fund’s investment objective and for hedging purposes. The Fund may also engage in borrowing for investment purposes in order to increase its holdings of portfolio
securities and/or to collateralize short sale positions, as well as for cash management purposes. The Fund’s short positions may equal up to 100% of the Fund’s net asset value, and it is possible that at certain times, the Fund may be
approximately 100% short.
The following paragraph shall be added after the
first paragraph under the heading “Performance Information” in the Fund’s “Fund Summary” section in the
No-Load
Summary Prospectus, the Load Summary Prospectus, the
No-Load
Prospectus and the Load Prospectus:
On November 13, 2013, the
Sub-Advisor
assumed all responsibilities for selecting the Fund’s investments and incorporated new principal investment strategies for the
Fund as discussed above under “Principal Investment Strategies.” Performance figures shown below for periods prior to November 13, 2013 represent performance of the prior
sub-advisor
to the Fund
under the previous investment strategies for the Fund.
The section titled
“Investment Advisor/Portfolio Manager” in the Fund’s “Fund Summary” section in the
No-Load
Summary Prospectus, the Load Summary Prospectus, the
No-Load
Prospectus and the Load Prospectus shall be replaced in its entirety to read as follows:
Forward Management, LLC (“Forward Management” or the “Advisor”) serves as investment advisor to the Fund.
Forward Management has engaged the services of PIMCO to act as
sub-advisor
to the Fund. The Fund is team managed and all investment decisions are made jointly by the team. The
members of the team are: Joseph Deane, Executive Vice President and head of municipal bond portfolio management for PIMCO, and David Hammer, Senior Vice President and municipal portfolio manager
for PIMCO. Mr. Deane has primary responsibility for the
day-to-day
management of the Fund. Messrs. Deane and Hammer have managed the Fund since November 2013.
The information under the heading/subheading “Management of the
Funds – Sub-Advisors/Portfolio Managers – Forward Credit Analysis Long/Short Fund” in the
No-Load
Prospectus and the Load Prospectus shall be replaced in its entirety to read as
follows:
Forward Management has engaged
the services of Pacific Investment Management Company LLC (“PIMCO”) to act as
sub-advisor
for the Forward Credit Analysis Long/Short Fund. PIMCO is located at 840 Newport Center Drive,
Suite 100, Newport Beach, CA 92660. PIMCO has approximately $2.008 trillion in assets under management as of December 31, 2012.
The Forward Credit Analysis Long/Short Fund is team managed and all investment decisions are made jointly by the team. The members
of the team are:
Joseph Deane.
Mr. Deane is an Executive Vice President and head of municipal bond portfolio management for PIMCO. Mr. Deane has primary responsibility for the
day-to-day
management of the Forward Credit Analysis Long/Short Fund. Prior to joining PIMCO in 2011, he was
co-head
of the tax-exempt department at Western Asset (WAMCO). Mr. Deane was previously a Managing
Director and head of tax-exempt investments from
1993-2005
at Smith Barney/Citigroup Asset Management. Earlier in his career, he held senior portfolio management positions with Shearson and E.F. Hutton.
Mr. Deane holds a bachelor’s degree from Iona College.
David Hammer. Mr. Hammer is a Senior Vice President and municipal bond portfolio manager for PIMCO. Prior to joining PIMCO in 2012, he was an Executive Director at Morgan Stanley, where he served as head of
the high yield and distressed municipal bond trading group. Mr. Hammer was previously a Vice President and investment grade bond trader in Morgan Stanley’s municipal bond department. Mr. Hammer has 10 years of investment
experience and holds a bachelor’s degree from Syracuse University.
In
addition, effective November 13, 2013, Forward Management will no longer manage the cash portion of the Fund. Accordingly, effective November 13, 2013, all references to Forward Management managing the cash portion of the Fund in each of
the prospectuses shall be deleted.
Reduction in Management Fee
Effective November 13, 2013, the contractual management fee Forward Management receives from the Fund is reduced from an annual rate (as a
percentage of the Fund’s average daily net assets) of 1.20% to an annual rate of 1.00% on the Fund’s average daily net assets. Accordingly, effective November 13, 2013, the following changes shall be made:
The “Annual Fund Operating Expenses” table and the “Examples”
table for the Fund in the
No-Load
Summary Prospectus and the
No-Load
Prospectus shall be replaced to read as follows:
Annual Fund Operating Expenses
(expenses that you pay each year as a percentage of the value of your investment)
(1)
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Investor Class
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Institutional Class
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Management Fee
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1.00
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%
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1.00
|
%
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|
Distribution (12b-1) Fees
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|
0.25
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%
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|
N/A
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|
Other Expenses
(2)
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0.49
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%
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|
0.39
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%
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|
Total Annual Fund Operating
Expenses
(3)
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1.74
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%
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1.39
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%
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|
(1)
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Restated to reflect current fees and expenses.
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(2)
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Other Expenses are based on estimated amounts for the current fiscal year.
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(3)
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The Fund’s investment advisor is contractually obligated to waive a portion of its fees and reimburse other expenses until April 30, 2015 in amounts necessary to
limit the Fund’s operating expenses (exclusive of brokerage costs, interest, taxes, dividends, acquired fund fees and expenses, and extraordinary expenses) for Investor Class and Institutional Class shares to an annual rate (as a percentage of
the Fund’s average daily net assets) of 1.79% and 1.44%, respectively. This expense limitation arrangement may not be terminated by the Fund’s investment advisor prior to such date under any circumstances.
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Examples
These
Examples are intended to help you compare the costs of investing in Investor Class or Institutional Class shares of the Fund with the costs of investing in other mutual funds. The Examples assume that you invest $10,000 in the noted class of shares
for the time periods indicated. The Examples also assume that your investment has a 5% return each year, that the Fund’s total annual operating expenses remain the same, and that the contractual fee waiver/reimbursement is in place for the
first year. Although actual costs may be higher or lower, based on these assumptions your costs whether or not you redeemed your shares would be:
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Investor Class
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Institutional Class
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1 Year
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$
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177
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|
$
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142
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3 Years
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$
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548
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$
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440
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5 Years
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$
|
943
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$
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760
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10 Years
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$
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2,049
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$
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1,667
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|
****
The “Annual Fund Operating Expenses” table and the “Examples”
table for the Fund in the Load Summary Prospectus and the Load Prospectus shall be replaced to read as follows:
Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your
investment)
(1)
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Class A
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Class C
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Advisor Class
|
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Management Fee
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|
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1.00
|
%
|
|
|
1.00
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%
|
|
|
1.00
|
%
|
|
Distribution (12b-1) Fees
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|
|
0.35
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%
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|
|
0.75
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%
|
|
|
N/A
|
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|
Other Expenses
(2)
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0.54
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%
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|
0.59
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%
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|
0.44
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%
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|
Total Annual Fund Operating
Expenses
(3)
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1.89
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%
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2.34
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%
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|
1.44
|
%
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|
(1)
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|
Restated to reflect current fees and expenses.
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(2)
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Other Expenses are based on estimated amounts for the current fiscal year.
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(3)
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The Fund’s investment advisor is contractually obligated to waive a portion of its fees and reimburse other expenses until April 30, 2015, in amounts necessary to
limit the Fund’s operating expenses (exclusive of brokerage costs, interest, taxes, dividends, acquired fund fees and expenses, and extraordinary expenses) for Class A, Class C and Advisor Class shares to an annual rate (as a
percentage of the Fund’s average daily net assets) of 1.94%, 2.39%, and 1.49%, respectively. This expense limitation arrangement may not be terminated by the Fund’s investment advisor prior to such date under any circumstances.
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|
Examples
These Examples are intended to help you compare the costs of investing
in Class A, Class C or Advisor Class shares of the Fund with the costs of investing in other mutual funds. The Examples assume that you invest $10,000 in the noted class of shares for the time periods indicated and then redeem all your
shares at the end of those periods. The Examples also assume that your investment has a 5% return each year, that the Fund’s total annual operating expenses remain the same, and that the contractual fee waiver/reimbursement is in place for the
first year. Although actual costs may be higher or lower, based on these assumptions your costs would be:
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Class A
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Class C
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Advisor Class
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1 Year
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$
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756
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$
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337
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$
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147
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3 Years
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$
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1,135
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|
$
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730
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$
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455
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5 Years
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$
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1,537
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$
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1,250
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$
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786
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10 Years
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$
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2,657
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$
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2,672
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$
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1,722
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|
You would pay the following expenses if you did not redeem your shares:
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Class A
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|
Class C
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|
Advisor Class
|
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|
1 Year
|
|
$
|
756
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|
$
|
237
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|
$
|
147
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|
3 Years
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|
$
|
1,135
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|
|
$
|
730
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|
|
$
|
455
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|
5 Years
|
|
$
|
1,537
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|
$
|
1,250
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|
|
$
|
786
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|
10 Years
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|
$
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2,657
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|
|
$
|
2,672
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|
$
|
1,722
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****
The following footnote shall replace the footnote pertaining to the Fund under the
table on
pages 141-142
of the
No-Load
Prospectus and
pages 137-138
of the Load Prospectus:
Effective as of November 13, 2013, the annual advisory fee (as a percentage of daily net assets) paid to Forward Management
was reduced from 1.20% to 1.00%. Additionally, effective as of September 16, 2013, Forward Management is contractually obligated to waive advisory fees received by Forward Management with respect to assets allocated to sub-advisors to the
extent necessary to limit the amount of the advisory fee retained by Forward Management after payment of
sub-advisory
fees to the
sub-advisors
to 0.50% until
April 30, 2016. This fee waiver arrangement terminates automatically if Forward Management no longer engages
sub-advisors
to manage the Fund.
****
PLEASE KEEP THIS SUPPLEMENT FOR FUTURE REFERENCE
SUPP CLS PIMCO 10302013
FORWARD FUNDS
Supplement dated October 30, 2013
to the
Forward Funds Statement of Additional Information (the
“SAI”)
dated May 1, 2013, as
supplemented
IMPORTANT NOTICE REGARDING THE
FORWARD CREDIT ANALYSIS LONG/SHORT FUND
The following information applies to the Forward Credit Analysis Long/Short Fund
(the “Fund”) only:
Appointment of a New Sub-Advisor
Effective November 13, 2013, Pacific Investment Management Company LLC (“PIMCO”) shall replace Cedar Ridge Partners, LLC (“Cedar
Ridge”) as the
sub-advisor
to the Fund. Forward Management, LLC (“Forward Management”), the Fund’s advisor, will oversee and coordinate the transition from Cedar Ridge to PIMCO.
Accordingly, effective November 13, 2013, all references to Cedar Ridge in the SAI shall be deleted and the following changes shall be made:
The paragraph under the heading/subheading “Investment Advisory and Other Services – Sub-Advisors – Forward Credit Analysis Long/Short
Fund” in the SAI shall be replaced in its entirety to read as follows:
Forward Management has engaged the services of Pacific Investment Management Company LLC (“PIMCO”) to act as
sub-advisor
for the Forward Credit Analysis Long/Short
Fund. PIMCO is located at 840 Newport Center Drive, Suite 100, Newport Beach, CA 92660. PIMCO is registered with the SEC under the Advisers Act. PIMCO is an investment management firm founded in 1971. PIMCO is a majority-owned subsidiary
of Allianz Asset Management with a minority interest held by PIMCO Partners, LLC, a California limited liability company. Prior to December 31, 2011, Allianz Asset Management was named Allianz Global Investors of America L.P. PIMCO Partners,
LLC is owned by the current managing directors and executive management of PIMCO. Through various holding company structures, Allianz Asset Management is majority owned by Allianz SE. As of December 31, 2012, PIMCO had approximately $2.008
trillion in assets under management.
The section titled “Investment
Advisory and Other Services – Portfolio Managers – Cedar Ridge Partners, LLC: Forward Credit Analysis Long/Short Fund” in the SAI shall be deleted in its entirety.
The following information shall be added under the heading/subheading “Investment Advisory and Other Services – Portfolio
Managers – Pacific Investment Management Company LLC” in the SAI:
Forward Credit Analysis Long/Short Fund
The Forward Credit Analysis Long/Short Fund is team managed by Joseph Deane, Executive Vice President and head of municipal bond portfolio management for PIMCO, and David Hammer, Senior Vice President and municipal
portfolio manager for PIMCO. Mr. Deane has primary responsibility for the
day-to-day
management of the Fund.
The table below includes details about the type, number, and assets under management
for the various types of accounts, and total assets in the accounts with respect to which the advisory fee is based on the performance of the accounts that Messrs. Deane and Hammer managed as of July 31, 2013:
Joseph Deane
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Type of Account
|
|
Number of
Accounts
Managed
|
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|
Total
Assets
Managed
(in Millions)
|
|
|
Number of
Accounts
Managed
for which
Advisory Fee is
Performance-
Based
|
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|
Total Assets
Managed
for which
Advisory Fee is
Performance-
Based
(in Millions)
|
|
|
Registered Investment Companies
|
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23
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|
$
|
6,463.2
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|
0
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|
$
|
0.0
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|
Other pooled investment vehicles
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|
0
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|
|
$
|
0.0
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|
0
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|
$
|
0.0
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|
|
Other accounts
|
|
|
11
|
|
|
$
|
1,168.4
|
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|
|
0
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|
|
$
|
0.0
|
|
David Hammer
|
|
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|
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|
|
|
|
|
|
|
|
|
|
Type of Account
|
|
Number of
Accounts
Managed
|
|
|
Total
Assets
Managed
(in Millions)
|
|
|
Number of
Accounts
Managed
for which
Advisory Fee is
Performance-
Based
|
|
|
Total Assets
Managed
for which
Advisory Fee is
Performance-
Based
(in Millions)
|
|
|
Registered Investment Companies
|
|
|
0
|
|
|
$
|
0.0
|
|
|
|
0
|
|
|
$
|
0.0
|
|
|
Other pooled investment vehicles
|
|
|
0
|
|
|
$
|
0.0
|
|
|
|
0
|
|
|
$
|
0.0
|
|
|
Other accounts
|
|
|
0
|
|
|
$
|
0.0
|
|
|
|
0
|
|
|
$
|
0.0
|
|
****
The information concerning the portfolio managers’ ownership with respect to the
Fund in the table on
pages 41-43
of the SAI shall be replaced as follows:
Information as of December 31, 2012 (except as otherwise noted)
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|
Name of Portfolio Manager
|
|
Fund
|
|
Dollar Range of
Equity Securities
in
the Fund*
|
|
Joseph Deane**
|
|
Forward Credit Analysis Long/Short Fund
|
|
A
|
|
David Hammer**
|
|
Forward Credit Analysis Long/Short Fund
|
|
A
|
|
|
**
|
|
Information as of August 30, 2013
|
|
In addition, effective
November 13, 2013, Forward Management will no longer manage the cash portion of the Fund. Accordingly, effective November 13, 2013, all references to Forward Management managing the cash portion of the Fund in the SAI shall be deleted.
Reduction in Management Fee and Sub-Advisory Fee
Effective November 13, 2013, the contractual management fee Forward Management receives from the Fund is reduced from an annual rate
(as a percentage of the Fund’s average daily net assets) of 1.20% to an annual rate of 1.00% on the Fund’s average daily net assets. Additionally, effective November 13, 2013, PIMCO shall act as
sub-advisor
to the Fund. Accordingly, effective November 13, 2013, the following changes shall be made:
The information concerning the investment advisory fee paid by the Fund as contained in the table on
pages 16-17
of the
SAI under the heading/subheading “Investment Advisory and Other Services – Investment Management and
Sub-Advisory
Agreements” shall be replaced to read as follows:
|
|
|
|
|
|
|
Fund
|
|
Advisory Fee
|
|
|
Forward Credit Analysis Long/Short Fund
|
|
|
1.00
|
%
|
The information concerning the sub-advisory fee paid
by the Fund as contained in the table on page 20 of the SAI under the heading/subheading “Investment Advisory and Other Services – Investment Management and
Sub-Advisory
Agreements”
shall be replaced to read as follows:
|
|
|
|
|
|
|
Fund
|
|
Sub-Advisory Fee
|
|
|
Forward Credit Analysis Long/Short Fund
|
|
|
0.50
|
%
|
****
PLEASE KEEP THIS SUPPLEMENT FOR FUTURE REFERENCE
SUPP CLS PIMCO SAI 10302013
Viropro (CE) (USOTC:VPRO)
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