Forward Funds NCSRS Certified semi-annual shareholder report (management investment company)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM N-CSR

CERTIFIED SHAREHOLDER REPORT OF REGISTERED

MANAGEMENT INVESTMENT COMPANIES

Investment Company Act file number: 811-06722

FORWARD FUNDS

(Exact name of registrant as specified in charter)

101 California Street, 16th Floor

San Francisco, CA 94111

(Address of principal executive offices) (Zip code)

J. Alan Reid, Jr., President

Forward Funds

101 California Street, 16th Floor

San Francisco, CA 94111

(Name and address of agent for service)

Registrant’s Telephone Number, including Area Code: (800) 999-6809

Date of fiscal year end: December 31

Date of reporting period: June 30, 2012

Form N-CSR is to be used by management investment companies to file reports with the Commission, not later than 10 days after the transmission to stockholders of any report that is required to be transmitted to stockholders under Rule 30e-1 under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may use the information provided on Form N-CSR in its regulatory, disclosure review, inspection, and policymaking roles.

A registrant is required to disclose the information specified by Form N-CSR, and the Commission will make this information public. A registrant is not required to respond to the collection of information contained in Form N-CSR unless the Form displays a currently valid Office of Management and Budget (“OMB”) control number. Please direct comments concerning the accuracy of the information collection burden estimate and any suggestions for reducing the burden to the Secretary, Securities and Exchange Commission, 100 F Street, NE, Washington, DC 20549. The OMB has reviewed this collection of information under the clearance requirements of 44 U.S.C. § 3507.

Item 1 - Reports to Stockholders

The following are copies of the reports transmitted to shareholders of the Forward Commodity Long/Short Strategy Fund, Forward CorePlus Fund, Forward Credit Analysis Long/Short Fund, Forward EM Corporate Debt Fund, Forward Emerging Markets Fund, Forward Endurance Long/Short Fund, Forward Extended MarketPlus Fund, Forward Focus Fund, Forward Frontier Strategy Fund, Forward Global Credit Long/Short 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 Large Cap Dividend Fund, Forward Managed Futures Strategy Fund, Forward Real Estate Fund, Forward Real Estate Long/Short Fund, Forward Select EM Dividend Fund, Forward Select Income Fund, Forward Small Cap Equity Fund, Forward Strategic Alternatives Fund, Forward Tactical Enhanced Fund, Forward Tactical Growth Fund, Forward U.S. Government Money, Forward Aggressive Growth Allocation Fund, Forward Balanced Allocation Fund, Forward Growth & Income Allocation Fund, Forward Growth Allocation Fund, Forward Income & Growth Allocation Fund and Forward Income Builder Fund (collectively, the “Funds”), each a series of the registrant, pursuant to Rule 30e-1 under the Investment Company Act of 1940, as amended (the “Act”) (17 CFR 270.30e-1).

Semi-Annual Report

June 30, 2012

Forward Credit Analysis Long/Short Fund

Forward EM Corporate Debt Fund

Forward Emerging Markets Fund

Forward Endurance Long/Short Fund

Forward Focus Fund

Forward Global Credit Long/Short Fund

Forward International Dividend Fund

Forward International Small Companies Fund

Forward Large Cap Dividend Fund

Forward Select EM Dividend Fund

Forward Small Cap Equity Fund

Forward Tactical Enhanced Fund

Forward Tactical Growth Fund

Forward Commodity Long/Short Fund

Forward Managed Futures Strategy Fund


FORWARD FUNDS:		Table of Contents



Shareholder Update			2

Fund Performance			5

Disclosure of Fund Expenses			14

Summary of Portfolio Holdings			21

Portfolio of Investments			24

Statement of Assets and Liabilities			73

Statement of Operations			83

Statement of Changes in Net Assets			89

Statement of Cash Flows			116

Financial Highlights			117

Notes to Financial Statements			174

Approval of the Investment Management Agreements and Investment Sub-Advisory Agreements			211

Forward Funds are distributed by Forward Securities, LLC,

101 California Street, 16^th 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.

June 30, 2012


		1


Shareholder Update		June 30, 2012

A MESSAGE FROM:

J. Alan Reid, Jr.

Chief Executive Officer

LOGO

Dear Shareholder:

The markets’ gyrations in the first half of the year illustrated once again why we believe so strongly that investors need access to new problem-solving ideas and out-of-the-box strategies. As we see it, relying on long-only strategies and traditional asset allocation is a recipe for risk in these uncertain times. We look far beyond the style box to help investors meet their challenges and pursue the outcomes they are seeking.

Where to look for growth?

After a strong Q1 and volatile Q2, the S&P 500 Index was up 9.49% and the Russell 2000 Index had risen 8.53% as of June 30, 2012. Still, the latest forecasts leave doubt about the strength of the U.S. economy’s momentum. Meanwhile, global stock markets struggled through the first half of the year, rallying in June to deliver a 3.38% return for the MSCI EAFE Index and a 4.12% return for the MSCI Emerging Markets Index as of June 30, 2012.

Forward’s strategies: Our robust real estate capabilities have stood us in good stead this year. The Forward International Real Estate Fund—Institutional Class had a 34.44% year-to-date return as of the end of June. The fund was ranked number one out of the 181 Global Real Estate funds in its Morningstar category for the 1-year period as of June 30, 2012. Our Forward Real Estate Long/Short Fund—Institutional Class earned 16.51% as of June 30, 2012, while the domestically-focused Forward Real Estate Fund—Institutional Class profited from the unfolding resurgence in commercial real estate, earning 15.64% in the first half of the year (see our white paper, Inflection Point: The Start of a New Cycle in Real Estate). Not so long ago, real estate was considered an alternative asset class, but we view it as a core investment category that provides both growth and income opportunities.

With Europe’s troubles and slowing growth in Asia, it’s been a less than stellar year for many global and emerging market strategies. Still, we believe exposure to expanding emerging and global economies remains a vital component of any diversified long-term investment strategy. All but one of our offerings in the global exposure category outperformed the MSCI EAFE Index over the first two quarters, with International Real Estate (as noted above) and the Forward International Dividend Fund—Institutional Class (which was up 5.71% year to date) being the top performers.

How to deal with unabated volatility and elevated correlations?

While the VIX has been down from last fall’s stratospheric levels, investors continue to see their gains undercut by see-saw equity markets. We believe heightened volatility is a secular trend that is unlikely to reverse. Meanwhile, correlations within and among asset classes have risen markedly over the past 15 years, as discussed in our recent white paper, Managing Correlation Risk with Alternative Investments.

Forward’s strategies: Forward’s product lineup includes seven long/short portfolios that don’t depend on rising markets. In all, we offer 12 alternative funds across a variety of asset classes, providing investors with an array of tools for pursuing non-correlated returns.

What’s the answer to income needs?

With 10-year Treasuries at record lows—and no assurance that we’ve reached the market bottom yet—traditional bond strategies are failing to meet investors’ income needs.

Forward’s strategies: Our fund family offers several alternative directions for income generation. The Forward Select Income Fund—Institutional Class, which focuses on preferred REIT (Real Estate Investment Trust) stocks,


June 30, 2012		2

returned 11.44% through June 30. Employing a multi-sector bond strategy, the Forward Credit Analysis Long/Short Fund—Institutional Class was up 8.88% through June 30, 2012. Forward Select EM Dividend Fund—Institutional Class gained 11.02%, and the Forward EM Corporate Debt Fund—Institutional Class returned 5.41% as of the end of June.

Forward’s mission is to help investors and advisors stay ahead of the curve and meet the challenges of an ever changing global investment climate. That means we are constantly working to provide investors with new and updated opportunities to pursue their long-term goals for uncorrelated return, investment income, global exposure and portfolio diversification. To learn more about Forward’s strategies, please visit www.forwardinvesting.com or call us at (800) 999-6809.

We also invite you to explore the fwd thinking section of our website, where we regularly post our latest white papers and webcasts on timely investment topics.

In closing, I want to take this opportunity to thank you for entrusting us with your assets. Ultimately, everything we do is aimed at helping our investors meet their long-term objectives. We feel privileged to be your partner in that effort, and we will continue striving to earn that privilege every day.

Sincerely,

LOGO

J. Alan Reid, Jr.

Chief Executive Officer

Forward

RISKS

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

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.

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

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

Investing in Exchange-Traded Funds (ETFs) will subject a fund to substantially the same risks as those associated with the direct ownership of the securities or other property held by the ETFs. (Forward EM Corporate Debt Fund)

Foreign securities, especially emerging or frontier markets, will involve additional risks including exchange rate fluctuations, social and political instability, less liquidity, greater volatility and less regulation. (Forward Credit Analysis Long/Short Fund, Forward EM Corporate Debt Fund, Forward International Dividend Fund, Forward International Real Estate Fund, Forward Real Estate Long/Short Fund, Forward Select EM Dividend 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 Credit Analysis Long/Short Fund, Forward EM Corporate Debt Fund)


		3		June 30, 2012

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

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

Short selling involves additional investment risks and transaction costs, and creates leverage, which can increase the risk and volatility of a fund. (Forward Credit Analysis Long/Short Fund, Forward Real Estate Long/Short Fund, Forward Select EM Dividend Fund)

The Forward Credit Analysis Long/Short Fund seeks to maximize total return (capital appreciation and income).

The Forward EM Corporate Debt Fund seeks to achieve high total return (capital appreciation and income).

The Forward International Dividend Fund seeks to achieve high total return (capital appreciation and income).

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

The Forward Real Estate Fund seeks income with capital appreciation as a secondary goal.

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

The Forward Select EM Dividend Fund seeks to achieve high total return through capital appreciation and current income.

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

The Chicago Board Options Exchange (CBOE) Volatility Index (VIX) shows the market’s expectation of 30-day volatility and is a widely used measure of market risk.

The MSCI EAFE (Europe, Australasia and Far East) Index is an unmanaged index of over 1,000 foreign common stock prices, including the reinvestment of dividends.

The 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.

The 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.

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

One cannot invest directly in an index.

Correlation is a statistical measure of how two securities move in relation to each other.

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

Forward Funds are distributed by Forward Securities, LLC.

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.

Forward International Real Estate Fund (KIRYX) is ranked number one in its category. (Inception 4/28/06) 1-Year Morningstar ranking of 1 among 181 Global Real Estate funds, as of 6/30/12. Morningstar rankings measure risk-adjusted returns.

^© 2012 Morningstar, Inc. All rights reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete, or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Past performance is no guarantee of future results.

The Forward International Real Estate Fund was ranked against the following numbers of U.S.-domiciled Global Real Estate funds over the following time periods: 1 out of 181 funds in the last year, 24 out of 152 funds in the last three years, and 39 out of 111 in the last five years. Morningstar ranking is for the institutional class only; other classes may have different performance characteristics.

Not FDIC Insured | No Bank Guarantee | May Lose Value


June 30, 2012		4

Fund Performance (Unaudited)

Performance Results for Periods Ended June 30, 2012

See page 10 for important performance disclosure information about the Forward Funds.

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 reflects 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.

Forward Credit Analysis Long/Short Fund⁽^a)


	1 YEAR		5 YEAR		SINCE INCEPTION		INCEPTION DATE
Average Annual Total Return
Investor Class		10.07%		N/A		9.62%		05/01/08

Institutional Class		10.37%		N/A		10.00%		05/01/08

Class A (load adjusted)^(b)(c)		3.27%		1.85%		1.49%		12/29/06

Class A (without load)^(c)(d)		9.61%		3.05%		2.58%		12/29/06

Class C (with CDSC)^(e)		8.28%		N/A		10.86%		06/03/09

Class C (without CDSC)^(f)		9.28%		N/A		10.86%		06/03/09

Class M		10.38%		N/A		7.43%		02/01/10

Forward EM Corporate Debt Fund^(g)


	1 YEAR		SINCE INCEPTION		INCEPTION DATE
Average Annual Total Return
Investor Class		-6.30%		5.02%		10/05/07

Institutional Class		-6.01%		5.37%		10/05/07

Class C (with CDSC)^(e)		-7.61%		4.59%		10/05/07

Class C (without CDSC)^(f)		-6.82%		4.59%		10/05/07

Forward Emerging Markets Fund⁽^h⁾

1 YEAR

5 YEAR

10 YEAR

SINCE
INCEPTION

INCEPTION
DATE

Average Annual Total Return

Investor Class

-18.55%

-2.05%

N/A

15.51%

04/09/03

Institutional Class

-18.38%

-1.67%

13.64%

6.45%

10/04/95

Class M

-18.15%

N/A

0.84%

02/01/10

Forward Endurance Long/Short Fund


	SINCE INCEPTION		INCEPTION DATE
Average Annual Total Return
Investor Class⁽ⁱ⁾		-0.96%		12/31/11

Institutional Class⁽ⁱ⁾		-0.80%		12/31/11


		5		June 30, 2012

Fund Performance (Unaudited)

Performance Results for Periods Ended June 30, 2012

See page 10 for important performance disclosure information about the Forward Funds.

Forward Focus Fund⁽^j)


	1 YEAR		5 YEAR		SINCE INCEPTION		INCEPTION DATE
Average Annual Total Return
Investor Class		-6.06%		N/A		10.55%		10/21/08

Institutional Class		-5.69%		N/A		3.72%		05/01/08

Class A (load adjusted)^(b)		-11.49%		-0.27%		4.41%		04/01/05

Class A (without load)^(d)		-6.10%		0.92%		5.27%		04/01/05

Forward Global Credit Long/Short Fund


	SINCE INCEPTION		INCEPTION DATE
Average Annual Total Return
Investor Class⁽ⁱ⁾		1.94%		09/30/11

Institutional Class⁽ⁱ⁾		2.25%		09/30/11

Class C (with CDSC)^(e)(i)		0.48%		09/30/11

Class C (without CDSC)^(f)(i)		1.47%		09/30/11

Class M⁽ⁱ⁾		2.26%		09/30/11

Forward International Dividend Fund^(k)

1 YEAR

5 YEAR

10 YEAR

SINCE
INCEPTION

INCEPTION
DATE

Average Annual Total Return

Investor Class

-9.58%

-7.37%

5.32%

3.54%

10/01/98

Institutional Class

-9.12%

-7.13%

N/A

-6.02%

05/01/07

Class M

-8.99%

N/A

-10.34%

05/02/11

Forward International Small Companies Fund^(l)


	1 YEAR		5 YEAR		10 YEAR		SINCE INCEPTION		INCEPTION DATE
Average Annual Total Return
Investor Class		-17.99%		-7.88%		7.48%		7.77%		03/05/02

Institutional Class		-17.69%		-7.55%		7.81%		7.28%		02/07/96

Class A (load adjusted)^(b)		-22.81%		-9.05%		N/A		1.38%		05/02/05

Class A (without load)^(d)		-18.09%		-7.97%		N/A		2.22%		05/02/05

Class M		-17.69%		N/A		N/A		1.81%		02/01/10


June 30, 2012		6

Fund Performance (Unaudited)

Performance Results for Periods Ended June 30, 2012

See page 10 for important performance disclosure information about the Forward Funds.

Forward Large Cap Dividend Fund^(m)


	1 YEAR		5 YEAR		SINCE INCEPTION		INCEPTION DATE
Average Annual Total Return
Investor Class		2.47%		N/A		-0.05%		05/02/11

Institutional Class		2.79%		0.88%		2.20%		01/31/07

Class A (load adjusted)^(b)		-3.56%		-0.75%		1.58%		10/31/06

Class A (without load)^(d)		2.28%		0.43%		2.64%		10/31/06

Forward Select EM Dividend Fund


	1 YEAR		SINCE INCEPTION		INCEPTION DATE
Average Annual Total Return
Investor Class		-6.83%		-9.84%		05/02/11

Institutional Class		-6.34%		-7.39%		05/03/11

Class C (with CDSC)^(e)		-8.20%		-10.30%		05/02/11

Class C (without CDSC)^(f)		-7.30%		-10.30%		05/02/11

Class M		-6.38%		-9.40%		05/02/11

Forward Small Cap Equity Fund


	1 YEAR		5 YEAR		10 YEAR		SINCE INCEPTION		INCEPTION DATE
Average Annual Total Return
Investor Class		-12.60%		-5.82%		3.65%		5.32%		10/01/98

Institutional Class		-12.00%		-5.44%		4.08%		3.99%		06/06/02

Class A (load adjusted)^(b)		-17.61%		-6.94%		N/A		0.15%		05/02/05

Class A (without load)^(d)		-12.59%		-5.83%		N/A		0.99%		05/02/05

Class M		-12.33%		N/A		N/A		4.39%		02/01/10

Forward Tactical Enhanced Fund


	1 YEAR		SINCE INCEPTION		INCEPTION DATE
Average Annual Total Return
Investor Class		1.11%		1.28%		12/31/10

Institutional Class		1.50%		1.65%		12/31/10

Class A (load adjusted)^(b)		-4.80%		-2.84%		12/31/10

Class A (without load)^(d)		0.99%		1.09%		12/31/10

Class C (with CDSC)^(e)		-0.49%		0.64%		12/31/10

Class C (without CDSC)^(f)		0.51%		0.64%		12/31/10

Class M		1.50%		0.19%		04/15/11


		7		June 30, 2012

Fund Performance (Unaudited)

Performance Results for Periods Ended June 30, 2012

See page 10 for important performance disclosure information about the Forward Funds.

Forward Tactical Growth Fund


	1 YEAR		SINCE INCEPTION		INCEPTION DATE
Average Annual Total Return
Investor Class		-2.02%		1.23%		09/14/09

Institutional Class		-1.67%		1.56%		09/14/09

Class A (load adjusted)^(b)		-7.78%		-3.26%		03/12/10

Class A (without load)^(d)		-2.14%		-0.74%		03/12/10

Class C (with CDSC)^(e)		-3.58%		0.62%		09/14/09

Class C (without CDSC)^(f)		-2.62%		0.62%		09/14/09

Class M		-1.67%		0.87%		02/01/10

Forward Commodity Long/Short Strategy Fund

1 YEAR

SINCE
INCEPTION

INCEPTION
DATE

Average Annual Total Return

Investor Class

-8.73%

0.03%

12/31/10

Institutional Class

-8.52%

0.33%

12/31/10

Class C (with CDSC)^(e)

-10.22%

-11.30%

05/04/11

Class C (without CDSC)^(f)

-9.33%

-11.30%

05/04/11

Class M⁽ⁱ⁾

N/A

-6.22%

12/07/11

Class Z

-8.51%

0.30%

12/31/10

Forward Managed Futures Strategy Fund


	SINCE INCEPTION		INCEPTION DATE
Average Annual Total Return
Investor Class⁽ⁱ⁾		-6.32%		01/30/12

Institutional Class⁽ⁱ⁾		-6.20%		01/30/12

Class C (with CDSC)^(e)(i)		-7.49%		01/30/12

Class C (without CDSC)^(f)(i)		-6.56%		01/30/12

Class Z⁽ⁱ⁾		-7.09%		01/31/12

(a) Prior to May 1, 2011 the Forward Credit Analysis Long/Short Fund was known as the Forward Long/Short Credit Analysis Fund.

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

(c) Class A shares of the fund originally commenced operations on 12/29/06, were liquidated on 11/21/08, and were launched again on 09/01/10. The performance shown for any period beginning on or after 11/24/08 and lasting through 08/31/10 is that of the fund’s Investor Class shares adjusted to reflect the specific operating expenses applicable to Class A shares. The performance shown for any period beginning on or after 09/01/10 is that of the fund’s Class A shares.

(d) Excludes sales charge.

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

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


June 30, 2012		8

Fund Performance (Unaudited)

Performance Results for Periods Ended June 30, 2012

See page 10 for important performance disclosure information about the Forward Funds.

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

(h) The Retail Class and Institutional Class of the Pictet Global Emerging Markets Fund were reorganized into the Investor and Institutional Class, respectively, of the Forward Global Emerging Markets Fund on September 16, 2004. Performance figures shown for prior periods prior to September 16, 2004 represent performance of the Retail Class and Institutional Class of the Pictet Global Emerging Markets Fund. Prior to May 1, 2008, the Forward Emerging Markets Fund was known as the Forward Global Emerging Markets Fund.

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

(j) Prior to October 20, 2010 the Forward Focus Fund was known as the Forward Legato Fund.

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

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

(m) Prior to November 1, 2011 the Forward Large Cap Dividend Fund was known as the Forward Large Cap Equity Fund.


		9		June 30, 2012

Fund Performance (Unaudited)

Performance Results for Periods Ended June 30, 2012

Risk Disclosures

Forward Credit Analysis Long/Short Fund

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

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

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

Forward EM Corporate Debt Fund

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

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

Forward Emerging Markets Fund

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

Forward Endurance Long/Short 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.


June 30, 2012		10

Fund Performance (Unaudited)

Performance Results for Periods Ended June 30, 2012

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

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

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 Focus Fund

Forward Global Credit Long/Short Fund

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

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

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

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

Forward International Dividend Fund

Forward International Small Companies Fund

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

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


		11		June 30, 2012

Fund Performance (Unaudited)

Performance Results for Periods Ended June 30, 2012

Forward Large Cap Dividend Fund

Forward Select EM Dividend Fund

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

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

Forward Small Cap Equity Fund

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

Forward Tactical Enhanced Fund

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

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

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

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

Forward Tactical Growth Fund

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

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


June 30, 2012		12

Fund Performance (Unaudited)

Performance Results for Periods Ended June 30, 2012

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

Forward Commodity Long/Short Strategy Fund

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

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

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

Forward Managed Futures Strategy Fund

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

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


		13		June 30, 2012

Disclosure of Fund Expenses (Unaudited)

For the Six Months Ended June 30, 2012

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 January 1, 2012 through June 30, 2012.

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.


	BEGINNING ACCOUNT VALUE 01/01/12		ENDING ACCOUNT VALUE 06/30/12		EXPENSE RATIO^(a)		EXPENSES PAID DURING PERIOD^(b) 01/01/12-06/30/12

FORWARD CREDIT ANALYSIS LONG/SHORT FUND
Investor Class
Actual	$	1,000.00	$	1,087.80		1.99%	$	10.33

Hypothetical	$	1,000.00	$	1,014.97		1.99%	$	9.97
Institutional Class
Actual	$	1,000.00	$	1,088.80		1.64%	$	8.52

Hypothetical	$	1,000.00	$	1,016.71		1.64%	$	8.22
Class A
Actual	$	1,000.00	$	1,085.30		2.14%	$	11.10

Hypothetical	$	1,000.00	$	1,014.22		2.14%	$	10.72
Class C
Actual	$	1,000.00	$	1,084.80		2.59%	$	13.43

Hypothetical	$	1,000.00	$	1,011.98		2.59%	$	12.96


June 30, 2012		14

Disclosure of Fund Expenses (Unaudited)

For the Six Months Ended June 30, 2012


	BEGINNING ACCOUNT VALUE 01/01/12		ENDING ACCOUNT VALUE 06/30/12		EXPENSE RATIO^(a)		EXPENSES PAID DURING PERIOD^(b) 01/01/12-06/30/12

FORWARD CREDIT ANALYSIS LONG/SHORT FUND (continued)
Class M
Actual	$	1,000.00	$	1,088.80		1.64%	$	8.52

Hypothetical	$	1,000.00	$	1,016.71		1.64%	$	8.22

FORWARD EM CORPORATE DEBT FUND
Investor Class
Actual	$	1,000.00	$	1,052.40		1.37%	$	6.99

Hypothetical	$	1,000.00	$	1,018.05		1.37%	$	6.87
Institutional Class
Actual	$	1,000.00	$	1,054.10		0.98%	$	5.01

Hypothetical	$	1,000.00	$	1,019.99		0.98%	$	4.92
Class C
Actual	$	1,000.00	$	1,049.90		1.94%	$	9.89

Hypothetical	$	1,000.00	$	1,015.22		1.94%	$	9.72

FORWARD EMERGING MARKETS FUND
Investor Class
Actual	$	1,000.00	$	1,049.20		1.81%	$	9.22

Hypothetical	$	1,000.00	$	1,015.86		1.81%	$	9.07
Institutional Class
Actual	$	1,000.00	$	1,052.30		1.41%	$	7.19

Hypothetical	$	1,000.00	$	1,017.85		1.41%	$	7.07
Class M
Actual	$	1,000.00	$	1,051.70		1.43%	$	7.29

Hypothetical	$	1,000.00	$	1,017.75		1.43%	$	7.17

FORWARD ENDURANCE LONG/SHORT FUND
Investor Class^(c)
Actual	$	1,000.00	$	990.40		2.34%	$	11.39

Hypothetical	$	1,000.00	$	1,013.23		2.34%	$	11.71
Institutional Class^(c)
Actual	$	1,000.00	$	992.00		1.99%	$	9.69

Hypothetical	$	1,000.00	$	1,014.97		1.99%	$	9.97

FORWARD FOCUS FUND
Investor Class
Actual	$	1,000.00	$	1,025.30		1.36%	$	6.85

Hypothetical	$	1,000.00	$	1,018.10		1.36%	$	6.82


		15		June 30, 2012

Disclosure of Fund Expenses (Unaudited)

For the Six Months Ended June 30, 2012


	BEGINNING ACCOUNT VALUE 01/01/12		ENDING ACCOUNT VALUE 06/30/12		EXPENSE RATIO^(a)		EXPENSES PAID DURING PERIOD^(b)01/01/12-06/30/12

FORWARD FOCUS FUND (continued)
Institutional Class
Actual	$	1,000.00	$	1,027.00		1.00%	$	5.04

Hypothetical	$	1,000.00	$	1,019.89		1.00%	$	5.02
Class A
Actual	$	1,000.00	$	1,024.30		1.51%	$	7.60

Hypothetical	$	1,000.00	$	1,017.35		1.51%	$	7.57

FORWARD GLOBAL CREDIT LONG/SHORT FUND
Investor Class
Actual	$	1,000.00	$	1,020.70		2.39%	$	12.01

Hypothetical	$	1,000.00	$	1,012.98		2.39%	$	11.96
Institutional Class
Actual	$	1,000.00	$	1,022.80		1.99%	$	10.01

Hypothetical	$	1,000.00	$	1,014.97		1.99%	$	9.97
Class C
Actual	$	1,000.00	$	1,017.40		2.99%	$	15.00

Hypothetical	$	1,000.00	$	1,010.00		2.99%	$	14.94
Class M
Actual	$	1,000.00	$	1,022.80		1.99%	$	10.01

Hypothetical	$	1,000.00	$	1,014.97		1.99%	$	9.97

FORWARD INTERNATIONAL DIVIDEND FUND
Investor Class
Actual	$	1,000.00	$	1,055.10		1.43%	$	7.31

Hypothetical	$	1,000.00	$	1,017.75		1.43%	$	7.17
Institutional Class
Actual	$	1,000.00	$	1,057.10		1.06%	$	5.42

Hypothetical	$	1,000.00	$	1,019.59		1.06%	$	5.32
Class M
Actual	$	1,000.00	$	1,057.20		1.07%	$	5.47

Hypothetical	$	1,000.00	$	1,019.54		1.07%	$	5.37

FORWARD INTERNATIONAL SMALL COMPANIES FUND
Investor Class
Actual	$	1,000.00	$	1,054.40		1.68%	$	8.58

Hypothetical	$	1,000.00	$	1,016.51		1.68%	$	8.42


June 30, 2012		16

Disclosure of Fund Expenses (Unaudited)

For the Six Months Ended June 30, 2012


	BEGINNING ACCOUNT VALUE 01/01/12		ENDING ACCOUNT VALUE 06/30/12		EXPENSE RATIO^(a)		EXPENSES PAID DURING PERIOD^(b)01/01/12-06/30/12

FORWARD INTERNATIONAL SMALL COMPANIES FUND (continued)
Institutional Class
Actual	$	1,000.00	$	1,056.20		1.33%	$	6.80

Hypothetical	$	1,000.00	$	1,018.25		1.33%	$	6.67
Class A
Actual	$	1,000.00	$	1,053.50		1.83%	$	9.34

Hypothetical	$	1,000.00	$	1,015.76		1.83%	$	9.17
Class M
Actual	$	1,000.00	$	1,056.20		1.36%	$	6.95

Hypothetical	$	1,000.00	$	1,018.10		1.36%	$	6.82

FORWARD LARGE CAP DIVIDEND FUND
Investor Class
Actual	$	1,000.00	$	1,051.80		1.30%	$	6.63

Hypothetical	$	1,000.00	$	1,018.40		1.30%	$	6.52
Institutional Class
Actual	$	1,000.00	$	1,053.50		0.96%	$	4.90

Hypothetical	$	1,000.00	$	1,020.09		0.96%	$	4.82
Class A
Actual	$	1,000.00	$	1,051.00		1.46%	$	7.45

Hypothetical	$	1,000.00	$	1,017.60		1.46%	$	7.32

FORWARD SELECT EM DIVIDEND FUND
Investor Class
Actual	$	1,000.00	$	1,106.60		1.79%	$	9.38

Hypothetical	$	1,000.00	$	1,015.96		1.79%	$	8.97
Institutional Class
Actual	$	1,000.00	$	1,110.20		1.39%	$	7.29

Hypothetical	$	1,000.00	$	1,017.95		1.39%	$	6.97
Class C
Actual	$	1,000.00	$	1,104.50		2.39%	$	12.51

Hypothetical	$	1,000.00	$	1,012.98		2.39%	$	11.96
Class M
Actual	$	1,000.00	$	1,109.80		1.39%	$	7.29

Hypothetical	$	1,000.00	$	1,017.95		1.39%	$	6.97


		17		June 30, 2012

Disclosure of Fund Expenses (Unaudited)

For the Six Months Ended June 30, 2012


	BEGINNING ACCOUNT VALUE 01/01/12		ENDING ACCOUNT VALUE 06/30/12		EXPENSE RATIO^(a)		EXPENSES PAID DURING PERIOD^(b)01/01/12-06/30/12

FORWARD SMALL CAP EQUITY FUND
Investor Class
Actual	$	1,000.00	$	1,054.90		1.32%	$	6.74

Hypothetical	$	1,000.00	$	1,018.30		1.32%	$	6.62
Institutional Class
Actual	$	1,000.00	$	1,056.40		1.01%	$	5.16

Hypothetical	$	1,000.00	$	1,019.84		1.01%	$	5.07
Class A
Actual	$	1,000.00	$	1,054.80		1.37%	$	7.00

Hypothetical	$	1,000.00	$	1,018.05		1.37%	$	6.87
Class M
Actual	$	1,000.00	$	1,056.60		1.03%	$	5.27

Hypothetical	$	1,000.00	$	1,019.74		1.03%	$	5.17

FORWARD TACTICAL ENHANCED FUND
Investor Class
Actual	$	1,000.00	$	1,057.80		2.34%	$	11.97

Hypothetical	$	1,000.00	$	1,013.23		2.34%	$	11.71
Institutional Class
Actual	$	1,000.00	$	1,059.70		1.99%	$	10.19

Hypothetical	$	1,000.00	$	1,014.97		1.99%	$	9.97
Class A
Actual	$	1,000.00	$	1,057.50		2.49%	$	12.74

Hypothetical	$	1,000.00	$	1,012.48		2.49%	$	12.46
Class C
Actual	$	1,000.00	$	1,054.90		2.94%	$	15.02

Hypothetical	$	1,000.00	$	1,010.24		2.94%	$	14.69
Class M
Actual	$	1,000.00	$	1,059.70		1.99%	$	10.19

Hypothetical	$	1,000.00	$	1,014.97		1.99%	$	9.97

FORWARD TACTICAL GROWTH FUND
Investor Class
Actual	$	1,000.00	$	1,040.90		1.75%	$	8.88

Hypothetical	$	1,000.00	$	1,016.16		1.75%	$	8.77
Institutional Class
Actual	$	1,000.00	$	1,042.60		1.41%	$	7.16

Hypothetical	$	1,000.00	$	1,017.85		1.41%	$	7.07


June 30, 2012		18

Disclosure of Fund Expenses (Unaudited)

For the Six Months Ended June 30, 2012


	BEGINNING ACCOUNT VALUE 01/01/12		ENDING ACCOUNT VALUE 06/30/12		EXPENSE RATIO^(a)		EXPENSES PAID DURING PERIOD^(b)01/01/12-06/30/12

FORWARD TACTICAL GROWTH FUND (continued)
Class A
Actual	$	1,000.00	$	1,040.20		1.90%	$	9.64

Hypothetical	$	1,000.00	$	1,015.42		1.90%	$	9.52
Class C
Actual	$	1,000.00	$	1,037.30		2.35%	$	11.90

Hypothetical	$	1,000.00	$	1,013.18		2.35%	$	11.76
Class M
Actual	$	1,000.00	$	1,042.50		1.40%	$	7.11

Hypothetical	$	1,000.00	$	1,017.90		1.40%	$	7.02

FORWARD COMMODITY LONG/SHORT STRATEGY FUND
Investor Class
Actual	$	1,000.00	$	912.30		1.67%	$	7.94

Hypothetical	$	1,000.00	$	1,016.56		1.67%	$	8.37
Institutional Class
Actual	$	1,000.00	$	913.90		1.32%	$	6.28

Hypothetical	$	1,000.00	$	1,018.30		1.32%	$	6.62
Class C
Actual	$	1,000.00	$	909.80		2.27%	$	10.78

Hypothetical	$	1,000.00	$	1,013.58		2.27%	$	11.36
Class M
Actual	$	1,000.00	$	911.30		1.30%	$	6.18

Hypothetical	$	1,000.00	$	1,018.40		1.30%	$	6.52
Class Z
Actual	$	1,000.00	$	914.20		1.31%	$	6.23

Hypothetical	$	1,000.00	$	1,018.35		1.31%	$	6.57

FORWARD MANAGED FUTURES STRATEGY FUND
Investor Class^(d)
Actual	$	1,000.00	$	936.80		2.68%	$	10.78

Hypothetical	$	1,000.00	$	1,011.54		2.68%	$	13.40
Institutional Class^(d)
Actual	$	1,000.00	$	938.00		2.33%	$	9.38

Hypothetical	$	1,000.00	$	1,013.28		2.33%	$	11.66


		19		June 30, 2012

Disclosure of Fund Expenses (Unaudited)

For the Six Months Ended June 30, 2012


	BEGINNING ACCOUNT VALUE 01/01/12		ENDING ACCOUNT VALUE 06/30/12		EXPENSE RATIO^(a)		EXPENSES PAID DURING PERIOD^(b)01/01/12-06/30/12

FORWARD MANAGED FUTURES STRATEGY FUND (continued)
Class C^(d)
Actual	$	1,000.00	$	934.40		3.28%	$	13.18

Hypothetical	$	1,000.00	$	1,008.55		3.28%	$	16.38
Class Z^(e)
Actual	$	1,000.00	$	929.10		2.28%	$	9.07

Hypothetical	$	1,000.00	$	1,013.53		2.28%	$	11.41

(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 value over the period, multiplied by the number of days in the most recent fiscal half year (182), then divided by 366.

(d) The Forward Managed Futures Strategy Fund commenced operations on January 30, 2012.

(e) The Forward Managed Futures Strategy Fund began offering Class Z shares on January 31, 2012.


June 30, 2012		20

Summary of Portfolio Holdings (Note 10) (Unaudited)

Under SEC Rules, all funds are required to include in their annual and semi-annual shareholder reports a presentation of portfolio holdings in a table, chart or graph by reasonably identifiable categories. The following tables which present portfolio holdings as a percent of total net assets are provided in compliance with such requirements.



FORWARD CREDIT ANALYSIS LONG/SHORT FUND
Municipal Bonds	103.69%

Corporate Bonds	2.15%

Preferred Stocks	0.72%

Short-Term Bank Debt Instruments & Net Cash	-6.56%
	100.00%

FORWARD EM CORPORATE DEBT FUND
South America	23.96%

Eastern Europe	19.83%

Asia	18.71%

Latin America	18.55%

Middle East	9.50%

Africa	4.12%

North America	2.47%

Europe	0.35%

Short-Term Bank Debt Instruments & Net Cash	2.51%
	100.00%

FORWARD EMERGING MARKETS FUND
Financials	36.15%	^(a)

Energy	22.10%

Information Technology	21.27%

Consumer Discretionary	15.07%

Telecommunications Services	11.25%

Materials	10.42%

Consumer Staples	9.54%

Industrials	5.73%

Health Care	2.20%

Chemicals	0.89%

Utilities	0.87%

Short-Term Bank Debt Instruments, Investments Purchased with Cash Collateral from Securities Loaned & Net Cash	-35.49%
	100.00%

FORWARD ENDURANCE LONG/SHORT FUND
Information Technology	64.85%	^(a)

Telecommunication Services	17.25%
Materials	3.49%

Financials	1.51%

Energy	1.43%

Health Care	0.88%

Industrials	0.87%

Consumer Discretionary	0.70%

Options Purchased	0.71%

Short-Term Bank Debt Instruments & Net Cash	8.31%
	100.00%

FORWARD FOCUS FUND
Information Technology	19.88%

Industrials	18.85%

Financials	15.16%

Materials	14.49%

Consumer Discretionary	10.78%

Health Care	10.60%

Consumer Staples	4.19%

Energy	3.48%

Short-Term Bank Debt Instruments & Net Cash	2.57%
	100.00%

FORWARD GLOBAL CREDIT LONG/SHORT FUND
Corporate Bonds	61.78%

Asset-Backed Securities	9.91%

Foreign Government Obligations	5.64%

Convertible Corporate Bonds	3.65%

Common Stocks	2.04%

Short-Term Bank Debt Instruments & Net Cash	16.98%
	100.00%

FORWARD INTERNATIONAL DIVIDEND FUND
Financials	20.37%

Industrials	12.58%

Consumer Discretionary	11.22%

Health Care	10.02%

Consumer Staples	9.26%

Energy	7.61%


		21		June 30, 2012

Summary of Portfolio Holdings (Note 10) (Unaudited)



FORWARD INTERNATIONAL DIVIDEND FUND (continued)
Telecommunication Services		7.30%

Utilities		5.77%

Materials		5.20%

Information Technology		4.18%

Mortgage Securities		3.28%

Short-Term Bank Debt Instruments & Net Cash		3.21%
		100.00%

FORWARD INTERNATIONAL SMALL COMPANIES FUND
Industrials		19.08%

Consumer Discretionary		18.37%

Information Technology		11.36%

Consumer Staples		9.83%

Financials		9.13%

Energy		6.25%

Exchange-Traded Funds		4.58%

Materials		4.25%

Health Care		3.85%

Telecommunications Services		2.12%

Utilities		1.36%

Short-Term Bank Debt Instruments, Investments Purchased with Cash Collateral from Securities Loaned & Net Cash		9.82%
		100.00%

FORWARD LARGE CAP DIVIDEND FUND
Information Technology		17.78%

Financials		17.31%

Industrials		12.51%

Consumer Discretionary		11.83%

Consumer Staples		11.31%

Health Care		10.12%

Energy		8.68%

Mortgage Securities		3.69%

Telecommunication Services	��	1.82%

Materials		1.73%

Short-Term Bank Debt Instruments & Net Cash		3.22%
		100.00%

FORWARD SELECT EM DIVIDEND FUND
Financials		21.14%

Industrials		14.16%

Consumer Staples		13.50%
Telecommunication Services		9.61%

Consumer Discretionary		9.37%

Utilities		9.17%

Materials		7.83%

Information Technology		7.27%

Health Care		5.27%

Energy		5.20%

Mortgage Securities		2.34%

Short-Term Bank Debt Instruments & Net Cash		-4.86%
		100.00%

FORWARD SMALL CAP EQUITY FUND
Consumer Discretionary		17.06%

Financials		15.68%

Industrials		15.13%

Information Technology		15.09%

Health Care		11.13%

Consumer Staples		7.52%

Materials		5.13%

Affiliated Investment Companies		4.97%

Energy		3.43%

Utilities		0.37%

Short-Term Bank Debt Instruments & Net Cash		4.49%
		100.00%

FORWARD TACTICAL ENHANCED FUND
U.S. Treasury Bonds & Notes		74.06%

Options Purchased		0.04%

Short-Term Bank Debt Instruments & Net Cash		25.90%
		100.00%

FORWARD TACTICAL GROWTH FUND
U.S. Treasury Bonds & Notes		74.15%

Short-Term Bank Debt Instruments & Net Cash		25.85%
		100.00%

FORWARD COMMODITY LONG/SHORT STRATEGY FUND
Agency Pass-Through Securities		30.59%

Corporate Bonds		16.15%

U.S. Treasury Bonds & Notes		15.69%

Municipal Bonds		3.06%

Collateralized Mortgage Obligations		1.85%

Asset-Backed Securities		0.67%

Short-Term Bank Debt Instruments & Net Cash		31.99%
		100.00%


June 30, 2012		22

Summary of Portfolio Holdings (Note 10) (Unaudited)



FORWARD MANAGED FUTURES STRATEGY FUND
Exchange-Traded Funds			72.09%

Short-Term Bank Debt Instruments & Net Cash			27.91%
			100.00%

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

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


		23		June 30, 2012

Portfolio of Investments (Note 10) (Unaudited)

Forward Credit Analysis Long/Short Fund


Shares			Value (Note 2)

	PREFERRED STOCKS: 0.72%
	Diversified Financial Services: 0.43%

	50,000	Citigroup Capital XII 8.500%	$	1,253,000

	21,250	JPMorgan Chase Capital XXVIII^(a) 7.200%		532,950

				1,785,950

	Electric: 0.29%

	12,188	Southern California Edison Co.^(a)(b) 4.580%		1,220,323

		Total Preferred Stocks (Cost $3,003,432)		3,006,273

Principal Amount

	CORPORATE BONDS: 2.15%
	Consumer Cyclical: 0.22%

$	250,000	General Motors Corp., Sr. Unsec. Notes 7.200%, 01/15/12^(c)(d)		25

	895,000	United Air Lines, Inc., Sr. Sec. Notes 9.875%, 08/01/13^(b)(e)		927,444

				927,469

	Financials: 0.90%

	3,000,000	Nationwide Mutual Insurance Co., Sub. Notes 5.810%, 12/15/24^(a)(b)(e)		2,730,177

	1,000,000	Penske Truck Leasing Co. Lp (PTL Finance Corp.), Unsec. Notes 3.750%, 05/11/17^(e)		1,009,427

				3,739,604

	Industrials: 1.03%

	4,000,000	Enterprise Products Operating Llc, Gtd. Notes, Series B 7.034%, 01/15/68^(a)(b)		4,284,904

		Total Corporate Bonds (Cost $8,573,437)		8,951,977

	MUNICIPAL BONDS: 103.69%
	Alaska: 2.83%

	9,400,000	Northern Alaska Tobacco Securitization Corp., Revenue Bonds (Tobacco Settlement Asset Backed), Series A 5.000%, 06/01/32^(b)		7,986,240

	5,000,000	5.000%, 06/01/46^(b)		3,776,500

				11,762,740
Principal Amount			Value (Note 2)


	Arizona: 0.13%

$	500,000	Salt Verde, Arizona, Financial Corp., Senior Gas Revenue Bonds 5.250%, 12/01/20	$	544,595

	California: 13.35%

	2,690,000	California County Tobacco Securitization Agency Tobacco Settlement, Asset-Backed Convertible Revenue Bonds (Los Angeles County Securitization Corp.) 5.450%, 06/01/28		2,266,217

	500,000	California Educational Facilities Authority, General Obligation Revenue Bonds (San Francisco University) 5.000%, 10/01/21		587,200

	3,945,000	California Housing Finance Agency, Revenue Bonds (Alternative Minimum Tax Home Mortgage), Series K 5.500%, 02/01/42		4,084,061

	1,425,000	California State Health Facilities Financing Authority, Revenue Bonds (Catholic Health Care West), Series J 5.625%, 07/01/32^(b)		1,547,336

	3,070,000	California State Pollution Control Financing Authority Pollution Control, Revenue Bonds (Refunding Pacific Gas-D-Rmkt) 4.750%, 12/01/23		3,311,855

	1,400,000	California State Public Works Board, Revenue Bonds (Build America Bonds), Series G-2 8.361%, 10/01/34^(b)		1,792,868

	2,000,000	California State Public Works Board, Revenue Bonds, Series A-1 5.750%, 03/01/30^(b)		2,245,560

	1,750,000	California Statewide Communities Development Authority, Revenue Bonds (Kaiser Permanente), Series A 5.000%, 04/01/42		1,869,508

	5,900,000	Golden State Tobacco Securitization Corp., Asset-Backed Revenue Bonds (California Tobacco Settlement), Sr. Series A-1 4.500%, 06/01/27		4,867,736

	10,000,000	Golden State Tobacco Securitization Corp., Asset-Backed Revenue Bonds (California Tobacco Settlement), Sr. Series A-2 0.000%, 06/01/37		7,501,500


June 30, 2012		24		See Notes to Financial Statements

Portfolio of Investments (Note 10) (Unaudited)

Forward Credit Analysis Long/Short Fund



Principal Amount			Value (Note 2)
	California (continued): 13.35%

$	4,700,000	Long Beach Bond Finance Authority, Natural Gas Purchase (Libor Index), Series B, VRDN 1.763%, 11/15/27^(a)(b)	$	3,455,487

	1,000,000	Long Beach, California Bond Finance Authority, Revenue Bonds, Series A 5.000%, 11/15/15^(b)		1,065,760

	2,725,000	Los Angeles Convention & Exhibit Center Authority, Lease Revenue Bonds, Series A 5.125%, 08/15/22^(b)		3,001,260

	2,500,000	Los Angeles Regional Airports Improvement Corp., Lease Revenue Bonds, Series C, VRDN 7.500%, 12/01/24^(f)		2,511,250

	5,550,000	Northern California Gas Authority, No. 1 Revenue Bonds, VRDN 1.034%, 07/01/27^(a)(b)		4,026,747

	1,500,000	Palomar Pomerado, California Health Care District, Certificate Participation Bonds, (Palomar Pamerado Health) 6.000%, 11/01/30		1,640,475

	1,925,000	State of California Municipal Bonds, General Obligation Revenue Bonds (Build America Bonds) 5.250%, 04/01/14^(b)		2,066,699

	3,170,000	7.550%, 04/01/39		4,079,537

	4,700,000	Tobacco Securitization Authority of Southern California, Tobacco Settlement Revenue Bonds, Series A1-SNR 5.000%, 06/01/37		3,676,857

				55,597,913

	Colorado: 1.25%

	2,365,000	Denver City & County, Special Facilities Airport Revenue Bonds (United Airlines Project), Series A 5.250%, 10/01/32		2,350,219

	2,915,000	Denver Colorado Health & Hospital Authority Healthcare, Revenue Bonds, Series B, VRDN 1.413%, 12/01/33^(a)(b)		2,118,359

	650,000	Public Authority for Colorado Energy, Natural Gas Purchase Revenue Bonds 5.750%, 11/15/18		723,320

				5,191,898
	Connecticut: 2.05%

$	2,500,000	Connecticut State Health & Educational Facility Authority, Revenue Bonds (Hartford Heath Care), Series A 5.000%, 07/01/41	$	2,633,125

	4,600,000	Connecticut State Health & Educational Facility Authority, Revenue Bonds (Stamford Hospital), Series I 5.000%, 07/01/30^(b)		4,869,974

	950,000	Connecticut State Health & Educational Facility Authority, Revenue Bonds (Yale-New Haven Hospital), Insured Ambac Indemnity Corp., Series J-1 5.000%, 07/01/26^(b)		1,031,349

				8,534,448

	Florida: 1.32%

	1,000,000	Citizens Property Insurance Corp., Sr. Sec. Revenue Bonds, Series A-1 5.000%, 06/01/22		1,123,730

	1,545,000	5.250%, 06/01/17		1,759,106

	700,000	6.000%, 06/01/16^(b)		805,812

	1,790,000	Tallahassee Florida Health Facilities, Revenue Bonds (Memory Healthcare Project) 6.375%, 12/01/30^(b)		1,791,898

				5,480,546

	Georgia: 3.24%

	5,160,000	City of Atlanta, Georgia Water & Wastewater Revenue Bonds, Series A 5.500%, 11/01/27^(b)		6,243,497

	1,600,000	Municipal Electric Authority of Georgia, Revenue Bonds (Build America Bonds) 6.655%, 04/01/57^(b)		1,835,456

	5,100,000	Municipal Electric Authority of Georgia, Revenue Bonds (Build America Bonds, Plant Vogtle Units 3&4 Project), Series P 7.055%, 04/01/57^(b)		5,399,625

				13,478,578

	Guam: 1.88%

	5,000,000	Guam Government Municipal Bonds, General Obligation Unlimited, Series A 7.000%, 11/15/39^(b)		5,553,900


See Notes to Financial Statements		25		June 30, 2012

Portfolio of Investments (Note 10) (Unaudited)

Forward Credit Analysis Long/Short Fund


Principal Amount			Value (Note 2)
	Guam (continued): 1.88%

$	2,100,000	Guam Government Municipal Bonds, Series A 6.000%, 11/15/19^(b)	$	2,261,322

				7,815,222

	Illinois: 3.90%

	1,000,000	Illinois Finance Authority, Revenue Bonds (Silver Cross & Medical Centers), Series A 7.000%, 08/15/44^(b)		1,144,100

	10,265,000	Railsplitter Tobacco Settlement Authority, Revenue Bonds 5.500%, 06/01/23^(b)		11,823,843

	3,000,000	State of Illinois, General Obligation Unlimited Bonds (Build America Bonds) 6.630%, 02/01/35		3,262,680

				16,230,623

	Indiana: 0.38%

	1,435,000	Indiana Finance Authority Finance Authority, Hospital Revenue Bonds (Parkview Health System) 5.000%, 05/01/29		1,579,935

	Iowa: 4.46%

	6,875,000	Iowa Tobacco Settlement Authority, Asset-Backed Revenue Bonds (Capital Appreciation), Series B 5.600%, 06/01/34		6,291,725

	5,730,000	Iowa Tobacco Settlement Authority, Asset-Backed Revenue Bonds, Series A 6.500%, 06/01/23		5,526,184

	3,000,000	Iowa Tobacco Settlement Authority, Asset-Backed Revenue Bonds, Series C 5.375%, 06/01/38		2,479,170

	5,185,000	5.500%, 06/01/42		4,254,189

				18,551,268

	Kentucky: 2.93%

	2,675,000	Kentucky Economic Development Finance Authority, Revenue Bonds (Baptist Healthcare System), Series A 5.375%, 08/15/24^(b)		3,046,451

	1,250,000	Kentucky Economic Development Finance Authority, Revenue Bonds (Owensboro Medical Health System), Series A 6.375%, 06/01/40^(b)		1,441,225


$	1,500,000	Kentucky Housing Corp., Housing Revenue Bonds, Series A 4.250%, 07/01/33	$	1,560,270

	2,700,000	Louisville & Jefferson County, Kentucky, Metropolitan Government Health Facilities Revenue Bonds (Jewish Hospital Saint Mary’s Healthcare) 6.125%, 02/01/37^(b)		3,441,393

	2,625,000	Louisville & Jefferson County, Kentucky, Metropolitan Government Health System Revenue Bonds (Norton Healthcare, Inc.) 5.250%, 10/01/36^(b)		2,722,571

				12,211,910

	Louisiana: 3.50%

	2,450,000	Louisiana Local Government Environmental Facilities & Community Development Authority, Revenue Bonds, (Westlake Chemical Corp., Project) 6.750%, 11/01/32^(b)		2,733,882

	2,100,000	Louisiana Public Facilities Authority, Revenue Bonds (Christus Health), Series A 6.000%, 07/01/29^(b)		2,411,766

	1,500,000	Louisiana Public Facilities Authority, Revenue Bonds (Ochsner Clinic Foundation Project) 6.250%, 05/15/31^(b)		1,685,325

	4,555,000	Louisiana Public Facilities Authority, Revenue Bonds (Ochsner Clinic Foundation Project), Series A 5.250%, 05/15/38^(b)		4,688,370

	3,000,000	Louisiana, Tobacco Settlement Financing Corp., Revenue Bonds (Asset Backed), Series 2001B 5.875%, 05/15/39		3,073,530

				14,592,873

	Maine: 0.41%

	1,475,000	Maine Health & Higher Educational Facilities Authority, Revenue Bonds (Maine General Medical Center) 6.750%, 07/01/36^(b)		1,691,117

	Maryland: 0.02%

	65,000	Montgomery County, Maryland, Housing Opportunities Commission, Single Family Mortgage Revenue Bonds, Series B 5.350%, 07/01/34^(b)		65,241


June 30, 2012		26		See Notes to Financial Statements

Portfolio of Investments (Note 10) (Unaudited)

Forward Credit Analysis Long/Short Fund



Principal Amount			Value (Note 2)
	Massachusetts: 0.85%

$	3,030,000	Massachusetts Development Finance Agency, Revenue Bonds (Tufts Medical Center), Series I 6.250%, 01/01/27^(b)	$	3,552,311

	Michigan: 0.41%

	400,000	Detroit Water & Sewerage Department Sewerage Disposal System, Revenue and Revenue Refunding Sr. Lien Bonds, Series A 5.250%, 07/01/39		410,632

	1,225,000	Michigan State Hospital Finance Authority, Revenue Bonds (Henry Ford Health System), Series A 5.250%, 11/15/32^(b)		1,306,365

				1,716,997

	Mississippi: 0.54%

	1,990,000	Mississippi Development Bank, Revenue Bonds (Magnolia Regional Health Center), Series A 6.500%, 10/01/31^(b)		2,255,784

	Missouri: 0.24%

	850,000	St. Louis, Missouri, Airport Revenue Bonds (Lambert-St. Louis International), Series A-1 6.625%, 07/01/34^(b)		991,627

	Nebraska: 4.33%

	5,650,000	Nebraska Central Plains Energy Project, Gas Project Revenue Bonds (Project No.3) 5.000%, 09/01/27		5,882,610

	7,000,000	5.000%, 09/01/32		7,150,570

	5,000,000	5.000%, 09/01/42		4,991,950

				18,025,130

	New Hampshire: 0.63%

	2,450,000	New Hampshire Business Finance Authority, Pollution Control Revenue Bonds (United Illuminating Co.), Series A, VRDN 4.500%, 07/01/27^(a)(b)		2,637,205

	New Jersey: 4.73%

	1,000,000	New Jersey Economic Development Authority, Revenue Bonds 5.000%, 06/15/20		1,136,640

	800,000	5.375%, 06/15/14		878,328

	2,255,000	New Jersey State Health Care Facilities Financing Authority, Revenue Bonds (Barnabas Health), Series A 5.625%, 07/01/32^(b)		2,444,307


$	1,500,000	New Jersey State Transportation Trust Fund Authority, Revenue Bonds, Series B 5.250%, 06/15/24	$	1,779,840

	6,135,000	New Jersey Tobacco Settlement Financing Corp., Revenue Bonds, Series 1A 4.500%, 06/01/23^(b)		5,751,501

	8,680,000	4.625%, 06/01/26		7,699,942

				19,690,558

	New York: 6.73%

	1,225,000	Albany, New York Industrial Development Agency, Civic Facility Revenue Bonds (St. Peter’s Hospital Project), Series A 5.750%, 11/15/22^(b)		1,405,663

	1,000,000	Brooklyn Arena Local Development Corp., Revenue Bonds (Barclays Center Project) 6.000%, 07/15/30^(b)		1,109,680

	1,500,000	Erie Tobacco Asset Securitization Corp., Asset-Backed Revenue Bonds (New York Tobacco Settlement), Series E 6.000%, 06/01/28		1,395,345

	1,000,000	Hudson, New York Yards Infrastructure Corp., Revenue Bonds, Series A 5.250%, 02/15/47^(b)		1,089,500

	3,900,000	Liberty, New York, Development Corp., Revenue Bonds (Goldman Sachs Headquarters, Llc) 5.250%, 10/01/35		4,379,115

	6,515,000	New York City, Industrial Development Agency, Special Facilities Revenue Bonds (American Airlines, Inc. — JFK International Airport), VRDN 7.625%, 08/01/25^(a)(f)		6,938,084

	3,000,000	8.000%, 08/01/28^(a)(b)(f)		3,194,820

	2,295,000	New York City, New York Industrial Development Agency, Revenue Bonds (Queens Baseball Stadium-Pilot Project) 5.000%, 01/01/18^(b)		2,455,558

	1,000,000	New York City, New York Industrial Development Agency, Special Facilities Revenue Bonds (British Airways Plc) 5.250%, 12/01/32		964,760

	750,000	New York City, New York Municipal Water Finance Authority, Water & Sewer Revenue Bonds, Series EE 6.011%, 06/15/42^(b)		993,720


See Notes to Financial Statements		27		June 30, 2012

Portfolio of Investments (Note 10) (Unaudited)

Forward Credit Analysis Long/Short Fund



Principal Amount			Value (Note 2)
	New York (continued): 6.73%

$	3,700,000	New York State, Liberty Development Corp., Liberty Revenue Bonds (Port Authority Consolidated Bonds), Series 1WTC-2011 5.000%, 12/15/41	$	4,083,468

				28,009,713

	North Carolina: 1.55%

	2,800,000	North Carolina Medical Care Commission, Health Care Facilities Revenue Bonds (Duke University Health Systems), Series A 5.000%, 06/01/42		3,050,964

	1,000,000	North Carolina Medical Care Commission, Health Care Facilities Revenue Bonds (Vidant Health), Series A 5.000%, 06/01/36		1,070,940

	1,300,000	North Carolina Medical Care Commission, Health Care Facilities Revenue Bonds (WakeMed Health), Series A 5.000%, 10/01/31		1,408,264

	825,000	North Carolina Municipal Power Agency, No. 1 Revenue Bonds (Catawba Electric), Series A 5.000%, 01/01/30		906,824

				6,436,992

	Ohio: 2.97%

	765,000	American Municipal Power-Ohio, Inc., Revenue Bonds (Build America Bonds) 6.053%, 02/15/43^(b)		928,335

	1,250,000	American Municipal Power-Ohio, Inc., Revenue Bonds (Fremont Energy Center Project), Series B 5.000%, 02/15/42		1,345,775

	3,000,000	Buckeye, Ohio Tobacco Settlement Financing Authority, Revenue Bonds (Asset-Backed Sr. Turbo), Series A-2 5.125%, 06/01/24		2,416,680

	5,980,000	Buckeye, Ohio Tobacco Settlement Financing Authority, Revenue Bonds (Capital Appreciation Asset-Backed Sr. Convertible), Series A-3 0.000%, 06/01/37		4,827,116

	1,500,000	County of Hancock, Ohio Hospital Revenue Bonds (Blanchard Valley Regional Health Center) 5.750%, 12/01/26^(b)		1,708,245


$	1,000,000	Ohio State Air Quality Development Authority, Revenue Bonds (Columbus Southern Power Co.), Series B 5.800%, 12/01/38^(b)	$	1,133,520

				12,359,671

	Oklahoma: 1.12%

	4,400,000	Oklahoma State Development Finance Authority, Revenue Bonds (St. John Health System, Inc.) 5.000%, 02/15/34		4,679,400

	Pennsylvania: 1.11%

	1,500,000	Allegheny County Industrial Development Authority, Revenue Bonds (Environmental Improvement) 6.750%, 11/01/24^(b)		1,689,510

	835,000	Pennsylvania Economic Development Financing Authority Exempt Facilities, Revenue Bonds (Allegheny Energy Supply Co.) 7.000%, 07/15/39^(b)		980,991

	1,800,000	Philadelphia Hospitals & Higher Education Facilities Authority, Revenue Bonds (Temple University Health Systems), Series B 6.250%, 07/01/23		1,946,034

				4,616,535

	Puerto Rico: 20.25%

	4,400,000	Children’s Trust Fund Puerto Rico Tobacco Settlement, Revenue Bonds (Asset-Backed Bonds) 5.500%, 05/15/39		4,400,088

	12,000,000	Children’s Trust Fund, Asset Backed Revenue Bonds, Series A 0.000%, 05/15/50		933,480

	4,000,000	Commonwealth of Puerto Rico, General Obligation Revenue Bonds (Public Improvement), Series A 5.500%, 07/01/39		4,114,520

	8,000,000	Puerto Rico Commonwealth Aqueduct & Sewer Authority, Revenue Bonds, Sr. Lien, Series A 5.750%, 07/01/37		8,371,120

	2,000,000	6.000%, 07/01/47		2,129,840

	3,225,000	6.125%, 07/01/24		3,765,252


June 30, 2012		28		See Notes to Financial Statements

Portfolio of Investments (Note 10) (Unaudited)

Forward Credit Analysis Long/Short Fund



Principal Amount			Value (Note 2)
	Puerto Rico (continued): 20.25%

$	2,000,000	Puerto Rico Commonwealth, General Obligation Unlimited Bonds (Public Improvement), Series A 5.500%, 07/01/32^(b)	$	2,128,780

	6,000,000	5.750%, 07/01/28		6,603,120

	4,000,000	5.750%, 07/01/41		4,244,800

	1,550,000	Puerto Rico Commonwealth Highway & Transportation Authority, Transportation Revenue Bonds, Series L 5.250%, 07/01/38^(b)		1,624,555

	1,855,000	Puerto Rico Commonwealth Highway & Transportation Authority, Transportation Revenue Bonds, Series N 5.250%, 07/01/39^(b)		1,914,898

	1,800,000	Puerto Rico Commonwealth Infrastructure Financing Authority, Special Tax Revenue Bonds, Insured Ambac Indemnity Corp., Series C 5.500%, 07/01/24^(b)		1,988,244

	475,000	5.500%, 07/01/25^(b)		522,809

	1,300,000	Puerto Rico Commonwealth Infrastructure Financing Authority, Special Tax Revenue Bonds, Series C 5.500%, 07/01/16^(b)		1,435,733

	3,200,000	Puerto Rico Electric Power Authority, Power Revenue Bonds, Series CCC 5.250%, 07/01/27^(b)		3,421,536

	2,900,000	Puerto Rico Electric Power Authority, Power Revenue Bonds, Series UU, VRDN 1.014%, 07/01/31^(a)(b)		1,951,294

	1,250,000	Puerto Rico Electric Power Authority, Power Revenue Bonds, Series WW 5.250%, 07/01/25^(b)		1,353,225

	1,855,000	Puerto Rico Infrastructure Financing Authority, Revenue Bonds (Ports Authority), Series B 5.250%, 12/15/26		1,956,654

	900,000	Puerto Rico Public Buildings Authority, Guaranteed Revenue Bonds (Government Facilities), Insured XL Capital Assurance, Inc., Series H 5.250%, 07/01/13^(b)		937,548

	2,000,000	Puerto Rico Public Buildings Authority, Guaranteed Revenue Bonds (Government Facilities), Series M-2, VRDN 5.750%, 07/01/34^(a)		2,207,240


$	5,800,000	Puerto Rico Public Buildings Authority, Guaranteed Revenue Bonds (Government Facilities), Series P 6.125%, 07/01/23	$	6,732,756

	4,000,000	Puerto Rico Public Buildings Authority, Guaranteed Revenue Bonds (Government Facilities), Series S 6.000%, 07/01/41		4,347,080

	3,905,000	Puerto Rico Public Finance Corp., Revenue Bonds (Commonwealth Appropriation), Series B 5.500%, 08/01/31		4,172,102

	5,000	Puerto Rico Sales Tax Financing Corp., Prerefunded Sales Tax Revenue Bonds (First Subordinate), Series A 5.500%, 08/01/28^(b)		6,446

	18,000,000	Puerto Rico Sales Tax Financing Corp., Sales Tax Revenue Bonds (Capital Appreciation), Series A 0.000%, 08/01/44		2,930,940

	3,000,000	Puerto Rico Sales Tax Financing Corp., Sales Tax Revenue Bonds (First Subordinate), Series A 5.375%, 08/01/39		3,200,460

	3,875,000	5.500%, 08/01/42^(b)		4,105,872

	1,725,000	6.000%, 08/01/42		1,923,272

	795,000	Puerto Rico Sales Tax Financing Corp., Unrefunded Sales Tax Revenue Bonds (First Subordinate), Series A 5.500%, 08/01/28^(b)		893,826

				84,317,490

	Tennessee: 2.52%

	3,290,000	Johnson City Health & Educational Facilities Board, First Mortgage Revenue Bonds (Mountain States Health Alliance), Series A 5.500%, 07/01/31^(b)		3,486,446

	3,850,000	Sullivan County, Tennessee, Health Educational & Housing Facilities Board, Hospital Revenue Bonds (Wellmont Health System Project), Series C 5.250%, 09/01/36^(b)		3,993,528

	2,750,000	Tennessee Energy Acquisition Corp., Gas Revenue Bonds, Series A 5.250%, 09/01/17		3,033,745

				10,513,719


See Notes to Financial Statements		29		June 30, 2012

Portfolio of Investments (Note 10) (Unaudited)

Forward Credit Analysis Long/Short Fund



Principal Amount			Value (Note 2)
	Texas: 7.65%

$	2,000,000	Central Texas Regional Mobility Authority, Sr. Lien Revenue Bonds 5.750%, 01/01/31^(b)	$	2,277,600

	1,850,000	Dallas-Fort Worth, Texas International Airport Facilities Improvement Corp., Revenue Bonds (American Airlines, Inc., Project) 6.000%, 11/01/14^(f)		1,135,030

	1,500,000	9.000%, 05/01/29^(f)		641,250

	1,000,000	Houston, Texas Airport Systems, Revenue Bonds (Special Facilities Continental Airlines, Inc., Terminal Projects) 6.500%, 07/15/30		1,087,440

	3,000,000	6.625%, 07/15/38		3,268,740

	1,100,000	Love Field Airport Modernization Corp., Special Facilities Revenue Bonds (Southwest Airlines Co. Project) 5.000%, 11/01/28		1,151,425

	2,000,000	North Central Texas Health Facility Development Corp., Hospital Revenue Bonds (Children’s Medical Center of Dallas Project) 5.000%, 08/15/32		2,205,160

	2,950,000	North Texas Tollway Authority, Revenue Bonds (Build America Bonds), Sub-Lien, Series B-2 8.910%, 02/01/30^(b)		3,403,975

	1,000,000	North Texas Tollway Authority, Revenue Bonds, Sub-Lien, Series A 6.250%, 02/01/23		1,129,680

	1,000,000	State of Texas, Private Activity Bond Surface Transportation Corp., Revenue Bonds (Sr. Lien LBJ Infrastructure Group) 7.000%, 06/30/40		1,197,310

	1,500,000	Texas Municipal Gas Acquisition & Supply Corp., Gas Supply Revenue Bonds, Series A 5.000%, 12/15/16		1,608,435

	5,000,000	Texas Municipal Gas Acquisition & Supply Corp., Gas Supply Revenue Bonds, Sr. Lien, Series B, VRDN 1.013%, 12/15/26^(a)		3,615,600

	4,470,000	Texas Municipal Gas Acquisition & Supply Corp., I, Gas Supply Revenue Bonds, Sr. Lien, Series D 5.625%, 12/15/17		4,916,151

	3,500,000	6.250%, 12/15/26		4,174,205


$	525,000	Trinity River Authority Texas, Pollution Control Revenue Bonds (Texas Electric Co. Project) 6.250%, 05/01/28^(b)	$	45,145

				31,857,146

	Virgin Islands: 0.64%

	500,000	Virgin Islands Public Finance Authority, Revenue Bonds (Sr. Lien/Capital Projects), Series A-1 5.000%, 10/01/39		509,695

	2,000,000	Virgin Islands Public Finance Authority, Revenue Bonds (Sr. Lien/Manufacturing Federal Loan Notes), Series A 5.000%, 10/01/29^(b)		2,136,180

				2,645,875

	Virginia: 3.55%

	3,000,000	Virginia State Small Business Financing Authority, Revenue Bonds (Sr. Lien Elizabeth River Crossings Opco, Llc Project) 5.250%, 01/01/32		3,130,320

	3,750,000	5.500%, 01/01/42		3,956,362

	7,000,000	6.000%, 01/01/37		7,712,880

				14,799,562

	Washington: 0.51%

	2,000,000	Washington State Health Care Facilities Authority, Revenue Bonds (Providence Health & Services), Series A 5.000%, 10/01/42		2,142,240

	West Virginia: 0.34%

	1,340,000	County of Pleasants, West Virginia Pollution Control Revenue Bonds (Allegheny Energy Supply Co.), Series F 5.250%, 10/15/37		1,416,286

	Wisconsin: 1.37%

	2,525,000	Wisconsin State General Fund Annual Appropriation, Revenue Bonds, Series A 5.750%, 05/01/33^(b)		3,033,181

	2,455,000	Wisconsin State Health & Educational Facilities Authority, Revenue Bonds (Aurora Health Care, Inc.), Series A 5.625%, 04/15/39^(b)		2,662,865

				5,696,046

		Total Municipal Bonds (Cost $414,152,711)		431,689,194


June 30, 2012		30		See Notes to Financial Statements

Portfolio of Investments (Note 10) (Unaudited)

Forward Credit Analysis Long/Short Fund


Par Value			Value (Note 2)

	SHORT-TERM BANK DEBT INSTRUMENTS: 6.53%


$	27,159,759	Wells Fargo Bank & Co.-San Francisco 0.030%, due 07/02/12	$	27,159,759

		Total Short-Term Bank Debt Instruments (Cost $27,159,759)		27,159,759

		Total Investments: 113.09% (Cost $452,889,339)		470,807,203

		Net Other Assets and Liabilities: (13.09)%		(54,485,353	)

		Net Assets: 100.00%	$	416,321,850

Percentages are stated as a percent of net assets.

(a) Interest rate will change at a future date. Interest rate shown reflects the rate in effect at June 30, 2012.

(b) Security, or portion of security, is being held as collateral for short sales.

(d) Security in default on interest payments.

(e) Securities exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be sold in the ordinary course of business in transactions exempt from registration, normally to qualified institutional buyers. At period end, the aggregate market value of those securities was $4,667,048, representing 1.12% of net assets.

(f) Security in default on interest payments. Pending the outcome of the bankruptcy filling. Security deemed to be liquid under the procedures approved by the Fund’s Board of Trustees.


Principal Amount			Value (Note 2)

	SCHEDULE OF SECURITIES SOLD SHORT
	Corporate Bonds

$	(2,000,000)	Citigroup, Inc., Sr. Unsec. Notes 4.500%, 01/14/22	$	(2,071,304	)

	(2,250,000)	Dow Chemical Co., Sr. Unsec. Notes 4.250%, 11/15/20		(2,451,337	)

	(2,250,000)	Ford Motor Credit Co. Llc., Sr. Unsec. Notes 5.750%, 02/01/21		(2,478,937	)

	(2,000,000)	Prudential Financial, Inc., Sr. Unsec. Notes, Series Medium-Term Notes 4.500%, 11/15/20		(2,125,176	)

				(9,126,754	)

	U.S. Treasury Bonds & Notes

	(12,000,000)	U.S. Treasury Bonds 3.125%, 11/15/41		(12,924,372	)

	(35,000,000)	U.S. Treasury Notes 1.000%, 10/31/16		(35,549,605	)

	(21,000,000)	2.000%, 11/15/21		(21,792,435	)

				(70,266,412	)

		Total Securities Sold Short (Proceeds $75,900,842)	$	(79,393,166	)

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

Date of Purchase

Security

Cost

Market
Value

% of Net
Assets

08/12/08

General Motors Corp., Sr. Unsec. Notes
7.200%, 01/15/12^(c)^(d)

0.00%^(g)

(g) Less than 0.005%.

Investment Abbreviations:

Gtd. — Guaranteed

Sec. — Secured

Sr. — Senior

Sub. — Subordinated

Unsec. — Unsecured

VRDN — Variable Rate Demand Notes


See Notes to Financial Statements		31		June 30, 2012

Portfolio of Investments (Note 10) (Unaudited)

Forward EM Corporate Debt Fund

Value
(Note 2)

COMMON STOCKS: 0.92%

Colombia: 0.92%

35,500

Pacific Rubiales Energy Corp.

752,795

Total Common Stocks
(Cost $975,382)

752,795

Principal
Amount

Currency

FOREIGN GOVERNMENT OBLIGATIONS: 3.23%

Argentina: 3.23%

Provincia de Buenos Aires,
Sr. Unsec. Notes

3,000,000

11.750%, 10/05/15^(a)

USD

2,055,000

Republic of Argentina, Sr. Unsec. Notes

24,000,000

0.000%, 12/15/35^(b)(c)

ARS

601,723

2,656,723

Total Foreign Government Obligations
(Cost $3,497,840)

2,656,723

ASSET-BACKED SECURITIES: 0.88%

China: 0.88%

Sealane Trade Finance, Ltd.,
Series 2011-1X, Class A

200,000

14.467%, 02/12/16^(b)

USD

205,460

Start CLO, Ltd., Series 2011-7A, Class A

500,000

15.468%, 06/09/15^(b)

USD

515,815

721,275

Total Asset-Backed Securities
(Cost $697,396)

721,275

CONVERTIBLE CORPORATE BONDS: 1.27%

Indonesia: 1.27%

Enercoal Resources Pte, Ltd.

1,100,000

9.250%, 08/05/14

USD

1,040,875

Total Convertible Corporate Bonds
(Cost $1,154,656)

1,040,875

CORPORATE BONDS: 88.95%

Argentina: 0.63%

Empresa Distribuidora Y Comercializadora Norte,
Sr. Unsec. Notes

1,425,000

9.750%, 10/25/22^(a)

USD

520,125

Principal
Amount

Currency

Value
(Note 2)

Brazil: 7.65%

Banco Bradesco SA (Cayman Islands),
Sub. Notes

1,000,000

5.750%, 03/01/22^(a)

USD

1,015,000

250,000

5.750%, 03/01/22^(d)

USD

253,750

BRF — Brasil Foods SA

300,000

5.875%, 06/06/22^(d)

USD

309,750

OSX 3 Leasing BV, Gtd. Notes

1,000,000

9.250%, 03/20/15

USD

1,003,500

Vale Overseas, Ltd., Sr. Unsec. Notes

1,750,000

4.375%, 01/11/22

USD

1,792,196

Voto-Votorantim Overseas Trading Operations NV, Sr. Unsec. Notes

1,750,000

6.625%, 09/25/19^(a)

USD

1,911,875

6,286,071

Chile: 0.34%

Inversiones Alsacia SA, Sec. Notes

289,656

8.000%, 08/18/18^(a)

USD

280,336

Colombia: 1.67%

Gruposura Finance, Gtd. Notes

300,000

5.700%, 05/18/21^(d)

USD

316,125

Gruposura Finance, Sr. Unsec. Notes

1,000,000

5.700%, 05/18/21^(a)

USD

1,053,750

1,369,875

Hong Kong: 1.90%

Hutchison Whampoa International 11, Ltd., Sr. Unsec. Notes

1,500,000

3.500%, 01/13/17^(d)

USD

1,559,691

Indonesia: 1.76%

Berau Capital Resources Pte, Ltd., First Lien Notes

1,300,000

12.500%, 07/08/15^(a)

USD

1,443,000

Kazakhstan: 1.93%

BTA Bank JSC, Sr. Unsec. Bonds

4,000,000

10.750%, 07/01/18^(a)(b)(e)(f)

USD

820,000

Tristan Oil Ltd., First Lien Notes

2,000,000

10.500%, 01/01/12^(a)(g)

USD

766,250

1,586,250


June 30, 2012		32		See Notes to Financial Statements

Portfolio of Investments (Note 10) (Unaudited)

Forward EM Corporate Debt Fund

Principal
Amount

Currency

Value
(Note 2)

Malaysia: 3.23%

Special Port Vehicle Sdn Bhd, Asset Backed Bonds, Series 7

9,000,000

5.200%, 07/30/13^(h)

MYR

2,656,353

Mexico: 16.41%

America Movil SAB de CV, Gtd. Notes

35,200,000

8.460%, 12/18/36

MXN

2,773,897

Desarrolladora Homex SAB de CV,
Sr. Unsec. Notes

1,745,000

9.750%, 03/25/20^(d)

USD

1,840,975

Grupo Famsa SA de CV, Sr. Unsec. Notes

1,040,000

11.000%, 07/20/15^(a)

USD

1,045,200

Grupo Senda Autotransporte SA de CV, Sr. Sec. Notes

1,150,000

10.500%, 10/03/15^(a)

USD

1,178,750

Maxcom Telecomunicaciones SAB de CV, Sr. Sec. Notes, Series B

3,480,000

11.000%, 12/15/14

USD

2,088,000

Petroleos Mexicanos, Sr. Unsec. Notes

2,250,000

1.950%, 12/20/22

USD

2,262,465

250,000

4.875%, 01/24/22^(d)

USD

270,625

750,000

5.500%, 06/27/44^(d)

USD

768,750

Urbi Desarrollos Urbanos SAB de CV,
Sr. Unsec. Notes

1,200,000

9.750%, 02/03/22^(d)

USD

1,269,000

13,497,662

Nigeria: 1.96%

Afren Plc, First Lien Notes

1,500,000

11.500%, 02/01/16^(a)

USD

1,608,750

Panama: 2.12%

Banco Latinoamericano de Comercio Exterior SA, Sr. Unsec. Notes

1,750,000

3.750%, 04/04/17^(d)

USD

1,745,625

Peru: 7.21%

Camposol SA, Sr. Unsec. Notes

1,000,000

9.875%, 02/02/17^(a)

USD

1,040,000

250,000

9.875%, 02/02/17^(d)

USD

260,000

Corp. Financiera de Desarrollo SA,
Sr. Unsec. Notes

1,000,000

4.750%, 02/08/22^(a)

USD

1,050,000

200,000

4.750%, 02/08/22^(d)

USD

210,000

Corp. Lindley SA, Sr. Unsec. Notes

2,000,000

6.750%, 11/23/21^(a)

USD

2,170,000

Volcan Cia Minera SAA, Sr. Unsec. Notes

1,150,000

5.375%, 02/02/22^(a)

USD

1,198,875

5,928,875

Qatar: 2.25%

Ras Laffan Liquefied Natural Gas Co.,
Ltd. II, Sec. Notes

1,679,600

5.298%, 09/30/20^(a)

USD

1,847,560

Republic of Korea (South): 7.72%

Export-Import Bank of Korea,
Sr. Unsec. Notes

2,000,000

5.000%, 04/11/22

USD

2,230,038

Hana Bank, Sr. Unsec. Notes

1,550,000

3.500%, 10/25/17^(d)

USD

1,601,593

Korea Gas Corp., Sr. Unsec. Notes

650,000

6.250%, 01/20/42^(d)

USD

783,100

Lotte Shopping Co. Ltd., Sr. Unsec. Notes

1,700,000

3.375%, 05/09/17^(d)

USD

1,730,517

6,345,248

Russia: 12.37%

Alfa Bank CJSC Via Ukraine Issuance Plc,
Sr. Unsec. Notes

62,500

13.000%, 07/30/12

USD

62,406

Bank of Moscow OJSC Via Kuznetski Capital, Sr. Sec. Notes

300,000

7.335%, 05/13/13^(a)

USD

311,868

Bank of Moscow via BOM Capital PL,
Sr. Unsec. Notes

1,000,000

6.699%, 03/11/15^(a)

USD

1,037,500

Gazprom OAO Via Gaz Capital SA,
Sr. Unsec. Notes

1,000,000

7.288%, 08/16/37^(a)

USD

1,140,000

1,000,000

8.125%, 07/31/14^(a)

USD

1,099,584


See Notes to Financial Statements		33		June 30, 2012

Portfolio of Investments (Note 10) (Unaudited)

Forward EM Corporate Debt Fund

Principal
Amount

Currency

Value
(Note 2)

Russia (continued): 12.37%

Promsvyazbank OJSC Via PSB Finance SA, Sec. Notes

1,500,000

11.250%, 07/08/16

USD

1,593,750

RSHB Capital SA for OJSC Russian Agricultural Bank, Sec. Notes

53,000,000

7.500%, 03/25/13

RUB

1,643,043

RusHydro Finance, Ltd., Sec. Notes

47,000,000

7.875%, 10/28/15

RUB

1,401,862

VimpelCom Holdings BV, Sr. Unsec. Notes

2,000,000

7.504%, 03/01/22^(a)

USD

1,883,880

10,173,893

Russian Federation: 2.84%

Nomos Bank Via Nomos Capital Plc,
Sub. Notes

1,200,000

10.000%, 04/26/19^(d)

USD

1,187,580

VTB Bank OJSC Via VTB Capital SA,
Sr. Unsec. Notes

1,125,000

6.000%, 04/12/17^(d)

USD

1,144,688

2,332,268

Singapore: 1.96%

Oversea-Chinese Banking Corp. Ltd.,
Sr. Unsec. Notes

1,600,000

1.625%, 03/13/15^(a)

USD

1,613,440

South Africa: 2.16%

African Development Bank,
Sr. Unsec. Notes

1,750,000

1.125%, 03/15/17

USD

1,774,932

Turkey: 1.23%

Yuksel Insaat AS, Sr. Unsec. Notes

1,250,000

9.500%, 11/10/15^(a)

USD

1,012,500

Ukraine: 2.69%

Alfa Issuance, Ltd., Sr. Unsec. Euro Medium-Term Notes

1,000,000

8.000%, 03/18/15

USD

1,052,020

Naftogaz Ukraine, Unsec. Notes

1,200,000

9.500%, 09/30/14

USD

1,156,500

2,208,520

United Arab Emirates: 6.02%

Dolphin Energy, Ltd., Sec. Notes

800,000

5.500%, 12/15/21^(d)

USD

895,040

Doric Nimrod Air, 1st Lien Notes

1,600,000

5.125%, 11/30/24^(d)

USD

1,600,000

Dubai Electricity & Water Authority,
Sr. Unsec. Notes

1,250,000

7.375%, 10/21/20^(a)

USD

1,375,000

MDC BV, Gtd. Medium-Term Notes

1,000,000

5.750%, 05/06/14^(a)

USD

1,076,500

4,946,540

United Kingdom: 0.35%

Tesco Plc, Sr. Unsec. Notes

250,000

5.500%, 11/15/17^(d)

USD

290,729

United States: 0.24%

Continental Airlines 1997-4 Class A Pass Through Trust, Series 974A

16,497

6.900%, 07/02/19

USD

17,363

MF Global Holdings, Ltd., Sr. Unsec. Notes

450,000

6.250%, 08/08/16^(f)

USD

175,864

193,227

Venezuela: 2.31%

CA La Electricidad de Caracas,
Sr. Unsec. Notes

750,000

8.500%, 04/10/18

USD

534,375

Petroleos de Venezuela SA,
Sr. Unsec. Notes

1,720,000

5.000%, 10/28/15

USD

1,361,036

1,895,411

Total Corporate Bonds
(Cost $74,666,361)

73,116,881

U.S. TREASURY BONDS & NOTES: 2.24%

United States: 2.24%

U.S. Treasury Bonds

1,750,000

3.000%, 05/15/42

USD

1,837,227

Total U.S. Treasury Bonds & Notes
(Cost $1,922,569)

1,837,227


June 30, 2012		34		See Notes to Financial Statements

Portfolio of Investments (Note 10) (Unaudited)

Forward EM Corporate Debt Fund

Par
Value

Currency

Value
(Note 2)

SHORT-TERM BANK DEBT INSTRUMENTS: 3.46%

Brown Brothers Harriman & Co.-Grand Cayman

0.030%, due 07/02/12

EUR

JPMorgan Chase-New York

2,849,964

0.030%, due 07/02/12

USD

2,849,964

Total Short-Term Bank Debt Instruments
(Cost $2,849,966)

2,849,966

Total Investments: 100.95%
(Cost $85,764,170)

82,975,742

Net Other Assets and Liabilities: (0.95)%

(782,352

)⁽ⁱ⁾

Net Assets: 100.00%

82,193,390

Percentages are stated as a percent of net assets.

(a) Securities were purchased pursuant to Regulation S under the Securities Act of 1933, which exempts from registration securities offered and sold outside of the United States. Such securities cannot be sold in the United States without either an effective registration statement filed pursuant to the Securities Act of 1933, or pursuant to an exemption from registration. These securities have been deemed liquid under guidelines approved by the Fund’s Board of Trustees. At period end, the aggregate market value of those securities was $31,554,743 representing 38.39% of net assets.

(b) Interest rate will change at a future date. Interest rate shown reflects the rate in effect at June 30, 2012.

(d) Securities exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be sold in the ordinary course of business in transactions exempt from registration, normally to qualified institutional buyers. At period end, the aggregate market value of those securities was $18,037,537, representing 21.95% of net assets.

(e) Represents a step bond. Rate disclosed is as of June 30, 2012.

(f) Security in default on interest payments pending the outcome of the bankruptcy filing. Security deemed to be liquid under the procedures approved by the Fund’s Board of Trustees.

(g) Security in default on interest payments. The issuer defaulted on the maturity payment, pending the outcome of the bankruptcy filling. Security deemed to be liquid under the procedures approved by the Fund’s Board of Trustees.

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

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

CREDIT DEFAULT SWAPS CONTRACTS ON CORPORATE AND SOVEREIGN OBLIGATION ISSUES - SELL PROTECTION^(j)


Reference Entity	Counterparty	Fixed Deal Receive Rate		Maturity Date		Implied Credit Spread at June 30,2012^(k)		Notional Amount^(l)		Market Value		Upfront Premiums Received		Unrealized Depreciation
Argentina Republic	Morgan Stanley		5.000%		06/20/17		0.124%	$	2,500,000	$	(672,466)	$	(215,715)	$	(456,751)
										$	(672,466)	$	(215,715)	$	(456,751)

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

(k) Implied credit spreads, represented in absolute terms, utilized in determining the market value of credit default swap agreements on corporate issues, sovereign issues of an emerging country, U.S. municipal issues, and U.S. Treasury obligation issues as of period end serve as an indicator of the current status of the payment/performance risk and represent the likelihood or risk of default for the credit derivative. The implied credit spread of a particular referenced entity reflects the cost of buying/selling protection and may include upfront payments required to be made to enter into the agreement. Wider credit spreads represent a deterioration of the referenced entity’s credit soundness and a greater likelihood or risk of default or other credit event occurring as defined under the terms of the agreement.

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


See Notes to Financial Statements		35		June 30, 2012

Portfolio of Investments (Note 10) (Unaudited)

Forward EM Corporate Debt Fund

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


Date of Purchase	Security	Cost		Market Value		% of Net Assets
03/27/12	Special Port Vehicle Sdn Bhd, Asset Backed Bonds, Series 7 5.200%, 07/30/13	$	2,700,028	$	2,656,353		3.23%

Investment Abbreviations:

Gtd. — Guaranteed

Sec. — Secured

Sr. — Senior

Sub. — Subordinated

Unsec. — Unsecured

Currency Abbreviations:

ARS — Argentine Peso

EUR — Euro

MYR — Malaysian Ringgit

MXN — Mexican Peso

RUB — Russian Ruble

USD — U.S. Dollar


June 30, 2012		36		See Notes to Financial Statements

Portfolio of Investments (Note 10) (Unaudited)

Forward Emerging Markets Fund


Shares			Value (Note 2)

	COMMON STOCKS: 130.97%
	Brazil: 6.39%

	15,691	Banco Santander Brasil SA, ADS	$	121,605

	8,700	Brasil Insurance Participacoes e Administracao SA		77,319

	8,800	Centrais Eletricas Brasileiras SA		62,128

	16	Cia De Bebidas das Americas^(a)		598

	6,858	Cia Hering		130,263

	6,900	Companhia Vale do Rio Doce		137,244

	9,137	Cosan, Ltd., Class A		115,948

	7,700	Embraer SA		50,681

	14,166	Gerdau SA, Sponsored ADR		124,094

	52,840	Itausa — Investimentos Itau SA		222,304

	6,844	Petroleo Brasileiro SA, ADR		128,462

	7,600	Souza Cruz SA		110,415

	4,409	Vivo Participacoes SA, ADR		109,079

				1,390,140

	China: 30.06%

	59,400	AIA Group, Ltd.		205,171

	378	Baidu, Inc., ADR^(a)		43,463

	1,465,502	Bank of China, Ltd., Class H		562,936

	584,000	China Eastern Airlines Corp., Ltd., Class H^(a)		187,730

	84,000	China Life Insurance Co., Ltd., Class H		221,214

	379,000	China Minsheng Banking Corp., Ltd., Class H		339,383

	95,800	China Mobile, Ltd.		1,051,644

	236,000	China National Building Material Co., Ltd., Class H		257,835

	160,000	China Petroleum & Chemical Corp., Class H		142,996

	301,500	China Railway Construction Corp., Ltd., Class H		252,779

	106,000	China Shenhua Energy Co., Ltd., Class H		375,060

	82,000	CITIC Securities Co., Ltd., Class H		174,173

	391,000	CNOOC, Ltd.		788,303

	462,000	Country Garden Holdings Co., Ltd.^(a)		183,453

	191,000	Evergrande Real Estate Group, Ltd.^(b)		98,918

	1,456,000	Industrial & Commercial Bank of China, Ltd., Class H		816,217

	75,000	Shanghai Industrial Holdings, Ltd.		199,156

	233,000	Shimao Property Holdings, Ltd.		361,141

	9,500	Tencent Holdings, Ltd.		280,547

				6,542,119


	Colombia: 0.95%

	3,517	Almacenes Exito SA	$	58,269

	1,477	BanColombia SA, Sponsored ADR		91,338

	1,021	Ecopetrol SA, Sponsored ADR^(b)		56,961

				206,568

	Hong Kong: 0.93%

	356,500	Mongolian Mining Corp.^(a)		202,298

	Hungary: 1.25%

	3,769	MOL Hungarian Oil and Gas Plc		272,957

	India: 3.41%

	50,466	Cairn Energy Plc^(a)		210,143

	3,515	Dr. Reddy’s Laboratories, Ltd., ADR		104,325

	3,818	HDFC Bank, Ltd., ADR		124,467

	4,266	ICICI Bank, Ltd., Sponsored ADR		138,261

	2,784	Infosys Technologies, Ltd., Sponsored ADR^(b)		125,447

	5,200	Sterlite Industries India, Ltd., ADR		39,416

				742,059

	Indonesia: 3.66%

	1,732,500	Alam Sutera Realty Tbk PT		91,075

	48,000	Gudang Garam Tbk PT		317,111

	308,500	PT Bank Rakyat Indonesia Tbk		211,293

	1,386,700	PT Bumi Serpong Damai Tbk		176,199

				795,678

	Ireland: 1.53%

	27,709	Dragon Oil Plc		235,995

	157,898	Kenmare Resources Plc^(a)		97,859

				333,854

	Kazakhstan: 1.27%

	14,327	Kazakhmys Plc		162,437

	13,464	Zhaikmunai, Sponsored GDR^(a)(c)		114,444

				276,881

	Korea: 28.25%

	6,592	Duksan Hi-Metal Co., Ltd.^(a)		141,950

	7,860	Grand Korea Leisure Co., Ltd.		163,168

	2,966	GS Engineering & Construction Corp.		200,512

	11,900	Hana Financial Group, Inc.		380,421


See Notes to Financial Statements		37		June 30, 2012

Portfolio of Investments (Note 10) (Unaudited)

Forward Emerging Markets Fund


Shares			Value (Note 2)
	Korea (continued): 28.25%

	5,920	Hankook Tire Co., Ltd.	$	236,086

	544	Hyundai Heavy Industries Co., Ltd.		124,129

	1,460	Hyundai Home Shopping Network Corp.		142,880

	832	Hyundai Mobis		201,674

	3,498	Hyundai Motor Co.		718,120

	13,864	KB Financial Group, Inc.		452,894

	3,100	Kia Motors Corp.		204,320

	5,660	Korea Electric Power Corp.^(a)		127,523

	1,268	LG Chem, Ltd.		328,254

	15,120	LG Display Co., Ltd.^(a)		285,457

	4,274	LG Electronics, Inc.		230,294

	4,018	LG Fashion Corp.		100,954

	17,509	Paradise Co., Ltd.		211,412

	1,296	Samsung Electronics Co., Ltd.		1,372,448

	9,210	SK Hynix, Inc.^(a)		194,479

	1,183	SK Innovation Co., Ltd.		144,926

	1,695	SK Telecom Co., Ltd.		185,491

				6,147,392

	Malaysia: 1.87%

	108,300	Axiata Group Bhd		187,472

	75,900	UMW Holdings Bhd		219,552

				407,024

	Mexico: 2.93%

	5,510	America Movil SAB de CV, ADR, Series L		143,591

	7,419	Cemex SAB de CV, Sponsored ADR^(a)		49,930

	1,990	Fomento Economico Mexicano SAB de CV, Sponsored ADR		177,607

	16,600	Grupo Financiero Banorte SAB de CV		85,789

	3,795	Ternium SA, Sponsored ADR		74,268

	39,600	Wal-Mart de Mexico SAB de CV, Series V		105,949

				637,134

	Philippines: 4.02%

	416,500	Alliance Global Group, Inc.		114,989

	115,590	Metropolitan Bank & Trust		255,121

	2,430	Philippine Long Distance Telephone Co.		154,067

	13,300	SM Investments Corp.	$	231,426

	79,460	Universal Robina Corp.		119,132
				874,735

	Russia: 12.08%

	147	AK Transneft OAO - Preferred Stock		214,434

	6,879	CTC Media, Inc.		55,445

	8,021	LUKOIL, Sponsored ADR^(a)		449,484

	2,008	Mail.ru Group, Ltd., Sponsored GDR^(a)(c)		68,384

	5,556	Mobile TeleSystems OJSC, Sponsored ADR^(a)		95,563

	13,721	NOMOS-BANK, Sponsored GDR^(a)(c)		165,150

	3,599	NovaTek OAO, Sponsored GDR^(c)		384,293

	57,095	OAO Gazprom, Sponsored ADR^(a)		542,140

	27,049	Sberbank of Russia		72,352

	11,233	Sistema JSFC, Sponsored GDR^(c)		210,683

	14,778	TMK OAO, GDR^(c)		178,073

	5,012	Uralkali, Sponsored GDR^(c)		193,051
				2,629,052

	South Africa: 8.74%

	2,254	AngloGold Ashanti, Ltd., Sponsored ADR		77,402

	4,746	British American Tobacco Plc		243,958

	84,259	FirstRand, Ltd.		272,734

	16,056	Imperial Holdings, Ltd.		338,911

	98,141	Life Healthcare Group Holdings, Ltd.		374,284

	6,620	SABMiller Plc		267,943

	52,959	Woolworths Holdings, Ltd.		326,226
				1,901,458

	Taiwan: 11.52%

	163,000	Acer, Inc.		170,108

	147,000	China Life Insurance Co., Ltd.		139,102

	192,196	Hon Hai Precision Industry Co., Ltd.		581,114

	15,000	HTC Corp.		198,045

	337,880	Mega Financial Holding Co., Ltd.		250,669

	27,000	Simplo Technology Co., Ltd.		186,472

	258,000	Taiwan Semiconductor Manufacturing Co., Ltd.^(a)		706,267

	633,000	United Microelectronics Corp.		275,580
				2,507,357


June 30, 2012		38		See Notes to Financial Statements

Portfolio of Investments (Note 10) (Unaudited)

Forward Emerging Markets Fund


Shares			Value (Note 2)


	Thailand: 10.50%

	80,700	Bangkok Bank Pcl, Non-Voting Depository Receipt	$	490,974

	188,500	Charoen Pokphand Foods Pcl, Non-Voting Depository Receipt		230,395

	63,400	Kasikornbank Public Co., Ltd.		332,697

	109,500	PTT Global Chemical Pcl		192,984

	38,900	PTT Public Co., Ltd.		398,480

	160,900	Shin Corp. Public Co., Ltd.		310,442

	145,020	Thai Union Frozen Products Pcl		329,435

				2,285,407

	Turkey: 1.61%

	11,579	Koza Altin Isletmeleri AS		223,853

	60,486	Turkiye Vakiflar Bankasi Turk Anonim Ortakligi		126,116

				349,969

		Total Common Stocks (Cost $26,630,455)		28,502,082

	EXCHANGE-TRADED FUNDS: 0.66%
	China: 0.66%

	110,400	iShares^® FTSE A50 China Index ETF		143,729

		Total Exchange-Traded Funds (Cost $182,215)		143,729

	PREFERRED STOCKS: 3.86%
	Brazil: 1.99%

	13,386	Companhia Vale do Rio Doce, Preferred Shares		260,389

	9,498	Petroleo Brasileiro SA, Sponsored ADR, Preferred Shares		172,293

				432,682

	Russia: 1.87%

	7,732	Mechel, Preferred Shares		39,820

	209,700	Sberbank, Preferred Shares		366,975

				406,795

		Total Preferred Stocks (Cost $897,361)		839,477

Par

Value

Currency

Value

(Note 2)

SHORT-TERM BANK DEBT INSTRUMENTS: 3.61%

Brown Brothers Harriman & Co. — Grand Cayman

237

0.030%, due 07/02/12

ZAR

99,147

0.030%, due 07/02/12

HKD

12,780

Royal Bank of Canada-Toronto

772,935

0.030%, due 07/02/12

USD

772,935

Total Short-Term Bank Debt Instruments

(Cost $785,741)

785,745

Total Investments: 139.10% (excluding investments purchased with cash collateral from securities loaned)

(Cost $28,495,772)

30,271,033



Shares

	INVESTMENTS PURCHASED WITH CASH COLLATERAL FROM SECURITIES LOANED: 2.10%

	457,001	Short-Term Investments Trust, Liquid Assets Portfolio Institutional Class, 0.160% 7 day-yield^(d)		457,001

		Total Investments Purchased with Cash Collateral From Securities Loaned (Cost $457,001)		457,001

		Total Investments: 141.20% (Cost $28,952,773)		30,728,034

		Net Other Assets and Liabilities: (41.20)%		(8,965,564	)

		Net Assets: 100.00%	$	21,762,470

Percentages are stated as a percent of net assets.

(a) Non-income producing security.

(b) Security, or portion of security, is currently on loan.

(c) Securities were purchased pursuant to Regulation S under the Securities Act of 1933, which exempts from registration securities offered and sold outside of the United States. Such securities cannot be sold in the United States without either an effective registration statement filed pursuant to the Securities Act of 1933, or pursuant to an exemption from registration. These securities have been deemed liquid under guidelines approved by the Fund’s Board of Trustees. At period end, the aggregate market value of those securities was $1,314,078 representing 6.04% of net assets.

(d) The security has been segregated to satisfy the commitment to return the cash collateral received in securities lending transactions upon the borrower’s return of the securities loaned. (Note 2).


See Notes to Financial Statements		39		June 30, 2012

Portfolio of Investments (Note 10) (Unaudited)

Forward Emerging Markets Fund

Investment Abbreviations:

ADR — American Depositary Receipt

ADS — American Depositary Share

ETF — Exchange Traded Fund

FTSE — Financial Times Stock Exchange

GDR — Global Depositary Receipt

Currency Abbreviations:

HKD — Hong Kong Dollar

USD — U.S. Dollar

ZAR — South African Rand


June 30, 2012		40		See Notes to Financial Statements

Portfolio of Investments (Note 10) (Unaudited)

Forward Endurance Long/Short Fund


Shares			Value (Note 2)

	COMMON STOCKS: 90.98%
	Consumer Discretionary: 0.70%

	500	Starbucks Corp.	$	26,660

	Energy: 1.43%

	500	Schlumberger, Ltd.		32,455

	1,600	Solazyme, Inc.^(a)		22,240

				54,695

	Financials: 1.51%

	1,500	Coresite Realty Corp.		38,730

	2,000	GSV Capital Corp.^(a)		18,600

				57,330

	Health Care: 0.88%

	400	Cerner Corp.^(a)		33,064

	Industrials: 0.87%

	500	Danaher Corp.		26,040

	300	KBR, Inc.		7,413

				33,453

	Information Technology: 64.85%^(b)

	1,200	Apple, Inc.^(a)		700,800

	310	Baidu, Inc., Sponsored ADR^(a)(c)		35,644

	5,500	EMC Corp.^(a)		140,965

	1,400	Equinix, Inc.^(a)		245,910

	1,100	Facebook, Inc., Class A^(a)		34,232

	2,700	Fusion-io, Inc.^(a)		56,403

	200	Google, Inc., Class A^(a)(c)		116,014

	3,600	InvenSense, Inc.^(a)		40,680

	6,800	Microsoft Corp.^(c)		208,013

	14,000	QUALCOMM, Inc.^(c)		779,520

	2,000	Sourcefire, Inc.^(a)		102,800

	1,000	Zynga, Inc., Class A^(a)		5,440

				2,466,421

	Materials: 3.49%

	1,340	Monsanto Co.		110,925

	200	Praxair, Inc.		21,746

				132,671


	Telecommunication Services: 17.25%

	18,400	AT&T, Inc.	$	656,143

		Total Common Stocks (Cost $3,586,046)		3,460,437

Contracts

	OPTIONS PURCHASED: 0.71%

	85	iShares Russell 2000^® Index , Expires August 2012, Strike Price $76.00 Put^(c)		12,240

	137	Market Vectors^® Semiconductor ETF , Expires August 2012, Strike Price $31.00 Put^(c)		10,275

	140	QUALCOMM, Inc. , Expires July 2012, Strike Price at $50.00 Put^(c)		4,340

		Total Options Purchased (Cost $49,753)		26,855

Par Value

	SHORT-TERM BANK DEBT INSTRUMENTS: 6.25%

$	237,646	Wells Fargo Bank & Co. — San Francisco 0.030%, due 07/02/12		237,646

		Total Short-Term Bank Debt Instruments (Cost $237,646)		237,646

		Total Investments: 97.94% (Cost $3,873,445)		3,724,938

		Net Other Assets and Liabilities: 2.06%		78,394	^(d)

		Net Assets: 100.00%	$	3,803,332

Percentages are stated as a percent of net assets.

(a) Non-income producing security.

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

(d) Includes cash which is being held as collateral for options written.


See Notes to Financial Statements		41		June 30, 2012

Portfolio of Investments (Note 10) (Unaudited)

Forward Endurance Long/Short Fund


Shares			Value (Note 2)

	SCHEDULE OF SECURITIES SOLD SHORT
	Common Stock

	(300)	Accenture Plc, Class A	$	(18,027	)

	(1,700)	Acme Packet, Inc.		(31,705	)

	(1,000)	Allscripts Healthcare Solutions, Inc.		(10,930	)

	(4,000)	Alpha Natural Resources, Inc.		(34,840	)

	(3,750)	Arch Coal, Inc.		(25,838	)

	(600)	Baker Hughes, Inc.		(24,660	)

	(600)	Caterpillar, Inc.		(50,946	)

	(3,000)	Cisco Systems, Inc.		(51,510	)

	(2,000)	ExactTarget, Inc.		(43,720	)

	(600)	Fluor Corp.		(29,604	)

	(500)	GameStop Corp., Class A		(9,180	)

	(3,000)	Groupon, Inc.		(31,890	)

	(300)	International Business Machines Corp.		(58,674	)

	(1,425)	Joy Global, Inc.		(80,840	)

	(1,000)	Juniper Networks, Inc.		(16,310	)

	(500)	Michael Kors Holdings, Ltd.		(20,920	)

	(4,400)	Peabody Energy Corp.		(107,888	)

	(625)	Procter & Gamble Co.		(38,281	)

	(500)	QLIK Technologies, Inc.		(11,060	)

	(75)	Salesforce.com, Inc.		(10,370	)

	(1,500)	Seagate Technology Plc		(37,095	)

	(4,000)	Walgreen Co.		(118,320	)

	(1,200)	Western Digital Corp.		(36,576	)

	(800)	Wolverine World Wide, Inc.		(31,024	)

		Total Securities Sold Short (Proceeds $998,192)	$	(930,208	)
Contracts			Value (Note 2)

	SCHEDULE OF OPTIONS WRITTEN
	(3)	Baidu, Inc., Sponsored ADR, Expires July 2012, Strike Price $120.00 Call	$	(495	)

	(55)	EMC Corp., Expires October 2012, Strike Price $25.00 Call		(11,055	)

	(2)	Google, Inc., Class A, Expires August 2012, Strike Price $560.00 Call		(7,080	)

	(85)	iShares Russell 2000^® Index, Expires August 2012, Strike Price $66.00 Put		(2,040	)

	(137)	Market Vectors^® Semicondutor ETF, Expires August 2012, Strike Price $27.00 Put		(2,740	)

	(68)	Microsoft Corp., Expires August 2012, Strike Price $30.00 Call		(8,772	)

	(140)	Qualcomm, Inc., Expires July 2012, Strike Price $45.00 Put		(840	)

		Total Options Written (Proceeds $31,675)	$	(33,022	)

Investment Abbreviations:

ADR — American Depositary Receipt

ETF — Exchange-Traded Fund


June 30, 2012		42		See Notes to Financial Statements

Portfolio of Investments (Note 10) (Unaudited)

Forward Focus Fund


Shares			Value (Note 2)

	COMMON STOCKS: 97.43%
	Consumer Discretionary: 10.78%

	2,600	Cash America International, Inc.	$	114,504

	35,000	Lincoln Educational Services Corp.		227,500

	7,000	Steiner Leisure, Ltd.^(a)		324,870

	4,000	Tiffany & Co.		211,800

				878,674

	Consumer Staples: 4.19%

	4,000	McCormick & Co., Inc.		242,600

	8,500	Rocky Mountain Chocolate Factory, Inc.		98,685

				341,285

	Energy: 3.48%

	7,450	World Fuel Services Corp.		283,324

	Financials: 15.16%

	30,000	American Equity Investment Life Holding Co.		330,300

	6,500	City National Corp.		315,770

	4,500	First of Long Island Corp.		130,365

	7,000	FXCM, Inc., Class A		82,320

	11,000	Raymond James Financial, Inc.		376,640

				1,235,395

	Health Care: 10.60%

	3,930	Techne Corp.		291,606

	5,000	Teleflex, Inc.		304,550

	4,400	Varian Medical Systems, Inc.^(a)		267,388

				863,544

	Industrials: 18.85%

	8,110	Advisory Board Co.^(a)		402,174

	24,400	Houston Wire & Cable Co.		266,692

	20,200	John Bean Technologies Corp.		274,114

	6,550	Nordson Corp.		335,950

	9,000	Robert Half International, Inc.		257,130

				1,536,060

	Information Technology: 19.88%

	6,000	Anixter International, Inc.		318,300

	17,800	Broadridge Financial Solutions, Inc.		378,606

	4,010	DST Systems, Inc.		217,783



	28,000	eMagin Corp.^(a)	$	86,520

	5,600	Littelfuse, Inc.		318,584

	5,850	MICROS Systems, Inc.^(a)		299,520

				1,619,313

	Materials: 14.49%

	5,200	Albemarle Corp.		310,129

	4,300	Bemis Co., Inc.		134,762

	2,082	Martin Marietta Materials, Inc.		164,103

	13,000	Neenah Paper, Inc.		346,970

	5,470	Scotts Miracle-Gro Co., Class A		224,926

				1,180,890

		Total Common Stocks (Cost $7,192,841)		7,938,485

Par Value

	SHORT-TERM BANK DEBT INSTRUMENTS: 2.29%

$	186,392	Royal Bank of Canada-Toronto 0.030%, due 07/02/12		186,392

		Total Short-Term Bank Debt Instruments (Cost $186,392)		186,392

		Total Investments: 99.72% (Cost $7,379,233)		8,124,877

		Net Other Assets and Liabilities: 0.28%		23,101

		Net Assets: 100.00%	$	8,147,978

Percentages are stated as a percent of net assets.

(a) Non-income producing security.


See Notes to Financial Statements		43		June 30, 2012

Portfolio of Investments (Note 10) (Unaudited)

Forward Global Credit Long/Short Fund

Value

(Note 2)

COMMON STOCKS: 2.04%

Colombia: 2.04%

5,000

Pacific Rubiales Energy Corp.

106,028

Total Common Stocks

(Cost $131,940)

106,028

Principal

Amount

Currency

FOREIGN GOVERNMENT OBLIGATIONS: 5.64%

Argentina: 5.64%

100,000

Provincia de Buenos Aires, Sr. Unsec. Notes
10.875%, 01/26/21^(a)

USD

55,500

200,000

11.750%, 10/05/15^(b)

USD

137,000

4,000,000

Republic of Argentina, Sr. Unsec. Notes
0.000%, 12/15/35^(c)(d)

ARS

100,287

292,787

Total Foreign Government Obligations
(Cost $377,642)

292,787

ASSET-BACKED SECURITIES: 9.91%

China: 9.91%

300,000

Sealane Trade Finance, Ltd., Series 2011-1X, Class A
14.467%, 02/12/16^(c)

USD

308,190

200,000

Start CLO, Ltd., 2011-7A, Class A
15.468%, 06/09/15^(c)

USD

206,326

514,516

Total Asset-Backed Securities
(Cost $496,094)

514,516

CONVERTIBLE CORPORATE BONDS: 3.65%

Indonesia: 3.65%

200,000

Enercoal Resources Pte, Ltd.
9.250%, 08/05/14

USD

189,250

Total Convertible Corporate Bonds
(Cost $189,379)

189,250

CORPORATE BONDS: 61.78%

Argentina: 1.05%

150,000

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

USD

54,750

Brazil: 1.93%

100,000

OSX 3 Leasing BV, Gtd. Notes
9.250%, 03/20/15

USD

100,350

Principal

Amount

Currency

Value

(Note 2)

Chile: 2.70%

144,828

Inversiones Alsacia SA, Sec. Notes
8.000%, 08/18/18^(b)

USD

140,168

Indonesia: 4.28%

200,000

Berau Capital Resources Pte, Ltd., First Lien Notes
12.500%, 07/08/15^(a)

USD

222,000

Kazakhstan: 4.62%

700,000

BTA Bank JSC, Sr. Unsec. Bonds
10.750%, 07/01/18^(b)(c)(e)(f)

USD

143,500

252,000

Tristan Oil Ltd., First Lien Notes
10.500%, 01/01/12^(b)(g)

USD

96,548

240,048

Malaysia: 5.68%

1,000,000

Special Port Vehicle Sdn Bhd, Asset Backed Bonds, Series 7
5.200%, 07/30/13^(h)

MYR

295,150

Mexico: 11.18%

100,000

Desarrolladora Homex SAB de CV,
Sr. Unsec. Notes
9.750%, 03/25/20^(a)

USD

105,500

200,000

Grupo Senda Autotransporte SA de CV,
Sr. Sec. Notes
10.500%, 10/03/15^(b)

USD

205,000

450,000

Maxcom Telecomunicaciones SAB de CV,
Sr. Sec. Notes, Series
B 11.000%, 12/15/14

USD

269,999

580,499

Nigeria: 4.13%

200,000

Afren Plc, First Lien Notes 11.500%, 02/01/16^(b)

USD

214,500

Republic of Korea (South): 8.28%

200,000

Export-Import Bank of Korea, Sr. Unsec. Notes
5.000%, 04/11/22

USD

223,004

200,000

Hana Bank, Sr. Unsec. Notes
3.500%, 10/25/17^(a)

USD

206,657

429,661

Russia: 5.68%

100,000

Promsvyazbank OJSC Via PSB Finance SA,
Sec. Notes
11.250%, 07/08/16

USD

106,250


June 30, 2012		44		See Notes to Financial Statements

Portfolio of Investments (Note 10) (Unaudited)

Forward Global Credit Long/Short Fund

Principal

Amount

Currency

Value

(Note 2)

Russia (continued): 5.68%

200,000

VimpelCom Holdings BV, Sr. Unsec. Notes 7.504%, 03/01/22^(b)

USD

188,388

294,638

Turkey: 2.34%

150,000

Yuksel Insaat AS, Sr. Unsec. Notes 9.500%, 11/10/15^(b)

USD

121,500

Ukraine: 1.86%

100,000

Naftogaz Ukraine, Unsec. Notes 9.500%, 09/30/14

USD

96,375

United States: 1.51%

200,000

MF Global Holdings, Ltd., Sr. Unsec. Notes 6.250%, 08/08/16^(f)

USD

78,162

Venezuela: 6.54%

100,000

CA La Electricidad de Caracas, Sr. Unsec. Notes 8.500%, 04/10/18

USD

71,250

170,000

Petroleos De Venezue SA, Sr. Unsec. Notes 5.000%, 10/28/15

USD

134,521

157,500

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

USD

133,875

339,646

Total Corporate Bonds
(Cost $3,542,079)

3,207,447

Par
Value

SHORT-TERM BANK DEBT INSTRUMENTS: 11.18%

580,344

Wells Fargo Bank & Co. — San Francisco 0.030%, due 07/02/12

USD

580,344

Total Short-Term Bank Debt Instruments
(Cost $580,344)

580,344

Total Investments: 94.20%
(Cost $5,317,478)

4,890,372

Net Other Assets and Liabilities: 5.80%

301,369

Net Assets: 100.00%

5,191,741

Percentages are stated as a percent of net assets.

(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 market value of those securities was $589,657, representing 11.36% of net assets.

(b) Securities were purchased pursuant to Regulation S under the Securities Act of 1933, which exempts from registration securities offered and sold outside of the United States. Such securities cannot be sold in the United States without either an effective registration statement filed pursuant to the Securities Act of 1933, or pursuant to an exemption from registration. These securities have been deemed liquid under guidelines approved by the Fund’s Board of Trustees. At period end, the aggregate market value of those securities was $1,435,229 representing 27.64% of net assets.

(d) Interest only security.

(e) Represents a step bond. Rate disclosed is as of June 30, 2012.

(f) Security in default on interest payments pending the outcome of the bankruptcy filing. Security deemed to be liquid under the procedures approved by the Fund’s Board of Trustees.

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


See Notes to Financial Statements		45		June 30, 2012

Portfolio of Investments (Note 10) (Unaudited)

Forward Global Credit Long/Short Fund

CREDIT DEFAULT SWAPS CONTRACTS ON CORPORATE AND SOVEREIGN OBLIGATION ISSUES - BUY PROTECTION⁽ⁱ⁾


Reference Entity	Counterparty	Fixed Deal (Pay) Rate		Maturity Date		Implied Credit Spread at June 30, 2012^(k)		Notional Amount^(l)		Market Value		Upfront Premiums Paid		Unrealized Depreciation
China Development Bank	Morgan Stanley		(1.000%)		12/20/16		0.017%	$	1,000,000	$	41,108	$	85,255	$	(44,147)
State of Israel	BNP Paribas		(1.000%)		06/20/17		0.019%		1,000,000		31,689		45,878		(14,189)
										$	72,797	$	131,133	$	(58,336)

CREDIT DEFAULT SWAPS CONTRACTS ON CORPORATE AND SOVEREIGN OBLIGATION ISSUES - SELL PROTECTION^(j)


Reference Entity	Counterparty	Fixed Deal Receive Rate		Maturity Date		Implied Credit Spread at June 30, 2012^(k)		Notional Amount^(l)		Market Value		Upfront Premiums Received		Unrealized Depreciation
Argentina Republic	Morgan Stanley		5.000%		06/20/17		0.083%	$	500,000	$	(134,493)	$	(43,143)	$	(91,350)
										$	(134,493)	$	(43,143)	$	(91,350)

(i) If the Fund is a buyer of protection and a credit event occurs, as defined under the terms of that particular swap agreement, the Fund will either (i) receive from the seller of protection an amount equal to the notional amount of the swap and deliver the referenced obligation or (ii) receive 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.

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

Date of Purchase

Security

Cost

Market

Value

% of Net

Assets

03/27/12

Special Port Vehicle Sdn Bhd, Asset Backed Bonds, Series 7
5.200%, 07/30/13

300,003

295,150

5.68%

Investment Abbreviations:

Gtd. — Guaranteed

Sec. — Secured

Sr. — Senior

Sub. — Subordinated

Unsec. — Unsecured

Currency Abbreviations:

ARS — Argentinian Pesos

MYR — Malaysian Ringgit

USD — U.S. Dollar


June 30, 2012		46		See Notes to Financial Statements

Portfolio of Investments (Note 10) (Unaudited)

Forward International Dividend Fund


Shares			Value (Note 2)

	COMMON STOCKS: 92.02%
	Australia: 0.40%

	258,000	Clough, Ltd.	$	197,390

	Austria: 1.15%

	13,955	Vienna Insurance Group AG		564,118

	Belgium: 1.01%

	10,500	EVS Broadcast Equipment SA		495,343

	Bermuda: 1.63%

	773,000	First Pacific Co., Ltd.		801,795

	Brazil: 3.84%

	78,500	BM&F BOVESPA SA		395,920

	33,300	BRF - Brasil Foods SA, ADR		505,827

	30,100	Cia Paranaense de Energia, Sponsored ADR		652,568

	24,000	Itau Unibanco Holding SA, Preferred ADR		334,080

				1,888,395

	Britain: 0.95%

	10,550	HSBC Holdings Plc, Sponsored ADR		465,572

	Canada: 2.79%

	12,000	Bank of Nova Scotia		621,480

	12,800	TELUS Corp., Non-Voting Depositary Receipt		748,544

				1,370,024

	Cayman Islands: 0.83%

	904,000	Kingsoft Corp., Ltd.		405,311

	China: 4.25%

	1,142,000	Agricultural Bank of China, Ltd.		462,527

	800,000	China Outfitters Holdings, Ltd.		162,815

	17,500	Mindray Medical International, Ltd., ADR		530,075

	1,180,000	Xinhua Winshare Publishing and Media Co., Ltd., Class H		509,629

	1,236,000	Zijin Mining Group Co., Ltd., Class H		420,550

				2,085,596

	Colombia: 0.65%

	5,200	Bancolombia SA, Sponsored ADR		321,568

	Egypt: 1.01%

	115,000	Commercial International Bank Egypt SAE		494,045



	Estonia: 1.10%

	118,470	Silvano Fashion Group AS, Class A	$	539,174

	France: 3.51%

	18,950	Sanofi, ADR		715,931

	22,400	Total SA, Sponsored ADR		1,006,880

				1,722,811

	Germany: 1.47%

	10,100	Bayer AG, Sponsored ADR		721,746

	Hong Kong: 6.25%

	21,500	Allied Group, Ltd.^(c)		48,530

	146,400	BOC Hong Kong Holdings, Ltd.		450,686

	785,379	Citic Telecom International Holdings, Ltd.		143,320

	14,445,500	CSI Properties, Ltd.		636,598

	23,200	First Pacific Co., Ltd., Sponsored ADR		121,104

	392,000	Guangdong Investment, Ltd.		283,771

	1,231,000	K Wah International Holdings, Ltd.		485,429

	379,000	SJM Holdings, Ltd.		710,159

	82,000	YGM Trading, Ltd.		192,810

				3,072,407

	India: 0.07%

	2,300	Bajaj Holdings and Investment, Ltd., Sponsored GDR^(a)(b)		32,166

	Indonesia: 3.90%

	524,000	PT AKR Corporindo Tbk		195,868

	2,850,000	PT Astra Graphia Tbk		414,191

	913,500	PT Kalbe Farma Tbk		369,434

	2,054,500	PT Media Nusantara Citra Tbk		437,762

	316,500	PT Tambang Batubara Bukit Asam Tbk		498,708

				1,915,963

	Ireland: 3.51%

	22,300	Experian Group, Ltd., Sponsored ADR		315,322

	37,000	Experian Plc		522,001

	14,547	WPP Group Plc, Sponsored ADR		885,330

				1,722,653


See Notes to Financial Statements		47		June 30, 2012

Portfolio of Investments (Note 10) (Unaudited)

Forward International Dividend Fund


Shares			Value (Note 2)
	Italy: 3.88%

	166,812	Danieli & Co. Officine Meccaniche SpA	$	1,905,543

	Japan: 8.92%

	8,700	ITOCHU Techno-Solutions Corp.		419,896

	23,050	Komatsu, Ltd.		550,234

	60,200	Kuraray Co., Ltd.		780,160

	7,300	Lawson, Inc.		510,499

	121,600	Mitsubishi UFJ Financial Group, Inc., ADR		577,600

	23,100	Santen Pharmaceutical Co., Ltd.		949,287

	38,500	VT Holdings Co., Ltd.		375,871

	100	Wacom Co., Ltd.		223,969

				4,387,516

	Korea: 1.02%

	10,000	Able C&C Co., Ltd.		502,606

	Malaysia: 1.17%

	452,000	Hartalega Holdings Bhd		574,390

	Mexico: 1.02%

	5,600	Fomento Economico Mexicano SAB de CV, Sponsored ADR		499,800

	Netherlands: 3.37%

	6,600	Nutreco NV		460,263

	11,850	Royal Dutch Shell Plc, ADR		799,046

	15,200	Sligro Food Group NV		395,467

				1,654,776

	New Zealand: 1.09%

	56,900	Telecom Corp. of New Zealand, Ltd., Sponsored ADR		536,567

	Pakistan: 0.49%

	22,100	HUB Power Co., Ltd., Sponsored GDR		243,100

	Philippines: 1.15%

	974,100	Manila Water Co., Inc.		567,333

	Russia: 1.88%

	35,000	M Video OJSC		241,026

	12,200	OAO LUKOIL, Sponsored ADR^(b)		684,176

				925,202

	Scotland: 1.46%

	32,800	Scottish & Southern Energy Plc	$	715,547

	Singapore: 4.79%

	22,273	China Yuchai International, Ltd.		304,472

	151,000	CSE Global, Ltd.		94,855

	79,200	Eng Kah Corp.		97,457

	430,000	Kian Ann Engineering, Ltd.		77,668

	279,000	Miclyn Express Offshore, Ltd.		582,516

	193,000	SembCorp Marine, Ltd.		736,708

	108,500	Singapore Press Holdings, Ltd.		335,172

	115,000	Wing Tai Holdings, Ltd.		121,895

				2,350,743

	Sri Lanka: 1.00%

	400,000	Commercial Bank of Ceylon Plc, Non-Voting Depository Receipt		219,567

	402,860	Hatton National Bank Plc		273,788

				493,355

	Switzerland: 4.00%

	16,230	Novartis AG, ADR		907,257

	15,450	Syngenta AG, ADR		1,057,398

				1,964,655

	Thailand: 6.64%

	17,100,000	Jasmine International Pcl		1,662,278

	257,000	Shin Corp. Pcl		495,858

	76,500	Siam Commercial Bank Pcl		357,999

	465,000	SNC Former Pcl, Non-Voting Depositary Receipt		371,821

	1,800,000	Thai Tap Water Supply Pcl		373,517

				3,261,473

	Turkey: 4.78%

	268,942	Anadolu Hayat Emeklilik AS		618,089

	93,275	Aselsan Elektronik Sanayi Ve Ticaret AS		579,641

	64,000	Cimsa Cimento Sanayi VE Tica		296,339

	51,500	Pinar Sut Mamulleri Sanayii AS		431,624

	25,100	Turk Traktor ve Ziraat Makineleri AS		424,693

				2,350,386


June 30, 2012		48		See Notes to Financial Statements

Portfolio of Investments (Note 10) (Unaudited)

Forward International Dividend Fund


Shares			Value (Note 2)


	United Kingdom: 4.92%

	24,043	GlaxoSmithKline Plc, Sponsored ADR	$	1,095,639

	26,900	Standard Chartered Plc		584,347

	21,840	Unilever Plc, Sponsored ADR		736,663

				2,416,649

	United States: 2.06%

	14,400	Corporate Office Properties Trust		338,544

	5,800	Philip Morris International, Inc.		506,108

	10,200	QR Energy LP		168,708

				1,013,360

	Vietnam: 0.06%

	24,150	HAGL JSC, GDR^(a)(b)(c)		29,463

		Total Common Stocks (Cost $45,752,313)		45,208,541

	CONVERTIBLE PREFERRED STOCKS: 0.24%
	United States: 0.24%

	4,500	FelCor Lodging Trust, Inc., Series C, 8.000%		118,620

		Total Convertible Preferred Stocks (Cost $116,661)		118,620

	PARTICIPATION NOTES: 0.15%
	India: 0.15%

	1,900	Hero Motocorp., Ltd. (Loan Participation Notes issued by Macquarie Capital (USA), Inc.), expiring 12/10/14^(b)		73,142

		Total Participation Notes (Cost $77,277)		73,142

	PREFERRED STOCKS: 1.09%
	United States: 1.09%

	21,800	Strategic Hotels & Resorts, Inc., Series A, 8.500%		533,010

		Total Preferred Stocks (Cost $677,980)		533,010

	WARRANTS: 0.01%
	Malaysia: 0.01%

	23,200	Hartalega Holdings Bhd, Warrants, Strike Price 4.14 MYR (expiring 05/29/15)^(b)		5,662

		Total Warrants (Cost $0)		5,662


Principal Amount					Value (Note 2)

	AGENCY PASS-THROUGH SECURITIES: 0.95%
	United States: 0.95%
$	2,396,409	GNMA 3.500%, 02/16/27			$	271,820

	1,513,780	5.887%, 02/16/36^(d)				195,695
						467,515
		Total Agency Pass-Through Securities (Cost $509,272)				467,515
	COLLATERALIZED MORTGAGE OBLIGATIONS: 2.33%
	United States: 2.33%

	1,810,959	FHLMC, REMICS 4.000%, 04/15/36				244,512

	2,003,319	4.000%, 11/15/28				159,929

	1,397,519	FNMA, REMICS 4.500%, 12/25/20				96,015

	1,189,134	6.435%, 07/25/41^(d)				185,569

	2,735,763	Freddie Mac, REMICS 3.500%, 04/15/30				288,054

	1,023,219	6.958%, 09/15/26^(d)				170,014
						1,144,093

		Total Collateralized Mortgage Obligations (Cost $1,182,145)				1,144,093

Par Value			Currency
	SHORT-TERM BANK DEBT INSTRUMENTS: 1.03%
	2	Brown Brothers Harriman & Co.-Grand Cayman 0.030%, due 07/02/12		GBP		3

	104	0.030%, due 07/02/12		EUR		131

	41	0.030%, due 07/02/12		AUD		42

	920,001	JPMorgan Chase-New York 0.030%, due 07/02/12		HKD		118,589
	386,038	Royal Bank of Canada-Toronto 0.030%, due 07/02/12		USD		386,038
		Total Short-Term Bank Debt Instruments (Cost $504,799)				504,803
		Total Investments: 97.82% (Cost $48,820,447)				48,055,386
		Net Other Assets and Liabilities: 2.18%				1,069,778

		Net Assets: 100.00%			$	49,125,164


See Notes to Financial Statements		49		June 30, 2012

Portfolio of Investments (Note 10) (Unaudited)

Forward International Dividend Fund

Percentages are stated as a percent of net assets.

(b) Non-income producing security.

(d) Interest rate will change at a future date. Interest rate shown reflects the rate in effect at June 30, 2012.

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		Market Value		% of Net Assets
01/19/10-04/14/10	Allied Group, Ltd.	$	66,397	$	48,530		0.10%
11/24/10	HAGL JSC, GDR^(a)(b)		51,800		29,463		0.06%
		$	118,197	$	77,993		0.16%

Investment Abbreviations:

ADR — American Depositary Receipt

GDR — Global Depositary Receipt

GNMA — Government National Mortgage Association

FHLMC — Federal Home Loan Mortgage Corporation

FNMA — Federal National Mortgage Association

REMICS — Real Estate Mortgage Investment Conduits

Currency Abbreviations:

AUD — Australian Dollar

EUR — Euro

GBP — Great British Pound

HKD — Hong Kong Dollar

MYR — Malaysian Ringgit

USD — U.S. Dollar


June 30, 2012		50		See Notes to Financial Statements

Portfolio of Investments (Note 10) (Unaudited)

Forward International Small Companies Fund


Shares			Value (Note 2)

	COMMON STOCKS: 83.55%
	Australia: 4.57%

	1,050,014	DUET Group	$	1,977,428

	118,508	Flight Centre, Ltd.^(a)		2,296,074

	402,614	Medusa Mining, Ltd.		1,990,323

	345,730	Metcash, Ltd.		1,192,490

	578,598	SAI Global, Ltd.		2,830,691

	443,065	Wotif.com Holdings, Ltd.^(a)		1,909,137

				12,196,143

	Austria: 1.05%

	54,913	Andritz AG		2,815,837

	Belgium: 1.42%

	39,932	Mobistar SA		1,366,441

	58,487	SA D’Ieteren NV		2,427,706

				3,794,147

	China: 0.57%

	610,800	China Insurance International Holdings Co., Ltd.^(b)		987,301

	974,000	New World Department Store China, Ltd.		523,538

				1,510,839

	Denmark: 1.75%

	74,709	D/S Norden AS		1,976,166

	15,781	SimCorp AS		2,710,349

				4,686,515

	France: 5.81%

	295,801	Altran Technologies SA^(b)		1,295,954

	79,541	Compagnie Generale de Geophysique-Veritas		2,036,841

	86,791	Etablissements Maurel et Prom^(a)		1,251,012

	60,963	Ingenico SA		2,956,343

	68,772	IPSOS^(a)		2,019,993

	88,435	SCOR SE		2,138,690

	83,152	Teleperformance SA		1,829,933

	48,547	Valeo SA^(a)		1,996,067

				15,524,833

	Germany: 6.94%

	280,427	ADVA AG Optical Networking^(b)		1,450,399

	24,649	Fielmann AG^(a)		2,277,740



	43,041	Kabel Deutschland Holding AG^(b)	$	2,675,764

	40,072	Krones AG^(a)		2,016,785

	39,418	MTU Aero Engines Holding AG		2,890,254

	24,085	Pfeiffer Vacuum Technology AG		2,449,343

	26,733	Rheinmetall AG		1,309,247

	46,258	Symrise AG		1,404,365

	343,876	TUI AG^(b)		2,050,984

				18,524,881

	Hong Kong: 1.90%

	1,736,168	Daphne International Holdings, Ltd.		1,750,054

	1,005,200	Esprit Holdings, Ltd.		1,281,450

	2,626,000	VST Holdings, Ltd.		453,579

	3,024,000	Xinyi Glass Holdings, Ltd.		1,602,052

				5,087,135

	Italy: 4.03%

	226,850	Amplifon SpA		1,058,174

	112,114	De’Longhi SpA		1,076,164

	72,550	Lottomatica Group SpA		1,395,545

	321,760	Pirelli & C. SpA		3,377,625

	130,869	Prysmian SpA		1,944,321

	882,285	Sorin SpA^(b)		1,915,972

				10,767,801

	Japan: 21.75%

	499,000	77 Bank, Ltd.		2,041,321

	76,261	Aeon Delight Co., Ltd.		1,743,027

	143,400	Coca-Cola West Co., Ltd.		2,491,807

	86,059	Daiseki Co., Ltd.		1,487,878

	34,500	Disco Corp.		1,931,413

	70,600	Don Quijote Co., Ltd.		2,420,899

	104,600	Foster Electric Co., Ltd.		1,688,046

	124,000	Hitachi Metals, Ltd.		1,462,839

	78,807	Hoshizaki Electric Co., Ltd.		1,982,622

	38,900	Japan Petroleum Exploration Co., Ltd.		1,469,669

	120,188	JSR Corp.		2,064,404

	180,200	JTEKT Corp.		1,839,535


See Notes to Financial Statements		51		June 30, 2012

Portfolio of Investments (Note 10) (Unaudited)

Forward International Small Companies Fund


Shares			Value (Note 2)


	Japan (continued): 21.75%

	410,400	JVC Kenwood Corp.	$	1,411,897

	215,800	Keiyo Bank, Ltd.		996,187

	114,000	Kyorin Co., Ltd.		2,393,094

	70,116	Musashi Seimitsu Industry Co., Ltd.		1,330,656

	154,000	NGK Insulators, Ltd.		1,681,891

	311,000	Nippon Denko Co., Ltd.		1,167,198

	91,000	Pola Orbis Holdings, Inc.		2,803,941

	166,400	Q.P. Corp.		2,518,847

	674,300	Sapporo Holdings, Ltd.		2,159,515

	242,000	Shimadzu Corp.		2,073,810

	83,200	Sundrug Co., Ltd.		2,696,831

	86,604	THK Co., Ltd.		1,616,478

	692,400	Tokyo Tatemono Co., Ltd.^(b)		2,572,625

	250,949	Toshiba Plant Systems & Services Corp.		2,960,467

	7,970	Ubic, Inc.		650,083

	2,433	United Urban Investment Corp.		2,614,558

	261,000	Yaskawa Electric Corp.		1,959,092

	182,100	Yokogawa Electric Corp.		1,863,487

				58,094,117

	Netherlands: 1.93%

	32,822	ASM International NV^(a)		1,241,936

	56,177	Nutreco NV		3,905,091

				5,147,027

	New Zealand: 0.91%

	1,268,194	Telecom Corp. of New Zealand, Ltd.		2,426,146

	Norway: 1.79%

	2,865,655	Marine Harvest ASA^(b)		2,030,982

	102,911	TGS NOPEC Geophysical Co., ASA		2,761,063

				4,792,045

	Singapore: 2.23%

	1,706,000	ComfortDelGro Corp., Ltd.		2,080,734

	3,420,190	Golden Agri-Resources, Ltd.		1,808,982

	843,000	Suntec Real Estate Investment Trust		898,401

	191,000	Venture Corp., Ltd.		1,179,096

				5,967,213


	Spain: 1.67%

	328,432	Jazztel Plc	$	1,857,873

	60,301	Viscofan SA		2,589,234

				4,447,107

	Sweden: 1.58%

	169,758	Alliance Oil Co., Ltd., SDR^(b)		1,541,147

	282,740	Meda AB, Class A		2,691,516

				4,232,663

	Switzerland: 4.36%

	41,490	Aryzta AG		2,058,873

	50,280	BKW AG		1,684,564

	31,176	DKSH Holding AG, Ltd.^(b)		1,708,004

	197,491	Kudelski SA-BR^(b)		1,498,114

	8,005	Kuoni Reisen Holding AG, Class B^(b)		2,445,820

	12,604	Partners Group Holding AG		2,238,882

				11,634,257

	United Kingdom: 19.29%

	173,072	Babcock International Group Plc		2,313,463

	1,420,314	Barratt Developments Plc		3,094,167

	800,025	BBA Aviation Plc		2,556,030

	163,957	Cookson Group Plc		1,515,006

	351,099	Daily Mail & General Trust Plc NV, Class A		2,325,960

	87,042	Derwent London Plc		2,526,019

	206,433	Domino Printing Sciences Plc		1,745,843

	1,310,788	EnQuest Plc		2,210,958

	219,253	Hunting Plc		2,477,503

	402,976	IG Group Holdings Plc		3,023,061

	525,176	Informa Plc		3,126,332

	495,045	International Personal Finance Plc		1,853,773

	459,644	Melrose Plc		2,678,635

	653,778	Mitchells & Butlers Plc^(b)		2,561,828

	635,420	Premier Farnell Plc		1,723,618

	556,966	Premier Oil Plc^(b)		2,948,341

	742,804	RPS Group Plc		2,425,563

	115,267	Spectris Plc		2,765,642

	74,684	Spirax-Sarco Engineering Plc		2,322,946


June 30, 2012		52		See Notes to Financial Statements

Portfolio of Investments (Note 10) (Unaudited)

Forward International Small Companies Fund

Value

(Note 2)

United Kingdom (continued): 19.29%

1,133,114

Spirent Communications Plc

2,848,269

474,427

St. James’s Place Capital Plc

2,483,923

51,526,880

Total Common Stocks

(Cost $204,699,755)

223,175,586

EXCHANGE-TRADED FUNDS: 4.58%

United States: 4.58%

338,620

iShares^® MSCI EAFE Small Cap Index Fund

12,237,727

Total Exchange-Traded Funds

(Cost $11,895,307)

12,237,727

PREFERRED STOCKS: 2.05%

Germany: 2.05%

22,534

Draegerwerk AG & Co. KGAA

2,218,610

59,582

Fuchs Petrolub AG

3,253,183

5,471,793

Total Preferred Stocks

(Cost $3,684,641)

5,471,793

Par

Value

Currency

SHORT-TERM BANK DEBT INSTRUMENTS: 6.76%

Brown Brothers Harriman & Co. — Grand Cayman

396,671,709

0.030%, due 07/02/12

JPY

4,962,428

0.030%, due 07/02/12

SEK

0.030%, due 07/02/12

GBP

0.030%, due 07/02/12

AUD

0.030%, due 07/02/12

EUR

JPMorgan Chase — New York

3,000,600

0.030%, due 07/02/12

USD

3,000,600

456,000

0.030%, due 07/02/12

HKD

58,778

Wells Fargo Bank & Co. — San Francisco

10,027,444

0.030%, due 07/02/12

USD

10,027,444

Total Short-Term Bank Debt Instruments

(Cost $18,050,856)

18,049,319

Total Investments: 96.94%
(excluding investments purchased with cash collateral from securities loaned)

(Cost $238,330,559)

258,934,425

INVESTMENTS PURCHASED WITH CASH
COLLATERAL FROM SECURITIES LOANED: 4.05%

10,815,818

Short-Term Investments Trust, Liquid Assets Portfolio Institutional Class, 0.160% 7 day-yield^(c)

10,815,818

Total Investments Purchased with Cash Collateral From Securities Loaned

(Cost $10,815,818)

10,815,818

Total Investments: 100.99%

(Cost $249,146,377)

269,750,243

Net Other Assets and Liabilities: (0.99)%

(2,639,501

)^(d)

Net Assets: 100.00%

267,110,742

Percentages are stated as a percent of net assets.

(a) Security, or portion of security, is currently on loan.

(b) Non-income producing security.

(c) The security has been segregated to satisfy the commitment to return the cash collateral received in securities lending transactions upon the borrower’s return of the securities loaned (Note 2).

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


See Notes to Financial Statements		53		June 30, 2012

Portfolio of Investments (Note 10) (Unaudited)

Forward International Small Companies Fund

TOTAL RETURN SWAP CONTRACTS

Counter Party

Reference Entry/Obligation

Fund
Pays

Fund
Receives

Termination
Date

Notional
Amount

Net
Unrealized
Gain

Barclays Capital

MSCI International Small Cap EAFE Index

115 Bps

Total Return

07/31/12

20,609,113

842,247

20,609,113

842,247

Investment Abbreviations:

EAFE — Europe, Australasia, Far East

MSCI — Morgan Stanley Capital International

SDR — Special Drawing Rights

Currency Abbreviations:

AUD — Australian Dollar

EUR — Euro

GBP — British Pound

HKD — Hong Kong Dollar

JPY — Japanese Yen

SEK — Swedish Kronor

USD — U.S. Dollar


June 30, 2012		54		See Notes to Financial Statements

Portfolio of Investments (Note 10) (Unaudited)

Forward Large Cap Dividend Fund


Shares			Value (Note 2)

	COMMON STOCKS: 89.88%
	Consumer Discretionary: 11.83%

	13,100	Comcast Corp., Class A	$	418,807

	4,247	McDonald’s Corp.		375,987

	6,020	Omnicom Group, Inc.		292,572

	20,200	Staples, Inc.		263,610

	9,540	Time Warner, Inc.		367,290

				1,718,266

	Consumer Staples: 11.31%

	7,350	Archer-Daniels-Midland Co.		216,972

	4,050	Coca-Cola Co.		316,670

	2,200	McCormick & Co., Inc.		133,430

	2,520	Philip Morris International, Inc.		219,895

	4,891	Procter & Gamble Co.		299,574

	6,550	Wal-Mart Stores, Inc.		456,665

				1,643,206

	Energy: 8.68%

	3,290	Chevron Corp.		347,095

	4,730	ConocoPhillips Corp.		264,312

	2,170	Exxon Mobil Corp.		185,687

	2,365	Phillips 66^(a)		78,613

	4,200	QR Energy LP		69,468

	3,190	Royal Dutch Shell Plc, ADR		215,102

	3,500	Williams Cos., Inc.		100,870

				1,261,147

	Financials: 14.10%

	5,360	American Express Co.		312,006

	1,350	BlackRock, Inc.		229,256

	1,250	CME Group, Inc., Class A		335,137

	3,990	Corporate Office Properties Trust		93,805

	9,200	Invesco, Ltd.		207,920

	6,630	JPMorgan Chase & Co.		236,890

	6,564	MetLife, Inc.		202,499

	5,210	NYSE Euronext, Inc.		133,272

	2,050	Public Storage		296,041

				2,046,826



	Healthcare: 10.12%

	3,790	Becton, Dickinson and Co.	$	283,303

	10,600	Cardinal Health, Inc.		445,200

	2,600	Novartis AG, ADR		145,340

	20,460	Pfizer, Inc.		470,580

	1,700	Techne Corp.		126,140

				1,470,563

	Industrials: 12.51%

	3,560	3M Co.		318,976

	3,400	Eaton Corp.		134,742

	3,650	Emerson Electric Co.		170,017

	5,510	General Dynamics Corp.		363,440

	2,200	Lockheed Martin Corp.		191,576

	2,120	Norfolk Southern Corp.		152,152

	3,910	Stanley Black & Decker, Inc.		251,648

	7,030	Waste Management, Inc.		234,802

				1,817,353

	Information Technology: 17.78%

	5,360	Automatic Data Processing, Inc.		298,338

	16,110	Intel Corp.		429,331

	2,220	International Business Machines Corp.		434,188

	7,200	KLA-Tencor Corp.		354,600

	3,720	Microchip Technology, Inc.		123,058

	11,560	Microsoft Corp.		353,620

	5,460	Qualcomm, Inc.		304,013

	9,900	Texas Instruments, Inc.		284,030

				2,581,178

	Materials: 1.73%

	8,000	Bemis Co., Inc.		250,720

	Telecommunication Services: 1.82%

	7,430	AT&T, Inc.		264,954

		Total Common Stocks (Cost $10,709,459)		13,054,213


See Notes to Financial Statements		55		June 30, 2012

Portfolio of Investments (Note 10) (Unaudited)

Forward Large Cap Dividend Fund


Shares			Value (Note 2)

	CONVERTIBLE PREFERRED STOCKS: 2.20%
	Financials: 2.20%

	12,200	FelCor Lodging Trust, Inc., Series A, 1.950%	$	319,518

		Total Convertible Preferred Stocks (Cost $323,544)		319,518

	PREFERRED STOCKS: 1.01%
	Financials: 1.01%

	6,000	Strategic Hotels & Resorts, Inc., Series A, 8.500%		146,700

		Total Preferred Stocks (Cost $186,600)		146,700

Principal Amount

	AGENCY PASS-THROUGH SECURITIES: 0.80%
	$1,376,031	GNMA 4.000%, 03/16/22		116,580

		Total Agency Pass-Through Securities (Cost $141,132)		116,580

	COLLATERALIZED MORTGAGE OBLIGATIONS: 2.89%
	2,003,319	FHLMC, REMICS 4.000%, 11/15/28		159,929

	1,112,450	4.500%, 10/15/30		165,591

	496,884	FNMA, REMICS 3.500%, 11/25/20		34,276

	266,847	4.000%, 09/25/20		18,490

	574,170	4.000%, 10/25/20		42,060

		Total Collateralized Mortgage Obligations (Cost $408,267)		420,346

Par Value

	SHORT-TERM BANK DEBT INSTRUMENTS: 2.00%
$	290,458	Wells Fargo Bank & Co.—San Francisco 0.030%, due 07/02/12		290,458

		Total Short-Term Bank Debt Instruments (Cost $290,458)		290,458

		Total Investments: 98.78% (Cost $12,059,460)		14,347,815

		Net Other Assets and Liabilities: 1.22%		177,445

		Net Assets: 100.00%	$	14,525,260

Percentages are stated as a percent of net assets.

(a) Non-income producing security.

Investment Abbreviations:

ADR — American Depositary Receipt.

FHLMC — Federal Home Loan Mortgage Corporation

FNMA — Federal National Mortgage Association

GNMA — Government National Mortgage Association

REMICS — Real Estate Mortgage Investment Conduits


June 30, 2012		56		See Notes to Financial Statements

Portfolio of Investments (Note 10) (Unaudited)

Forward Select EM Dividend Fund


Shares			Value (Note 2)

	COMMON STOCKS: 99.14%
	Brazil: 5.81%

	16,100	BM&F Bovespa SA	$	81,201

	5,300	BRF — Brasil Foods SA, ADR^(a)		80,507

	5,300	Cia Paranaense de Energia, Sponsored ADR^(a)		114,904

	5,850	Itau Unibanco Holding SA, Preferred ADR^(a)		81,432

				358,044

	Chile: 1.30%

	4,200	Corpbanca SA, ADR^(a)(b)		80,010

	China: 7.58%

	195,000	Agricultural Bank of China, Ltd., Class H		78,978

	350	China Petroleum & Chemical Corp., ADR^(a)		31,217

	373,000	Kingsoft Corp., Ltd.		167,235

	2,000	Mindray Medical International, Ltd., ADR^(a)		60,580

	379,500	Zijin Mining Group Co., Ltd., Class H		129,125

				467,135

	Egypt: 1.15%

	16,500	Commercial International Bank Egypt SAE		70,701

	Estonia: 2.52%

	34,200	Silvano Fashion Group AS, Class A		155,649

	Hong Kong: 9.81%

	2,000	China Mobile, Ltd., Sponsored ADR^(a)		109,340

	15,000	First Pacific Co., Ltd., Sponsored ADR^(a)		78,300

	140,000	Guangdong Investment, Ltd.		101,347

	308,000	Sino Biopharmaceutical		111,704

	85,000	SJM Holdings, Ltd.		159,270

	19,000	YGM Trading, Ltd.		44,675

				604,636

	India: 0.34%

	1,500	Bajaj Holdings and Investment, Ltd., Sponsored GDR^(b)(c)		20,978

	Indonesia: 13.06%

	166,000	PT AKR Corporindo Tbk		62,050

	1,340,300	PT Astra Graphia Tbk		194,786

	186,000	PT Bank Mandiri Tbk		144,322

	245,000	PT Kalbe Farma Tbk		99,082

	455,500	PT Media Nusantara Citra Tbk		97,055




	50,400	PT Tambang Batubara Bukit Asam Tbk	$	79,415

	3,700	PT Telekomunikasi Indonesia Tbk, Sponsored ADR^(a)		128,871

				805,581

	Italy: 3.69%

	19,900	Danieli & Compagnia Officine Meccaniche SpA		227,324

	Malaysia: 4.08%

	161,700	Eng Kah Corp. Bhd		198,975

	41,400	Hartalega Holdings Bhd		52,610

				251,585

	Mexico: 3.37%

	1,450	Fomento Economico Mexicano SAB de CV, Sponsored ADR^(a)		129,413

	32,000	Grupo Bimbo SAB de CV, Series A		78,658

				208,071

	Pakistan: 0.48%

	2,700	HUB Power Co., Sponsored GDR		29,700

	Philippines: 3.16%

	335,000	Manila Water Co.		195,110

	Poland: 1.22%

	7,200	Powszechna Kasa Oszczednosci Bank Polski SA		75,026

	Russia: 1.96%

	1,300	Lukoil OAO, Sponsored ADR^(a)(c)		72,904

	7,000	M Video OJSC		48,205

				121,109

	Singapore: 3.05%

	7,600	China Yuchai International, Ltd.^(a)		103,892

	22,000	SembCorp Marine, Ltd.		83,977

				187,869

	South Africa: 2.95%

	1,800	Kumba Iron Ore, Ltd.		121,354

	3,000	Santam, Ltd.		60,367

				181,721

	South Korea: 0.98%

	1,200	Able C&C Co., Ltd.		60,313


See Notes to Financial Statements		57		June 30, 2012

Portfolio of Investments (Note 10) (Unaudited)

Forward Select EM Dividend Fund


Shares			Value (Note 2)

	COMMON STOCKS (continued): 99.14%
	Sri Lanka: 2.02%

	100,000	Commercial Bank of Ceylon Plc, Non-Voting Depository Receipt	$	54,892

	102,860	Hatton National Bank Plc		69,905

				124,797

	Taiwan: 4.32%

	165,000	Formosan Rubber Group, Inc.		109,796

	50,000	Kinik Co.		70,372

	32,000	Quanta Computer, Inc.		85,934

				266,102

	Thailand: 15.23%

	85,500	Charoen Pokphand Foods Pcl, Non-Voting Depository Receipt		104,503

	3,050,000	Jasmine International Pcl		296,488

	25,700	PTT Exploration & Production Pcl		136,982

	30,000	Shin Corp. Pcl		57,882

	18,000	Siam Commercial Bank Pcl, Non-Voting Depository Receipt		84,235

	65,000	SNC Former Pcl, Non-Voting Depository Receipt		51,975

	153,000	Supalai Public Co., Ltd.		83,125

	600,000	Thai Tap Water Supply Pcl		124,506

				939,696

	Turkey: 9.57%

	40,800	Anadolu Hayat Emeklilik AS		93,768

	22,000	Aselsan Elektronik Sanayi Ve Ticaret AS		136,715

	26,500	Cimsa Cimento Sanayi VE Tica		122,703

	11,900	Pinar SUT Mamulleri Sanayii AS		99,734

	8,100	Turk Traktor ve Ziraat Makineleri AS		137,052

				589,972

	United Kingdom: 0.88%

	2,500	Standard Chartered Plc		54,307

	United States: 0.61%

	1,600	Corporate Office Properties Trust		37,616

		Total Common Stocks (Cost $6,384,710)		6,113,052

Value
(Note 2)

PARTICIPATION NOTES: 1.18%

India: 1.18%

1,900

Hero Motocorp, Ltd. (Loan Participation Notes issued by Macquarie Capital (USA), Inc.), expiring 12/10/14^(c)

73,142

Total Participation Notes
(Cost $83,570)

73,142

PREFERRED STOCKS: 2.18%

Brazil: 1.31%

2,100

Companhia de Bebidas das Americas, Preferred ADR^(a)

80,493

United States: 0.87%

2,200

Strategic Hotels & Resorts, Inc.,
Series A, 8.500%

53,790

Total Preferred Stocks
(Cost $136,999)

134,283

WARRANTS: 0.02%

Malaysia: 0.02%

4,140

Hartalega Holdings Bhd, Warrants, Strike Price 4.14 MYR (expiring 05/24/15)^(c)

1,010

Total Warrants
(Cost $0)

1,010

Principal
Amount

COLLATERALIZED MORTGAGE OBLIGATIONS: 2.34%

United States: 2.34%

1,233,781

Federal Home Loan Mortgage Corporation, REMICS
4.000%, 05/15/26

84,680

478,606

GNMA, REMICS
4.500%, 05/16/35

59,511

144,191

Total Collateralized Mortgage Obligations
(Cost $215,086)

144,191

Par
Value

Currency

SHORT-TERM BANK DEBT INSTRUMENTS: 4.30%

Brown Brothers Harriman & Co. — Grand Cayman
0.030%, due 07/02/12

ZAR

0.030%, due 07/02/12

EUR


June 30, 2012		58		See Notes to Financial Statements

Portfolio of Investments (Note 10) (Unaudited)

Forward Select EM Dividend Fund

Par
Value

Currency

Value
(Note 2)

SHORT-TERM DEBT INSTRUMENTS (continued): 4.30%

265,125

Royal Bank of Canada-Toronto
0.030%, due 07/02/12

USD

265,125

Total Short-Term Bank Debt Instruments
(Cost $265,136)

265,136

Total Investments: 109.16%
(Cost $7,085,501)

6,730,814

Net Other Assets and Liabilities: (9.16)%

(565,011

)

Net Assets: 100.00%

6,165,803

Percentages are stated as a percent of net assets.

(a) Security, or portion of security, is being held as collateral for the letter of credit. At period end, the aggregate market value of those securities was $1,151,862 representing 18.68% of net assets.

Investment Abbreviations:

ADR — American Depositary Receipt

GDR — Global Depositary Receipt

GNMA — Government National Mortgage Association

REMICS — Real Estate Mortgage Investment Conduits

Currency Abbreviations:

EUR — Euro

MYR — Malaysian Ringgit

USD — U.S. Dollar

ZAR �� South African Rand


See Notes to Financial Statements		59		June 30, 2012

Portfolio of Investments (Note 10) (Unaudited)

Forward Small Cap Equity Fund


Shares			Value (Note 2)

	COMMON STOCKS: 90.54%
	Consumer Discretionary: 17.06%

	24,500	AFC Enterprises, Inc.^(a)	$	566,930

	10,000	AMC Networks, Inc., Class A^(a)		355,500

	24,000	Arctic Cat, Inc.^(a)		877,440

	5,000	Coinstar, Inc.^(a)		343,300

	10,000	Domino’s Pizza, Inc.		309,100

	22,500	Express, Inc.^(a)		408,825

	25,000	Fifth & Pacific Co., Inc.^(a)		268,250

	15,000	Finish Line, Inc., Class A		313,650

	25,000	Gaylord Entertainment Co.^(a)		964,000

	5,000	Lions Gate Entertainment Corp.^(a)		73,700

	5,000	Oxford Industries, Inc.		223,500

	5,000	Pier 1 Imports, Inc.		82,150

	40,000	Saks, Inc.^(a)		426,000

	20,000	Shuffle Master, Inc.^(a)		276,000

	15,000	Sotheby’s		500,400

	15,000	Tilly’s, Inc., Class A^(a)		240,750

	15,000	Warnaco Group, Inc., Class A^(a)		638,700

				6,868,195

	Consumer Staples: 7.52%

	20,000	B&G Foods, Inc.		532,000

	5,000	Hain Celestial Group, Inc.^(a)		275,200

	110,000	Heckmann Corp.^(a)		371,800

	20,000	National Beverage Corp.^(a)		298,800

	220,000	Star Scientific, Inc.^(a)		1,003,200

	10,000	United Natural Foods, Inc.^(a)		548,600

				3,029,600

	Energy: 3.43%

	27,500	Forum Energy Technologies, Inc.^(a)		541,475

	75,000	Kodiak Oil & Gas Corp.^(a)		615,750

	20,000	Rex Energy Corp.^(a)		224,200

				1,381,425

	Financials: 15.68%

	15,000	Aspen Insurance Holdings, Ltd.		433,500

	15,000	BioMed Realty Trust, Inc.		280,200

	20,000	Evercore Partners, Inc., Class A		467,800




	100,000	FelCor Lodging Trust, Inc.^(a)	$	470,000

	5,000	Home Properties, Inc.		306,800

	40,000	RAIT Financial Trust		184,800

	25,000	Sabra Health Care REIT, Inc.		427,750

	12,900	Stifel Financial Corp.^(a)		398,610

	25,000	Strategic Hotels & Resorts, Inc.^(a)		161,500

	100,000	Sunstone Hotel Investors, Inc.^(a)		1,099,000

	10,000	SVB Financial Group^(a)		587,200

	25,000	TCF Financial Corp.		287,000

	30,000	Texas Capital Bancshares, Inc.^(a)		1,211,700

				6,315,860

	Health Care: 11.13%

	5,000	Air Methods Corp.^(a)		491,250

	20,000	Amicus Therapeutics, Inc.^(a)		110,000

	5,000	athenahealth, Inc.^(a)		395,850

	10,000	Cardiovascular Systems, Inc.^(a)		97,900

	7,500	Covance, Inc.^(a)		358,875

	60,000	Endologix, Inc.^(a)		926,400

	30,000	Exact Sciences Corp.^(a)		321,600

	132,684	K-V Pharmaceutical Co., Class A^(a)		71,649

	15,000	Myriad Genetics, Inc.^(a)		356,550

	50,000	Neurocrine Biosciences, Inc.^(a)		395,500

	13,000	Questcor Pharmaceuticals, Inc.^(a)		692,120

	5,000	Santarus, Inc.^(a)		35,450

	33,000	Sciclone Pharmaceuticals, Inc.^(a)		231,330

				4,484,474

	Industrials: 15.13%

	20,000	Advisory Board Co.^(a)		991,800

	5,000	Allegiant Travel Co.^(a)		348,400

	10,000	American Railcar Industries, Inc.^(a)		271,000

	10,000	Genesee & Wyoming, Inc., Class A^(a)		528,400

	15,000	GEO Group, Inc.^(a)		340,800

	25,000	Hexcel Corp.^(a)		644,750

	30,000	Spirit Aerosystems Holdings, Inc., Class A^(a)		714,900

	30,000	Thermon Group Holdings, Inc.^(a)		621,300


June 30, 2012		60		See Notes to Financial Statements

Portfolio of Investments (Note 10) (Unaudited)

Forward Small Cap Equity Fund


Shares			Value (Note 2)
	Industrials (continued): 15.13%

	20,000	Titan International, Inc.	$	490,600

	20,000	Titan Machinery, Inc.^(a)		607,400

	40,000	US Airways Group, Inc.^(a)		533,200

				6,092,550

	Information Technology: 15.09%

	25,000	Cirrus Logic, Inc.^(a)		747,000

	5,000	DealerTrack Holdings, Inc.^(a)		150,550

	30,525	Envivio, Inc.^(a)		195,665

	15,000	FEI Co.^(a)		717,600

	20,000	Finisar Corp.^(a)		299,200

	78,000	InvenSense, Inc.^(a)		881,400

	30,000	Kenexa Corp.^(a)		870,900

	40,000	Keynote Systems, Inc.		594,000

	10,000	Manhattan Associates, Inc.^(a)		457,100

	19,100	Sourcefire, Inc.^(a)		981,740

	10,000	Web.com Group, Inc.^(a)		183,200

				6,078,355

	Materials: 5.13%

	5,000	American Vanguard Corp.		132,950

	37,500	Coeur d’Alene Mines Corp.^(a)		658,500

	300,000	Golden Star Resources, Ltd.^(a)		348,000

	100,000	Hecla Mining Co.		475,000

	7,000	Schnitzer Steel Industries, Inc., Class A		196,140

	30,000	Stillwater Mining Co.^(a)		256,200

				2,066,790
Shares			Value (Note 2)
	Utilities: 0.37%

	5,201	Connecticut Water Service, Inc.	$	150,725

		Total Common Stocks (Cost $34,806,234)		36,467,974

	AFFILIATED INVESTMENT COMPANIES: 4.97%

	2,000,000	Forward U.S. Government Money Fund Class Z, 0.060% 7-day yield		2,000,000

		Total Affiliated Investment Companies (Cost $2,000,000)		2,000,000

Par Value

	SHORT -TERM BANK DEBT INSTRUMENTS: 3.67%

		JPMorgan Chase-New York

	$1,478,321	0.030%, due 07/02/12		1,478,321

		Total Short -Term Bank Debt Instruments (Cost $1,478,321)		1,478,321

		Total Investments: 99.18% (Cost $38,284,555)		39,946,295

		Net Other Assets and Liabilities: 0.82%		329,116	^(b)

		Net Assets: 100.00%	$	40,275,411

Percentages are stated as a percent of net assets.

(a) Non-income producing security.

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

FUTURES CONTRACTS

Description

Position

Contracts

Expiration
Date

Value

Unrealized
Gain

E-mini Russell 2000^® Index Future

Long

09/24/12

3,579,300

152,874

3,579,300

152,874

Investment Abbreviations:

REIT — Real Estate Investment Trust


See Notes to Financial Statements		61		June 30, 2012

Portfolio of Investments (Note 10) (Unaudited)

Forward Tactical Enhanced Fund


Contracts			Value (Note 2)

	OPTIONS PURCHASED: 0.04%

	146	ProShares Ultra Silver ETF , Expires July 2012, Strike Price $35.00 Put	$	13,140

		Total Options Purchased (Cost $19,325)		13,140

Par Value

	SHORT-TERM SECURITIES: 74.06%
$	25,400,000	U.S. Treasury Bills, Discount Notes 0.059%, due 08/30/12^(a)		25,398,018

		Total Short-Term Securities (Cost $25,397,459)		25,398,018

	SHORT-TERM BANK DEBT INSTRUMENTS: 24.50%
	8,402,105	Bank of Montreal-Montreal 0.030%, due 07/02/12		8,402,105

		Total Short-Term Bank Debt Instruments (Cost $8,402,105)		8,402,105

		Total Investments: 98.60% (Cost $33,818,889)		33,813,263

		Net Other Assets and Liabilities: 1.40%		481,405	^(b)

		Net Assets: 100.00%	$	34,294,668

Percentages are stated as a percent of net assets.

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

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

FUTURES CONTRACTS


Description	Position	Contracts		Expiration Date		Value		Unrealized Gain
E-mini Nasdaq 100^® Futures	Long		166		09/24/12	$	8,664,370	$	82,482
E-mini S&P 500^® Futures	Long		128		09/24/12		8,680,960		64,314
						$	17,345,330	$	146,796

Investment Abbreviations:

ETF — Exchange-Traded Fund

S&P — Standard & Poor’s


June 30, 2012		62		See Notes to Financial Statements

Portfolio of Investments (Note 10) (Unaudited)

Forward Tactical Growth Fund


Par Value			Value (Note 2)

	SHORT-TERM SECURITIES: 74.15%

		U.S. Treasury Bills, Discount Notes

$	774,600,000	0.059%, due 08/30/12^(a)	$	774,539,581

		Total Short-Term Securities (Cost $774,522,540)		774,539,581

	SHORT-TERM BANK DEBT INSTRUMENTS: 24.40%

		JPMorgan Chase-New York

	104,935,296	0.030%, due 07/02/12		104,935,296

		Wells Fargo Bank & Co. — San Francisco

	150,000,000	0.030%, due 07/02/12		150,000,000

		Total Short-Term Bank Debt Instruments (Cost $254,935,296)		254,935,296

		Total Investments: 98.55% (Cost $1,029,457,836)		1,029,474,877

		Net Other Assets and Liabilities: 1.45%		15,129,477	^(b)

		Net Assets: 100.00%	$	1,044,604,354

Percentages are stated as a percent of net assets.

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

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

FUTURES CONTRACTS

Description

Position

Contracts

Expiration
Date

Value

Unrealized
Gain

E-mini S&P 500^® Futures

Long

6,157

09/24/12

417,567,740

4,846,745

417,567,740

4,846,745

Investment Abbreviations:

S&P — Standard & Poor’s


See Notes to Financial Statements		63		June 30, 2012

Consolidated Portfolio of Investments (Note 10) (Unaudited)

Forward Commodity Long/Short Strategy Fund


Principal Amount			Value (Note 2)

	AGENCY PASS-THROUGH SECURITIES: 30.59%
	Federal Government Loan Mortgage Corporation (FGLMC): 0.83%

$	1,339,594	FGLMC 4.000%, 12/01/40	$	1,437,616

	Federal Home Loan Bank (FHLB): 1.52%

	350,000	FHLB 0.750%, 05/10/17^(a)(b)		350,132

	2,100,000	5.250%, 06/18/14		2,301,745

				2,651,877

	Federal Home Loan Mortgage Corp (FHLMC): 8.53%

	500,000	FHLMC 0.500%, 02/24/15		499,110

	500,000	0.550%, 12/27/13		500,457

	500,000	0.625%, 03/06/15		501,543

	1,000,000	0.800%, 12/19/14		1,001,650

	500,000	0.850%, 02/24/16		501,052

	500,000	0.875%, 12/19/14		500,889

	1,500,000	0.875%, 11/14/14		1,502,401

	500,000	0.920%, 12/12/14		500,860

	1,000,000	1.020%, 06/19/15		1,002,371

	1,000,000	1.375%, 02/25/14		1,017,248

	1,000,000	1.625%, 04/15/13		1,010,909

	73,218	1.920%, 07/01/19^(a)		74,123

	44,362	2.052%, 08/01/19^(a)		44,831

	3,825	2.125%, 08/01/18^(a)		3,837

	2,089	2.185%, 03/01/17^(a)		2,098

	2,600	2.185%, 01/01/26^(a)		2,698

	3,434	2.208%, 08/01/17^(a)		3,633

	42,576	2.213%, 02/01/23^(a)		43,371

	23,871	2.218%, 07/01/19^(a)		24,232

	6,799	2.227%, 03/01/20^(a)		6,815

	3,437	2.250%, 05/01/18^(a)		3,478

	33,952	2.256%, 12/01/29^(a)		36,004

	2,570	2.260%, 09/01/30^(a)		2,737

	13,834	2.262%, 12/01/18^(a)		14,736

	13,341	2.268%, 01/01/23^(a)		13,841

	4,423	2.270%, 09/01/18^(a)		4,605




$	4,413	2.277%, 09/01/27^(a)	$	4,691

	13,673	2.280%, 12/01/20^(a)		14,558

	8,984	2.290%, 11/01/18^(a)		9,410

	33,545	2.305%, 12/01/18^(a)		33,963

	4,064	2.314%, 12/01/27^(a)		4,315

	17,054	2.325%, 10/01/27^(a)		17,927

	38,221	2.350%, 10/01/33^(a)		40,599

	3,626	2.350%, 07/01/18^(a)		3,847

	11,790	2.350%, 02/01/32^(a)		12,525

	4,522	2.353%, 12/01/27^(a)		4,802

	27,763	2.357%, 08/01/30^(a)		29,579

	4,014	2.375%, 03/01/24^(a)		4,072

	2,496	2.400%, 11/01/19^(a)		2,508

	1,854	2.415%, 06/01/18^(a)		1,867

	36,331	2.420%, 07/01/31^(a)		36,598

	7,033	2.456%, 11/01/27^(a)		7,387

	30,544	2.484%, 10/01/30^(a)		31,698

	33,664	2.485%, 05/01/27^(a)		33,967

	16,323	2.500%, 07/01/18^(a)		16,933

	39,572	2.527%, 07/01/32^(a)		42,055

	51,014	2.550%, 10/01/20^(a)		51,079

	23,898	2.581%, 04/01/30^(a)		25,451

	5,090	2.648%, 04/01/21^(a)		5,311

	5,909	2.668%, 08/01/23^(a)		5,948

	2,554	2.680%, 10/01/22^(a)		2,732

	62,744	2.704%, 07/01/24^(a)		63,939

	57,567	2.875%, 08/01/36^(a)		61,608

	8,769	2.970%, 08/01/19^(a)		8,788

	8,994	3.039%, 11/01/19^(a)		9,092

	42,286	3.365%, 08/01/26^(a)		42,361

	14,443	3.446%, 10/01/35^(a)		15,335

	204,808	3.781%, 08/01/23^(a)		207,850

	29,134	3.856%, 12/01/17^(a)		29,433

	65,807	3.952%, 06/01/24^(a)		66,192


June 30, 2012		64		See Notes to Financial Statements

Consolidated Portfolio of Investments (Note 10) (Unaudited)

Forward Commodity Long/Short Strategy Fund


Principal Amount			Value (Note 2)
	Federal Home Loan Mortgage Corp (FHLMC) (continued): 8.53%

$	53,066	3.953%, 10/01/19^(a)	$	53,432

	84,388	4.000%, 05/01/25^(a)		85,297

	107,968	4.083%, 08/01/24^(a)		108,359

	65,213	4.097%, 01/01/22^(a)		66,002

	1,000,000	4.125%, 09/27/13		1,047,734

	23,956	4.240%, 11/01/24^(a)		23,995

	13,647	4.740%, 03/01/19^(a)		14,508

	65,141	4.780%, 04/01/24^(a)		68,005

	4,641	4.820%, 05/01/20^(a)		4,971

	3,816	5.504%, 08/01/24^(a)		4,082

	125,582	5.843%, 07/01/37^(a)		130,099

	413,052	5.856%, 04/01/36^(a)		442,664

	22,916	5.911%, 06/01/36^(a)		24,598

	124,711	FHLMC, Gold 2.348%, 03/01/27^(a)		126,849

	139,719	2.555%, 02/01/29^(a)		149,351

	979,539	4.000%, 12/01/41		1,051,215

	735,715	4.500%, 07/01/41		788,484

	814,434	5.000%, 10/01/40		884,131

				14,841,725

	Federal National Mortgage Association (FNMA): 16.81%

	3,500,000	FNMA 0.375%, 03/16/15		3,492,132

	500,000	0.600%, 11/21/13		500,303

	500,000	0.625%, 05/17/17^(a)(b)		500,385

	2,300,000	0.750%, 12/18/13		2,316,040

	250,000	0.850%, 02/08/16		250,644

	21,026	1.115%, 01/01/21^(a)		21,146

	3,641	1.540%, 06/01/21^(a)		3,687

	113,152	1.553%, 06/01/40^(a)		116,028

	69,981	1.553%, 06/01/40^(a)		71,823

	31,142	1.553%, 10/01/40^(a)		31,944

	234,097	1.675%, 03/01/34^(a)		235,743

	11,851	1.823%, 01/01/17^(a)		11,966

	53,654	1.850%, 10/01/32^(a)		55,341

	23,313	1.904%, 01/01/36^(a)		24,292


$	5,681	1.946%, 09/01/33^(a)	$	5,976

	464,853	1.962%, 07/01/34^(a)		486,224

	12,122	1.973%, 03/01/28^(a)		12,778

	6,202	1.983%, 12/01/24^(a)		6,383

	9,959	1.984%, 04/01/18^(a)		10,411

	9,500	2.001%, 11/01/33^(a)		10,032

	21,992	2.035%, 06/01/30^(a)		22,181

	123,418	2.040%, 02/01/26^(a)		128,989

	4,696	2.045%, 11/01/33^(a)		4,943

	66,457	2.065%, 02/01/25^(a)		69,589

	31,125	2.065%, 06/01/19^(a)		31,516

	615,008	2.079%, 01/01/35^(a)		651,691

	56,287	2.084%, 04/01/32^(a)		57,926

	6,701	2.107%, 08/01/29^(a)		7,057

	420,045	2.114%, 11/01/35^(a)		439,366

	313,530	2.123%, 11/01/35^(a)		327,209

	357,354	2.144%, 07/01/34^(a)		359,377

	719	2.150%, 01/01/20^(a)		722

	20,656	2.157%, 11/01/22^(a)		21,083

	5,938	2.157%, 12/01/35^(a)		6,095

	29,593	2.191%, 08/01/35^(a)		30,936

	151,268	2.200%, 11/01/17^(a)		160,417

	35,029	2.202%, 11/01/35^(a)		37,060

	10,853	2.205%, 10/01/28^(a)		11,314

	19,916	2.205%, 01/01/24^(a)		21,036

	14,487	2.206%, 04/01/18^(a)		14,951

	1,351	2.230%, 07/01/25^(a)		1,437

	16,550	2.234%, 03/01/35^(a)		17,543

	154,067	2.239%, 02/01/33^(a)		162,749

	57,579	2.250%, 08/01/30^(a)		57,986

	52,628	2.273%, 11/01/31^(a)		53,204

	49,847	2.280%, 01/01/25^(a)		50,220

	22,328	2.280%, 08/01/36^(a)		23,707

	43,285	2.280%, 01/01/21^(a)		46,160

	25,424	2.291%, 09/01/23^(a)		25,680


See Notes to Financial Statements		65		June 30, 2012

Consolidated Portfolio of Investments (Note 10) (Unaudited)

Forward Commodity Long/Short Strategy Fund


Principal Amount			Value (Note 2)
	Federal National Mortgage Association (FNMA) (continued): 16.81%

$	25,359	2.291%, 07/01/34^(a)	$	27,036

	15,126	2.295%, 04/01/33^(a)		16,043

	278,227	2.298%, 05/01/33^(a)		292,350

	64,086	2.301%, 07/01/36^(a)		67,804

	41,134	2.306%, 10/01/25^(a)		43,804

	22,488	2.307%, 12/01/26^(a)		23,521

	14,037	2.318%, 01/01/28^(a)		14,845

	84,307	2.323%, 06/01/33^(a)		85,267

	17,349	2.325%, 05/01/24^(a)		17,460

	100,863	2.327%, 08/01/33^(a)		107,176

	53,169	2.330%, 09/01/33^(a)		55,257

	49,114	2.340%, 12/01/30^(a)		52,307

	1,118	2.345%, 10/01/27^(a)		1,180

	3,240	2.346%, 05/01/33^(a)		3,441

	10,748	2.350%, 09/01/24^(a)		11,062

	234,523	2.354%, 06/01/33^(a)		243,015

	752,050	2.358%, 09/01/31^(a)		800,249

	985	2.361%, 03/01/30^(a)		1,047

	51,105	2.363%, 02/01/35^(a)		51,993

	162,871	2.365%, 05/01/34^(a)		173,337

	106,743	2.365%, 03/01/37^(a)		113,850

	36,000	2.366%, 01/01/33^(a)		36,750

	27,257	2.373%, 12/01/30^(a)		28,514

	70,668	2.390%, 07/01/36^(a)		75,113

	79,455	2.395%, 09/01/31^(a)		81,185

	1,108	2.410%, 10/01/16^(a)		1,118

	468	2.410%, 07/01/17^(a)		471

	73,050	2.413%, 01/01/31^(a)		75,161

	87,017	2.413%, 06/01/32^(a)		88,812

	24,259	2.425%, 01/01/23^(a)		24,445

	44,753	2.435%, 08/01/32^(a)		47,493

	526,530	2.446%, 09/01/32^(a)		560,271

	2,638	2.449%, 09/01/37^(a)		2,778

	30,293	2.456%, 08/01/33^(a)		31,341

	33,923	2.456%, 05/01/19^(a)		35,307


$	10,767	2.459%, 09/01/33^(a)	$	11,515

	8,784	2.486%, 07/01/28^(a)		9,395

	9,053	2.489%, 10/01/19^(a)		9,428

	58,014	2.495%, 06/01/36^(a)		61,895

	407,437	2.499%, 11/01/33^(a)		415,530

	161,320	2.503%, 07/01/33^(a)		172,630

	51,510	2.605%, 07/01/34^(a)		54,687

	96,326	2.615%, 11/01/33^(a)		97,546

	22,875	2.625%, 11/01/26^(a)		24,332

	209,245	2.633%, 03/01/34^(a)		223,303

	31,709	2.652%, 08/01/34^(a)		33,757

	57,706	2.715%, 02/01/34^(a)		61,512

	15,577	2.723%, 02/01/26^(a)		16,648

	47,254	2.733%, 09/01/30^(a)		50,195

	1,300,000	2.750%, 02/05/14		1,351,689

	3,500,000	2.750%, 03/13/14		3,643,512

	82,033	2.766%, 05/01/33^(a)		87,695

	39,804	2.778%, 12/01/35^(a)		41,083

	12,036	2.780%, 03/01/36^(a)		12,384

	38,372	2.815%, 01/01/18^(a)		39,598

	16,804	2.880%, 06/01/33^(a)		16,996

	72,096	2.885%, 04/01/35^(a)		74,428

	33,314	2.956%, 11/01/36^(a)		34,546

	112,008	2.999%, 05/01/34^(a)		118,766

	2,577	3.575%, 08/01/26^(a)		2,726

	5,083	3.680%, 03/01/25^(a)		5,087

	5,105	3.825%, 01/01/19^(a)		5,448

	1,135,101	4.000%, 06/01/39		1,210,356

	127,336	4.000%, 04/01/41		138,484

	944,490	4.000%, 12/01/41		1,016,474

	23,724	4.002%, 07/01/17^(a)		25,278

	180,001	4.035%, 05/01/36^(a)		186,368

	55,351	4.123%, 02/01/26^(a)		58,370

	1,339	4.347%, 08/01/20^(a)		1,349

	1,217,316	4.500%, 07/01/41		1,312,996


June 30, 2012		66		See Notes to Financial Statements

Consolidated Portfolio of Investments (Note 10) (Unaudited)

Forward Commodity Long/Short Strategy Fund


Principal Amount			Value (Note 2)
	Federal National Mortgage Association (FNMA) (continued): 16.81%

$	1,253,342	4.500%, 03/01/41	$	1,351,853

	986,797	4.500%, 12/01/40		1,071,289

	894,165	4.500%, 02/01/41		964,445

	34,014	4.583%, 12/01/19^(a)		36,178

	6,430	4.602%, 04/01/29^(a)		6,501

	9,251	4.690%, 06/01/19^(a)		9,684

	820	4.743%, 05/01/18^(a)		838

	942	4.805%, 12/01/26^(a)		1,013

	8,288	4.898%, 03/01/27^(a)		8,898

	665,008	5.000%, 02/01/34		723,848

	20,534	5.508%, 04/01/36^(a)		22,063

	97,197	6.500%, 07/01/17		101,318

	19,120	6.750%, 12/01/16^(a)		20,166

				29,240,325

	Government National Mortgage Association (GNMA): 2.90%

	43,623	GNMA 1.625%, 03/20/29^(a)		45,274

	64,048	1.625%, 01/20/29^(a)		66,473

	56,251	1.625%, 02/20/30^(a)		58,380

	39,685	1.625%, 10/20/29^(a)		41,154

	18,534	1.625%, 01/20/29^(a)		19,235

	4,660	1.625%, 07/20/27^(a)		4,824

	50,524	1.625%, 03/20/27^(a)		52,436

	68,748	1.625%, 10/20/27^(a)		71,294

	3,783	1.625%, 07/20/27^(a)		3,916

	41,423	1.625%, 12/20/29^(a)		42,956

	72,043	1.625%, 03/20/33^(a)		74,771

	66,021	1.625%, 12/20/32^(a)		68,466

	49,992	1.625%, 10/20/37^(a)		51,843

	281,360	1.625%, 08/20/33^(a)		291,260

	455,853	1.625%, 09/20/32^(a)		471,893

	181,844	1.625%, 02/20/32^(a)		189,295

	446,383	1.625%, 01/20/32^(a)		463,281

	47,877	1.625%, 03/20/32^(a)		49,689

	25,924	1.625%, 02/20/32^(a)		26,906

	46,544	1.625%, 02/20/27^(a)		48,306


$	13,853	1.625%, 01/20/24^(a)	$	14,377

	111,356	1.625%, 01/20/23^(a)		115,570

	5,782	1.625%, 03/20/22^(a)		6,001

	5,641	1.625%, 02/20/24^(a)		5,855

	22,114	1.625%, 03/20/24^(a)		22,951

	41,129	1.625%, 03/20/24^(a)		42,686

	70,240	1.625%, 10/20/25^(a)		72,841

	43,679	1.625%, 01/20/27^(a)		45,333

	5,103	1.625%, 12/20/26^(a)		5,292

	46,364	1.625%, 03/20/22^(a)		48,120

	78,397	1.625%, 03/20/34^(a)		81,365

	62,959	2.125%, 10/20/35^(a)		65,414

	4,038	2.375%, 04/20/22^(a)		4,198

	2,166	2.375%, 06/20/27^(a)		2,252

	3,969	2.375%, 04/20/27^(a)		4,126

	9,535	2.375%, 05/20/21^(a)		9,913

	80,381	2.500%, 05/20/34^(a)		83,833

	294,785	3.000%, 09/16/39		302,958

	11,649	3.000%, 10/20/18^(a)		12,192

	12,299	3.500%, 01/20/19^(a)		12,913

	968,609	4.000%, 09/15/41		1,060,084

	44,479	4.000%, 03/20/16^(a)		46,856

	747,564	5.000%, 10/15/39		829,530

				5,036,312

		Total Agency Pass-Through Securities (Cost $52,848,417)		53,207,855

	ASSET-BACKED SECURITIES: 0.67%

	500,000	BMW Vehicle Lease Trust, Series 2012-1, Class A3 0.750%, 06/20/14		500,287

	156,250	Charming Shoppes Master Trust, Series 2007-1A, Class A1 1.492%, 09/15/17^(a)(c)		156,343

	500,000	Mercedes-Benz Auto Lease Trust, Series 2012-A, Class A2 0.660%, 07/15/13		500,194

		Total Asset-Backed Securities (Cost $1,156,892)		1,156,824


See Notes to Financial Statements		67		June 30, 2012

Consolidated Portfolio of Investments (Note 10) (Unaudited)

Forward Commodity Long/Short Strategy Fund


Principal Amount			Value (Note 2)

	COLLATERALIZED MORTGAGE OBLIGATIONS: 1.85%
	Collateralized Mortgage Obligations-Other: 0.62%

$	54,294	Credit Suisse First Boston Mortgage Securities Corp., Series 2002-CKS4, Class A2 5.183%, 11/15/36	$	54,337

	634,021	Deutsche Mortgage Securities, Inc., Series 2004-1, Class 1A1 5.500%, 09/25/33^(c)		660,530

	300,000	JPMorgan Chase Commercial Mortgage Securities Corp., Series 2004-CBX, Class A5 4.654%, 01/12/37		301,369

	65,740	LB-UBS Commercial Mortgage Trust, Series 2007-C2, Class A2 5.303%, 02/15/40		65,766

				1,082,002

	Federal Home Loan Mortgage Corp (FHLMC): 1.05%

	995,252	FHLMC, REMICS 2.500%, 04/15/50		1,017,803

	187,320	3.900%, 01/15/23		193,970

	347,938	4.000%, 08/15/22		356,981

	228,263	4.000%, 03/15/26		241,880

				1,810,634

	Federal National Mortgage Association (FNMA): 0.18%

	319,460	FNMA, REMICS 0.795%, 12/25/37^(a)		321,738

		Total Collateralized Mortgage Obligations (Cost $3,208,687)		3,214,374

	CORPORATE BONDS: 16.15%
	Basic Materials: 0.56%

	300,000	BHP Billiton Finance USA, Ltd., Sr. Unsec. Notes 5.400%, 03/29/17		351,222

	600,000	WMC Finance U.S.A., Ltd., Sr. Unsec. Notes 5.125%, 05/15/13		624,200

				975,422

	Communications: 0.60%

	400,000	NBCUniversal Media Llc, Sr. Unsec. Notes 2.100%, 04/01/14		407,313

	600,000	Verizon New York, Inc., Sr. Unsec. Notes 7.000%, 05/01/13		629,832

				1,037,145


	Consumer Cyclical: 0.32%

$	500,000	Staples, Inc., Sr. Unsec. Notes 9.750%, 01/15/14	$	559,098

	Consumer Non-Cyclical: 3.82%

	500,000	Amgen, Inc., Sr. Unsec. Notes 2.500%, 11/15/16		520,252

	615,000	Anheuser-Busch InBev Worldwide, Inc., Sr. Unsec. Notes 1.500%, 07/14/14		623,804

	454,000	3.000%, 10/15/12		457,111

	500,000	Bottling Group Llc, Sr. Unsec. Notes 5.500%, 04/01/16		580,042

	500,000	Cargill, Inc., Sr. Unsec. Notes 5.000%, 11/15/13^(c)		526,713

	1,250,000	Coca-Cola Co., Sr. Unsec. Notes 0.750%, 03/13/15		1,253,525

	440,000	7.375%, 03/03/14		487,512

	445,000	Colgate-Palmolive Co., Sr. Unsec. Medium-Term Notes 2.625%, 05/01/17		474,491

	225,000	Cornell University, Sr. Unsec. Notes 4.350%, 02/01/14		238,407

	500,000	SABMiller Plc, Sr. Unsec. Notes 5.500%, 08/15/13^(c)		523,277

	600,000	Teva Pharmaceutical Finance Co., Llc, Sr. Unsec. Notes 5.550%, 02/01/16		681,402

	250,000	WellPoint, Inc., Unsec. Notes 5.250%, 01/15/16		279,479

				6,646,015

	Energy: 1.38%

	500,000	Noble Corp./Cayman Islands, Sr. Unsec. Notes 5.875%, 06/01/13		522,314

	800,000	Shell International Finance, Sr. Unsec. Notes 4.000%, 03/21/14		847,416

	1,000,000	Valero Energy Corp., Sr. Unsec. Notes 6.700%, 01/15/13		1,029,190

				2,398,920

	Financials: 5.80%

	320,000	Berkshire Hathaway Finance Corp., Sr. Unsec. Notes 2.450%, 12/15/15		334,296


June 30, 2012		68		See Notes to Financial Statements

Consolidated Portfolio of Investments (Note 10) (Unaudited)

Forward Commodity Long/Short Strategy Fund


Principal Amount			Value (Note 2)
	Financials (continued): 5.80%

$	521,000	Branch Banking & Trust Co., Sub. Notes 0.767%, 05/23/17^(a)	$	482,819

	1,250,000	0.788%, 09/13/16^(a)		1,182,870

	400,000	Caterpillar Financial Services Corp., Sr. Unsec. Medium-Term Notes 6.200%, 09/30/13		427,716

	1,500,000	Caterpillar Financial Services Corp., Sr. Unsec. Notes 1.050%, 03/26/15		1,509,923

	1,000,000	Danske Bank A/S, Sr. Unsec. Notes 1.517%, 04/14/14^(a)(c)		978,336

	500,000	John Deere Capital Corp., Sr. Unsec. Medium-Term Notes 1.600%, 03/03/14		508,117

	750,000	M&I Marshall & Ilsley Bank, Sub. Notes, Series BN 0.737%, 12/04/12^(a)		748,332

	300,000	National Australia Bank, Ltd., Sr. Unsec. Notes 1.189%, 04/11/14^(a)(c)		300,305

	500,000	National City Bank, Sub. Notes 0.838%, 06/07/17^(a)		468,421

	1,000,000	SunTrust Bank, Sub. Notes 0.757%, 08/24/15^(a)		934,038

	1,250,000	Wachovia Bank NA, Sub. Notes 0.798%, 03/15/16^(a)		1,200,518

	1,000,000	WEA Finance Llc/WCI Finance Llc, Gtd. Notes 5.400%, 10/01/12^(c)		1,009,994

				10,085,685

	Industrials: 1.72%

	600,000	General Electric Co., Sr. Unsec. Notes 5.000%, 02/01/13		615,433

	325,000	Honeywell International, Inc., Sr. Unsec. Notes 5.400%, 03/15/16		372,704

	1,250,000	Thermo Fisher Scientific, Inc., Sr. Unsec. Notes 3.200%, 03/01/16		1,339,788

		Union Pacific Corp., Sr. Unsec. Notes

	650,000	5.450%, 01/31/13		667,823

				2,995,748

	Technology: 0.98%

	850,000	Adobe Systems, Inc., Sr. Unsec. Notes 3.250%, 02/01/15		893,912


$	500,000	Hewlett-Packard Co., Sr. Unsec. Notes 2.950%, 08/15/12	$	500,955

	300,000	3.000%, 09/15/16		309,001

				1,703,868

	Utilities: 0.97%

	750,000	Alabama Power Capital Trust V, Ltd., Gtd. Notes 3.568%, 10/01/42^(a)		759,263

	880,000	Niagara Mohawk Power Corp., Sr. Unsec. Notes 3.553%, 10/01/14^(c)		927,879

				1,687,142

		Total Corporate Bonds (Cost $28,050,151)		28,089,043

	MUNICIPAL BONDS: 3.06%

	500,000	Citizens Property Insurance Corp., Floating Notes, High Risk Sr., Revenue Bonds, Series A3 1.930%, 06/01/13^(a)		504,210

	125,000	City of Newport News, Virginia, Taxable Refunding General Obligation Unlimited Bonds, Series B 0.629%, 07/15/14		125,350

	300,000	Georgia Municipal Gas Authority, Taxable, Revenue Bonds, Gas Portfolio III 1.770%, 10/01/13		301,947

	60,000	Lexington School District No. 2 Educational Facilities Corp., Installment Revenue Bonds, Series A 5.890%, 12/01/13		63,260

	500,000	Nebraska State Public Power District, Taxable General Obligation Revenue Bonds, Series B 4.850%, 01/01/14		530,680

	500,000	New Jersey State Economic Development Authority, Taxable Revenue Bonds (Build America Bonds) 1.468%, 06/15/13^(a)		500,525

	500,000	New York City, New York, General Obligation Unlimited Bonds, Series G, SubSeries G-2 0.550%, 04/01/14		499,395

	500,000	Ohio State Water Development Authority Water Pollution Control, Taxable Refunding Revenue Bonds, (Water Quality), Series A 0.814%, 06/01/15		503,800


See Notes to Financial Statements		69		June 30, 2012

Consolidated Portfolio of Investments (Note 10) (Unaudited)

Forward Commodity Long/Short Strategy Fund


Principal Amount			Value (Note 2)

	MUNICIPAL BONDS (continued): 3.06%


$	50,000	Oklahoma Capital Improvement Authority, State Facilities Revenue Bonds, Higher Education, Series B 2.026%, 07/01/14	$	51,307

	150,000	Oregon State Local Governments, Taxable, Pension General Obligation, Ltd. 5.571%, 06/01/14		161,840

	475,000	Peralta California Community College District, Limited Obligation Revenue Bonds 5.400%, 11/01/12		482,073

	500,000	Port of Seattle Washington, Taxable Refunding Revenue Bonds, Intermediate Lien, Series C 0.883%, 11/01/13		501,530

	500,000	University of California, Taxable Revenue Bonds, (National Transmission System), Series AA-2 0.887%, 07/01/13		502,470

	600,000	Virginia State Housing Development Authority, Revenue Bonds (Taxable Rental Housing), Series C 3.930%, 08/01/12		601,404

		Total Municipal Bonds (Cost $5,311,056)		5,329,791

	U.S. TREASURY BONDS & NOTES: 15.69%

	4,000,000	U.S. Treasury Notes 2.125%, 11/30/14		4,169,376

	5,750,000	2.250%, 01/31/15		6,026,270

	5,750,000	2.375%, 02/28/15		6,052,772

	5,000,000	2.375%, 09/30/14		5,229,300

	5,500,000	2.625%, 12/31/14		5,809,804

		Total U.S. Treasury Bonds & Notes (Cost $27,267,223)		27,287,522
Par Value			Value (Note 2)

	SHORT-TERM BANK DEBT INSTRUMENTS: 23.57%


$	4,813,270	Bank of Nova Scotia-Toronto 0.030%, due 07/02/12	$	4,813,270

	16,626,361	Royal Bank of Canada-Toronto 0.030%, due 07/02/12		16,626,361

$	19,560,506	Wells Fargo Bank & Co. — San Francisco 0.030%, due 07/02/12		19,560,506

		Total Short-Term Bank Debt Instruments (Cost $41,000,137)		41,000,137

		Total Investments: 91.58% (Cost $158,842,563)		159,285,546

		Net Other Assets and Liabilities: 8.42%		14,649,767	^(d)

		Net Assets: 100.00%	$	173,935,313

Percentages are stated as a percent of net assets.

(a) Interest rate will change at a future date. Interest rate shown reflects the rate in effect at June 30, 2012.

(b) Represents a step bond. Rate disclosed is as of June 30, 2012.

(c) Securities exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be sold in the ordinary course of business in transactions exempt from registration, normally to qualified institutional buyers. At period end, the aggregate market value of those securities was $5,083,377, representing 2.92% of net assets.

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


June 30, 2012		70		See Notes to Financial Statements

Consolidated Portfolio of Investments (Note 10) (Unaudited)

Forward Commodity Long/Short Strategy Fund

TOTAL RETURN SWAP CONTRACTS

Counter Party

Reference Entry/Obligation

Fund
Pays

Fund
Receives

Termination
Date

Notional
Amount

Net
Unrealized
Loss

Credit Suisse

CS Momentum & Volatility Enhanced Return Strategy Custom 15- Total Return

125 Bps

Total Return

07/10/12

178,642,512

(4,385,611)

178,642,512

(4,385,611)

Investment Abbreviations:

Bps — Basis Points

Gtd. — Guaranteed

Ltd. — Limited

REMICS — Real Estate Mortgage Investment Conduits

Sr. — Senior

Sub. — Subordinated

Unsec. — Unsecured


See Notes to Financial Statements		71		June 30, 2012

Consolidated Portfolio of Investments (Note 10) (Unaudited)

Forward Managed Futures Strategy Fund


Shares			Value (Note 2)

	EXCHANGE-TRADED FUNDS: 72.09%

	33,000	Vanguard Mortgage-Backed Securities ETF	$	1,727,220

	21,600	Vanguard Short-Term Corporate Bond ETF		1,709,640

	56,200	Vanguard Short-Term Government Bond ETF		3,423,142

		Total Exchange-Traded Funds (Cost $6,845,389)		6,860,002

Par Value

	SHORT-TERM BANK DEBT INSTRUMENTS: 12.18%

		JP Morgan Chase-New York

	$1,159,241	0.030%, due 07/02/12		1,159,241

		Total Short-Term Bank Debt Instruments (Cost $1,159,241)		1,159,241

		Total Investments: 84.27% (Cost $8,004,630)		8,019,243

		Net Other Assets and Liabilities: 15.73%		1,496,551	^(a)

		Net Assets: 100.00%	$	9,515,794

Percentages are stated as a percent of net assets.

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

TOTAL RETURN SWAP CONTRACTS

Counter Party

Reference Entry/Obligation

Fund
Pays

Fund
Receives

Termination
Date

Notional
Amount

Net
Unrealized
Loss

Credit Suisse

CS Multi Asset Future

150 Bps

Total Return

07/10/12

15,280,780

(741,139)

15,280,780

(741,139)

Investment Abbreviations:

ETF — Exchange-Traded Fund

Bps — Basis Points


June 30, 2012		72		See Notes to Financial Statements

Statement of Assets and Liabilities (Unaudited)


	FORWARD CREDIT ANALYSIS LONG/SHORT FUND		FORWARD EM CORPORATE DEBT FUND			FORWARD EMERGING MARKETS FUND
ASSETS:
Investments, at value^(a)	$	470,807,203	$	82,975,742		$	30,728,034
Foreign currency, at value (Cost $0, $0 and $409,665, respectively)		0		0			409,931
Deposit with broker for swap contracts		0		570,000			0
Deposit with broker for futures contracts		0		0			217,653
Deposit with broker for securities sold short		29,994,419		0			0
Receivable for swap contract payments		0		3,819			0
Receivable for investments sold		5,577,558		3,115,899			4,919,099
Receivable for shares sold		777,047		31,731			2,439,185
Interest and dividends receivable		5,453,950		1,403,810			447,867
Other assets		62,436		22,768			31,277

Total Assets		512,672,613		88,123,769			39,193,046

LIABILITIES:
Securities sold short (Proceeds $75,900,842, $0 and $0, respectively)		79,393,166		0			0
Payable for interest on short sales		294,608		0			0
Payable to custodian^(b)		0		0			15,572,256
Unrealized loss on swap contracts		0		456,751			0
Swap premiums received		0		215,715			0
Payable for investments purchased		15,709,864		5,092,395			759,674
Payable for shares redeemed		306,355		75,204			531,121
Payable for collateral upon return of securities loaned		0		0			457,001
Payable to advisor		467,073		50,349			16,600
Payable for distribution and service fees		104,521		22,516			4,279
Payable to trustees		1,421		633			2,803
Payable for chief compliance officer fee		797		269			492
Payable to ReFlow (Note 2)		0		463			792
Accrued expenses and other liabilities		72,958		16,084			85,558

Total Liabilities		96,350,763		5,930,379			17,430,576

NET ASSETS	$	416,321,850	$	82,193,390		$	21,762,470

NET ASSETS CONSIST OF:
Paid-in capital (Note 7)	$	400,561,284	$	86,292,107		$	22,984,366
Accumulated net investment income/(loss)		186,825		67,281			(65,774	)
Accumulated net realized gain/(loss) on investments, securities sold short, futures contracts, swap contracts and foreign currency transactions		1,148,201		(917,135	)		(2,928,822	)
Net unrealized appreciation/(depreciation) on investments, securities sold short, futures contracts, swap contracts and translation of assets and liabilities in foreign currencies		14,425,540		(3,248,863	)		1,772,700

TOTAL NET ASSETS	$	416,321,850	$	82,193,390		$	21,762,470

INVESTMENTS, AT COST	$	452,889,339	$	85,764,170		$	28,952,773

PRICING OF SHARES
Investor Class:
Net Asset Value, offering and redemption price per share		$8.68		$9.41			$10.01
Net Assets	$	250,950,109	$	66,476,455		$	15,569,229
Shares of beneficial interest outstanding		28,926,289		7,065,435			1,554,786


See Notes to Financial Statements		73		June 30, 2012

Statement of Assets and Liabilities (Unaudited)


	FORWARD CREDIT ANALYSIS LONG/SHORT FUND (continued)		FORWARD EM CORPORATE DEBT FUND (continued)		FORWARD EMERGING MARKETS FUND (continued)
Institutional Class:
Net Asset Value, offering and redemption price per share		$8.62		$9.34		$10.26
Net Assets	$	91,947,120	$	14,552,659	$	5,330,261
Shares of beneficial interest outstanding		10,665,747		1,557,460		519,515
Class A:
Net Asset Value, offering and redemption price per share		$8.65		—		—
Net Assets	$	6,185,091		—		—
Shares of beneficial interest outstanding		715,038		—		—
Maximum offering price per share (NAV/0.9425, based on maximum sales charge of 5.75% of the offering price)		$9.18		—		—
Class C:
Net Asset Value, offering and redemption price per share		$8.68		$9.44		—
Net Assets	$	20,539,229	$	1,164,276		—
Shares of beneficial interest outstanding		2,366,906		123,321		—
Class M:
Net Asset Value, offering and redemption price per share		$8.62		—		$10.37
Net Assets	$	46,700,301		—	$	862,980
Shares of beneficial interest outstanding		5,415,538		—		83,244

(a) At June 30, 2012, securities with a market value of $0, $0 and $463,546, respectively, were on loan to brokers.

(b) The Forward Emerging Markets Fund borrowed for temporary administrative purposes.


June 30, 2012		74		See Notes to Financial Statements

Statement of Assets and Liabilities (Unaudited)


	FORWARD ENDURANCE LONG/SHORT FUND			FORWARD FOCUS FUND		FORWARD GLOBAL CREDIT LONG/SHORT FUND
ASSETS:
Investments, at value	$	3,724,938		$	8,124,877	$	4,890,372
Deposit with broker for swap contracts		3,085			0		0
Deposit with broker for securities sold short		1,056,719			0		0
Receivable for swap contract payments		0			0		153
Receivable for investments sold		0			0		451,460
Receivable for shares sold		0			19,782		0
Swap premiums paid		0			0		131,133
Receivable due from advisor		0			0		1,807
Interest and dividends receivable		1,068			6,877		114,770
Other assets		6,989			12,114		52,222

Total Assets		4,792,799			8,163,650		5,641,917

LIABILITIES:
Securities sold short (Proceeds $998,192, $0 and $0, respectively)		930,208			0		0
Options written, at value (Premiums received $31,675, $0 and $0, respectively)		33,022			0		0
Unrealized loss on swap contracts		0			0		149,686
Swap premiums received		0			0		43,143
Payable for investments purchased		2,809			0		250,000
Payable to advisor		1,230			1,401		0
Payable for distribution and service fees		211			1,586		1,439
Payable to trustees		562			238		65
Payable for chief compliance officer fee		404			41		40
Accrued expenses and other liabilities		21,021			12,406		5,803

Total Liabilities		989,467			15,672		450,176

NET ASSETS	$	3,803,332		$	8,147,978	$	5,191,741

NET ASSETS CONSIST OF:
Paid-in capital (Note 7)	$	3,948,915		$	7,272,773	$	5,263,210
Accumulated net investment income/(loss)		(27,769	)		46,744		225,115
Accumulated net realized gain/(loss) on investments, securities sold short, options contracts, swap contracts and foreign currency transactions		(35,944	)		82,817		280,401
Net unrealized appreciation/(depreciation) on investments, securities sold short, options contracts, swap contracts and translation of assets and liabilities in foreign currencies		(81,870	)		745,644		(576,985	)

TOTAL NET ASSETS	$	3,803,332		$	8,147,978	$	5,191,741

INVESTMENTS, AT COST	$	3,873,445		$	7,379,233	$	5,317,478

PRICING OF SHARES
Investor Class:
Net Asset Value, offering and redemption price per share		$24.77			$9.33		$24.66
Net Assets	$	188,184		$	1,119,884	$	1,358,760
Shares of beneficial interest outstanding		7,599			120,014		55,103
Institutional Class:
Net Asset Value, offering and redemption price per share		$24.81			$9.51		$24.71
Net Assets	$	3,615,148		$	4,669,104	$	1,368,466
Shares of beneficial interest outstanding		145,725			490,989		55,387


See Notes to Financial Statements		75		June 30, 2012

Statement of Assets and Liabilities (Unaudited)


	FORWARD ENDURANCE LONG/SHORT FUND (continued)		FORWARD FOCUS FUND (continued)		FORWARD GLOBAL CREDIT LONG/SHORT FUND (continued)
Class A:
Net Asset Value, offering and redemption price per share		—		$9.26		—
Net Assets		—	$	2,358,990		—
Shares of beneficial interest outstanding		—		254,838		—
Maximum offering price per share (NAV/0.9425, based on maximum sales charge of 5.75% of the offering price)		—		$9.82		—
Class C:
Net Asset Value, offering and redemption price per share		—		—		$24.58
Net Assets		—		—	$	1,229,223
Shares of beneficial interest outstanding		—		—		50,000
Class M:
Net Asset Value, offering and redemption price per share		—		—		$24.71
Net Assets		—		—	$	1,235,292
Shares of beneficial interest outstanding		—		—		50,000


June 30, 2012		76		See Notes to Financial Statements

Statement of Assets and Liabilities (Unaudited)


	FORWARD INTERNATIONAL DIVIDEND FUND			FORWARD INTERNATIONAL SMALL COMPANIES FUND			FORWARD LARGE CAP DIVIDEND FUND
ASSETS:
Investments, at value^(a)		$48,055,386			$269,750,243			$14,347,815
Foreign currency, at value (Cost $2,925, $38 and $0, respectively)		2,892			38			0
Deposit with broker for swap contracts		0			10,000,000			0
Deposit with broker for futures contracts		106,967			0			0
Unrealized gain on swap contracts		0			842,247			0
Receivable for investments sold		873,771			2,004,897			142,992
Receivable for shares sold		10,899			228,034			0
Interest and dividends receivable		380,648			684,363			38,617
Other assets		20,005			128,659			20,220

Total Assets		49,450,568			283,638,481			14,549,644

LIABILITIES:
Payable for investments purchased		284,612			678,240			0
Payable for shares redeemed		15,027			4,650,592			0
Payable for collateral upon return of securities loaned		0			10,815,818			0
Payable to advisor		17,812			218,619			3,507
Payable for distribution and service fees		3,816			22,072			4,610
Payable to trustees		1,875			7,152			576
Payable for chief compliance officer fee		41			1,452			98
Payable to ReFlow (Note 2)		269			0			100
Accrued expenses and other liabilities		1,952			133,794			15,493

Total Liabilities		325,404			16,527,739			24,384

NET ASSETS		$49,125,164			$267,110,742			$14,525,260

NET ASSETS CONSIST OF:
Paid-in capital (Note 7)		$53,811,347			$492,155,105			$14,338,876
Accumulated net investment income		703,398			699,712			170,306
Accumulated net realized loss on investments, futures contracts, swap contracts and foreign currency transactions		(4,627,117	)		(247,191,901	)		(2,272,277	)
Net unrealized appreciation/(depreciation) on investments, futures contracts, swap contracts and translation of assets and liabilities in foreign currencies		(762,464	)		21,447,826			2,288,355

TOTAL NET ASSETS		$49,125,164			$267,110,742			$14,525,260

INVESTMENTS, AT COST		$48,820,447			$249,146,377			$12,059,460

PRICING OF SHARES
Investor Class:
Net Asset Value, offering and redemption price per share		$8.18			$12.20			$10.79
Net Assets		$ 6,915,598			$ 38,453,346			$ 116,815
Shares of beneficial interest outstanding		845,005			3,150,758			10,829
Institutional Class:
Net Asset Value, offering and redemption price per share		$6.96			$12.21			$10.65
Net Assets		$42,120,379			$218,566,109			$ 4,404,543
Shares of beneficial interest outstanding		6,055,139			17,895,078			413,477


See Notes to Financial Statements		77		June 30, 2012

Statement of Assets and Liabilities (Unaudited)


	FORWARD INTERNATIONAL DIVIDEND FUND (continued)		FORWARD INTERNATIONAL SMALL COMPANIES FUND (continued)		FORWARD LARGE CAP DIVIDEND FUND (continued)
Class A:
Net Asset Value, offering and redemption price per share		—		$12.21		$10.80
Net Assets		—		$814,129		$10,003,902
Shares of beneficial interest outstanding		—		66,669		926,467
Maximum offering price per share (NAV/0.9425, based on maximum sales charge of 5.75% of the offering price)		—		$12.95		$11.46
Class M:
Net Asset Value, offering and redemption price per share		$6.96		$12.22		—
Net Assets		$89,187		$9,277,158		—
Shares of beneficial interest outstanding		12,822		758,899		—

(a) At June 30, 2012, securities with a market value of $0, $10,729,535 and $0, respectively, were on loan to brokers.


June 30, 2012		78		See Notes to Financial Statements

Statement of Assets and Liabilities (Unaudited)


	FORWARD SELECT EM DIVIDEND FUND			FORWARD SMALL CAP EQUITY FUND
ASSETS:
Investments in affiliates, at value	$	0		$	2,000,000
Investments, at value		6,730,814			37,946,295
Foreign currency, at value (Cost $2,053 and $0, respectively)		2,030			0
Deposit with broker for futures contracts		6,464			1,316,568
Variation margin receivable		0			152,874
Receivable for investments sold		56,111			104,878
Receivable for shares sold		10,087			3,189
Receivable due from advisor		3,708			0
Interest and dividends receivable		49,617			8,811
Other assets		34,557			27,779

Total Assets		6,893,388			41,560,394

LIABILITIES:
Payable on loan (Note 2)		552,478			0
Payable for interest due on loan (Note 2)		67			0
Payable for investments purchased		152,601			1,125,190
Payable for shares redeemed		204			61,059
Payable to advisor		0			20,397
Payable for distribution and service fees		817			8,072
Payable to trustees		136			3,062
Payable for chief compliance officer fee		38			1,620
Accrued expenses and other liabilities		21,244			65,583

Total Liabilities		727,585			1,284,983

NET ASSETS	$	6,165,803		$	40,275,411

NET ASSETS CONSIST OF:
Paid-in capital (Note 7)	$	8,543,984		$	78,658,079
Accumulated net investment income/(loss)		114,458			(172,919	)
Accumulated net realized loss on investments, futures contracts and foreign currency transactions		(2,137,629	)		(40,024,363	)
Net unrealized appreciation/(depreciation) on investments, futures contracts and translation of assets and liabilities in foreign currencies		(355,010	)		1,814,614

TOTAL NET ASSETS	$	6,165,803		$	40,275,411

INVESTMENTS IN AFFILIATES, AT COST	$	0		$	2,000,000

INVESTMENTS, AT COST		7,085,501			36,284,555

PRICING OF SHARES
Investor Class:
Net Asset Value, offering and redemption price per share		$21.13			$15.19
Net Assets	$	1,166,179		$	25,935,553
Shares of beneficial interest outstanding		55,184			1,707,130
Institutional Class:
Net Asset Value, offering and redemption price per share		$21.14			$15.92
Net Assets	$	3,588,299		$	10,797,967
Shares of beneficial interest outstanding		169,774			678,079


See Notes to Financial Statements		79		June 30, 2012

Statement of Assets and Liabilities (Unaudited)


	FORWARD SELECT EM DIVIDEND FUND (continued)		FORWARD SMALL CAP EQUITY FUND (continued)
Class A:
Net Asset Value, offering and redemption price per share		—		$15.22
Net Assets		—	$	589,812
Shares of beneficial interest outstanding		—		38,764
Maximum offering price per share (NAV/0.9425, based on maximum sales charge of 5.75% of the offering price)		—		$16.15
Class C:
Net Asset Value, offering and redemption price per share		$21.15		—
Net Assets	$	586,801		—
Shares of beneficial interest outstanding		27,748		—
Class M:
Net Asset Value, offering and redemption price per share		$21.14		$15.86
Net Assets	$	824,524	$	2,952,079
Shares of beneficial interest outstanding		38,998		186,079


June 30, 2012		80		See Notes to Financial Statements

Statement of Assets and Liabilities (Unaudited)


	FORWARD TACTICAL ENHANCED FUND			FORWARD TACTICAL GROWTH FUND
ASSETS:
Investments, at value	$	33,813,263		$	1,029,474,877
Deposit with broker for futures contracts		152,776			12,545,888
Deposit with broker for securities sold short		204,059			0
Variation margin receivable		146,796			4,846,745
Receivable for shares sold		36,317			1,644,696
Other assets		33,655			97,222

Total Assets		34,386,866			1,048,609,428

LIABILITIES:
Payable for shares redeemed		13,653			2,468,853
Payable to advisor		41,358			948,981
Payable for distribution and service fees		9,146			269,632
Payable to trustees		428			8,916
Payable for chief compliance officer fee		179			7,205
Accrued expenses and other liabilities		27,434			301,487

Total Liabilities		92,198			4,005,074

NET ASSETS	$	34,294,668		$	1,044,604,354

NET ASSETS CONSIST OF:
Paid-in capital (Note 7)	$	33,804,064		$	1,031,247,423
Accumulated net investment loss		(327,661	)		(7,127,039	)
Accumulated net realized gain on investments, options contracts and futures contracts		677,095			15,620,184
Net unrealized appreciation on investments and futures contracts		141,170			4,863,786

TOTAL NET ASSETS	$	34,294,668		$	1,044,604,354

INVESTMENTS, AT COST	$	33,818,889		$	1,029,457,836

PRICING OF SHARES
Investor Class:
Net Asset Value, offering and redemption price per share		$25.43			$25.73
Net Assets	$	15,338,901		$	216,996,186
Shares of beneficial interest outstanding		603,139			8,433,889
Institutional Class:
Net Asset Value, offering and redemption price per share		$25.57			$25.97
Net Assets	$	12,583,114		$	66,264,919
Shares of beneficial interest outstanding		492,195			2,551,865
Class A:
Net Asset Value, offering and redemption price per share		$25.36			$25.61
Net Assets	$	3,438,090		$	147,336,886
Shares of beneficial interest outstanding		135,590			5,754,119
Maximum offering price per share (NAV/0.9425, based on maximum sales charge of 5.75% of the offering price)		$26.91			$27.17
Class C:
Net Asset Value, offering and redemption price per share		$25.19			$25.30
Net Assets	$	2,863,593		$	136,315,353
Shares of beneficial interest outstanding		113,663			5,387,269
Class M:
Net Asset Value, offering and redemption price per share		$25.57			$25.98
Net Assets	$	70,970		$	477,691,010
Shares of beneficial interest outstanding		2,776			18,389,487


See Notes to Financial Statements		81		June 30, 2012

Consolidated Statement of Assets and Liabilities (Unaudited)


	FORWARD COMMODITY LONG/SHORT STRATEGY FUND			FORWARD MANAGED FUTURES STRATEGY FUND
ASSETS:
Investments, at value	$	159,285,546		$	8,019,243
Deposit with broker for swap contracts		19,062,912			2,250,000
Receivable for investments sold		59,811			0
Receivable for shares sold		365,618			0
Interest and dividends receivable		681,919			6,376
Other assets		33,487			33,823

Total Assets		179,489,293			10,309,442

LIABILITIES:
Unrealized loss on swap contracts		4,385,611			741,139
Payable for swap contract payments		166,103			17,514
Payable for investments purchased		680,446			0
Payable for shares redeemed		106,592			64
Payable to advisor		142,250			750
Payable for distribution and service fees		24,934			1,292
Payable to trustees		178			530
Payable for chief compliance officer fee		88			336
Accrued expenses and other liabilities		47,778			32,023

Total Liabilities		5,553,980			793,648

NET ASSETS	$	173,935,313		$	9,515,794

NET ASSETS CONSIST OF:
Paid-in capital (Note 7)	$	188,350,578		$	10,226,570
Accumulated net investment loss		(531,596	)		(67,784	)
Accumulated net realized gain/(loss) on investments and swap contracts		(9,941,041	)		83,534
Net unrealized depreciation on investments and swap contracts		(3,942,628	)		(726,526	)

TOTAL NET ASSETS	$	173,935,313		$	9,515,794

INVESTMENTS, AT COST	$	158,842,563		$	8,004,630

PRICING OF SHARES
Investor Class:
Net Asset Value, offering and redemption price per share		$24.65			$23.42
Net Assets	$	35,852,024		$	1,220,345
Shares of beneficial interest outstanding		1,454,476			52,108
Institutional Class:
Net Asset Value, offering and redemption price per share		$24.73			$23.45
Net Assets	$	95,977,818		$	1,002,457
Shares of beneficial interest outstanding		3,880,534			42,743
Class C:
Net Asset Value, offering and redemption price per share		$24.50			$23.36
Net Assets	$	9,014,464		$	974,548
Shares of beneficial interest outstanding		367,872			41,717
Class M:
Net Asset Value, offering and redemption price per share		$24.67			—
Net Assets		$27,284,709			—
Shares of beneficial interest outstanding		1,105,961			—
Class Z:
Net Asset Value, offering and redemption price per share		$24.71			$23.46
Net Assets	$	5,806,298		$	6,318,444
Shares of beneficial interest outstanding		234,992			269,307


June 30, 2012		82		See Notes to Financial Statements

Statement of Operations

For the Six Months Ended June 30, 2012 (Unaudited)


	FORWARD CREDIT ANALYSIS LONG/SHORT FUND			FORWARD EM CORPORATE DEBT FUND			FORWARD EMERGING MARKETS FUND
INVESTMENT INCOME:
Interest	$	8,504,495		$	1,819,649		$	580
Dividends		109,221			4,565			726,789
Securities lending income		—			—			6,902
Foreign taxes withheld		0			(5,280	)		(82,717	)

Total Investment Income		8,613,716			1,818,934			651,554

EXPENSES:
Investment advisory fee		2,193,175			171,077			312,859
Interest on short sales		1,010,000			—			—
Administration fee		93,856			22,372			31,657
Custodian fee		9,028			9,749			85,751
Legal and audit fee		43,778			17,303			16,462
Transfer agent fee		56,657			5,048			23,412
Trustees’ fees and expenses		16,416			3,265			3,393
Registration/filing fees		24,728			12,304			16,095
Reports to shareholder and printing fees		23,514			2,076			10,939
Distribution and service fees
Investor Class		390,947			74,848			38,535
Institutional Class		14,266			—			—
Class A		8,461			—			—
Class C		87,538			5,561			—
Class M		4,825			—			—
Chief compliance officer fee		7,804			1,370			1,743
ReFlow fees (Note 2)		—			851			11,389
Other		7,040			4,395			5,999

Total expenses before waiver		3,992,033			330,219			558,234
Less fees waived/reimbursed by investment advisor (Note 3)		(151,230	)		(11,231	)		(165,812	)

Total net expenses		3,840,803			318,988			392,422

NET INVESTMENT INCOME:		4,772,913			1,499,946			259,132

Net realized gain/(loss) on investments		6,930,621			(373,926	)		1,824,282
Net realized loss on securities sold short		(378,831	)		0			0
Net realized gain on futures contracts		0			0			502,734
Net realized gain on swap contracts		0			105,853			0
Net realized gain/(loss) on foreign currency		0			502,722			(287,759	)
Net change in unrealized appreciation/(depreciation) on investments		11,459,983			(1,581,591	)		(123,365	)
Net change in unrealized depreciation on securities sold short		(2,071,748	)		0			0
Net change in unrealized depreciation on futures contracts		0			0			(137,300	)
Net change in unrealized depreciation on swap contracts		0			(453,828	)		0
Net change in unrealized depreciation on translation of assets and liabilities in foreign currency		0			(431	)		(1,708	)

NET REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS, SECURITIES SOLD SHORT, FUTURES CONTRACTS, SWAP CONTRACTS AND FOREIGN CURRENCY TRANSLATIONS		15,940,025			(1,801,201	)		1,776,884

NET INCREASE/(DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS	$	20,712,938		$	(301,255	)	$	2,036,016


See Notes to Financial Statements		83		June 30, 2012

Statement of Operations

For the Six Months Ended June 30, 2012 (Unaudited)


	FORWARD ENDURANCE LONG/SHORT FUND^(a)			FORWARD FOCUS FUND			FORWARD GLOBAL CREDIT LONG/SHORT FUND
INVESTMENT INCOME:
Interest	$	51		$	38		$	265,748
Dividends		8,390			86,240			1,100
Foreign taxes withheld		0			0			(515	)

Total Investment Income		8,441			86,278			266,333

EXPENSES:
Interest on loan		4,290			—			—
Dividend expense on short sales		3,447			—			—
Investment advisory fee		21,213			32,529			38,430
Administration fee		5,715			6,308			7,922
Custodian fee		5,578			646			4,931
Legal and audit fee		14,341			8,761			19,329
Transfer agent fee		687			1,646			200
Trustees’ fees and expenses		737			536			317
Registration/filing fees		1,366			9,919			7,104
Reports to shareholder and printing fees		3,043			1,068			5,941
Distribution and service fees
Investor Class		378			2,325			2,598
Institutional Class		660			1,274			—
Class A		—			6,649			—
Class C		—			—			6,241
Chief compliance officer fee		460			246			135
Other		1,256			1,085			1,842

Total expenses before waiver		63,171			72,992			94,990
Less fees waived/reimbursed by investment advisor (Note 3)		(26,961	)		(21,293	)		(35,168	)

Total net expenses		36,210			51,699			59,822

NET INVESTMENT INCOME/(LOSS):		(27,769	)		34,579			206,511

Net realized gain/(loss) on investments		(80,978	)		45,357			212,311
Net realized gain on securities sold short		25,283			0			0
Net realized gain on option contracts		23,005			0			0
Net realized loss on swap contracts		0			0			(23,280	)
Net realized gain/(loss) on foreign currency		(3,254	)		0			54,056
Net change in unrealized appreciation/(depreciation) on investments		(148,507	)		173,884			(220,069	)
Net change in unrealized appreciation on securities sold short		67,984			0			0
Net change in unrealized depreciation on options contracts		(1,347	)		0			0
Net change in unrealized depreciation on swap contracts		0			0			(133,531	)
Net change in unrealized appreciation on translation of assets and liabilities in foreign currency		0			0			157

NET REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS, SECURITIES SOLD SHORT, OPTION CONTRACTS, SWAP CONTRACTS AND FOREIGN CURRENCY TRANSLATIONS		(117,814	)		219,241			(110,356	)

NET INCREASE/(DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS	$	(145,583	)	$	253,820		$	96,155

(a) The Forward Endurance Long/Short Fund commenced operations on January 3, 2012.


June 30, 2012		84		See Notes to Financial Statements

Statement of Operations

For the Six Months Ended June 30, 2012 (Unaudited)


	FORWARD INTERNATIONAL DIVIDEND FUND			FORWARD INTERNATIONAL SMALL COMPANIES FUND			FORWARD LARGE CAP DIVIDEND FUND
INVESTMENT INCOME:
Interest	$	115,888		$	2,615		$	42,748
Dividends		1,566,300			4,661,476			378,550
Securities lending income		—			215,796			—
Dividends from affiliated investment company shares		—			321			—
Foreign taxes withheld		(91,389	)		(460,647	)		(2,097	)

Total Investment Income		1,590,799			4,419,561			419,201

EXPENSES:
Investment advisory fee		133,162			1,556,157			57,822
Administration fee		17,978			105,288			8,404
Custodian fee		12,768			86,060			1,598
Legal and audit fee		11,704			58,319			8,671
Transfer agent fee		4,986			66,161			2,381
Trustees’ fees and expenses		857			21,943			740
Registration/filing fees		12,932			23,300			17,866
Reports to shareholder and printing fees		3,451			20,189			1,690
Distribution and service fees
Investor Class		11,004			87,070			143
Institutional Class		6,440			64,790			1,115
Class A		—			2,532			27,293
Class M		17			1,902			—
Chief compliance officer fee		708			9,974			457
ReFlow fees (Note 2)		269			16,084			1,080
Other		4,029			27,948			2,004

Total expenses before waiver		220,305			2,147,717			131,264
Less fees waived/reimbursed by investment advisor (Note 3)		(44,109	)		0			(37,157	)
Affiliated management fee waiver (Note 2)		—			(1,422	)		—

Total net expenses		176,196			2,146,295			94,107

NET INVESTMENT INCOME:		1,414,603			2,273,266			325,094

Net realized gain/(loss) on investments		(1,366,771	)		5,227,251			(77,976	)
Net realized loss on futures contracts		(861,564	)		0			0
Net realized loss on swap contracts		0			(171,168	)		0
Net realized gain/(loss) on foreign currency		(98,701	)		332,815			0
Net change in unrealized appreciation/(depreciation) on investments		(656,375	)		12,599,303			472,536
Net change in unrealized appreciation on futures contracts		10,684			0			0
Net change in unrealized appreciation on swap contracts		0			393,232			0
Net change in unrealized appreciation/(depreciation) on translation of assets and liabilities in foreign currency		1,176			(11,441	)		0

NET REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS, FUTURES CONTRACTS, SWAP CONTRACTS AND FOREIGN CURRENCY TRANSLATIONS		(2,971,551	)		18,369,992			394,560

NET INCREASE/(DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS	$	(1,556,948	)	$	20,643,258		$	719,654


See Notes to Financial Statements		85		June 30, 2012

Statement of Operations

For the Six Months Ended June 30, 2012 (Unaudited)


	FORWARD SELECT EM DIVIDEND FUND			FORWARD SMALL CAP EQUITY FUND
INVESTMENT INCOME:
Interest	$	27,318		$	518
Dividends		306,755			104,685
Dividends from affiliated investment company shares		—			152
Foreign taxes withheld		(19,455	)		0

Total Investment Income		314,618			105,355

EXPENSES:
Investment advisory fee		38,344			195,282
Administration fee		10,766			18,382
Custodian fee		10,710			3,587
Legal and audit fee		10,877			12,072
Transfer agent fee		922			45,977
Trustees’ fees and expenses		433			668
Registration/filing fees		8,218			24,935
Reports to shareholder and printing fees		1,372			15,664
Distribution and service fees
Investor Class		2,370			50,401
Institutional Class		—			3,499
Class A		—			1,405
Class C		2,959			—
Class M		—			613
Chief compliance officer fee		196			740
ReFlow fees (Note 2)		323			—
Interest Expense		2,544			—
Other		3,188			4,599

Total expenses before waiver		93,222			377,824
Less fees waived/reimbursed by investment advisor (Note 3)		(36,895	)		(99,139	)
Affiliated management fee waiver (Note 2)		—			(411	)

Total net expenses		56,327			278,274

NET INVESTMENT INCOME/(LOSS):		258,291			(172,919	)

Net realized gain/(loss) on investments		(132,448	)		754,810
Net realized gain on futures contracts		106,464			317,831
Net realized loss on foreign currency		(97,059	)		0
Net change in unrealized appreciation on investments		637,322			1,915,908
Net change in unrealized appreciation on futures contracts		0			119,374
Net change in unrealized depreciation on translation of assets and liabilities in foreign currency		(160	)		0

NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS, FUTURES CONTRACTS AND FOREIGN CURRENCY TRANSLATIONS		514,119			3,107,923

NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS	$	772,410		$	2,935,004


June 30, 2012		86		See Notes to Financial Statements

Statement of Operations

For the Six Months Ended June 30, 2012 (Unaudited)


	FORWARD TACTICAL ENHANCED FUND			FORWARD TACTICAL GROWTH FUND
INVESTMENT INCOME:
Interest	$	4,855		$	137,952
Dividends		—			499,205

Total Investment Income		4,855			637,157

EXPENSES:
Investment advisory fee		255,549			5,181,782
Administration fee		11,955			244,926
Custodian fee		570			2,639
Legal and audit fee		10,263			129,622
Transfer agent fee		4,646			237,736
Trustees’ fees and expenses		1,930			61,547
Registration/filing fees		17,664			60,444
Reports to shareholder and printing fees		3,646			120,258
Repayment of reimbursed expenses (Note 3)		—			3,914
Distribution and service fees
Investor Class		25,712			464,850
Institutional Class		2,687			16,597
Class A		8,404			403,825
Class C		12,403			697,744
Class M		—			79,113
Chief compliance officer fee		888			30,040
Other		2,875			29,159

Total expenses before waiver		359,192			7,764,196
Less fees waived/reimbursed by investment advisor (Note 3)		(26,676	)		0

Total net expenses		332,516			7,764,196

NET INVESTMENT LOSS:		(327,661	)		(7,127,039	)

Net realized gain on investments		12,959			8,404,262
Net realized gain on futures contracts		1,881,945			31,100,993
Net change in unrealized appreciation/(depreciation) on investments		(5,626	)		689,055
Net change in unrealized appreciation on futures contracts		45,605			5,681,917

NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS, OPTION CONTRACTS AND FUTURES CONTRACTS		1,934,883			45,876,227

NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS	$	1,607,222		$	38,749,188


See Notes to Financial Statements		87		June 30, 2012

Consolidated Statement of Operations


	FORWARD COMMODITY LONG/SHORT STRATEGY FUND			FORWARD MANAGED FUTURES STRATEGY FUND
	SIX MONTHS ENDED JUNE 30, 2012 (UNAUDITED)			PERIOD ENDED JUNE 30, 2012^(a) (UNAUDITED)
INVESTMENT INCOME:
Interest	$	649,839		$	242
Dividends		—			33,115

Total Investment Income		649,839			33,357

EXPENSES:
Investment advisory fee		814,835			41,414
Administration fee		91,464			29,262
Custodian fee		7,918			2,355
Legal and audit fee		54,372			30,661
Transfer agent fee		17,313			1,475
Trustees’ fees and expenses		10,699			1,163
Registration/filing fees		19,952			13,038
Reports to shareholder and printing fees		8,363			3,340
Distribution and service fees
Investor Class		86,194			1,871
Institutional Class		21,791			216
Class C		35,529			4,309
Class M		4,617			—
Chief compliance officer fee		4,291			542
Other		4,097			2,272

Total expenses before waiver		1,181,435			131,918
Less fees waived/reimbursed by investment advisor (Note 3)		0			(30,777	)

Total net expenses		1,181,435			101,141

NET INVESTMENT LOSS:		(531,596	)		(67,784	)

Net realized gain on investments		2,888			0
Net realized gain/(loss) on swap contracts		(9,564,097	)		83,534
Net change in unrealized appreciation on investments		549,526			14,613
Net change in unrealized depreciation on swap contracts		(4,789,995	)		(741,139	)

NET REALIZED AND UNREALIZED LOSS ON INVESTMENTS AND SWAP CONTRACTS		(13,801,678	)		(642,992	)

NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS	$	(14,333,274	)	$	(710,776	)

(a) The Forward Managed Futures Strategy Fund commenced operations on January 30, 2012.


June 30, 2012		88		See Notes to Financial Statements

Statement of Changes in Net Assets


	FORWARD CREDIT ANALYSIS LONG/SHORT FUND
	SIX MONTHS ENDED JUNE 30, 2012 (UNAUDITED)			YEAR ENDED DECEMBER 31, 2011
OPERATIONS:
Net investment income	$	4,772,913		$	7,870,377
Net realized gain/(loss) on investments		6,930,621			(2,578,101	)
Net realized loss on securities sold short		(378,831	)		(2,585,194	)
Net change in unrealized appreciation on investments and securities sold short		9,388,235			8,407,998

Net increase in net assets resulting from operations		20,712,938			11,115,080

DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income
Investor Class		(2,828,427	)		(5,716,585	)
Institutional Class		(1,054,891	)		(1,325,787	)
Class A		(57,534	)		(81,083	)
Class C		(201,401	)		(516,445	)
Class M		(448,768	)		(209,994	)
From net realized gains on investments
Investor Class		—			(296,040	)
Institutional Class		—			(72,248	)
Class A		—			(3,104	)
Class C		—			(31,055	)
Class M		—			(7,402	)

Total distributions		(4,591,021	)		(8,259,743	)

SHARE TRANSACTIONS:
Investor Class
Proceeds from sale of shares		131,552,581			99,742,842
Issued to shareholders in reinvestment of distributions		2,631,946			5,505,373
Cost of shares redeemed		(51,117,822	)		(87,610,628	)

Net increase from share transactions		83,066,705			17,637,587

Institutional Class
Proceeds from sale of shares		69,234,931			35,481,853
Issued to shareholders in reinvestment of distributions		977,605			1,325,042
Cost of shares redeemed		(19,876,575	)		(15,562,644	)

Net increase from share transactions		50,335,961			21,244,251

Class A
Proceeds from sale of shares		4,506,655			521,562
Issued to shareholders in reinvestment of distributions		35,436			16,964
Cost of shares redeemed		(109,637	)		(1,320,635	)

Net increase/(decrease) from share transactions		4,432,454			(782,109	)

Class C
Proceeds from sale of shares		4,828,879			7,190,546
Issued to shareholders in reinvestment of distributions		155,227			405,582
Cost of shares redeemed		(1,127,051	)		(7,581,444	)

Net increase from share transactions		3,857,055			14,684


See Notes to Financial Statements		89		June 30, 2012

Statement of Changes in Net Assets


	FORWARD CREDIT ANALYSIS LONG/SHORT FUND (continued)
	SIX MONTHS ENDED JUNE 30, 2012 (UNAUDITED)			YEAR ENDED DECEMBER 31, 2011
Class M
Proceeds from sale of shares	$	44,999,712		$	7,043,059
Issued to shareholders in reinvestment of distributions		348,158			18,909
Cost of shares redeemed		(3,158,590	)		(8,007,563	)

Net increase/(decrease) from share transactions		42,189,280			(945,595	)

Net increase in net assets	$	200,003,372		$	40,024,155

NET ASSETS:
Beginning of period		216,318,478			176,294,323

End of period (including accumulated net investment income of $186,825 and $4,933, respectively)	$	416,321,850		$	216,318,478

Other Information:
SHARE TRANSACTIONS:
Investor Class
Sold		15,231,778			12,487,420
Distributions reinvested		305,796			685,366
Redeemed		(5,924,752	)		(11,027,817	)

Net increase in shares outstanding		9,612,822			2,144,969

Institutional Class
Sold		8,059,838			4,469,995
Distributions reinvested		114,238			165,545
Redeemed		(2,334,245	)		(1,957,957	)

Net increase in shares outstanding		5,839,831			2,677,583

Class A
Sold		523,056			64,922
Distributions reinvested		4,116			2,106
Redeemed		(12,721	)		(163,083	)

Net increase/(decrease) in shares outstanding		514,451			(96,055	)

Class C
Sold		558,767			897,524
Distributions reinvested		18,042			50,442
Redeemed		(131,118	)		(953,912	)

Net increase/(decrease) in shares outstanding		445,691			(5,946	)

Class M
Sold		5,232,295			887,719
Distributions reinvested		40,588			2,348
Redeemed		(369,890	)		(1,000,790	)

Net increase/(decrease) in shares outstanding		4,902,993			(110,723	)


June 30, 2012		90		See Notes to Financial Statements

Statement of Changes in Net Assets


	FORWARD EM CORPORATE DEBT FUND
	SIX MONTHS ENDED JUNE 30, 2012 (UNAUDITED)			YEAR ENDED DECEMBER 31, 2011
OPERATIONS:
Net investment income	$	1,499,946		$	1,186,570
Net realized loss on investments		(373,926	)		(850,075	)
Net realized loss on futures contracts		—			(14,099	)
Net realized gain on swap contracts		105,853			143
Net realized gain on foreign currency transactions		502,722			1,384,119
Net change in unrealized depreciation on investments, futures contracts, swap contracts and translation of assets and liabilities in foreign currency		(2,035,850	)		(2,955,038	)

Net decrease in net assets resulting from operations		(301,255	)		(1,248,380	)

DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income
Investor Class		(1,155,894	)		(927,571	)
Institutional Class		(267,597	)		(1,584,601	)
Class C		(17,860	)		(237,664	)

Total distributions		(1,441,351	)		(2,749,836	)

SHARE TRANSACTIONS:
Investor Class
Proceeds from sale of shares		66,510,908			12,633,159
Issued to shareholders in reinvestment of distributions		1,099,301			323,410
Cost of shares redeemed		(4,015,053	)		(12,897,426	)

Net increase from share transactions		63,595,156			59,143

Institutional Class
Proceeds from sale of shares		7,418,622			13,050,802
Issued to shareholders in reinvestment of distributions		6,703			204,104
Cost of shares redeemed		(525,005	)		(20,706,647	)

Net increase/(decrease) from share transactions		6,900,320			(7,451,741	)

Class C
Proceeds from sale of shares		6,000			94,035
Issued to shareholders in reinvestment of distributions		1,462			18,011
Cost of shares redeemed		(24,409	)		(1,001,982	)

Net decrease from share transactions		(16,947	)		(889,936	)

Net increase/(decrease) in net assets	$	68,735,923		$	(12,280,750	)

NET ASSETS:
Beginning of period		13,457,467			25,738,217

End of period (including accumulated net investment income of $67,281 and $8,686, respectively)	$	82,193,390		$	13,457,467

Other Information:
SHARE TRANSACTIONS:
Investor Class
Sold		6,854,136			1,090,839
Distributions reinvested		116,864			32,479
Redeemed		(422,500	)		(1,142,319	)

Net increase/(decrease) in shares outstanding		6,548,500			(19,001	)


See Notes to Financial Statements		91		June 30, 2012

Statement of Changes in Net Assets


	FORWARD EM CORPORATE DEBT FUND (continued)
	SIX MONTHS ENDED JUNE 30, 2012 (UNAUDITED)			YEAR ENDED DECEMBER 31, 2011
Institutional Class
Sold		770,146			1,123,553
Distributions reinvested		715			22,566
Redeemed		(55,614	)		(1,889,253	)

Net increase/(decrease) in shares outstanding		715,247			(743,134	)

Class C
Sold		638			8,559
Distributions reinvested		155			1,924
Redeemed		(2,565	)		(97,023	)

Net decrease in shares outstanding		(1,772	)		(86,540	)


June 30, 2012		92		See Notes to Financial Statements

Statement of Changes in Net Assets


	FORWARD EMERGING MARKETS FUND
	SIX MONTHS ENDED JUNE 30, 2012 (UNAUDITED)			YEAR ENDED DECEMBER 31, 2011
OPERATIONS:
Net investment income	$	259,132		$	761,159
Net realized gain on investments		1,824,282			16,259,053
Net realized gain on futures contracts		502,734			709,703
Net realized gain/(loss) on foreign currency transactions		(287,759	)		3,306,967
Net change in unrealized depreciation on investments, futures contracts and translation of assets and liabilities in foreign currency		(262,373	)		(43,547,600	)

Net increase/(decrease) in net assets resulting from operations		2,036,016			(22,510,718	)

DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income
Investor Class		—			(1,275,161	)
Institutional Class		—			(2,133,235	)
Class M		—			(10,785	)
From net realized gains on investments
Investor Class		—			(9,766,080	)
Institutional Class		—			(14,903,069	)
Class M		—			(65,707	)

Total distributions		—			(28,154,037	)

SHARE TRANSACTIONS:
Investor Class
Proceeds from sale of shares		15,461,625			63,920,842
Issued to shareholders in reinvestment of distributions		—			9,621,171
Cost of shares redeemed		(25,167,617	)		(77,636,462	)

Net decrease from share transactions		(9,705,992	)		(4,094,449	)

Institutional Class
Proceeds from sale of shares		1,634,648			29,097,472
Issued to shareholders in reinvestment of distributions		—			13,262,480
Cost of shares redeemed		(28,103,815	)		(140,715,474	)

Net decrease from share transactions		(26,469,167	)		(98,355,522	)

Class M
Proceeds from sale of shares		870,145			85,910
Issued to shareholders in reinvestment of distributions		—			76,493
Cost of shares redeemed		(131,196	)		(191,219	)

Net increase/(decrease) from share transactions		738,949			(28,816	)

Net decrease in net assets	$	(33,400,194	)	$	(153,143,542	)

NET ASSETS:
Beginning of period		55,162,664			208,306,206

End of period (including accumulated net investment loss of $(65,774) and $(324,906), respectively)	$	21,762,470		$	55,162,664


See Notes to Financial Statements		93		June 30, 2012

Statement of Changes in Net Assets


	FORWARD EMERGING MARKETS FUND (continued)
	SIX MONTHS ENDED JUNE 30, 2012 (UNAUDITED)			YEAR ENDED DECEMBER 31, 2011
Other Information:
SHARE TRANSACTIONS:
Investor Class
Sold		1,476,663			3,368,862
Distributions reinvested		—			930,724
Redeemed		(2,382,691	)		(4,223,465	)

Net increase/(decrease) in shares outstanding		(906,028	)		76,121

Institutional Class
Sold		157,781			1,577,518
Distributions reinvested		—			1,238,385
Redeemed		(2,864,683	)		(7,003,500	)

Net decrease in shares outstanding		(2,706,902	)		(4,187,597	)

Class M
Sold		77,201			4,776
Distributions reinvested		—			7,155
Redeemed		(12,246	)		(9,556	)

Net increase in shares outstanding		64,955			2,375


June 30, 2012		94		See Notes to Financial Statements

Statement of Changes in Net Assets


	FORWARD ENDURANCE LONG/SHORT FUND
	SIX MONTHS ENDED JUNE 30, 2012^(a) (UNAUDITED)
OPERATIONS:
Net investment loss	$	(27,769	)
Net realized loss on investments		(80,978	)
Net realized gain on securities sold short		25,283
Net realized gain on option contracts		23,005
Net realized loss on foreign currency transactions		(3,254	)
Net change in unrealized depreciation on investments, securities sold short and options contracts		(81,870	)

Net decrease in net assets resulting from operations		(145,583	)


SHARE TRANSACTIONS:
Investor Class
Proceeds from sale of shares		189,964

Net increase from share transactions		189,964

Institutional Class
Proceeds from sale of shares		3,764,156
Cost of shares redeemed		(5,205	)

Net increase from share transactions		3,758,951

Net increase in net assets	$	3,803,332

NET ASSETS:
Beginning of period		0

End of period (including accumulated net investment loss of $(27,769))	$	3,803,332

Other Information:
SHARE TRANSACTIONS:
Investor Class
Sold		7,599

Net increase in shares outstanding		7,599

Institutional Class
Sold		145,922
Redeemed		(197	)

Net increase in shares outstanding		145,725

(a) The Forward Endurance Long/Short Fund commenced operations on January 3, 2012.


See Notes to Financial Statements		95		June 30, 2012

Statement of Changes in Net Assets


	FORWARD FOCUS FUND
	SIX MONTHS ENDED JUNE 30, 2012 (UNAUDITED)			YEAR ENDED DECEMBER 31, 2011
OPERATIONS:
Net investment income	$	34,579		$	12,165
Net realized gain on investments		45,357			701,785
Net change in unrealized appreciation/(depreciation) on investments		173,884			(973,371	)

Net increase/(decrease) in net assets resulting from operations		253,820			(259,421	)

DISTRIBUTIONS TO SHAREHOLDERS:
From net realized gains on investments
Investor Class		—			(126,220	)
Institutional Class		—			(534,887	)
Class A		—			(262,692	)

Total distributions		—			(923,799	)

SHARE TRANSACTIONS:
Investor Class
Proceeds from sale of shares		—			67,400
Issued to shareholders in reinvestment of distributions		—			8,970
Cost of shares redeemed		(15,463	)		(15	)

Net increase/(decrease) from share transactions		(15,463	)		76,355

Institutional Class
Proceeds from sale of shares		549,999			2,357,024
Issued to shareholders in reinvestment of distributions		—			34,364
Cost of shares redeemed		(919,704	)		(1,882,156	)

Net increase/(decrease) from share transactions		(369,705	)		509,232

Class A
Proceeds from sale of shares		9,162			192,563
Issued to shareholders in reinvestment of distributions		—			30,543
Cost of shares redeemed		(2,822	)		(3,181,710	)

Net increase/(decrease) from share transactions		6,340			(2,958,604	)

Net decrease in net assets	$	(125,008	)	$	(3,556,237	)

NET ASSETS:
Beginning of period		8,272,986			11,829,223

End of period (including accumulated net investment income of $46,744 and $12,165, respectively)	$	8,147,978		$	8,272,986

Other Information:
SHARE TRANSACTIONS:
Investor Class
Sold		—			6,119
Distributions reinvested		—			982
Redeemed		(1,651	)		(2	)

Net increase/(decrease) in shares outstanding		(1,651	)		7,099


June 30, 2012		96		See Notes to Financial Statements

Statement of Changes in Net Assets


	FORWARD FOCUS FUND (continued)
	SIX MONTHS ENDED JUNE 30, 2012 (UNAUDITED)			YEAR ENDED DECEMBER 31, 2011
Institutional Class
Sold		56,366			227,970
Distributions reinvested		—			3,703
Redeemed		(91,263	)		(175,549	)

Net increase/(decrease) in shares outstanding		(34,897	)		56,124

Class A
Sold		1,005			18,339
Distributions reinvested		—			3,371
Redeemed		(302	)		(335,394	)

Net increase/(decrease) in shares outstanding		703			(313,684	)


See Notes to Financial Statements		97		June 30, 2012

Statement of Changes in Net Assets


	FORWARD GLOBAL CREDIT LONG/SHORT FUND
	SIX MONTHS ENDED JUNE 30, 2012 (UNAUDITED)			PERIOD ENDED DECEMBER 31, 2011^(a)
OPERATIONS:
Net investment income	$	206,511		$	179,163
Net realized gain on investments		212,311			30,101
Net realized gain/(loss) on swap contracts		(23,280	)		8,828
Net realized gain/(loss) on foreign currency transactions		54,056			(1,736	)
Net change in unrealized depreciation on investments, swap contracts and translation of assets and liabilities in foreign currency		(353,443	)		(223,542	)

Net increase/(decrease) in net assets resulting from operations		96,155			(7,186	)

DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income
Investor Class		—			(38,193	)
Institutional Class		—			(39,708	)
Class C		—			(35,629	)
Class M		—			(38,714	)
From net realized gains on investments
Investor Class		—			(3,019	)
Institutional Class		—			(3,039	)
Class C		—			(2,958	)
Class M		—			(2,958	)

Total distributions		—			(164,218	)

SHARE TRANSACTIONS:
Investor Class
Proceeds from sale of shares		108,250			1,276,440
Cost of shares redeemed		(5,511	)		(702	)

Net increase from share transactions		102,739			1,275,738

Institutional Class
Proceeds from sale of shares		102,860			1,304,295
Issued to shareholders in reinvestment of distributions		—			1,129
Cost of shares redeemed		(476	)		(19,295	)

Net increase from share transactions		102,384			1,286,129

Class C
Proceeds from sale of shares		—			1,250,000

Net increase from share transactions		—			1,250,000

Class M
Proceeds from sale of shares		—			1,250,000

Net increase from share transactions		—			1,250,000

Net increase in net assets	$	301,278		$	4,890,463

NET ASSETS:
Beginning of period		4,890,463			0

End of period (including accumulated net investment income of $225,115 and $18,604, respectively)	$	5,191,741		$	4,890,463


June 30, 2012		98		See Notes to Financial Statements

Statement of Changes in Net Assets


	FORWARD GLOBAL CREDIT LONG/SHORT FUND (continued)
	SIX MONTHS ENDED JUNE 30, 2012 (UNAUDITED)			PERIOD ENDED DECEMBER 31, 2011^(a)
Other Information:
SHARE TRANSACTIONS:
Investor Class
Sold		4,316			51,035
Redeemed		(219	)		(29	)

Net increase in shares outstanding		4,097			51,006

Institutional Class
Sold		4,006			52,129
Distributions reinvested		—			47
Redeemed		(19	)		(776	)

Net increase in shares outstanding		3,987			51,400

Class C
Sold		—			50,000

Net increase in shares outstanding		—			50,000

Class M
Sold		—			50,000

Net increase in shares outstanding		—			50,000

(a) The Forward Global Credit Long/Short Fund commenced operations on October 3, 2011.


See Notes to Financial Statements		99		June 30, 2012

Statement of Changes in Net Assets


	FORWARD INTERNATIONAL DIVIDEND FUND
	SIX MONTHS ENDED JUNE 30, 2012 (UNAUDITED)			YEAR ENDED DECEMBER 31, 2011^(a)
OPERATIONS:
Net investment income	$	1,414,603		$	420,582
Net realized gain/(loss) on investments		(1,366,771	)		117,813
Net realized loss on futures contracts		(861,564	)		(61,399	)
Net realized loss on foreign currency transactions		(98,701	)		(17,476	)
Net change in unrealized depreciation on investments, futures contracts and translation of assets and liabilities in foreign currency		(644,515	)		(1,457,004	)

Net decrease in net assets resulting from operations		(1,556,948	)		(997,484	)

DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income
Investor Class		(83,259	)		(203,619	)
Institutional Class		(637,021	)		(260,990	)
Class M		(1,569	)		(1,008	)

Total distributions		(721,849	)		(465,617	)

SHARE TRANSACTIONS:
Investor Class
Proceeds from sale of shares		4,488,414			2,022,892
Issued to shareholders in reinvestment of distributions		78,962			182,458
Cost of shares redeemed		(857,736	)		(2,438,419	)

Net increase/(decrease) from share transactions		3,709,640			(233,069	)

Institutional Class
Proceeds from sale of shares		45,100,971			5,691,756
Issued to shareholders in reinvestment of distributions		97,635			77,844
Cost of shares redeemed		(6,473,581	)		(1,026,181	)

Net increase from share transactions		38,725,025			4,743,419

Class M
Proceeds from sale of shares		86,639			36,000
Issued to shareholders in reinvestment of distributions		1,408			1,008
Cost of shares redeemed		(15,717	)		(8,442	)

Net increase from share transactions		72,330			28,566

Net increase in net assets	$	40,228,198		$	3,075,815

NET ASSETS:
Beginning of period		8,896,966			5,821,151

End of period (including accumulated net investment income of $703,398 and $10,644, respectively)	$	49,125,164		$	8,896,966

Other Information:
SHARE TRANSACTIONS:
Investor Class
Sold		535,459			220,705
Distributions reinvested		9,717			20,964
Redeemed		(103,316	)		(270,641	)

Net increase/(decrease) in shares outstanding		441,860			(28,972	)


June 30, 2012		100		See Notes to Financial Statements

Statement of Changes in Net Assets


	FORWARD INTERNATIONAL DIVIDEND FUND (continued)
	SIX MONTHS ENDED JUNE 30, 2012 (UNAUDITED)			YEAR ENDED DECEMBER 31, 2011^(a)
Institutional Class
Sold		6,089,251			764,317
Distributions reinvested		14,051			10,508
Redeemed		(899,840	)		(135,052	)

Net increase in shares outstanding		5,203,462			639,773

Class M
Sold		11,658			4,386
Distributions reinvested		202			144
Redeemed		(2,329	)		(1,239	)

Net increase in shares outstanding		9,531			3,291

(a) The Forward International Dividend Fund began offering Class M shares on May 2, 2011.


See Notes to Financial Statements		101		June 30, 2012

Statement of Changes in Net Assets


	FORWARD INTERNATIONAL SMALL COMPANIES FUND
	SIX MONTHS ENDED JUNE 30, 2012 (UNAUDITED)			YEAR ENDED DECEMBER 31, 2011
OPERATIONS:
Net investment income	$	2,273,266		$	4,350,394
Net realized gain/(loss) on investments		5,227,251			(4,080,001	)
Net realized loss on swap contracts		(171,168	)		(587,657	)
Net realized gain on foreign currency transactions		332,815			16,133,672
Net change in unrealized appreciation/(depreciation) on investments, swap contracts and translation of assets and liabilities in foreign currency		12,981,094			(112,591,794	)

Net increase/(decrease) in net assets resulting from operations		20,643,258			(96,775,386	)

DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income
Investor Class		—			(600,026	)
Institutional Class		—			(4,540,965	)
Class A		—			(9,583	)
Class M		—			(941	)

Total distributions		—			(5,151,515	)

SHARE TRANSACTIONS:
Investor Class
Proceeds from sale of shares		12,506,918			35,117,408
Issued to shareholders in reinvestment of distributions		—			480,227
Cost of shares redeemed		(28,679,811	)		(68,380,290	)

Net decrease from share transactions		(16,172,893	)		(32,782,655	)

Institutional Class
Proceeds from sale of shares		24,997,823			98,573,412
Issued to shareholders in reinvestment of distributions		—			4,291,354
Cost of shares redeemed		(105,654,953	)		(168,020,070	)

Net decrease from share transactions		(80,657,130	)		(65,155,304	)

Class A
Proceeds from sale of shares		8,883			574,142
Issued to shareholders in reinvestment of distributions		—			8,841
Cost of shares redeemed		(264,064	)		(565,766	)

Net increase/(decrease) from share transactions		(255,181	)		17,217

Class M
Proceeds from sale of shares		11,195,057			88,167
Issued to shareholders in reinvestment of distributions		—			645
Cost of shares redeemed		(1,410,292	)		(79,064	)

Net increase from share transactions		9,784,765			9,748

Net decrease in net assets	$	(66,657,181	)	$	(199,837,895	)

NET ASSETS:
Beginning of period		333,767,923			533,605,818

End of period (including accumulated net investment income/(loss) of $699,712 and $(1,573,554), respectively)	$	267,110,742		$	333,767,923


June 30, 2012		102		See Notes to Financial Statements

Statement of Changes in Net Assets


	FORWARD INTERNATIONAL SMALL COMPANIES FUND (continued)
	SIX MONTHS ENDED JUNE 30, 2012 (UNAUDITED)			YEAR ENDED DECEMBER 31, 2011
Other Information:
SHARE TRANSACTIONS:
Investor Class
Sold		985,142			2,678,798
Distributions reinvested		—			41,978
Redeemed		(2,312,645	)		(4,842,552	)

Net decrease in shares outstanding		(1,327,503	)		(2,121,776	)

Institutional Class
Sold		1,969,815			7,299,247
Distributions reinvested		—			375,118
Redeemed		(8,360,257	)		(13,382,018	)

Net decrease in shares outstanding		(6,390,442	)		(5,707,653	)

Class A
Sold		714			40,069
Distributions reinvested		—			771
Redeemed		(20,996	)		(42,577	)

Net decrease in shares outstanding		(20,282	)		(1,737	)

Class M
Sold		865,232			5,830
Distributions reinvested		—			56
Redeemed		(111,427	)		(5,769	)

Net increase in shares outstanding		753,805			117


See Notes to Financial Statements		103		June 30, 2012

Statement of Changes in Net Assets


	FORWARD LARGE CAP DIVIDEND FUND
	SIX MONTHS ENDED JUNE 30, 2012 (UNAUDITED)			YEAR ENDED DECEMBER 31, 2011^(a)
OPERATIONS:
Net investment income	$	325,094		$	534,713
Net realized gain/(loss) on investments		(77,976	)		1,290,737
Net change in unrealized appreciation/(depreciation) on investments		472,536			(1,298,852	)

Net increase in net assets resulting from operations		719,654			526,598

DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income
Investor Class		(1,027	)		(2,437	)
Institutional Class		(55,186	)		(213,653	)
Class A		(98,575	)		(344,910	)

Total distributions		(154,788	)		(561,000	)

SHARE TRANSACTIONS:
Investor Class
Proceeds from sale of shares		51,620			59,763
Issued to shareholders in reinvestment of distributions		867			1,851
Cost of shares redeemed		(84	)		—

Net increase from share transactions		52,403			61,614

Institutional Class
Proceeds from sale of shares		2,044,979			5,571,305
Issued to shareholders in reinvestment of distributions		3,141			9,797
Cost of shares redeemed		(2,724,363	)		(3,551,183	)

Net increase/(decrease) from share transactions		(676,243	)		2,029,919

Class A
Proceeds from sale of shares		438,938			888,946
Issued to shareholders in reinvestment of distributions		8,820			22,305
Cost of shares redeemed		(189,893	)		(6,806,417	)

Net increase/(decrease) from share transactions		257,865			(5,895,166	)

Net increase/(decrease) in net assets	$	198,891		$	(3,838,035	)

NET ASSETS:
Beginning of period		14,326,369			18,164,404

End of period (including accumulated net investment income of $170,306 and $0, respectively)	$	14,525,260		$	14,326,369

Other Information:
SHARE TRANSACTIONS:
Investor Class
Sold		4,723			5,853
Distributions reinvested		83			178
Redeemed		(8	)		—

Net increase in shares outstanding		4,798			6,031


June 30, 2012		104		See Notes to Financial Statements

Statement of Changes in Net Assets


	FORWARD LARGE CAP DIVIDEND FUND (continued)
	SIX MONTHS ENDED JUNE 30, 2012 (UNAUDITED)			YEAR ENDED DECEMBER 31, 2011^(a)
Institutional Class
Sold		191,543			528,286
Distributions reinvested		303			953
Redeemed		(256,367	)		(335,077	)

Net increase/(decrease) in shares outstanding		(64,521	)		194,162

Class A
Sold		40,234			82,991
Distributions reinvested		839			2,141
Redeemed		(17,257	)		(659,180	)

Net increase/(decrease) in shares outstanding		23,816			(574,048	)

(a) The Forward Large Cap Dividend Fund began offering Investor Class shares on May 2, 2011.


See Notes to Financial Statements		105		June 30, 2012

Statement of Changes in Net Assets


	FORWARD SELECT EM DIVIDEND FUND
	SIX MONTHS ENDED JUNE 30, 2012 (UNAUDITED)			PERIOD ENDED DECEMBER 31, 2011^(a)
OPERATIONS:
Net investment income	$	258,291		$	350,838
Net realized loss on investments		(132,448	)		(1,243,111	)
Net realized gain/(loss) on futures contracts		106,464			(526,065	)
Net realized loss on foreign currency transactions		(97,059	)		(262,917	)
Net change in unrealized appreciation/(depreciation) on investments, futures contracts and translation of assets and liabilities in foreign currency		637,162			(992,172	)

Net increase/(decrease) in net assets resulting from operations		772,410			(2,673,427	)

DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income
Investor Class		(24,656	)		(22,118	)
Institutional Class		(90,848	)		(282,643	)
Class C		(10,273	)		(12,674	)
Class M		(17,459	)		(17,431	)
From return of capital
Investor Class		—			(168	)
Institutional Class		—			(2,147	)
Class C		—			(96	)
Class M		—			(132	)

Total distributions		(143,236	)		(337,409	)

SHARE TRANSACTIONS:
Investor Class
Proceeds from sale of shares		641,647			1,255,771
Issued to shareholders in reinvestment of distributions		11,654			6,031
Cost of shares redeemed		(609,634	)		(36,094	)

Net increase from share transactions		43,667			1,225,708

Institutional Class
Proceeds from sale of shares		531,978			15,080,283
Issued to shareholders in reinvestment of distributions		273			106
Cost of shares redeemed		(1,628,584	)		(8,324,055	)

Net increase/(decrease) from share transactions		(1,096,333	)		6,756,334

Class C
Proceeds from sale of shares		15,173			675,000
Issued to shareholders in reinvestment of distributions		274			—

Net increase from share transactions		15,447			675,000

Class M
Proceeds from sale of shares		178,762			812,020
Issued to shareholders in reinvestment of distributions		4,312			309
Cost of shares redeemed		(15,610	)		(52,151	)

Net increase from share transactions		167,464			760,178

Net increase/(decrease) in net assets	$	(240,581	)	$	6,406,384


June 30, 2012		106		See Notes to Financial Statements

Statement of Changes in Net Assets


	FORWARD SELECT EM DIVIDEND FUND (continued)
	SIX MONTHS ENDED JUNE 30, 2012 (UNAUDITED)			PERIOD ENDED DECEMBER 31, 2011^(a)
NET ASSETS:
Beginning of period	$	6,406,384		$	0

End of period (including accumulated net investment income/(loss) of $114,458 and $(597), respectively)	$	6,165,803		$	6,406,384

Other Information:
SHARE TRANSACTIONS:
Investor Class
Sold		29,117			54,143
Distributions reinvested		549			317
Redeemed		(27,133	)		(1,809	)

Net increase in shares outstanding		2,533			52,651

Institutional Class
Sold		25,539			632,586
Distributions reinvested		13			6
Redeemed		(73,595	)		(414,775	)

Net increase/(decrease) in shares outstanding		(48,043	)		217,817

Class C
Sold		735			27,000
Distributions reinvested		13			—

Net increase in shares outstanding		748			27,000

Class M
Sold		8,187			33,898
Distributions reinvested		208			16
Redeemed		(704	)		(2,607	)

Net increase in shares outstanding		7,691			31,307

(a) The Forward Select EM Dividend Fund commenced operations on May 2, 2011.


See Notes to Financial Statements		107		June 30, 2012

Statement of Changes in Net Assets


	FORWARD SMALL CAP EQUITY FUND
	SIX MONTHS ENDED JUNE 30, 2012 (UNAUDITED)			YEAR ENDED DECEMBER 31, 2011
OPERATIONS:
Net investment loss	$	(172,919	)	$	(1,022,743	)
Net realized gain on investments		754,810			87,508,839
Net realized gain/(loss) on futures contracts		317,831			(501,237	)
Net change in unrealized appreciation/(depreciation) on investments and futures contracts		2,035,282			(90,344,928	)

Net increase/(decrease) in net assets resulting from operations		2,935,004			(4,360,069	)

SHARE TRANSACTIONS:
Investor Class
Proceeds from sale of shares		253,422			28,074,473
Cost of shares redeemed		(6,069,282	)		(100,642,379	)

Net decrease from share transactions		(5,815,860	)		(72,567,906	)

Institutional Class
Proceeds from sale of shares		177,229			4,788,038
Cost of shares redeemed		(8,460,166	)		(220,164,605	)

Net decrease from share transactions		(8,282,937	)		(215,376,567	)

Class A
Proceeds from sale of shares		19,902			164,542
Cost of shares redeemed		(243,555	)		(1,387,225	)

Net decrease from share transactions		(223,653	)		(1,222,683	)

Class M
Proceeds from sale of shares		3,563,677			149,017
Cost of shares redeemed		(608,298	)		(66,774	)

Net increase from share transactions		2,955,379			82,243

Net decrease in net assets	$	(8,432,067	)	$	(293,444,982	)

NET ASSETS:
Beginning of period		48,707,478			342,152,460

End of period (including accumulated net investment loss of $(172,919) and $0, respectively)	$	40,275,411		$	48,707,478

Other Information:
SHARE TRANSACTIONS:
Investor Class
Sold		16,405			1,611,061
Redeemed		(390,956	)		(6,128,087	)

Net decrease in shares outstanding		(374,551	)		(4,517,026	)

Institutional Class
Sold		11,002			272,728
Redeemed		(514,712	)		(12,313,735	)

Net decrease in shares outstanding		(503,710	)		(12,041,007	)

Class A
Sold		1,282			9,645
Redeemed		(15,575	)		(82,801	)

Net decrease in shares outstanding		(14,293	)		(73,156	)

Class M
Sold		213,237			8,384
Redeemed		(37,433	)		(4,047	)

Net increase in shares outstanding		175,804			4,337


June 30, 2012		108		See Notes to Financial Statements

Statement of Changes in Net Assets


	FORWARD TACTICAL ENHANCED FUND
	SIX MONTHS ENDED JUNE 30, 2012 (UNAUDITED)			PERIOD ENDED DECEMBER 31, 2011^(a)
OPERATIONS:
Net investment loss	$	(327,661	)	$	(416,442	)
Net realized gain on investments		12,959			0
Net realized gain on option contracts		0			5,098
Net realized gain/(loss) on futures contracts		1,881,945			(1,085,131	)
Net change in unrealized appreciation on investments and futures contracts		39,979			101,191

Net increase/(decrease) in net assets resulting from operations		1,607,222			(1,395,284	)

DISTRIBUTIONS TO SHAREHOLDERS:
From net realized gains on investments
Investor Class		—			(24,358	)
Institutional Class		—			(22,001	)
Class A		—			(4,572	)
Class C		—			(4,117	)
Class M		—			(162	)

Total distributions		—			(55,210	)

SHARE TRANSACTIONS:
Investor Class
Proceeds from sale of shares		6,345,093			15,829,736
Issued to shareholders in reinvestment of distributions		—			24,330
Cost of shares redeemed		(3,765,302	)		(3,032,274	)

Net increase from share transactions		2,579,791			12,821,792

Institutional Class
Proceeds from sale of shares		5,274,365			13,312,876
Issued to shareholders in reinvestment of distributions		—			12,207
Cost of shares redeemed		(5,188,387	)		(1,063,897	)

Net increase from share transactions		85,978			12,261,186

Class A
Proceeds from sale of shares		939,493			2,678,420
Issued to shareholders in reinvestment of distributions		—			4,571
Cost of shares redeemed		(226,361	)		(21,361	)

Net increase from share transactions		713,132			2,661,630

Class C
Proceeds from sale of shares		718,244			3,489,716
Issued to shareholders in reinvestment of distributions		—			4,066
Cost of shares redeemed		(132,265	)		(1,135,993	)

Net increase from share transactions		585,979			2,357,789

Class M
Proceeds from sale of shares		8,750			96,778
Issued to shareholders in reinvestment of distributions		—			137
Cost of shares redeemed		(25,002	)		(10,000	)

Net increase/(decrease) from share transactions		(16,252	)		86,915

Net increase in net assets	$	5,555,850		$	28,738,818


See Notes to Financial Statements		109		June 30, 2012

Statement of Changes in Net Assets


	FORWARD TACTICAL ENHANCED FUND (continued)
	SIX MONTHS ENDED JUNE 30, 2012 (UNAUDITED)			PERIOD ENDED DECEMBER 31, 2011^(a)
NET ASSETS:
Beginning of period	$	28,738,818		$	0

End of period (including accumulated net investment loss of $(327,661) and $0, respectively)	$	34,294,668		$	28,738,818

Other Information:
SHARE TRANSACTIONS:
Investor Class
Sold		247,942			625,573
Distributions reinvested		—			1,002
Redeemed		(148,066	)		(123,312	)

Net increase in shares outstanding		99,876			503,263

Institutional Class
Sold		205,555			532,633
Distributions reinvested		—			501
Redeemed		(203,131	)		(43,363	)

Net increase in shares outstanding		2,424			489,771

Class A
Sold		37,157			108,192
Distributions reinvested		—			189
Redeemed		(9,073	)		(875	)

Net increase in shares outstanding		28,084			107,506

Class C
Sold		28,406			136,619
Distributions reinvested		—			169
Redeemed		(5,298	)		(46,233	)

Net increase in shares outstanding		23,108			90,555

Class M
Sold		336			3,832
Distributions reinvested		—			6
Redeemed		(1,026	)		(372	)

Net increase/(decrease) in shares outstanding		(690	)		3,466

(a) The Forward Tactical Enhanced Fund commenced operations on January 3, 2011. The Forward Tactical Enhanced Fund began offering Class M shares on April 15, 2011.


June 30, 2012		110		See Notes to Financial Statements

Statement of Changes in Net Assets


	FORWARD TACTICAL GROWTH FUND
	SIX MONTHS ENDED JUNE 30, 2012 (UNAUDITED)			YEAR ENDED DECEMBER 31, 2011
OPERATIONS:
Net investment loss	$	(7,127,039	)	$	(12,448,830	)
Net realized gain/(loss) on investments		8,404,262			(100,658	)
Net realized gain/(loss) on futures contracts		31,100,993			(596,519	)
Net change in unrealized appreciation/(depreciation) on investments and futures contracts		6,370,972			(36,729,945	)

Net increase/(decrease) in net assets resulting from operations		38,749,188			(49,875,952	)

DISTRIBUTIONS TO SHAREHOLDERS:
From net realized gains on investments
Investor Class		—			(1,394,264	)
Institutional Class		—			(389,080	)
Class A		—			(898,650	)
Class C		—			(778,830	)
Class M		—			(1,626,530	)

Total distributions		—			(5,087,354	)

SHARE TRANSACTIONS:
Investor Class
Proceeds from sale of shares		30,775,673			109,940,935
Issued to shareholders in reinvestment of distributions		—			1,373,092
Cost of shares redeemed		(76,053,112	)		(159,033,989	)

Net decrease from share transactions		(45,277,439	)		(47,719,962	)

Institutional Class
Proceeds from sale of shares		17,433,749			38,650,871
Issued to shareholders in reinvestment of distributions		—			352,079
Cost of shares redeemed		(24,072,273	)		(117,152,488	)

Net decrease from share transactions		(6,638,524	)		(78,149,538	)

Class A
Proceeds from sale of shares		31,497,155			139,053,099
Issued to shareholders in reinvestment of distributions		—			869,576
Cost of shares redeemed		(52,397,887	)		(43,474,434	)

Net increase/(decrease) from share transactions		(20,900,732	)		96,448,241

Class C
Proceeds from sale of shares		11,271,870			61,876,317
Issued to shareholders in reinvestment of distributions		—			703,493
Cost of shares redeemed		(19,819,559	)		(32,609,270	)

Net increase/(decrease) from share transactions		(8,547,689	)		29,970,540

Class M
Proceeds from sale of shares		250,792,662			235,202,336
Issued to shareholders in reinvestment of distributions		—			1,521,728
Cost of shares redeemed		(75,754,155	)		(127,713,782	)

Net increase from share transactions		175,038,507			109,010,282

Net increase in net assets	$	132,423,311		$	54,596,257


See Notes to Financial Statements		111		June 30, 2012

Statement of Changes in Net Assets


	FORWARD TACTICAL GROWTH FUND (continued)
	SIX MONTHS ENDED JUNE 30, 2012 (UNAUDITED)			YEAR ENDED DECEMBER 31, 2011
NET ASSETS:
Beginning of period	$	912,181,043		$	857,584,786

End of period (including accumulated net investment loss of $(7,127,039) and $0, respectively)	$	1,044,604,354		$	912,181,043

Other Information:
SHARE TRANSACTIONS:
Investor Class
Sold		1,196,060			4,229,623
Distributions reinvested		—			55,056
Redeemed		(2,938,731	)		(6,060,527	)

Net decrease in shares outstanding		(1,742,671	)		(1,775,848	)

Institutional Class
Sold		665,519			1,464,440
Distributions reinvested		—			14,010
Redeemed		(928,122	)		(4,409,426	)

Net decrease in shares outstanding		(262,603	)		(2,930,976	)

Class A
Sold		1,226,903			5,366,308
Distributions reinvested		—			35,007
Redeemed		(2,047,539	)		(1,686,554	)

Net increase/(decrease) in shares outstanding		(820,636	)		3,714,761

Class C
Sold		441,478			2,377,846
Distributions reinvested		—			28,586
Redeemed		(778,403	)		(1,273,550	)

Net increase/(decrease) in shares outstanding		(336,925	)		1,132,882

Class M
Sold		9,708,004			8,955,197
Distributions reinvested		—			60,530
Redeemed		(2,913,365	)		(4,915,187	)

Net increase in shares outstanding		6,794,639			4,100,540


June 30, 2012		112		See Notes to Financial Statements

Consolidated Statement of Changes in Net Assets


	FORWARD COMMODITY LONG/ SHORT STRATEGY FUND
	SIX MONTHS ENDED JUNE 30, 2012 (UNAUDITED)				YEAR ENDED DECEMBER 31, 2011^(a)
OPERATIONS:
Net investment loss		$	(531,596	)		$	(237,785	)
Net realized gain/(loss) on investments			2,888				(288,602	)
Net realized gain/(loss) on swap contracts			(9,564,097	)			1,903,975
Net change in unrealized appreciation/(depreciation) on investments and swap contracts			(4,240,469	)			297,841

Net increase/(decrease) in net assets resulting from operations			(14,333,274	)			1,675,429

DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income
Investor Class			—				(606,958	)
Institutional Class			—				(874,677	)
Class C			—				(56,852	)
Class M			—				(14,177	)
Class Z			—				(209,547	)
From return of capital
Investor Class			—				(5,183	)
Institutional Class			—				(7,470	)
Class C			—				(485	)
Class M			—				(121	)
Class Z			—				(1,789	)

Total distributions			—				(1,777,259	)

SHARE TRANSACTIONS:
Investor Class
Proceeds from sale of shares			20,122,125				56,629,979
Issued to shareholders in reinvestment of distributions			—				610,704
Cost of shares redeemed			(28,282,543	)			(8,470,303	)

Net increase/(decrease) from share transactions			(8,160,418	)			48,770,380

Institutional Class
Proceeds from sale of shares			56,208,893				69,397,342
Issued to shareholders in reinvestment of distributions			—				499,193
Cost of shares redeemed			(18,933,439	)			(2,973,677	)

Net increase from share transactions			37,275,454				66,922,858

Class C
Proceeds from sale of shares			5,116,398				5,215,451
Issued to shareholders in reinvestment of distributions			—				54,543
Cost of shares redeemed			(625,262	)			(35,928	)

Net increase from share transactions			4,491,136				5,234,066

Class M
Proceeds from sale of shares			29,281,672				1,729,990
Issued to shareholders in reinvestment of distributions			—				14,298
Cost of shares redeemed			(2,471,781	)			—

Net increase from share transactions			26,809,891				1,744,288


See Notes to Financial Statements		113		June 30, 2012

Consolidated Statement of Changes in Net Assets


	FORWARD COMMODITY LONG/ SHORT STRATEGY FUND (continued)
	SIX MONTHS ENDED JUNE 30, 2012 (UNAUDITED)				YEAR ENDED DECEMBER 31, 2011^(a)
Class Z
Proceeds from sale of shares			—			$	35,825,000
Issued to shareholders in reinvestment of distributions			—				202,063
Cost of shares redeemed		$	(4,250,000	)			(26,494,301	)

Net increase/(decrease) from share transactions			(4,250,000	)			9,532,762

Net increase in net assets		$	41,832,789			$	132,102,524

NET ASSETS:
Beginning of period			132,102,524				0

End of period (including accumulated net investment loss of $(531,596) and $0, respectively)		$	173,935,313			$	132,102,524

Other Information:
SHARE TRANSACTIONS:
Investor Class
Sold			782,786				2,073,618
Distributions reinvested			—				22,803
Redeemed			(1,110,207	)			(314,524	)

Net increase/(decrease) in shares outstanding			(327,421	)			1,781,897

Institutional Class
Sold			2,185,401				2,540,959
Distributions reinvested			—				18,605
Redeemed			(753,327	)			(111,104	)

Net increase in shares outstanding			1,432,074				2,448,460

Class C
Sold			200,125				191,555
Distributions reinvested			—				2,042
Redeemed			(24,484	)			(1,366	)

Net increase in shares outstanding			175,641				192,231

Class M
Sold			1,138,499				63,479
Distributions reinvested			—				533
Redeemed			(96,550	)			—

Net increase in shares outstanding			1,041,949				64,012

Class Z
Sold			—				1,394,519
Distributions reinvested			—				7,534
Redeemed			(164,479	)			(1,002,582	)

Net increase/(decrease) in shares outstanding			(164,479	)			399,471

(a) The Forward Commodity Long/Short Strategy Fund commenced operations on January 3, 2011. The Forward Commodity Long/Short Strategy Fund began offering Class C shares on May 2, 2011.


June 30, 2012		114		See Notes to Financial Statements

Consolidated Statement of Changes in Net Assets


	FORWARD MANAGED FUTURES STRATEGY FUND
	PERIOD ENDED JUNE 30, 2012^(a) (UNAUDITED)
OPERATIONS:
Net investment loss		$	(67,784	)
Net realized gain on swap contracts			83,534
Net change in unrealized depreciation on investments and swap contracts			(726,526	)

Net decrease in net assets resulting from operations			(710,776	)

SHARE TRANSACTIONS:
Investor Class
Proceeds from sale of shares			1,322,299
Cost of shares redeemed			(10,732	)

Net increase from share transactions			1,311,567

Institutional Class
Proceeds from sale of shares			1,070,003

Net increase from share transactions			1,070,003

Class C
Proceeds from sale of shares			1,045,000

Net increase from share transactions			1,045,000

Class Z
Proceeds from sale of shares			6,800,000

Net increase from share transactions			6,800,000

Net increase in net assets		$	9,515,794

NET ASSETS:
Beginning of period			0

End of period (including accumulated net investment loss of $(67,784))		$	9,515,794

Other Information:
SHARE TRANSACTIONS:
Investor Class
Sold			52,529
Redeemed			(421	)

Net increase in shares outstanding			52,108

Institutional Class
Sold			42,743

Net increase in shares outstanding			42,743

Class C
Sold			41,717

Net increase in shares outstanding			41,717

Class Z
Sold			269,307

Net increase in shares outstanding			269,307

(a) The Forward Managed Futures Strategy Fund commenced operations on January 30, 2012. The Forward Managed Futures Strategy Fund began offering Class Z shares on January 31, 2012.


See Notes to Financial Statements		115		June 30, 2012

Statement of Cash Flows (Unaudited)

For the Six Months Ended June 30, 2012


	FORWARD CREDIT ANALYSIS LONG/SHORT FUND			FORWARD SELECT EM DIVIDEND FUND
CASH FLOWS FROM OPERATING ACTIVITIES:
Net increase in net assets resulting from operations	$	20,712,938		$	772,410
Adjustments to reconcile net increase in net assets resulting from operations to net cash provided/(used) in operating activities
Purchases of investment securities		(255,947,430	)		(3,148,595	)
Proceeds from sale of investment securities		128,452,472			3,279,485
Proceeds from securities sold short transactions		59,749,168			—
Purchases to cover securities sold short transactions		(50,386,785	)		—
Net (purchases) proceeds from short-term investment securities		(17,408,331	)		47,698
Discount and premiums amortized		(254,963	)		5,701
Net realized (gain)/loss on investment securities		(6,930,621	)		132,448
Net realized loss on securities sold short		378,831			—
Net realized loss on foreign currency		—			97,059
Net change in unrealized appreciation on investments, securities sold short and translation of assets and liabilities in foreign currency		(9,388,235	)		(637,162	)
Changes in assets and liabilities:
Increase in deposit with broker for securities sold short		(29,994,419	)		—
Increase in deposit with broker for futures contracts		—			(6,464	)
Increase in receivable due from advisor		—			(1,205	)
Increase in interest and dividends receivable		(1,560,971	)		(34,697	)
Increase in other assets		(37,443	)		(33,722	)
Decrease in payable due to broker for securities sold short		(18,320,579	)		—
Decrease in payable for interest on short sales		(50,465	)		—
Increase in payable for interest due on loan		—			67
Increase in payable for advisor		225,097			0
Increase in payable for distribution and service fees		36,239			44
Decrease in payable to trustees		(369	)		(44	)
Decrease in payable for chief compliance officer fee		(308	)		(23	)
Decrease in accrued expenses and other liabilities		(13,751	)		(17,461	)

Net cash provided (used) in operating activities		(180,739,925	)		455,539

CASH FLOWS FROM FINANCING ACTIVITIES:
Cash provided by loan, net		—			552,478
Proceeds from sale of shares		256,598,445			1,379,227
Cost of shares redeemed		(75,415,871	)		(2,253,788	)
Cash distributions paid		(442,649	)		(126,723	)

Net cash provided (used) by financing activities		180,739,925			(448,806	)

EFFECT OF EXCHANGE RATES ON CASH		—			(6,707	)
NET CHANGE IN CASH FOR THE PERIOD		0			26

CASH & FOREIGN CURRENCY, BEGINNING OF PERIOD		0			2,004

CASH & FOREIGN CURRENCY, END OF PERIOD	$	0		$	2,030

Non-cash financing activities not included herein consist of reinvestment of distributions of $4,148,372 and $16,513, respectively.

Cash paid for interest on short sales and interest paid to broker for Forward Credit Analysis Long/Short Fund was $1,060,465 and cash paid for interest on loan for Forward Select EM Dividend Fund was $2,477.


June 30, 2012		116		See Notes to Financial Statements

Financial Highlights

For a share outstanding throughout the periods presented.

Forward Credit Analysis Long/Short Fund


	INVESTOR CLASS
	SIX MONTHS ENDED JUNE 30, 2012 (UNAUDITED)			YEAR ENDED DECEMBER 31, 2011^(a)			YEAR ENDED DECEMBER 31, 2010			YEAR ENDED DECEMBER 31, 2009			PERIOD ENDED DECEMBER 31, 2008^(b)
NET ASSET VALUE, BEGINNING OF PERIOD	$	8.09		$	7.96		$	8.08		$	5.84		$	7.63
INCOME/(LOSS) FROM OPERATIONS:
Net investment income		0.14	^(c)		0.32	^(c)		0.41			0.48			0.47
Net realized and unrealized gain/(loss) on investments		0.57			0.14			(0.07	)		2.19			(1.68	)

Total from Investment Operations		0.71			0.46			0.34			2.67			(1.21	)

LESS DISTRIBUTIONS:
From investment income		(0.12	)		(0.31	)		(0.39	)		(0.43	)		(0.58	)

From capital gains		—			(0.02	)		(0.07	)		—			—

Total Distributions		(0.12	)		(0.33	)		(0.46	)		(0.43	)		(0.58	)

NET INCREASE/(DECREASE) IN NET ASSET VALUE		0.59			0.13			(0.12	)		2.24			(1.79	)

NET ASSET VALUE, END OF PERIOD	$	8.68		$	8.09		$	7.96		$	8.08		$	5.84

TOTAL RETURN		8.78	%^(d)		5.83	%		4.17	%		46.56	%		(16.59	)%^(d)
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (in 000s)	$	250,950		$	156,238		$	136,654		$	61,043		$	12,867
RATIOS TO AVERAGE NET ASSETS (excluding interest expense):
Net investment income including reimbursement/waiver		3.92	%^(e)		6.13	%		6.39	%		8.48	%		13.10	%^(e)
Operating expenses including reimbursement/waiver		1.99	%^(e)		1.99	%		1.98	%^(f)		1.93	%^(g)		1.84	%^(e)
Operating expenses excluding reimbursement/waiver		2.09	%^(e)		2.14	%		2.14	%		2.22	%		2.52	%^(e)
RATIOS TO AVERAGE NET ASSETS (including interest expense):
Net investment income including reimbursement/waiver		3.23	%^(e)		3.95	%		5.15	%		6.61	%		8.79	%^(e)
Operating expenses including reimbursement/waiver		2.68	%^(e)		4.17	%		3.22	%^(f)		3.80	%^(g)		6.14	%^(e)
Operating expenses excluding reimbursement/waiver		2.78	%^(e)		4.32	%		3.39	%		4.09	%		6.82	%^(e)
PORTFOLIO TURNOVER RATE		39	%^(d)		133	%		89	%		221	%		311	%^(h)

(a) Prior to May 1, 2011, the Forward Credit Analysis Long/Short Fund was known as the Forward Long/Short Credit Analysis Fund.

(b) The Fund began offering Investor Class shares on May 1, 2008

(d) Not Annualized.

(e) Annualized.

(f) Effective May 1, 2010, the net expense limitation changed from 1.95% to 1.99%.

(g) Effective May 1, 2009, the net expense limitation changed from 1.84% to 1.95%.

(h) Portfolio turnover rate is calculated at the Fund level and represents the year ended December 31, 2008.


See Notes to Financial Statements		117		June 30, 2012

Financial Highlights

For a share outstanding throughout the periods presented.

Forward Credit Analysis Long/Short Fund


	INSTITUTIONAL CLASS
	SIX MONTHS ENDED JUNE 30, 2012 (UNAUDITED)			YEAR ENDED DECEMBER 31, 2011^(a)			YEAR ENDED DECEMBER 31, 2010			YEAR ENDED DECEMBER 31, 2009			PERIOD ENDED DECEMBER 31, 2008^(b)
NET ASSET VALUE, BEGINNING OF PERIOD	$	8.04		$	7.91		$	8.03		$	5.81		$	7.63
INCOME/(LOSS) FROM OPERATIONS:
Net investment income		0.15	^(c)		0.34	^(c)		0.48			0.54			0.39
Net realized and unrealized gain/(loss) on investments		0.56			0.15			(0.11	)		2.14			(1.59	)

Total from Investment Operations		0.71			0.49			0.37			2.68			(1.20	)

LESS DISTRIBUTIONS:
From investment income		(0.13	)		(0.34	)		(0.42	)		(0.46	)		(0.62	)
From capital gains		—			(0.02	)		(0.07	)		—			—

Total Distributions		(0.13	)		(0.36	)		(0.49	)		(0.46	)		(0.62	)

NET INCREASE/(DECREASE) IN NET ASSET VALUE		0.58			0.13			(0.12	)		2.22			(1.82	)

NET ASSET VALUE, END OF PERIOD	$	8.62		$	8.04		$	7.91		$	8.03		$	5.81

TOTAL RETURN		8.88	%^(d)		6.23	%		4.54	%		47.08	%		(16.35	)%^(d)
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (in 000s)	$	91,947		$	38,790		$	16,994		$	4,787		$	793
RATIOS TO AVERAGE NET ASSETS (excluding interest expense):
Net investment income including reimbursement/waiver		4.21	%^(e)		6.39	%		6.82	%		8.89	%		12.49	%^(e)
Operating expenses including reimbursement/waiver		1.64	%^(e)		1.64	%		1.63	%^(f)		1.57	%^(g)		1.49	%^(e)
Operating expenses excluding reimbursement/waiver		1.75	%^(e)		1.79	%		1.80	%		1.86	%		2.53	%^(e)
RATIOS TO AVERAGE NET ASSETS (including interest expense):
Net investment income including reimbursement/waiver		3.52	%^(e)		4.21	%		5.57	%		7.01	%		8.58	%^(e)
Operating expenses including reimbursement/waiver		2.33	%^(e)		3.82	%		2.88	%^(f)		3.45	%^(g)		5.40	%^(e)
Operating expenses excluding reimbursement/waiver		2.44	%^(e)		3.97	%		3.06	%		3.74	%		6.44	%^(e)
PORTFOLIO TURNOVER RATE		39	%^(d)		133	%		89	%		221	%		311	%^(h)

(a) Prior to May 1, 2011, the Forward Credit Analysis Long/Short Fund was known as the Forward Long/Short Credit Analysis Fund.

(b) The Fund began offering Institutional Class shares on May 1, 2008.

(d) Not Annualized.

(e) Annualized.

(f) Effective May 1, 2010, the net expense limitation changed from 1.60% to 1.64%.

(g) Effective May 1, 2009, the net expense limitation changed from 1.49% to 1.60%.

(h) Portfolio turnover rate is calculated at the Fund level and represents the year ended December 31, 2008.


June 30, 2012		118		See Notes to Financial Statements

Financial Highlights

For a share outstanding throughout the periods presented.

Forward Credit Analysis Long/Short Fund


	CLASS A
	SIX MONTHS ENDED JUNE 30, 2012 (UNAUDITED)			YEAR ENDED DECEMBER 31, 2011^(a)			PERIOD ENDED DECEMBER 31, 2010^(b)
NET ASSET VALUE, BEGINNING OF PERIOD	$	8.08		$	7.95		$	8.70
INCOME/(LOSS) FROM OPERATIONS:
Net investment income		0.13	^(c)		0.31	^(c)		0.14
Net realized and unrealized gain/(loss) on investments		0.56			0.14			(0.63	)

Total from Investment Operations		0.69			0.45			(0.49	)

LESS DISTRIBUTIONS:
From investment income		(0.12	)		(0.30	)		(0.19	)
From capital gains		—			(0.02	)		(0.07	)

Total Distributions		(0.12	)		(0.32	)		(0.26	)

NET INCREASE/(DECREASE) IN NET ASSET VALUE		0.57			0.13			(0.75	)

NET ASSET VALUE, END OF PERIOD	$	8.65		$	8.08		$	7.95

TOTAL RETURN^(d)		8.53	%^(e)		5.68	%		(5.69	)%^(e)
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (in 000s)	$	6,185		$	1,621		$	2,360
RATIOS TO AVERAGE NET ASSETS (excluding interest expense):
Net investment income including reimbursement/waiver		3.72	%^(f)		6.06	%		5.63	%^(f)
Operating expenses including reimbursement/waiver		2.14	%^(f)		2.14	%		2.14	%^(f)
Operating expenses excluding reimbursement/waiver		2.26	%^(f)		2.29	%		2.36	%^(f)
RATIOS TO AVERAGE NET ASSETS (including interest expense):
Net investment income including reimbursement/waiver		3.03	%^(f)		3.88	%		4.46	%^(f)
Operating expenses including reimbursement/waiver		2.83	%^(f)		4.32	%		3.31	%^(f)
Operating expenses excluding reimbursement/waiver		2.95	%^(f)		4.47	%		3.53	%^(f)
PORTFOLIO TURNOVER RATE		39	%^(e)		133	%		89	%^(g)

(a) Prior to May 1, 2011, the Forward Credit Analysis Long/Short Fund was known as the Forward Long/Short Credit Analysis Fund.

(b) The Fund began offering Class A shares on September 1, 2010.

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

(e) Not Annualized.

(f) Annualized.

(g) Portfolio turnover rate is calculated at the Fund level and represents the year ended December 31, 2010.


See Notes to Financial Statements		119		June 30, 2012

Financial Highlights

For a share outstanding throughout the periods presented.

Forward Credit Analysis Long/Short Fund


	CLASS C
	SIX MONTHS ENDED JUNE 30, 2012 (UNAUDITED)			YEAR ENDED DECEMBER 31, 2011^(a)			YEAR ENDED DECEMBER 31, 2010			PERIOD ENDED DECEMBER 31, 2009^(b)
NET ASSET VALUE, BEGINNING OF PERIOD	$	8.09		$	7.97		$	8.10		$	7.26
INCOME/(LOSS) FROM OPERATIONS:
Net investment income		0.11	^(c)		0.27	^(c)		0.39			0.29
Net realized and unrealized gain/(loss) on investments		0.57			0.13			(0.10	)		0.88

Total from Investment Operations		0.68			0.40			0.29			1.17

LESS DISTRIBUTIONS:
From investment income		(0.09	)		(0.26	)		(0.35	)		(0.33	)
From capital gains		—			(0.02	)		(0.07	)		—

Total Distributions		(0.09	)		(0.28	)		(0.42	)		(0.33	)

NET INCREASE/(DECREASE) IN NET ASSET VALUE		0.59			0.12			(0.13	)		0.84

NET ASSET VALUE, END OF PERIOD	$	8.68		$	8.09		$	7.97		$	8.10

TOTAL RETURN^(d)		8.48	%^(e)		5.07	%		3.50	%		16.37	%^(e)
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (in 000s)	$	20,539		$	15,550		$	15,357		$	4,377
RATIOS TO AVERAGE NET ASSETS (excluding interest expense):
Net investment income including reimbursement/waiver		3.34	%^(f)		5.51	%		5.75	%		9.32	%^(f)
Operating expenses including reimbursement/waiver		2.59	%^(f)		2.59	%		2.58	%		2.24	%^(f)
Operating expenses excluding reimbursement/waiver		2.69	%^(f)		2.74	%		2.76	%		2.41	%^(f)
RATIOS TO AVERAGE NET ASSETS (including interest expense):
Net investment income including reimbursement/waiver		2.65	%^(f)		3.33	%		4.51	%		6.55	%^(f)
Operating expenses including reimbursement/waiver		3.28	%^(f)		4.77	%		3.82	%^(g)		5.01	%^(f)
Operating expenses excluding reimbursement/waiver		3.38	%^(f)		4.92	%		4.00	%		5.18	%^(f)
PORTFOLIO TURNOVER RATE		39	%^(e)		133	%		89	%		221	%^(h)

(a) Prior to May 1, 2011, the Forward Credit Analysis Long/Short Fund was known as the Forward Long/Short Credit Analysis Fund.

(b) The Fund began offering Class C shares on June 3, 2009.

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

(e) Not Annualized.

(f) Annualized.

(g) Effective May 1, 2010, the net expense limitation changed from 2.55% to 2.59%.

(h) Portfolio turnover rate is calculated at the Fund level and represents the year ended December 31, 2009.


June 30, 2012		120		See Notes to Financial Statements

Financial Highlights

For a share outstanding throughout the periods presented.

Forward Credit Analysis Long/Short Fund


	CLASS M
	SIX MONTHS ENDED JUNE 30, 2012 (UNAUDITED)			YEAR ENDED DECEMBER 31, 2011^(a)			PERIOD ENDED DECEMBER 31, 2010^(b)
NET ASSET VALUE, BEGINNING OF PERIOD	$	8.04		$	7.91		$	8.17
INCOME/(LOSS) FROM OPERATIONS:
Net investment income		0.15	^(c)		0.35	^(c)		0.40
Net realized and unrealized gain/(loss) on investments		0.56			0.14			(0.17	)

Total from Investment Operations		0.71			0.49			0.23

LESS DISTRIBUTIONS:
From investment income		(0.13	)		(0.34	)		(0.42	)
From capital gains		—			(0.02	)		(0.07	)

Total Distributions		(0.13	)		(0.36	)		(0.49	)

NET INCREASE/(DECREASE) IN NET ASSET VALUE		0.58			0.13			(0.26	)

NET ASSET VALUE, END OF PERIOD	$	8.62		$	8.04		$	7.91

TOTAL RETURN		8.88	%^(d)		6.24	%		2.73	%^(d)
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (in 000s)	$	46,700		$	4,120		$	4,930
RATIOS TO AVERAGE NET ASSETS (excluding interest expense):
Net investment income including reimbursement/waiver		4.17	%^(e)		6.54	%		6.85	%^(e)
Operating expenses including reimbursement/waiver		1.64	%^(e)		1.64	%		1.63	%^(e)(f)
Operating expenses excluding reimbursement/waiver		1.76	%^(e)		1.79	%		1.85	%^(e)
RATIOS TO AVERAGE NET ASSETS (including interest expense):
Net investment income including reimbursement/waiver		3.48	%^(e)		4.36	%		5.50	%^(e)
Operating expenses including reimbursement/waiver		2.33	%^(e)		3.82	%		2.98	%^(e)(f)
Operating expenses excluding reimbursement/waiver		2.45	%^(e)		3.97	%		3.20	%^(e)
PORTFOLIO TURNOVER RATE		39	%^(d)		133	%		89	%^(g)

(a) Prior to May 1, 2011, the Forward Credit Analysis Long/Short Fund was known as the Forward Long/Short Credit Analysis Fund.

(b) The Fund began offering Class M shares on February 1, 2010.

(d) Not Annualized.

(e) Annualized.

(f) Effective May 1, 2010, the net expense limitation changed from 1.60% to 1.64%.

(g) Portfolio turnover rate is calculated at the Fund level and represents the year ended December 31, 2010.


See Notes to Financial Statements		121		June 30, 2012

Financial Highlights

For a share outstanding throughout the periods presented.

Forward EM Corporate Debt Fund


	INVESTOR CLASS
	SIX MONTHS ENDED JUNE 30, 2012 (UNAUDITED)			YEAR ENDED DECEMBER 31, 2011^(a)			YEAR ENDED DECEMBER 31, 2010			YEAR ENDED DECEMBER 31, 2009			YEAR ENDED DECEMBER 31, 2008			PERIOD ENDED DECEMBER 31, 2007^(b)
NET ASSET VALUE, BEGINNING OF PERIOD	$	9.10		$	11.05		$	10.60		$	9.30		$	10.19		$	10.00
INCOME/(LOSS) FROM OPERATIONS:
Net investment income		0.29	^(c)		0.61	^(c)		0.42			0.47			0.40			0.08
Net realized and unrealized gain/(loss) on investments		0.19			(0.89	)		0.25			1.21			(0.87	)		0.19

Total from Investment Operations		0.48			(0.28	)		0.67			1.68			(0.47	)		0.27

LESS DISTRIBUTIONS:
From investment income		(0.17	)		(1.67	)		(0.22	)		(0.38	)		(0.42	)		(0.08	)

Total Distributions		(0.17	)		(1.67	)		(0.22	)		(0.38	)		(0.42	)		(0.08	)

NET INCREASE/(DECREASE) IN NET ASSET VALUE		0.31			(1.95	)		0.45			1.30			(0.89	)		0.19

NET ASSET VALUE, END OF PERIOD	$	9.41		$	9.10		$	11.05		$	10.60		$	9.30		$	10.19

TOTAL RETURN		5.24	%^(d)		(2.73	)%		6.47	%		18.43	%		(4.91	)%		2.71	%^(d)
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (in 000s)	$	66,476		$	4,702		$	5,924		$	5,766		$	5,073		$	4,297
RATIOS TO AVERAGE NET ASSETS:
Net investment income including reimbursement/waiver		6.08	%^(e)		5.35	%		3.80	%		4.61	%		4.10	%		3.57	%^(e)
Operating expenses including reimbursement/waiver		1.37	%^(e)		1.39	%		1.39	%		1.26	%^(f)		1.16	%		1.24	%^(e)
Operating expenses excluding reimbursement/waiver		1.37	%^(e)		1.89	%		1.90	%		1.41	%		1.36	%		1.60	%^(e)
PORTFOLIO TURNOVER RATE		85	%^(d)		357	%		74	%		59	%		56	%		1	%^(d)

(a) Prior to May 1, 2011, the Forward EM Corporate Debt Fund was known as the Forward International Fixed Income Fund.

(b) The Fund began offering Investor Class shares on October 5, 2007.

(d) Not Annualized.

(e) Annualized.

(f) Effective May 1, 2009, the net expense limitation changed from 1.24% to 1.39%.


June 30, 2012		122		See Notes to Financial Statements

Financial Highlights

For a share outstanding throughout the periods presented.

Forward EM Corporate Debt Fund


	INSTITUTIONAL CLASS
	SIX MONTHS ENDED JUNE 30, 2012 (UNAUDITED)			YEAR ENDED DECEMBER 31, 2011^(a)			YEAR ENDED DECEMBER 31, 2010			YEAR ENDED DECEMBER 31, 2009			YEAR ENDED DECEMBER 31, 2008			PERIOD ENDED DECEMBER 31, 2007^(b)
NET ASSET VALUE, BEGINNING OF PERIOD	$	9.04		$	11.02		$	10.55		$	9.27		$	10.19		$	10.00
INCOME/(LOSS) FROM OPERATIONS:
Net investment income		0.30	^(c)		0.68	^(c)		0.48			0.48			0.44			0.09
Net realized and unrealized gain/(loss) on investments		0.19			(0.92	)		0.23			1.21			(0.88	)		0.19

Total from Investment Operations		0.49			(0.24	)		0.71			1.69			(0.44	)		0.28

LESS DISTRIBUTIONS:
From investment income		(0.19	)		(1.74	)		(0.24	)		(0.41	)		(0.48	)		(0.09	)

Total Distributions		(0.19	)		(1.74	)		(0.24	)		(0.41	)		(0.48	)		(0.09	)

NET INCREASE/(DECREASE) IN NET ASSET VALUE		0.30			(1.98	)		0.47			1.28			(0.92	)		0.19

NET ASSET VALUE, END OF PERIOD	$	9.34		$	9.04		$	11.02		$	10.55		$	9.27		$	10.19

TOTAL RETURN		5.41	%^(d)		(2.40	)%		6.91	%		18.70	%		(4.60	)%		2.77	%^(d)
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (in 000s)	$	14,553		$	7,613		$	17,469		$	16,257		$	12,088		$	12,858
RATIOS TO AVERAGE NET ASSETS:
Net investment income including reimbursement/waiver		6.41	%^(e)		6.10	%		4.22	%		4.89	%		4.27	%		3.84	%^(e)
Operating expenses including reimbursement/waiver		0.98	%^(e)		0.99	%		0.99	%		0.97	%		0.97	%		0.99	%^(e)
Operating expenses excluding reimbursement/waiver		1.17	%^(e)		1.49	%		1.45	%		1.13	%		1.35	%		1.60	%^(e)
PORTFOLIO TURNOVER RATE		85	%^(d)		357	%		74	%		59	%		56	%		1	%^(d)

(a) Prior to May 1, 2011, the Forward EM Corporate Debt Fund was known as the Forward International Fixed Income Fund.

(b) The Fund began offering Institutional Class shares on October 5, 2007.

(d) Not Annualized.

(e) Annualized.


See Notes to Financial Statements		123		June 30, 2012

Financial Highlights

For a share outstanding throughout the periods presented.

Forward EM Corporate Debt Fund


	CLASS C
	SIX MONTHS ENDED JUNE 30, 2012 (UNAUDITED)			YEAR ENDED DECEMBER 31, 2011^(a)			YEAR ENDED DECEMBER 31, 2010			YEAR ENDED DECEMBER 31, 2009			YEAR ENDED DECEMBER 31, 2008			PERIOD ENDED DECEMBER 31, 2007^(b)
NET ASSET VALUE, BEGINNING OF PERIOD	$	9.13		$	11.08		$	10.66		$	9.35		$	10.19		$	10.00
INCOME/(LOSS) FROM OPERATIONS:
Net investment income		0.26	^(c)		0.52	^(c)		0.44			0.42			0.39			0.07
Net realized and unrealized gain/(loss) on investments		0.20			(0.87	)		0.17			1.23			(0.88	)		0.19

Total from Investment Operations		0.46			(0.35	)		0.61			1.65			(0.49	)		0.26

LESS DISTRIBUTIONS:
From investment income		(0.15	)		(1.60	)		(0.19	)		(0.34	)		(0.35	)		(0.07	)

Total Distributions		(0.15	)		(1.60	)		(0.19	)		(0.34	)		(0.35	)		(0.07	)

NET INCREASE/(DECREASE) IN NET ASSET VALUE		0.31			(1.95	)		0.42			1.31			(0.84	)		0.19

NET ASSET VALUE, END OF PERIOD	$	9.44		$	9.13		$	11.08		$	10.66		$	9.35		$	10.19

TOTAL RETURN^(d)		4.99	%^(e)		(3.31	)%		5.87	%		18.00	%		(5.00	)%		2.63	%^(e)
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (in 000s)	$	1,164		$	1,142		$	2,345		$	4,445		$	3,879		$	4,229
RATIOS TO AVERAGE NET ASSETS:
Net investment income including reimbursement/waiver		5.39	%^(f)		4.54	%		3.24	%		4.24	%		3.90	%		3.23	%^(f)
Operating expenses including reimbursement/waiver		1.94	%^(f)		1.94	%		1.94	%		1.63	%^(g)		1.35	%		1.58	%^(f)
Operating expenses excluding reimbursement/waiver		2.18	%^(f)		2.48	%		2.38	%		1.77	%		1.36	%		1.60	%^(f)
PORTFOLIO TURNOVER RATE		85	%^(e)		357	%		74	%		59	%		56	%		1	%^(e)

(a) Prior to May 1, 2011, the Forward EM Corporate Debt Fund was known as the Forward International Fixed Income Fund.

(b) The Fund began offering Class C shares on October 5, 2007.

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

(e) Not Annualized.

(f) Annualized.

(g) Effective May 1, 2009, the net expense limitation changed from 1.89% to 1.94%.


June 30, 2012		124		See Notes to Financial Statements

Financial Highlights

For a share outstanding throughout the periods presented.

Forward Emerging Markets Fund


	INVESTOR CLASS
	SIX MONTHS ENDED JUNE 30, 2012 (UNAUDITED)			YEAR ENDED DECEMBER 31, 2011			YEAR ENDED DECEMBER 31, 2010			YEAR ENDED DECEMBER 31, 2009			YEAR ENDED DECEMBER 31, 2008^(a)			YEAR ENDED DECEMBER 31, 2007
NET ASSET VALUE, BEGINNING OF PERIOD	$	9.55		$	20.97		$	21.47		$	12.28		$	28.51		$	23.08
INCOME/(LOSS) FROM OPERATIONS:
Net investment income		0.03	^(b)		0.11	^(b)		0.00	^(c)		0.01	^(b)		0.38			0.04
Net realized and unrealized gain/(loss) on investments		0.43			(4.61	)		3.43			9.33			(16.20	)		8.98

Total from Investment Operations		0.46			(4.50	)		3.43			9.34			(15.82	)		9.02

LESS DISTRIBUTIONS:
From investment income		—			(0.57	)		(0.25	)		(0.15	)		—			(0.05	)
From capital gains		—			(6.35	)		(3.68	)		—			(0.41	)		(3.55	)

Total Distributions		—			(6.92	)		(3.93	)		(0.15	)		(0.41	)		(3.60	)

REDEMPTION FEES ADDED TO PAID IN CAPITAL		—			—			—			—			—			0.01

NET INCREASE/(DECREASE) IN NET ASSET VALUE		0.46			(11.42	)		(0.50	)		9.19			(16.23	)		5.43

NET ASSET VALUE, END OF PERIOD	$	10.01		$	9.55		$	20.97		$	21.47		$	12.28		$	28.51

TOTAL RETURN		4.92	%^(d)		(22.33	)%		16.56	%		76.16	%		(55.38	)%		38.63	%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (in 000s)	$	15,569		$	23,498		$	49,997		$	39,864		$	14,576		$	25,008
RATIOS TO AVERAGE NET ASSETS:
Net investment income including reimbursement/waiver		0.62	%^(e)		0.55	%		0.01	%		0.04	%		1.67	%		0.17	%
Operating expenses including reimbursement/waiver		1.81	%^(e)(f)		1.79	%		1.79	%		1.77	%^(g)		1.72	%^(h)		1.69	%
Operating expenses excluding reimbursement/waiver		2.48	%^(e)		2.15	%		2.02	%		2.00	%		2.10	%		2.09	%
PORTFOLIO TURNOVER RATE		64	%^(d)		102	%		129	%		120	%		214	%		121	%

(a) Prior to May 1, 2008, the Forward Emerging Markets Fund was known as the Forward Global Emerging Markets Fund.

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

(d) Not Annualized.

(e) Annualized.

(f) Effective May 1, 2012, the net expense limitation changed from 1.79% to 1.89%.

(g) Effective May 1, 2009, the net expense limitation changed from 1.74% to 1.79%.

(h) Effective May 1, 2008, the net expense limitation changed from 1.69% to 1.74%.


See Notes to Financial Statements		125		June 30, 2012

Financial Highlights

For a share outstanding throughout the periods presented.

Forward Emerging Markets Fund


	INSTITUTIONAL CLASS
	SIX MONTHS ENDED JUNE 30, 2012 (UNAUDITED)			YEAR ENDED DECEMBER 31, 2011			YEAR ENDED DECEMBER 31, 2010			YEAR ENDED DECEMBER 31, 2009			YEAR ENDED DECEMBER 31, 2008^(a)			YEAR ENDED DECEMBER 31, 2007
NET ASSET VALUE, BEGINNING OF PERIOD	$	9.76		$	21.31		$	21.76		$	12.40		$	28.66		$	23.18
INCOME/(LOSS) FROM OPERATIONS:
Net investment income		0.07	^(b)		0.15	^(b)		0.12	^(b)		0.07	^(b)		0.34			0.12
Net realized and unrealized gain/(loss) on investments		0.43			(4.70	)		3.45			9.48			(16.19	)		9.03

Total from Investment Operations		0.50			(4.55	)		3.57			9.55			(15.85	)		9.15

LESS DISTRIBUTIONS:
From investment income		—			(0.65	)		(0.34	)		(0.19	)		—			(0.13	)
From capital gains		—			(6.35	)		(3.68	)		—			(0.41	)		(3.55	)

Total Distributions		—			(7.00	)		(4.02	)		(0.19	)		(0.41	)		(3.68	)

REDEMPTION FEES ADDED TO PAID IN CAPITAL		—			—			—			—			—			0.01

NET INCREASE/(DECREASE) IN NET ASSET VALUE		0.50			(11.55	)		(0.45	)		9.36			(16.26	)		5.48

NET ASSET VALUE, END OF PERIOD	$	10.26		$	9.76		$	21.31		$	21.76		$	12.40		$	28.66

TOTAL RETURN		5.23	%^(c)		(22.21	)%		17.12	%		76.94	%		(55.19	)%		39.00	%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (in 000s)	$	5,330		$	31,484		$	157,970		$	291,105		$	49,529		$	61,829
RATIOS TO AVERAGE NET ASSETS:
Net investment income including reimbursement/waiver		1.28	%^(d)		0.76	%		0.62	%		0.36	%		1.76	%		0.51	%
Operating expenses including reimbursement/waiver		1.41	%^(d)(e)		1.39	%		1.39	%		1.38	%		1.39	%		1.39	%
Operating expenses excluding reimbursement/waiver		2.07	%^(d)		1.76	%		1.59	%		1.53	%		1.77	%		1.79	%
PORTFOLIO TURNOVER RATE		64	%^(c)		102	%		129	%		120	%		214	%		121	%

(a) Prior to May 1, 2008, the Forward Emerging Markets Fund was known as the Forward Global Emerging Markets Fund.

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

(d) Annualized.

(e) Effective May 1, 2012, the net expense limitation changed from 1.39% to 1.49%.


June 30, 2012		126		See Notes to Financial Statements

Financial Highlights

For a share outstanding throughout the periods presented.

Forward Emerging Markets Fund


	CLASS M
	SIX MONTHS ENDED JUNE 30, 2012 (UNAUDITED)			YEAR ENDED DECEMBER 31, 2011			PERIOD ENDED DECEMBER 31, 2010^(a)
NET ASSET VALUE, BEGINNING OF PERIOD	$	9.86		$	21.34		$	20.49
INCOME/(LOSS) FROM OPERATIONS:
Net investment income		0.10	^(b)		0.17	^(b)		0.06
Net realized and unrealized gain/(loss) on investments		0.41			(4.67	)		4.78

Total from Investment Operations		0.51			(4.50	)		4.84

LESS DISTRIBUTIONS:
From investment income		—			(0.63	)		(0.31	)
From capital gains		—			(6.35	)		(3.68	)

Total Distributions		—			(6.98	)		(3.99	)

NET INCREASE/(DECREASE) IN NET ASSET VALUE		0.51			(11.48	)		0.85

NET ASSET VALUE, END OF PERIOD	$	10.37		$	9.86		$	21.34

TOTAL RETURN		5.17	%^(c)		(21.96	)%		24.30	%^(c)
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (in 000s)	$	863		$	180		$	340
RATIOS TO AVERAGE NET ASSETS:
Net investment income including reimbursement/waiver		1.82	%^(d)		0.86	%		0.35	%^(d)
Operating expenses including reimbursement/waiver		1.43	%^(d)(e)		1.39	%		1.39	%^(d)
Operating expenses excluding reimbursement/waiver		2.22	%^(d)		1.74	%		1.64	%^(d)
PORTFOLIO TURNOVER RATE		64	%^(c)		102	%		129	%^(f)

(a) The Fund began offering Class M shares on February 1, 2010.

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

(d) Annualized.

(e) Effective May 1, 2012, the net expense limitation changed from 1.39% to 1.49%.

(f) Portfolio turnover rate is calculated at the Fund level and represents the year ended December 31, 2010.


See Notes to Financial Statements		127		June 30, 2012

Financial Highlights

For a share outstanding throughout the periods presented.

Forward Endurance Long/Short Fund


	INVESTOR CLASS
	SIX MONTHS ENDED JUNE 30, 2012^(a)(UNAUDITED)
NET ASSET VALUE, BEGINNING OF PERIOD	$	25.00
INCOME/(LOSS) FROM OPERATIONS:
Net investment loss^(b)		(0.26	)
Net realized and unrealized gain on investments		0.03

Total from Investment Operations		(0.23	)

NET DECREASE IN NET ASSET VALUE		(0.23	)

NET ASSET VALUE, END OF PERIOD	$	24.77

TOTAL RETURN		(0.96	)%^(c)
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (in 000s)	$	188
RATIOS TO AVERAGE NET ASSETS (excluding interest expense):
Net investment loss including reimbursement/waiver		(1.57	)%^(d)
Operating expenses including reimbursement/waiver		2.34	%^(d)
Operating expenses excluding reimbursement/waiver		5.14	%^(d)
RATIOS TO AVERAGE NET ASSETS (including interest expense):
Net investment loss including reimbursement/waiver		(2.12	)%^(d)
Operating expenses including reimbursement/waiver		2.89	%^(d)
Operating expenses excluding reimbursement/waiver		5.69	%^(d)
PORTFOLIO TURNOVER RATE		97	%^(c)

(a) The Fund began offering Investor Class shares on January 3, 2012.

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

(d) Annualized.


June 30, 2012		128		See Notes to Financial Statements

Financial Highlights

For a share outstanding throughout the periods presented.

Forward Endurance Long/Short Fund


	INSTITUTIONAL CLASS
	SIX MONTHS ENDED JUNE 30, 2012^(a)(UNAUDITED)
NET ASSET VALUE, BEGINNING OF PERIOD	$	25.00
INCOME/(LOSS) FROM OPERATIONS:
Net investment loss^(b)		(0.24	)
Net realized and unrealized gain on investments		0.05

Total from Investment Operations		(0.19	)

NET DECREASE IN NET ASSET VALUE		(0.19	)

NET ASSET VALUE, END OF PERIOD	$	24.81

TOTAL RETURN		(0.80	)%^(c)
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (in 000s)	$	3,615
RATIOS TO AVERAGE NET ASSETS (excluding interest expense):
Net investment loss including reimbursement/waiver		(1.41	)%^(d)
Operating expenses including reimbursement/waiver		1.99	%^(d)
Operating expenses excluding reimbursement/waiver		3.83	%^(d)
RATIOS TO AVERAGE NET ASSETS (including interest expense):
Net investment loss including reimbursement/waiver		(1.95	)%^(d)
Operating expenses including reimbursement/waiver		2.54	%^(d)
Operating expenses excluding reimbursement/waiver		4.38	%^(d)
PORTFOLIO TURNOVER RATE		97	%^(c)

(a) The Fund began offering Institutional Class shares on January 3, 2012.

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

(d) Annualized.


See Notes to Financial Statements		129		June 30, 2012

Financial Highlights

For a share outstanding throughout the periods presented.

Forward Focus Fund


	INVESTOR CLASS
	SIX MONTHS ENDED JUNE 30, 2012 (UNAUDITED)			YEAR ENDED DECEMBER 31, 2011			YEAR ENDED DECEMBER 31, 2010^(a)			YEAR ENDED DECEMBER 31, 2009			PERIOD ENDED DECEMBER 31, 2008^(b)
NET ASSET VALUE, BEGINNING OF PERIOD	$	9.10		$	10.24		$	10.10		$	8.00		$	8.92
INCOME/(LOSS) FROM OPERATIONS:
Net investment income/(loss)		0.03	^(c)		0.01	^(c)		(0.09	)		(0.10	)		0.00	^(d)
Net realized and unrealized gain/(loss) on investments		0.20			(0.10	)		2.22			2.21			(0.67	)

Total from Investment Operations		0.23			(0.09	)		2.13			2.11			(0.67	)

LESS DISTRIBUTIONS:
From capital gains		—			(1.05	)		(1.99	)		(0.01	)		(0.25	)

Total Distributions		—			(1.05	)		(1.99	)		(0.01	)		(0.25	)

NET INCREASE/(DECREASE) IN NET ASSET VALUE		0.23			(1.14	)		0.14			2.10			(0.92	)

NET ASSET VALUE, END OF PERIOD	$	9.33		$	9.10		$	10.24		$	10.10		$	8.00

TOTAL RETURN		2.53	%^(e)		(0.95	)%		21.80	%		26.44	%		(7.38	)%^(e)
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (in 000s)	$	1,120		$	1,108		$	1,174		$	1,145		$	906
RATIOS TO AVERAGE NET ASSETS:
Net investment income/(loss) including reimbursement/waiver		0.65	%^(f)		0.05	%		(0.80	)%		(0.79	)%		(0.30	)%^(f)
Operating expenses including reimbursement/waiver		1.36	%^(f)(g)		1.34	%		1.64	%^(h)		1.68	%		1.69	%^(f)
Operating expenses excluding reimbursement/waiver		1.85	%^(f)		1.71	%		2.45	%		2.09	%		2.56	%^(f)
PORTFOLIO TURNOVER RATE		3	%^(e)		32	%		106	%		22	%		35	%⁽ⁱ⁾

(a) Prior to October 20, 2010, the Forward Focus Fund was known as the Forward Legato Fund.

(b) The Fund began offering Investor Class shares on October 21, 2008.

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

(e) Not Annualized.

(f) Annualized.

(g) Effective May 1, 2012, the net expense limitation changed from 1.34% to 1.39%.

(h) Effective May 1, 2010, the net expense limitation changed from 1.69% to 1.71%. Effective November 1, 2010, the net expense limitation changed from 1.71% to 1.34%

(i) Portfolio turnover rate is calculated at the Fund level and represents the year ended December 31, 2008.


June 30, 2012		130		See Notes to Financial Statements

Financial Highlights

For a share outstanding throughout the periods presented.

Forward Focus Fund


	INSTITUTIONAL CLASS
	SIX MONTHS ENDED JUNE 30, 2012 (UNAUDITED)			YEAR ENDED DECEMBER 31, 2011			YEAR ENDED DECEMBER 31, 2010^(a)			YEAR ENDED DECEMBER 31, 2009			PERIOD ENDED DECEMBER 31, 2008^(b)
NET ASSET VALUE, BEGINNING OF PERIOD	$	9.26		$	10.36		$	10.17		$	8.02		$	11.27
INCOME/(LOSS) FROM OPERATIONS:
Net investment income/(loss)		0.05	^(c)		0.04	^(c)		(0.06	)		(0.03	)		0.01
Net realized and unrealized gain/(loss) on investments		0.20			(0.09	)		2.24			2.19			(3.01	)

Total from Investment Operations		0.25			(0.05	)		2.18			2.16			(3.00	)

LESS DISTRIBUTIONS:
From capital gains		—			(1.05	)		(1.99	)		(0.01	)		(0.25	)

Total Distributions		—			(1.05	)		(1.99	)		(0.01	)		(0.25	)

NET INCREASE/(DECREASE) IN NET ASSET VALUE		0.25			(1.10	)		0.19			2.15			(3.25	)

NET ASSET VALUE, END OF PERIOD	$	9.51		$	9.26		$	10.36		$	10.17		$	8.02

TOTAL RETURN		2.70	%^(d)		(0.54	)%		22.15	%		27.00	%		(26.52	)%^(d)
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (in 000s)	$	4,669		$	4,869		$	4,869		$	3,686		$	2,142
RATIOS TO AVERAGE NET ASSETS:
Net investment income/(loss) including reimbursement/waiver		0.97	%^(e)		0.40	%		(0.42	)%		(0.27	)%		0.19	%^(e)
Operating expenses including reimbursement/waiver		1.00	%^(e)(f)		0.99	%		1.27	%^(g)		1.29	%		1.29	%^(e)
Operating expenses excluding reimbursement/waiver		1.50	%^(e)		1.36	%		2.15	%		1.72	%		1.81	%^(e)
PORTFOLIO TURNOVER RATE		3	%^(d)		32	%		106	%		22	%		35	%^(h)

(a) Prior to October 20, 2010, the Forward Focus Fund was known as the Forward Legato Fund.

(b) The Fund began offering Institutional Class shares on May 1, 2008.

(d) Not Annualized.

(e) Annualized.

(f) Effective May 1, 2012, the net expense limitation changed from 0.99% to 1.04%.

(g) Effective May 1, 2010, the net expense limitation changed from 1.29% to 1.36%. Effective November 1, 2010, the net expense limitation changed from 1.36% to 0.99%.

(h) Portfolio turnover rate is calculated at the Fund level and represents the year ended December 31, 2008.


See Notes to Financial Statements		131		June 30, 2012

Financial Highlights

For a share outstanding throughout the periods presented.

Forward Focus Fund


	CLASS A
	SIX MONTHS ENDED JUNE 30, 2012 (UNAUDITED)			YEAR ENDED DECEMBER 31, 2011			YEAR ENDED DECEMBER 31, 2010^(a)			YEAR ENDED DECEMBER 31, 2009			YEAR ENDED DECEMBER 31, 2008			YEAR ENDED DECEMBER 31, 2007
NET ASSET VALUE, BEGINNING OF PERIOD	$	9.04		$	10.19		$	10.08		$	7.99		$	11.92		$	12.19
INCOME/(LOSS) FROM OPERATIONS:
Net investment income/(loss)		0.02	^(b)		(0.02	)^(b)		(0.12	)		(0.02	)		(0.11	)		(0.10	)
Net realized and unrealized gain/(loss) on investments		0.20			(0.08	)		2.22			2.12			(3.57	)		1.13

Total from Investment Operations		0.22			(0.10	)		2.10			2.10			(3.68	)		1.03

LESS DISTRIBUTIONS:
From capital gains		—			(1.05	)		(1.99	)		(0.01	)		(0.25	)		(1.30	)

Total Distributions		—			(1.05	)		(1.99	)		(0.01	)		(0.25	)		(1.30	)

NET INCREASE/(DECREASE) IN NET ASSET VALUE		0.22			(1.15	)		0.11			2.09			(3.93	)		(0.27	)

NET ASSET VALUE, END OF PERIOD	$	9.26		$	9.04		$	10.19		$	10.08		$	7.99		$	11.92
																��
TOTAL RETURN^(c)		2.43	%^(d)		(1.04	)%		21.55	%		26.35	%		(30.78	)%		8.30	%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (in 000s)	$	2,359		$	2,297		$	5,787		$	7,450		$	2,194		$	7,294
RATIOS TO AVERAGE NET ASSETS:
Net investment income/(loss) including reimbursement/waiver		0.50	%^(e)		(0.19	)%		(0.97	)%		(0.84	)%		(0.66	)%		(0.73	)%
Operating expenses including reimbursement/waiver		1.51	%^(e)(f)		1.49	%		1.79	%^(g)		1.84	%		1.77	%^(h)		1.69	%⁽ⁱ⁾
Operating expenses excluding reimbursement/waiver		2.00	%^(e)		2.01	%		2.55	%		2.22	%		2.07	%		1.96	%
PORTFOLIO TURNOVER RATE		3	%^(d)		32	%		106	%		22	%		35	%		33	%

(a) Prior to October 20, 2010, the Forward Focus Fund was known as the Forward Legato Fund.

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

(d) Not Annualized.

(e) Annualized.

(f) Effective May 1, 2012, the net expense limitation changed from 1.49% to 1.54%.

(g) Effective May 1, 2010, the net expense limitation changed from 1.84% to 1.86%. Effective November 1, 2010, the net expense limitation changed from 1.86% to 1.49%.

(h) Effective May 1, 2008, the net expense limitation changed from 1.69% to 1.84%.

(i) Effective January 2, 2007, the net expense limitation changed from 1.79% to 1.69%.


June 30, 2012		132		See Notes to Financial Statements

Financial Highlights

For a share outstanding throughout the periods presented.

Forward Global Credit Long/Short Fund


	INVESTOR CLASS
	SIX MONTHS ENDED JUNE 30, 2012 (UNAUDITED)			PERIOD ENDED DECEMBER 31, 2011^(a)
NET ASSET VALUE, BEGINNING OF PERIOD	$	24.16		$	25.00
INCOME/(LOSS) FROM OPERATIONS:
Net investment income^(b)		1.00			0.89
Net realized and unrealized loss on investments		(0.50	)		(0.92	)

Total from Investment Operations		0.50			(0.03	)

LESS DISTRIBUTIONS:
From investment income		—			(0.75	)
From capital gains		—			(0.06	)

Total Distributions		—			(0.81	)

NET INCREASE/(DECREASE) IN NET ASSET VALUE		0.50			(0.84	)

NET ASSET VALUE, END OF PERIOD	$	24.66		$	24.16

TOTAL RETURN		2.07	%^(c)		(0.12	)%^(c)
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (in 000s)	$	1,359		$	1,232
RATIOS TO AVERAGE NET ASSETS:
Net investment income including reimbursement/waiver		8.01	%^(d)		14.43	%^(d)
Operating expenses including reimbursement/waiver		2.39	%^(d)		2.39	%^(d)
Operating expenses excluding reimbursement/waiver		3.77	%^(d)		4.85	%^(d)
PORTFOLIO TURNOVER RATE		189	%^(c)		80	%^(c)

(a) The Fund began offering Investor Class shares on October 3, 2011.

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

(d) Annualized.


See Notes to Financial Statements		133		June 30, 2012

Financial Highlights

For a share outstanding throughout the periods presented.

Forward Global Credit Long/Short Fund


	INSTITUTIONAL CLASS
	SIX MONTHS ENDED JUNE 30, 2012 (UNAUDITED)			PERIOD ENDED DECEMBER 31, 2011^(a)
NET ASSET VALUE, BEGINNING OF PERIOD	$	24.16		$	25.00
INCOME/(LOSS) FROM OPERATIONS:
Net investment income^(b)		1.05			0.91
Net realized and unrealized loss on investments		(0.50	)		(0.92	)

Total from Investment Operations		0.55			(0.01	)

LESS DISTRIBUTIONS:
From investment income		—			(0.77	)
From capital gains		—			(0.06	)

Total Distributions		—			(0.83	)

NET INCREASE/(DECREASE) IN NET ASSET VALUE		0.55			(0.84	)

NET ASSET VALUE, END OF PERIOD	$	24.71		$	24.16

TOTAL RETURN		2.28	%^(c)		(0.02	)%^(c)
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (in 000s)	$	1,368		$	1,242
RATIOS TO AVERAGE NET ASSETS:
Net investment income including reimbursement/waiver		8.38	%^(d)		14.83	%^(d)
Operating expenses including reimbursement/waiver		1.99	%^(d)		1.99	%^(d)
Operating expenses excluding reimbursement/waiver		3.36	%^(d)		4.45	%^(d)
PORTFOLIO TURNOVER RATE		189	%^(c)		80	%^(c)

(a) The Fund began offering Institutional Class shares on October 3, 2011.

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

(d) Annualized.


June 30, 2012		134		See Notes to Financial Statements

Financial Highlights

For a share outstanding throughout the periods presented.

Forward Global Credit Long/Short Fund


	CLASS C
	SIX MONTHS ENDED JUNE 30, 2012 (UNAUDITED)			PERIOD ENDED DECEMBER 31, 2011^(a)
NET ASSET VALUE, BEGINNING OF PERIOD	$	24.16		$	25.00
INCOME/(LOSS) FROM OPERATIONS:
Net investment income^(b)		0.93			0.85
Net realized and unrealized loss on investments		(0.51	)		(0.92	)

Total from Investment Operations		0.42			(0.07	)

LESS DISTRIBUTIONS:
From investment income		—			(0.71	)
From capital gains		—			(0.06	)

Total Distributions		—			(0.77	)

NET INCREASE/(DECREASE) IN NET ASSET VALUE		0.42			(0.84	)

NET ASSET VALUE, END OF PERIOD	$	24.58		$	24.16

TOTAL RETURN^(c)		1.74	%^(d)		(0.27	)%^(d)
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (in 000s)	$	1,229		$	1,208
RATIOS TO AVERAGE NET ASSETS:
Net investment income including reimbursement/waiver		7.42	%^(e)		13.78	%^(e)
Operating expenses including reimbursement/waiver		2.99	%^(e)		2.99	%^(e)
Operating expenses excluding reimbursement/waiver		4.36	%^(e)		5.45	%^(e)
PORTFOLIO TURNOVER RATE		189	%^(d)		80	%^(d)

(a) The Fund began offering Class C shares on October 3, 2011.

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

(d) Not Annualized.

(e) Annualized.


See Notes to Financial Statements		135		June 30, 2012

Financial Highlights

For a share outstanding throughout the periods presented.

Forward Global Credit Long/Short Fund


	CLASS M
	SIX MONTHS ENDED JUNE 30, 2012 (UNAUDITED)			PERIOD ENDED DECEMBER 31, 2011^(a)
NET ASSET VALUE, BEGINNING OF PERIOD	$	24.16		$	25.00
INCOME/(LOSS) FROM OPERATIONS:
Net investment income^(b)		1.05			0.91
Net realized and unrealized loss on investments		(0.50	)		(0.92	)

Total from Investment Operations		0.55			(0.01	)

LESS DISTRIBUTIONS:
From investment income		—			(0.77	)
From capital gains		—			(0.06	)

Total Distributions		—			(0.83	)

NET INCREASE/(DECREASE) IN NET ASSET VALUE		0.55			(0.84	)

NET ASSET VALUE, END OF PERIOD	$	24.71		$	24.16

TOTAL RETURN		2.28	%^(c)		(0.02	)%^(c)
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (in 000s)	$	1,235		$	1,208
RATIOS TO AVERAGE NET ASSETS:
Net investment income including reimbursement/waiver		8.42	%^(d)		14.78	%^(d)
Operating expenses including reimbursement/waiver		1.99	%^(d)		1.99	%^(d)
Operating expenses excluding reimbursement/waiver		3.36	%^(d)		4.45	%^(d)
PORTFOLIO TURNOVER RATE		189	%^(c)		80	%^(c)

(a) The Fund began offering Class M shares on October 3, 2011.

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

(d) Annualized.


June 30, 2012		136		See Notes to Financial Statements

Financial Highlights

For a share outstanding throughout the periods presented.

Forward International Dividend Fund


	INVESTOR CLASS
	SIX MONTHS ENDED JUNE 30, 2012 (UNAUDITED)			YEAR ENDED DECEMBER 31, 2011			YEAR ENDED DECEMBER 31, 2010^(a)			YEAR ENDED DECEMBER 31, 2009			YEAR ENDED DECEMBER 31, 2008			YEAR ENDED DECEMBER 31, 2007
NET ASSET VALUE, BEGINNING OF PERIOD	$	7.86		$	9.49		$	8.48		$	8.63		$	19.40		$	18.23
INCOME/(LOSS) FROM OPERATIONS:^(b)
Net investment income		0.32	^(c)		0.47	^(c)		0.20	^(c)		0.27	^(c)		0.66			0.14
Net realized and unrealized gain/(loss) on investments		0.11			(1.61	)		1.32			2.82			(11.00	)		2.32

Total from Investment Operations		0.43			(1.14	)		1.52			3.09			(10.34	)		2.46

LESS DISTRIBUTIONS:
From investment income		(0.11	)		(0.49	)		(0.51	)		(3.24	)		(0.12	)		(0.13	)
From capital gains		—			—			—			—			(0.31	)		(1.18	)

Total Distributions		(0.11	)		(0.49	)		(0.51	)		(3.24	)		(0.43	)		(1.31	)

REDEMPTION FEES ADDED TO PAID IN CAPITAL		—			—			—			—			—			0.02

NET INCREASE/(DECREASE) IN NET ASSET VALUE		0.32			(1.63	)		1.01			(0.15	)		(10.77	)		1.17

NET ASSET VALUE, END OF PERIOD	$	8.18		$	7.86		$	9.49		$	8.48		$	8.63		$	19.40

TOTAL RETURN		5.51	%^(d)		(12.45	)%		17.97	%		35.88	%		(53.22	)%		13.39	%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (in 000s)	$	6,916		$	3,170		$	4,100		$	4,954		$	12,494		$	59,726
RATIOS TO AVERAGE NET ASSETS:
Net investment income including reimbursement/waiver		7.65	%^(e)		5.26	%		2.31	%		2.97	%		2.32	%		0.90	%
Operating expenses including reimbursement/waiver		1.43	%^(e)(f)		1.49	%		1.51	%^(g)		1.34	%		1.30	%^(h)		1.25	%⁽ⁱ⁾
Operating expenses excluding reimbursement/waiver		1.73	%^(e)		2.81	%		3.92	%		1.81	%		1.70	%		1.48	%
PORTFOLIO TURNOVER RATE		38	%^(d)		93	%		113	%		73	%		94	%		63	%

(a) Prior to May 1, 2010, the Forward International Dividend Fund was known as the Forward International Equity Fund.

(b) 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) Not Annualized.

(e) Annualized.

(f) Effective May 1, 2012, the net expense limitation changed from 1.49% to 1.34%.

(g) Effective May 1, 2010, the net expense limitation changed from 1.34% to 1.60%. Effective December 1, 2010, the net expense limitation changed from 1.60% to 1.49%.

(h) Effective May 1, 2008, the net expense limitation changed from 1.24% to 1.34%.

(i) Effective May 1, 2007, the net expense limitation changed from 1.29% to 1.24%.


See Notes to Financial Statements		137		June 30, 2012

Financial Highlights

For a share outstanding throughout the periods presented.

Forward International Dividend Fund


	INSTITUTIONAL CLASS
	SIX MONTHS ENDED JUNE 30, 2012 (UNAUDITED)			YEAR ENDED DECEMBER 31, 2011			YEAR ENDED DECEMBER 31, 2010^(a)			YEAR ENDED DECEMBER 31, 2009			YEAR ENDED DECEMBER 31, 2008			PERIOD ENDED DECEMBER 31, 2007^(b)
NET ASSET VALUE, BEGINNING OF PERIOD	$	6.70		$	8.12		$	7.23		$	8.62		$	19.41		$	19.99
INCOME/(LOSS) FROM OPERATIONS:^(c)
Net investment income		0.33	^(d)		0.44	^(d)		0.21	^(d)		0.29	^(d)		0.43			0.09
Net realized and unrealized gain/(loss) on investments		0.05			(1.37	)		1.11			2.79			(10.76	)		0.66

Total from Investment Operations		0.38			(0.93	)		1.32			3.08			(10.33	)		0.75

LESS DISTRIBUTIONS:
From investment income		(0.12	)		(0.49	)		(0.43	)		(4.47	)		(0.15	)		(0.16	)
From capital gains		—			—			—			—			(0.31	)		(1.18	)

Total Distributions		(0.12	)		(0.49	)		(0.43	)		(4.47	)		(0.46	)		(1.34	)

REDEMPTION FEES ADDED TO PAID IN CAPITAL		—			—			—			—			—			0.01

NET INCREASE/(DECREASE) IN NET ASSET VALUE		0.26			(1.42	)		0.89			(1.39	)		(10.79	)		(0.58	)

NET ASSET VALUE, END OF PERIOD	$	6.96		$	6.70		$	8.12		$	7.23		$	8.62		$	19.41

TOTAL RETURN		5.71	%^(e)		(12.01	)%		18.30	%		35.84	%		(53.12	)%		3.59	%^(e)
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (in 000s)	$	42,120		$	5,705		$	1,721		$	283		$	13,036		$	23,078
RATIOS TO AVERAGE NET ASSETS:
Net investment income including reimbursement/waiver		9.32	%^(f)		5.88	%		2.86	%		3.12	%		2.82	%		0.95	%^(f)
Operating expenses including reimbursement/waiver		1.06	%^(f)(g)		1.14	%		1.16	%^(h)		0.99	%		0.99	%		0.99	%^(f)
Operating expenses excluding reimbursement/waiver		1.34	%^(f)		2.45	%		3.54	%		1.39	%		1.42	%		1.23	%^(f)
PORTFOLIO TURNOVER RATE		38	%^(e)		93	%		113	%		73	%		94	%		63	%⁽ⁱ⁾

(a) Prior to May 1, 2010, the Forward International Dividend Fund was known as the Forward International Equity Fund.

(b) The Fund began offering Institutional Class shares on May 1, 2007.

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

(e) Not Annualized.

(f) Annualized.

(g) Effective May 1, 2012, the net expense limitation changed from 1.14% to 0.99%.

(h) Effective May 1, 2010, the net expense limitation changed from 0.99% to 1.25%. Effective December 1, 2010, the net expense limitation changed from 1.25% to 1.14%.

(i) Portfolio turnover rate is calculated at the Fund level and represents the year ended December 31, 2007.


June 30, 2012		138		See Notes to Financial Statements

Financial Highlights

For a share outstanding throughout the periods presented.

Forward International Dividend Fund


	CLASS M
	SIX MONTHS ENDED JUNE 30, 2012 (UNAUDITED)			PERIOD ENDED DECEMBER 31, 2011^(a)
NET ASSET VALUE, BEGINNING OF PERIOD	$	6.70		$	8.56
INCOME/(LOSS) FROM OPERATIONS:
Net investment income^(b)		0.33			0.25
Net realized and unrealized gain/(loss) on investments		0.05			(1.64	)

Total from Investment Operations		0.38			(1.39	)

LESS DISTRIBUTIONS:
From investment income		(0.12	)		(0.47	)

Total Distributions		(0.12	)		(0.47	)

NET INCREASE/(DECREASE) IN NET ASSET VALUE		0.26			(1.86	)

NET ASSET VALUE, END OF PERIOD	$	6.96		$	6.70

TOTAL RETURN		5.72	%^(c)		(16.68	)%^(c)
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (in 000s)	$	89		$	22
RATIOS TO AVERAGE NET ASSETS:
Net investment income including reimbursement/waiver		9.36	%^(d)		5.48	%^(d)
Operating expenses including reimbursement/waiver		1.07	%^(d)(e)		1.14	%^(d)
Operating expenses excluding reimbursement/waiver		1.35	%^(d)		2.50	%^(d)
PORTFOLIO TURNOVER RATE		38	%^(c)		93	%^(f)

(a) The Fund began offering Class M Shares on May 2, 2011.

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

(d) Annualized.

(e) Effective May 1, 2012, the net expense limitation changed from 1.14% to 0.99%.

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


See Notes to Financial Statements		139		June 30, 2012

Financial Highlights

For a share outstanding throughout the periods presented.

Forward International Small Companies Fund


	INVESTOR CLASS
	SIX MONTHS ENDED JUNE 30, 2012 (UNAUDITED)			YEAR ENDED DECEMBER 31, 2011			YEAR ENDED DECEMBER 31, 2010			YEAR ENDED DECEMBER 31, 2009			YEAR ENDED DECEMBER 31, 2008			YEAR ENDED DECEMBER 31, 2007
NET ASSET VALUE, BEGINNING OF PERIOD	$	11.57		$	14.54		$	12.15		$	9.51		$	18.04		$	18.96
INCOME/(LOSS) FROM OPERATIONS:
Net investment income		0.07	^(a)		0.09	^(a)		0.10			0.12			0.15			0.11
Net realized and unrealized gain/(loss) on investments		0.56			(2.93	)		2.41		��	2.63			(8.56	)		0.64

Total from Investment Operations		0.63			(2.84	)		2.51			2.75			(8.41	)		0.75

LESS DISTRIBUTIONS:
From investment income		—			(0.13	)		(0.12	)		(0.11	)		(0.12	)		(0.08	)
From capital gains		—			—			—			—			—			(1.60	)

Total Distributions		—			(0.13	)		(0.12	)		(0.11	)		(0.12	)		(1.68	)

REDEMPTION FEES ADDED TO PAID IN CAPITAL		—			—			—			—			—			0.01

NET INCREASE/(DECREASE) IN NET ASSET VALUE		0.63			(2.97	)		2.39			2.64			(8.53	)		(0.92	)

NET ASSET VALUE, END OF PERIOD	$	12.20		$	11.57		$	14.54		$	12.15		$	9.51		$	18.04

TOTAL RETURN		5.44	%^(b)		(19.49	)%		20.69	%		28.89	%		(46.60	)%		3.82	%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (in 000s)	$	38,453		$	51,814		$	95,936		$	101,110		$	108,661		$	274,585
RATIOS TO AVERAGE NET ASSETS:
Net Investment income including reimbursement/waiver/repayment of previously waived fees		1.14	%^(c)		0.65	%		0.60	%		0.72	%		0.91	%		0.54	%
Operating expenses including reimbursement/waiver/repayment of previously waived fees		1.68	%^(c)(d)		1.62	%		1.64	%		1.62	%		1.58	%^(e)		1.60	%^(f)
Operating expenses excluding reimbursement/waiver		n/a			n/a			n/a			n/a			1.61	%		1.62	%
PORTFOLIO TURNOVER RATE		54	%^(b)		79	%		82	%		114	%		95	%		79	%

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

(b) Not Annualized.

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

(e) Effective February 1, 2008, the Advisor had not agreed to limit the expenses.

(f) Effective January 2, 2007, the net expense limitation changed from 1.56% to 1.60%.


June 30, 2012		140		See Notes to Financial Statements

Financial Highlights

For a share outstanding throughout the periods presented.

Forward International Small Companies Fund


	INSTITUTIONAL CLASS
	SIX MONTHS ENDED JUNE 30, 2012 (UNAUDITED)			YEAR ENDED DECEMBER 31, 2011			YEAR ENDED DECEMBER 31, 2010			YEAR ENDED DECEMBER 31, 2009			YEAR ENDED DECEMBER 31, 2008			YEAR ENDED DECEMBER 31, 2007
NET ASSET VALUE, BEGINNING OF PERIOD	$	11.57		$	14.55		$	12.16		$	9.52		$	18.10		$	19.02
INCOME/(LOSS) FROM OPERATIONS:
Net investment income		0.09	^(a)		0.13	^(a)		0.12			0.12			0.18			0.14
Net realized and unrealized gain/(loss) on investments		0.55			(2.92	)		2.44			2.68			(8.58	)		0.68

Total from Investment Operations		0.64			(2.79	)		2.56			2.80			(8.40	)		0.82

LESS DISTRIBUTIONS:
From investment income		—			(0.19	)		(0.17	)		(0.16	)		(0.18	)		(0.15	)
From capital gains		—			—			—			—			—			(1.60	)

Total Distributions		—			(0.19	)		(0.17	)		(0.16	)		(0.18	)		(1.75	)

REDEMPTION FEES ADDED TO PAID IN CAPITAL		—			—			—			—			—			0.01

NET INCREASE/(DECREASE) IN NET ASSET VALUE		0.64			(2.98	)		2.39			2.64			(8.58	)		(0.92	)

NET ASSET VALUE, END OF PERIOD	$	12.21		$	11.57		$	14.55		$	12.16		$	9.52		$	18.10

TOTAL RETURN		5.62	%^(b)		(19.18	)%		21.10	%		29.37	%		(46.42	)%		4.18	%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (in 000s)	$	218,566		$	280,888		$	436,307		$	431,875		$	329,966		$	626,083
RATIOS TO AVERAGE NET ASSETS:
Net investment income including reimbursement/waiver/repayment of previously waived fees		1.49	%^(c)		0.94	%		0.94	%		1.10	%		1.26	%		0.84	%
Operating expenses including reimbursement/waiver/repayment of previously waived fees		1.33	%^(c)(d)		1.27	%		1.27	%		1.25	%		1.23	%^(e)		1.25	%^(f)
Operating expenses excluding reimbursement/waiver		n/a			n/a			n/a			n/a			1.26	%		1.28	%
PORTFOLIO TURNOVER RATE		54	%^(b)		79	%		82	%		114	%		95	%		79	%

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

(b) Not Annualized.

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

(e) Effective February 1, 2008, the Advisor had not agreed to limit the expenses.

(f) Effective January 2, 2007, the net expense limitation changed from 1.26% to 1.25%.


See Notes to Financial Statements		141		June 30, 2012

Financial Highlights

For a share outstanding throughout the periods presented.

Forward International Small Companies Fund


	CLASS A
	SIX MONTHS ENDED JUNE 30, 2012 (UNAUDITED)			YEAR ENDED DECEMBER 31, 2011			YEAR ENDED DECEMBER 31, 2010			YEAR ENDED DECEMBER 31, 2009			YEAR ENDED DECEMBER 31, 2008			YEAR ENDED DECEMBER 31, 2007
NET ASSET VALUE, BEGINNING OF PERIOD	$	11.59		$	14.55		$	12.16		$	9.51		$	18.04		$	18.95
INCOME/(LOSS) FROM OPERATIONS:^(a)
Net investment income		0.06	^(b)		0.07	^(b)		0.12			0.08			0.18			0.03
Net realized and unrealized gain/(loss) on investments		0.56			(2.92	)		2.37			2.66			(8.59	)		0.76

Total from Investment Operations		0.62			(2.85	)		2.49			2.74			(8.41	)		0.79

LESS DISTRIBUTIONS:
From investment income		—			(0.11	)		(0.10	)		(0.09	)		(0.12	)		(0.11	)
From capital gains		—			—			—			—			—			(1.60	)

Total Distributions		—			(0.11	)		(0.10	)		(0.09	)		(0.12	)		(1.71	)

REDEMPTION FEES ADDED TO PAID IN CAPITAL		—			—			—			—			—			0.01

NET INCREASE/(DECREASE) IN NET ASSET VALUE		0.62			(2.96	)		2.39			2.65			(8.53	)		(0.91	)

NET ASSET VALUE, END OF PERIOD	$	12.21		$	11.59		$	14.55		$	12.16		$	9.51		$	18.04

TOTAL RETURN^(c)		5.35	%^(d)		(19.58	)%		20.44	%		28.80	%		(46.64	)%		4.03	%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (in 000s)	$	814		$	1,007		$	1,290		$	1,247		$	2,010		$	5,632
RATIOS TO AVERAGE NET ASSETS:
Net investment income including reimbursement/waiver/repayment of previously waived fees		1.00	%^(e)		0.51	%		0.51	%		0.77	%		0.91	%		0.52	%
Operating expenses including reimbursement/waiver/repayment of previously waived fees		1.83	%^(e)(f)		1.78	%		1.79	%		1.72	%		1.61	%^(g)		1.52	%^(h)
Operating expenses excluding reimbursement/waiver		n/a			n/a			n/a			n/a			1.63	%		1.53	%
PORTFOLIO TURNOVER RATE		54	%^(d)		79	%		82	%		114	%		95	%		79	%

(a) 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.

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

(d) Not Annualized.

(e) Annualized.

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

(g) Effective February 1, 2008, the Advisor had not agreed to limit the expenses.

(h) Effective January 2, 2007, the net expense limitation changed from 1.56% to 1.60%.


June 30, 2012		142		See Notes to Financial Statements

Financial Highlights

For a share outstanding throughout the periods presented.

Forward International Small Companies Fund


	CLASS M
	SIX MONTHS ENDED JUNE 30, 2012 (UNAUDITED)			YEAR ENDED DECEMBER 31, 2011			PERIOD ENDED DECEMBER 31, 2010^(a)
NET ASSET VALUE, BEGINNING OF PERIOD	$	11.57		$	14.55		$	12.04
INCOME/(LOSS) FROM OPERATIONS:
Net investment income		0.15	^(b)		0.15	^(b)		0.13
Net realized and unrealized gain/(loss) on investments		0.50			(2.94	)		2.55

Total from Investment Operations		0.65			(2.79	)		2.68

LESS DISTRIBUTIONS:
From investment income		—			(0.19	)		(0.17	)

Total Distributions		—			(0.19	)		(0.17	)

NET INCREASE/(DECREASE) IN NET ASSET VALUE		0.65			(2.98	)		2.51

NET ASSET VALUE, END OF PERIOD	$	12.22		$	11.57		$	14.55

TOTAL RETURN		5.62	%^(c)		(19.18	)%		22.30	%^(c)
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (in 000s)	$	9,277		$	59		$	72
RATIOS TO AVERAGE NET ASSETS:
Net investment income		2.42	%^(d)		1.09	%		1.19	%^(d)
Operating expenses		1.36	%^(d)(e)		1.27	%		1.29	%^(d)
PORTFOLIO TURNOVER RATE		54	%^(c)		79	%		82	%^(f)

(a) The Fund began offering Class M shares on February 1, 2010.

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

(d) Annualized.

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

(f) Portfolio turnover rate is calculated at the Fund level and represents the year ended December 31, 2010.


See Notes to Financial Statements		143		June 30, 2012

Financial Highlights

For a share outstanding throughout the periods presented.

Forward Large Cap Dividend Fund


	INVESTOR CLASS
	SIX MONTHS ENDED JUNE 30, 2012 (UNAUDITED)			PERIOD ENDED DECEMBER 31, 2011^(a)
NET ASSET VALUE, BEGINNING OF PERIOD	$	10.37		$	11.35
INCOME/(LOSS) FROM OPERATIONS:
Net investment income^(b)		0.25			0.19
Net realized and unrealized gain/(loss) on investments		0.28			(0.75	)

Total from Investment Operations		0.53			(0.56	)

LESS DISTRIBUTIONS:
From investment income		(0.11	)		(0.42	)

Total Distributions		(0.11	)		(0.42	)

NET INCREASE/(DECREASE) IN NET ASSET VALUE		0.42			(0.98	)

NET ASSET VALUE, END OF PERIOD	$	10.79		$	10.37

TOTAL RETURN		5.18	%^(c)		(4.98	)%^(c)
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (in 000s)	$	117		$	63
RATIOS TO AVERAGE NET ASSETS:
Net investment income including reimbursement/waiver		4.57	%^(d)		2.67	%^(d)
Operating expenses including reimbursement/waiver		1.30	%^(d)(e)		1.34	%^(d)
Operating expenses excluding reimbursement/waiver		1.82	%^(d)		1.95	%^(d)
PORTFOLIO TURNOVER RATE		19	%^(c)		101	%^(f)

(a) The Fund began offering Investor Class shares on May 2, 2011. Prior to November 1, 2011, the Forward Large Cap Dividend Fund was known as the Forward Large Cap Equity Fund.

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

(d) Annualized.

(e) Effective May 1, 2012, the net expense limitation changed from 1.34% to 1.24%.

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


June 30, 2012		144		See Notes to Financial Statements

Financial Highlights

For a share outstanding throughout the periods presented.

Forward Large Cap Dividend Fund


	INSTITUTIONAL CLASS
	SIX MONTHS ENDED JUNE 30, 2012 (UNAUDITED)			YEAR ENDED DECEMBER 31, 2011^(a)			YEAR ENDED DECEMBER 31, 2010			YEAR ENDED DECEMBER 31, 2009			YEAR ENDED DECEMBER 31, 2008			PERIOD ENDED DECEMBER 31, 2007^(b)
NET ASSET VALUE, BEGINNING OF PERIOD	$	10.24		$	10.21		$	9.04		$	7.44		$	11.66		$	10.53
INCOME/(LOSS) FROM OPERATIONS:
Net investment income		0.26	^(c)		0.35	^(c)		0.11	^(c)		0.30			0.08			0.09
Net realized and unrealized gain/(loss) on investments		0.28			0.13			1.15			1.51			(4.22	)		1.12

Total from Investment Operations		0.54			0.48			1.26			1.81			(4.14	)		1.21

LESS DISTRIBUTIONS:
From investment income		(0.13	)		(0.45	)		(0.09	)		(0.21	)		(0.08	)		(0.09	)

Total Distributions		(0.13	)		(0.45	)		(0.09	)		(0.21	)		(0.08	)		(0.09	)

REDEMPTION FEES ADDED TO PAID IN CAPITAL		—			—			—			—			—			0.01

NET INCREASE/(DECREASE) IN NET ASSET VALUE		0.41			0.03			1.17			1.60			(4.22	)		1.13

NET ASSET VALUE, END OF PERIOD	$	10.65		$	10.24		$	10.21		$	9.04		$	7.44		$	11.66

TOTAL RETURN		5.35	%^(d)		4.64	%		13.98	%		24.34	%		(35.48	)%		11.59	%^(d)
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (in 000s)	$	4,405		$	4,895		$	2,898		$	990		$	5,016		$	6,683
RATIOS TO AVERAGE NET ASSETS:
Net investment income including reimbursement/waiver		4.79	%^(e)		3.33	%		1.22	%		1.14	%		0.91	%		0.95	%^(e)
Operating expenses including reimbursement/waiver		0.96	%^(e)(f)		0.99	%		0.99	%		0.99	%		0.99	%		0.99	%^(e)
Operating expenses excluding reimbursement/waiver		1.48	%^(e)		1.40	%		1.35	%		1.67	%		1.29	%		1.52	%^(e)
PORTFOLIO TURNOVER RATE		19	%^(d)		101	%		73	%		182	%		89	%		75	%^(g)

(a) Prior to November 1, 2011, the Forward Large Cap Dividend Fund was known as the Forward Large Cap Equity Fund.

(b) The Fund began offering Institutional Class shares on January 31, 2007.

(d) Not Annualized.

(e) Annualized.

(f) Effective May 1, 2012, the net expense limitation changed from 0.99% to 0.89%.

(g) Portfolio turnover rate is calculated at the Fund level and represents the year ended December 31, 2007.


See Notes to Financial Statements		145		June 30, 2012

Financial Highlights

For a share outstanding throughout the periods presented.

Forward Large Cap Dividend Fund


	CLASS A
	SIX MONTHS ENDED JUNE 30, 2012 (UNAUDITED)			YEAR ENDED DECEMBER 31, 2011^(a)			YEAR ENDED DECEMBER 31, 2010			YEAR ENDED DECEMBER 31, 2009			YEAR ENDED DECEMBER 31, 2008			YEAR ENDED DECEMBER 31, 2007
NET ASSET VALUE, BEGINNING OF PERIOD	$	10.38		$	10.34		$	9.17		$	7.45		$	11.65		$	10.40
INCOME/(LOSS) FROM OPERATIONS:
Net investment income		0.24	^(b)		0.30	^(b)		0.07			0.04			0.04			0.06
Net realized and unrealized gain/(loss) on investments		0.29			0.12			1.16			1.73			(4.20	)		1.24

Total from Investment Operations		0.53			0.42			1.23			1.77			(4.16	)		1.30

LESS DISTRIBUTIONS:
From investment income		(0.11	)		(0.38	)		(0.06	)		(0.05	)		(0.04	)		(0.06	)

Total Distributions		(0.11	)		(0.38	)		(0.06	)		(0.05	)		(0.04	)		(0.06	)

REDEMPTION FEES ADDED TO PAID IN CAPITAL		—			—			—			—			—			0.01

NET INCREASE/(DECREASE) IN NET ASSET VALUE		0.42			0.04			1.17			1.72			(4.20	)		1.25

NET ASSET VALUE, END OF PERIOD	$	10.80		$	10.38		$	10.34		$	9.17		$	7.45		$	11.65

TOTAL RETURN^(c)		5.10	%^(d)		4.09	%		13.45	%		23.78	%		(35.70	)%		12.58	%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (in 000s)	$	10,004		$	9,369		$	15,266		$	13,761		$	8,102		$	12,291
RATIOS TO AVERAGE NET ASSETS:
Net investment income including reimbursement/waiver		4.37	%^(e)		2.83	%		0.75	%		0.64	%		0.44	%		0.52	%
Operating expenses including reimbursement/waiver		1.46	%^(e)(f)		1.49	%		1.49	%		1.49	%		1.44	%^(g)		1.34	%^(h)
Operating expenses excluding reimbursement/waiver		1.97	%^(e)		1.87	%		1.85	%		2.01	%		1.73	%		1.87	%
PORTFOLIO TURNOVER RATE		19	%^(d)		101	%		73	%		182	%		89	%		75	%

(a) Prior to November 1, 2011, the Forward Large Cap Dividend Fund was known as the Forward Large Cap Equity Fund.

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

(d) Not Annualized.

(e) Annualized.

(f) Effective May 1, 2012, the net expense limitation changed from 1.49% to 1.39%.

(g) Effective May 1, 2008, the net expense limitation changed from 1.34% to 1.49%.

(h) Effective January 2, 2007, the net expense limitation changed from 1.35% to 1.34%.


June 30, 2012		146		See Notes to Financial Statements

Financial Highlights

For a share outstanding throughout the periods presented.

Forward Select EM Dividend Fund


	INVESTOR CLASS
	SIX MONTHS ENDED JUNE 30, 2012 (UNAUDITED)			PERIOD ENDED DECEMBER 31, 2011^(a)
NET ASSET VALUE, BEGINNING OF PERIOD	$	19.50		$	25.00
INCOME/(LOSS) FROM OPERATIONS:
Net investment income^(b)		0.81			0.58
Net realized and unrealized gain/(loss) on investments		1.25			(5.52	)

Total from Investment Operations		2.06			(4.94	)

LESS DISTRIBUTIONS:
From investment income		(0.43	)		(0.56	)
Tax return of capital		—			(0.00	)^(c)

Total Distributions		(0.43	)		(0.56	)

NET INCREASE/(DECREASE) IN NET ASSET VALUE		1.63			(5.50	)

NET ASSET VALUE, END OF PERIOD	$	21.13		$	19.50

TOTAL RETURN		10.66	%^(d)		(19.87	)%^(d)
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (in 000s)	$	1,166		$	1,026
RATIOS TO AVERAGE NET ASSETS (excluding interest expense):
Net investment income including reimbursement/waiver		7.64	%^(e)		4.12	%^(e)
Operating expenses including reimbursement/waiver		1.79	%^(e)		1.79	%^(e)
Operating expenses excluding reimbursement/waiver		2.87	%^(e)		2.96	%^(e)
RATIOS TO AVERAGE NET ASSETS (including interest expense):
Net investment income including reimbursement/waiver		7.56	%^(e)		n/a
Operating expenses including reimbursement/waiver		1.86	%^(e)		n/a
Operating expenses excluding reimbursement/waiver		2.94	%^(e)		n/a
PORTFOLIO TURNOVER RATE		48	%^(d)		147	%^(d)

(a) The Fund began offering Investor Class shares on May 2, 2011.

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

(d) Not Annualized.

(e) Annualized.


See Notes to Financial Statements		147		June 30, 2012

Financial Highlights

For a share outstanding throughout the periods presented.

Forward Select EM Dividend Fund


	INSTITUTIONAL CLASS
	SIX MONTHS ENDED JUNE 30, 2012 (UNAUDITED)			PERIOD ENDED DECEMBER 31, 2011^(a)
NET ASSET VALUE, BEGINNING OF PERIOD	$	19.48		$	24.37
INCOME/(LOSS) FROM OPERATIONS:
Net investment income^(b)		0.79			0.76
Net realized and unrealized gain/(loss) on investments		1.35			(5.03	)

Total from Investment Operations		2.14			(4.27	)

LESS DISTRIBUTIONS:
From investment income		(0.48	)		(0.62	)
Tax return of capital		—			(0.00	)^(c)

Total Distributions		(0.48	)		(0.62	)

NET INCREASE/(DECREASE) IN NET ASSET VALUE		1.66			(4.89	)

NET ASSET VALUE, END OF PERIOD	$	21.14		$	19.48

TOTAL RETURN		11.02	%^(d)		(17.60	)%^(d)
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (in 000s)	$	3,588		$	4,244
RATIOS TO AVERAGE NET ASSETS (excluding interest expense):
Net investment income including reimbursement/waiver		7.41	%^(e)		5.23	%^(e)
Operating expenses including reimbursement/waiver		1.39	%^(e)		1.39	%^(e)
Operating expenses excluding reimbursement/waiver		2.43	%^(e)		2.19	%^(e)
RATIOS TO AVERAGE NET ASSETS (including interest expense):
Net investment income including reimbursement/waiver		7.33	%^(e)		n/a
Operating expenses including reimbursement/waiver		1.46	%^(e)		n/a
Operating expenses excluding reimbursement/waiver		2.50	%^(e)		n/a
PORTFOLIO TURNOVER RATE		48	%^(d)		147	%^(f)

(a) The Fund began offering Institutional Class shares on May 3, 2011.

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

(d) Not Annualized.

(e) Annualized.

(f) Portfolio turnover rate is calculated at the Fund level and represents the period of May 2, 2011 (inception) through December 31, 2011.


June 30, 2012		148		See Notes to Financial Statements

Financial Highlights

For a share outstanding throughout the periods presented.

Forward Select EM Dividend Fund


	CLASS C
	SIX MONTHS ENDED JUNE 30, 2012 (UNAUDITED)			PERIOD ENDED DECEMBER 31, 2011^(a)
NET ASSET VALUE, BEGINNING OF PERIOD	$	19.49		$	25.00
INCOME/(LOSS) FROM OPERATIONS:
Net investment income^(b)		0.73			0.53
Net realized and unrealized gain/(loss) on investments		1.30			(5.57	)

Total from Investment Operations		2.03			(5.04	)

LESS DISTRIBUTIONS:
From investment income		(0.37	)		(0.47	)
Tax return of capital		—			(0.00	)^(c)

Total Distributions		(0.37	)		(0.47	)

NET INCREASE/(DECREASE) IN NET ASSET VALUE		1.66			(5.51	)

NET ASSET VALUE, END OF PERIOD	$	21.15		$	19.49

TOTAL RETURN^(d)		10.45	%^(e)		(20.20	)%^(e)
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (in 000s)	$	587		$	526
RATIOS TO AVERAGE NET ASSETS (excluding interest expense):
Net investment income including reimbursement/waiver		6.90	%^(f)		3.72	%^(f)
Operating expenses including reimbursement/waiver		2.39	%^(f)		2.39	%^(f)
Operating expenses excluding reimbursement/waiver		3.48	%^(f)		3.42	%^(f)
RATIOS TO AVERAGE NET ASSETS (including interest expense):
Net investment income including reimbursement/waiver		6.82	%^(f)		n/a
Operating expenses including reimbursement/waiver		2.46	%^(f)		n/a
Operating expenses excluding reimbursement/waiver		3.56	%^(f)		n/a
PORTFOLIO TURNOVER RATE		48	%^(e)		147	%^(e)

(a) The Fund began offering Class C shares on May 2, 2011.

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

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

(e) Not Annualized.

(f) Annualized.


See Notes to Financial Statements		149		June 30, 2012

Financial Highlights

For a share outstanding throughout the periods presented.

Forward Select EM Dividend Fund


	CLASS M
	SIX MONTHS ENDED JUNE 30, 2012 (UNAUDITED)			PERIOD ENDED DECEMBER 31, 2011^(a)
NET ASSET VALUE, BEGINNING OF PERIOD	$	19.48		$	25.00
INCOME/(LOSS) FROM OPERATIONS:
Net investment income^(b)		0.86			0.66
Net realized and unrealized gain/(loss) on investments		1.27			(5.56	)

Total from Investment Operations		2.13			(4.90	)

LESS DISTRIBUTIONS:
From investment income		(0.47	)		(0.62	)
Tax return of capital		—			(0.00	)^(c)

Total Distributions		(0.47	)		(0.62	)

NET INCREASE/(DECREASE) IN NET ASSET VALUE		1.66			(5.52	)

NET ASSET VALUE, END OF PERIOD	$	21.14		$	19.48

TOTAL RETURN		10.98	%^(d)		(19.66	)%^(d)
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (in 000s)	$	825		$	610
RATIOS TO AVERAGE NET ASSETS (excluding interest expense):
Net investment income including reimbursement/waiver		8.15	%^(e)		4.60	%^(e)
Operating expenses including reimbursement/waiver		1.39	%^(e)		1.39	%^(e)
Operating expenses excluding reimbursement/waiver		2.52	%^(e)		2.47	%^(e)
RATIOS TO AVERAGE NET ASSETS (including interest expense):
Net investment income including reimbursement/waiver		8.07	%^(e)		n/a
Operating expenses including reimbursement/waiver		1.46	%^(e)		n/a
Operating expenses excluding reimbursement/waiver		2.59	%^(e)		n/a
PORTFOLIO TURNOVER RATE		48	%^(d)		147	%^(d)

(a) The Fund began offering Class M Shares on May 2, 2011.

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

(d) Not Annualized.

(e) Annualized.


June 30, 2012		150		See Notes to Financial Statements

Financial Highlights

For a share outstanding throughout the periods presented.

Forward Small Cap Equity Fund


	INVESTOR CLASS
	SIX MONTHS ENDED JUNE 30, 2012 (UNAUDITED)			YEAR ENDED DECEMBER 31, 2011			YEAR ENDED DECEMBER 31, 2010			YEAR ENDED DECEMBER 31, 2009			YEAR ENDED DECEMBER 31, 2008^(a)			YEAR ENDED DECEMBER 31, 2007
NET ASSET VALUE, BEGINNING OF PERIOD	$	14.40		$	16.71		$	14.45		$	11.98		$	19.71		$	20.47
INCOME/(LOSS) FROM OPERATIONS:
Net investment loss		(0.07	)^(b)		(0.14	)^(b)		(0.41	)		(0.17	)		(0.11	)		(0.22	)
Net realized and unrealized gain/(loss) on investments		0.86			(2.17	)		2.67			2.64			(7.58	)		1.76

Total from Investment Operations		0.79			(2.31	)		2.26			2.47			(7.69	)		1.54

LESS DISTRIBUTIONS:
From investment income		—			—			—			—			(0.04	)		—
From capital gains		—			—			—			—			—			(2.30	)

Total Distributions		—			—			—			—			(0.04	)		(2.30	)

REDEMPTION FEES ADDED TO PAID IN CAPITAL		—			—			—			—			—			0.00	^(c)

NET INCREASE/(DECREASE) IN NET ASSET VALUE		0.79			(2.31	)		2.26			2.47			(7.73	)		(0.76	)

NET ASSET VALUE, END OF PERIOD	$	15.19		$	14.40		$	16.71		$	14.45		$	11.98		$	19.71

TOTAL RETURN		5.49	%^(d)		(13.82	)%		15.64	%		20.62	%		(39.02	)%		7.36	%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (in 000s)	$	25,936		$	29,976		$	110,293		$	194,146		$	202,874		$	386,404
RATIOS TO AVERAGE NET ASSETS:
Net Investment loss including reimbursement/waiver/repayment of previously waived fees		(0.86	)%^(e)		(0.88	)%		(1.13	)%		(1.05	)%		(0.60	)%		(1.05	)%
Operating expenses including reimbursement/waiver/repayment of previously waived fees		1.32	%^(e)(f)(g)		1.34	%^(h)		1.69	%		1.70	%		1.65	%		1.71	%⁽ⁱ⁾
Operating expenses excluding reimbursement/waiver		1.75	%^(e)		1.60	%		n/a			n/a			n/a			n/a
PORTFOLIO TURNOVER RATE		65	%^(d)		234	%		162	%		203	%		313	%		232	%

(a) Prior to May 1, 2008, the Forward Small Cap Equity Fund was known as the Forward Hoover Small Cap Equity Fund.

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

(d) Not Annualized.

(e) Annualized.

(f) Effective May 1, 2012, the net expense limitation changed from 1.29% to 1.39%.

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

(h) Effective February 1, 2011, the Advisor agreed to limit expense at 1.29%.

(i) Effective January 2, 2007, the Advisor had not agreed to limit the expenses.


See Notes to Financial Statements		151		June 30, 2012

Financial Highlights

For a share outstanding throughout the periods presented.

Forward Small Cap Equity Fund


	INSTITUTIONAL CLASS
	SIX MONTHS ENDED JUNE 30, 2012 (UNAUDITED)			YEAR ENDED DECEMBER 31, 2011			YEAR ENDED DECEMBER 31, 2010			YEAR ENDED DECEMBER 31, 2009			YEAR ENDED DECEMBER 31, 2008^(a)			YEAR ENDED DECEMBER 31, 2007
NET ASSET VALUE, BEGINNING OF PERIOD	$	15.07		$	17.37		$	14.98		$	12.37		$	20.27		$	20.93
INCOME/(LOSS) FROM OPERATIONS:
Net investment loss		(0.05	)^(b)		(0.11	)^(b)		(0.11	)		(0.12	)		(0.07	)		(0.16	)
Net realized and unrealized gain/(loss) on investments		0.90			(2.19	)		2.50			2.73			(7.79	)		1.80

Total from Investment Operations		0.85			(2.30	)		2.39			2.61			(7.86	)		1.64

LESS DISTRIBUTIONS:
From investment income		—			—			—			—			(0.04	)		—
From capital gains		—			—			—			—			—			(2.30	)

Total Distributions		—			—			—			—			(0.04	)		(2.30	)

REDEMPTION FEES ADDED TO PAID IN CAPITAL		—			—			—			—			—			0.00	^(c)

NET INCREASE/(DECREASE) IN NET ASSET VALUE		0.85			(2.30	)		2.39			2.61			(7.90	)		(0.66	)

NET ASSET VALUE, END OF PERIOD	$	15.92		$	15.07		$	17.37		$	14.98		$	12.37		$	20.27

TOTAL RETURN		5.64	%^(d)		(13.24	)%		15.96	%		21.10	%		(38.78	)%		7.67	%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (in 000s)	$	10,798		$	17,812		$	229,643		$	221,890		$	141,442		$	178,787
RATIOS TO AVERAGE NET ASSETS:
Net investment loss including reimbursement/waiver/repayment of previously waived fees		(0.57	)%^(e)		(0.62	)%		(0.82	)%		(0.72	)%		(0.25	)%		(0.70	)%
Operating expenses including reimbursement/waiver/repayment of previously waived fees		1.01	%^(e)(f)(g)		1.03	%^(h)		1.38	%		1.36	%		1.30	%		1.37	%⁽ⁱ⁾
Operating expenses excluding reimbursement/waiver		1.44	%^(e)		1.32	%		n/a			n/a			n/a			n/a
PORTFOLIO TURNOVER RATE		65	%^(d)		234	%		162	%		203	%		313	%		232	%

(a) Prior to May 1, 2008, the Forward Small Cap Equity Fund was known as the Forward Hoover Small Cap Equity Fund.

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

(d) Not Annualized.

(e) Annualized.

(f) Effective May 1, 2012, the net expense limitation changed from 0.99% to 1.09%.

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

(h) Effective February 1, 2011, the Advisor agreed to limit expense at 0.99%.

(i) Effective January 2, 2007, the Advisor had not agreed to limit the expenses.


June 30, 2012		152		See Notes to Financial Statements

Financial Highlights

For a share outstanding throughout the periods presented.

Forward Small Cap Equity Fund


	CLASS A
	SIX MONTHS ENDED JUNE 30, 2012 (UNAUDITED)			YEAR ENDED DECEMBER 31, 2011			YEAR ENDED DECEMBER 31, 2010			YEAR ENDED DECEMBER 31, 2009			YEAR ENDED DECEMBER 31, 2008^(a)			YEAR ENDED DECEMBER 31, 2007
NET ASSET VALUE, BEGINNING OF PERIOD	$	14.42		$	16.74		$	14.49		$	12.01		$	19.75		$	20.49
INCOME/(LOSS) FROM OPERATIONS:
Net investment loss		(0.07	)^(b)		(0.15	)^(b)		(0.44	)		(0.65	)		(0.22	)		(0.28	)
Net realized and unrealized gain/(loss) on investments		0.87			(2.17	)		2.69			3.13			(7.48	)		1.84

Total from Investment Operations		0.80			(2.32	)		2.25			2.48			(7.70	)		1.56

LESS DISTRIBUTIONS:
From investment income		—			—			—			—			(0.04	)		—
From capital gains		—			—			—			—			—			(2.30	)

Total Distributions		—			—			—			—			(0.04	)		(2.30	)

REDEMPTION FEES ADDED TO PAID IN CAPITAL		—			—			—			—			—			0.00	^(c)

NET INCREASE/(DECREASE) IN NET ASSET VALUE		0.80			(2.32	)		2.25			2.48			(7.74	)		(0.74	)

NET ASSET VALUE, END OF PERIOD	$	15.22		$	14.42		$	16.74		$	14.49		$	12.01		$	19.75

TOTAL RETURN^(d)		5.48	%^(e)		(13.86	)%		15.53	%		20.65	%		(38.99	)%		7.45	%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (in 000s)	$	590		$	765		$	2,113		$	2,289		$	4,637		$	10,934
RATIOS TO AVERAGE NET ASSETS:
Net investment loss including reimbursement/waiver/repayment of previously waived fees		(0.92	)%^(f)		(0.91	)%		(1.18	)%		(1.02	)%		(0.60	)%		(0.96	)%
Operating expenses including reimbursement/waiver/repayment of previously waived fees		1.37	%^(f)(g)(h)		1.38	%⁽ⁱ⁾		1.75	%		1.70	%		1.61	%		1.62	%^(j)
Operating expenses excluding reimbursement/waiver		1.80	%^(f)		1.61	%		n/a			n/a			n/a			n/a
PORTFOLIO TURNOVER RATE		65	%^(e)		234	%		162	%		203	%		313	%		232	%

(a) Prior to May 1, 2008, the Forward Small Cap Equity Fund was known as the Forward Hoover Small Cap Equity Fund.

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

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

(e) Not Annualized.

(f) Annualized.

(g) Effective May 1, 2012, the net expense limitation changed from 1.34% to 1.44%.

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

(i) Effective February 1, 2011, the Advisor agreed to limit expense at 1.34%.

(j) Effective January 2, 2007, the Advisor had not agreed to limit the expenses.


See Notes to Financial Statements		153		June 30, 2012

Financial Highlights

For a share outstanding throughout the periods presented.

Forward Small Cap Equity Fund


	CLASS M
	SIX MONTHS ENDED JUNE 30, 2012 (UNAUDITED)			YEAR ENDED DECEMBER 31, 2011			PERIOD ENDED DECEMBER 31, 2010^(a)
NET ASSET VALUE, BEGINNING OF PERIOD	$	15.01		$	17.37		$	14.30
INCOME/(LOSS) FROM OPERATIONS:
Net investment loss		(0.04	)^(b)		(0.09	)^(b)		(0.07	)
Net realized and unrealized gain/(loss) on investments		0.89			(2.27	)		3.14

Total from Investment Operations		0.85			(2.36	)		3.07

NET INCREASE/(DECREASE) IN NET ASSET VALUE		0.85			(2.36	)		3.07

NET ASSET VALUE, END OF PERIOD	$	15.86		$	15.01		$	17.37

TOTAL RETURN		5.66	%^(c)		(13.59	)%		21.47	%^(c)
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (in 000s)	$	2,952		$	154		$	103
RATIOS TO AVERAGE NET ASSETS:
Net investment loss including reimbursement/waiver		(0.47	)%^(d)		(0.57	)%		(0.80	)%^(d)
Operating expenses including reimbursement/waiver		1.03	%^(d)(e)(f)		1.03	%^(g)		1.41	%^(d)
Operating expenses excluding reimbursement/waiver		1.53	%^(d)		1.15	%		n/a
PORTFOLIO TURNOVER RATE		65	%^(c)		234	%		162	%^(h)

(a) The Fund began offering Class M shares on February 1, 2010.

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

(d) Annualized.

(e) Effective May 1, 2012, the net expense limitation changed from 0.99% to 1.09%.

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

(g) Effective February 1, 2011, the Advisor agreed to limit expense at 0.99%.

(h) Portfolio turnover rate is calculated at the Fund level and represents the year ended December 31, 2010.


June 30, 2012		154		See Notes to Financial Statements

Financial Highlights

For a share outstanding throughout the periods presented.

Forward Tactical Enhanced Fund


	INVESTOR CLASS
	SIX MONTHS ENDED JUNE 30, 2012 (UNAUDITED)			YEAR ENDED DECEMBER 31, 2011^(a)
NET ASSET VALUE, BEGINNING OF PERIOD	$	24.04		$	25.00
INCOME/(LOSS) FROM OPERATIONS:
Net investment loss^(b)		(0.29	)		(0.66	)
Net realized and unrealized gain/(loss) on investments		1.68			(0.25	)

Total from Investment Operations		1.39			(0.91	)

LESS DISTRIBUTIONS:
From capital gains		—			(0.05	)

Total Distributions		—			(0.05	)

NET INCREASE/(DECREASE) IN NET ASSET VALUE		1.39			(0.96	)

NET ASSET VALUE, END OF PERIOD	$	25.43		$	24.04

TOTAL RETURN		5.78	%^(c)		(3.65	)%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (in 000s)	$	15,339		$	12,098
RATIOS TO AVERAGE NET ASSETS:
Net investment loss including reimbursement/waiver		(2.31	)%^(d)		(2.69	)%
Operating expenses including reimbursement/waiver		2.34	%^(d)		2.71	%^(e)
Operating expenses excluding reimbursement/waiver		2.52	%^(d)		2.91	%
PORTFOLIO TURNOVER RATE		0	%^(c)		0	%

(a) The Fund began offering Investor Class shares on January 3, 2011.

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

(d) Annualized.

(e) Effective October 1, 2011, the net expense limitation changed from 2.84% to 2.34%.


See Notes to Financial Statements		155		June 30, 2012

Financial Highlights

For a share outstanding throughout the periods presented.

Forward Tactical Enhanced Fund


	INSTITUTIONAL CLASS
	SIX MONTHS ENDED JUNE 30, 2012 (UNAUDITED)			YEAR ENDED DECEMBER 31, 2011^(a)
NET ASSET VALUE, BEGINNING OF PERIOD	$	24.12		$	25.00
INCOME/(LOSS) FROM OPERATIONS:
Net investment loss^(b)		(0.25	)		(0.57	)
Net realized and unrealized gain/(loss) on investments		1.70			(0.26	)

Total from Investment Operations		1.45			(0.83	)

LESS DISTRIBUTIONS:
From capital gains		—			(0.05	)

Total Distributions		—			(0.05	)

NET INCREASE/(DECREASE) IN NET ASSET VALUE		1.45			(0.88	)

NET ASSET VALUE, END OF PERIOD	$	25.57		$	24.12

TOTAL RETURN		5.97	%^(c)		(3.29	)%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (in 000s)	$	12,583		$	11,816
RATIOS TO AVERAGE NET ASSETS:
Net investment loss including reimbursement/waiver		(1.96	)%^(d)		(2.33	)%
Operating expenses including reimbursement/waiver		1.99	%^(d)		2.36	%^(e)
Operating expenses excluding reimbursement/waiver		2.17	%^(d)		2.71	%
PORTFOLIO TURNOVER RATE		0	%^(c)		0	%

(a) The Fund began offering Institutional Class shares on January 3, 2011.

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

(d) Annualized.

(e) Effective October 1, 2011, the net expense limitation changed from 2.49% to 1.99%.


June 30, 2012		156		See Notes to Financial Statements

Financial Highlights

For a share outstanding throughout the periods presented.

Forward Tactical Enhanced Fund


	CLASS A
	SIX MONTHS ENDED JUNE 30, 2012 (UNAUDITED)			YEAR ENDED DECEMBER 31, 2011^(a)
NET ASSET VALUE, BEGINNING OF PERIOD	$	23.98		$	25.00
INCOME/(LOSS) FROM OPERATIONS:
Net investment loss^(b)		(0.31	)		(0.69	)
Net realized and unrealized gain/(loss) on investments		1.69			(0.28	)

Total from Investment Operations		1.38			(0.97	)

LESS DISTRIBUTIONS:
From capital gains		—			(0.05	)

Total Distributions		—			(0.05	)

NET INCREASE/(DECREASE) IN NET ASSET VALUE		1.38			(1.02	)

NET ASSET VALUE, END OF PERIOD	$	25.36		$	23.98

TOTAL RETURN^(c)		5.75	%^(d)		(3.90	)%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (in 000s)	$	3,438		$	2,578
RATIOS TO AVERAGE NET ASSETS:
Net investment loss including reimbursement/waiver		(2.46	)%^(e)		(2.83	)%
Operating expenses including reimbursement/waiver		2.49	%^(e)		2.86	%^(f)
Operating expenses excluding reimbursement/waiver		2.67	%^(e)		3.10	%
PORTFOLIO TURNOVER RATE		0	%^(d)		0	%

(a) The Fund began offering Class A shares on January 3, 2011.

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

(d) Not Annualized.

(e) Annualized.

(f) Effective October 1, 2011, the net expense limitation changed from 2.99% to 2.49%.


See Notes to Financial Statements		157		June 30, 2012

Financial Highlights

For a share outstanding throughout the periods presented.

Forward Tactical Enhanced Fund


	CLASS C
	SIX MONTHS ENDED JUNE 30, 2012 (UNAUDITED)			YEAR ENDED DECEMBER 31, 2011^(a)
NET ASSET VALUE, BEGINNING OF PERIOD	$	23.88		$	25.00
INCOME/(LOSS) FROM OPERATIONS:
Net investment loss^(b)		(0.37	)		(0.81	)
Net realized and unrealized gain/(loss) on investments		1.68			(0.26	)

Total from Investment Operations		1.31			(1.07	)

LESS DISTRIBUTIONS:
From capital gains		—			(0.05	)

Total Distributions		—			(0.05	)

NET INCREASE/(DECREASE) IN NET ASSET VALUE		1.31			(1.12	)

NET ASSET VALUE, END OF PERIOD	$	25.19		$	23.88

TOTAL RETURN^(c)		5.49	%^(d)		(4.29	)%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (in 000s)		2,864		$	2,163
RATIOS TO AVERAGE NET ASSETS:
Net investment loss including reimbursement/waiver		(2.91	)%^(e)		(3.29	)%
Operating expenses including reimbursement/waiver		2.94	%^(e)		3.31	%^(f)
Operating expenses excluding reimbursement/waiver		3.12	%^(e)		3.53	%
PORTFOLIO TURNOVER RATE		0	%^(d)		0	%

(a) The Fund began offering Class C shares on January 3, 2011.

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

(d) Not Annualized.

(e) Annualized.

(f) Effective October 1, 2011, the net expense limitation changed from 3.44% to 2.94%.


June 30, 2012		158		See Notes to Financial Statements

Financial Highlights

For a share outstanding throughout the periods presented.

Forward Tactical Enhanced Fund


	CLASS M
	SIX MONTHS ENDED JUNE 30, 2012 (UNAUDITED)			PERIOD ENDED DECEMBER 31, 2011^(a)
NET ASSET VALUE, BEGINNING OF PERIOD	$	24.12		$	25.56
INCOME/(LOSS) FROM OPERATIONS:
Net investment loss^(b)		(0.25	)		(0.40	)
Net realized and unrealized gain/(loss) on investments		1.70			(0.99	)

Total from Investment Operations		1.45			(1.39	)

LESS DISTRIBUTIONS:
From capital gains		—			(0.05	)

Total Distributions		—			(0.05	)

NET INCREASE/(DECREASE) IN NET ASSET VALUE		1.45			(1.44	)

NET ASSET VALUE, END OF PERIOD	$	25.57		$	24.12

TOTAL RETURN		5.97	%^(c)		(5.41	)%^(c)
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (in 000s)	$	71		$	84
RATIOS TO AVERAGE NET ASSETS:
Net investment loss including reimbursement/waiver		(1.96	)%^(d)		(2.28	)%^(d)
Operating expenses including reimbursement/waiver		1.99	%^(d)		2.31	%^(d)(e)
Operating expenses excluding reimbursement/waiver		2.12	%^(d)		2.38	%^(d)
PORTFOLIO TURNOVER RATE		0	%^(c)		0	%^(f)

(a) The Fund began offering Class M shares on April 15, 2011.

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

(d) Annualized.

(e) Effective October 1, 2011, the net expense limitation changed from 2.49% to 1.99%.

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


See Notes to Financial Statements		159		June 30, 2012

Financial Highlights

For a share outstanding throughout the periods presented.

Forward Tactical Growth Fund


	INVESTOR CLASS
	SIX MONTHS ENDED JUNE 30, 2012 (UNAUDITED)			YEAR ENDED DECEMBER 31, 2011			YEAR ENDED DECEMBER 31, 2010			PERIOD ENDED DECEMBER 31, 2009^(a)
NET ASSET VALUE, BEGINNING OF PERIOD	$	24.73		$	26.26		$	25.69		$	25.00
INCOME/(LOSS) FROM OPERATIONS:
Net investment loss		(0.21	)^(b)		(0.38	)^(b)		(0.24	)		(0.05	)
Net realized and unrealized gain/(loss) on investments		1.21			(1.02	)		0.81			0.74

Total from Investment Operations		1.00			(1.40	)		0.57			0.69

LESS DISTRIBUTIONS:
From capital gains		—			(0.13	)		—			—

Total Distributions		—			(0.13	)		—			—

NET INCREASE/(DECREASE) IN NET ASSET VALUE		1.00			(1.53	)		0.57			0.69

NET ASSET VALUE, END OF PERIOD	$	25.73		$	24.73		$	26.26		$	25.69

TOTAL RETURN		4.09	%^(c)		(5.36	)%		2.22	%		2.76	%^(c)
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (in 000s)	$	216,996		$	251,617		$	313,875		$	133,848
RATIOS TO AVERAGE NET ASSETS:
Net investment loss including reimbursement/waiver		(1.61	)%^(d)		(1.44	)%		(1.05	)%		(1.28	)%^(d)
Operating expenses including reimbursement/waiver		1.75	%^(d)		1.80	%^(e)		1.80	%		1.82	%^(d)
Operating expenses excluding reimbursement/waiver		n/a			1.80	%		1.80	%		1.82	%^(d)
PORTFOLIO TURNOVER RATE		151	%^(c)		387	%		762	%		758	%^(c)

(a) The Fund began offering Investor Class shares on September 14, 2009.

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

(d) Annualized.

(e) Effective May 1, 2011, the Advisor had not agreed to limit the expenses.


June 30, 2012		160		See Notes to Financial Statements

Financial Highlights

For a share outstanding throughout the periods presented.

Forward Tactical Growth Fund


	INSTITUTIONAL CLASS
	SIX MONTHS ENDED JUNE 30, 2012 (UNAUDITED)			YEAR ENDED DECEMBER 31, 2011			YEAR ENDED DECEMBER 31, 2010			PERIOD ENDED DECEMBER 31, 2009^(a)
NET ASSET VALUE, BEGINNING OF PERIOD	$	24.91		$	26.37		$	25.71		$	25.00
INCOME/(LOSS) FROM OPERATIONS:
Net investment loss		(0.16	)^(b)		(0.30	)^(b)		(0.17	)		(0.01	)
Net realized and unrealized gain/(loss) on investments		1.22			(1.03	)		0.83			0.72

Total from Investment Operations		1.06			(1.33	)		0.66			0.71

LESS DISTRIBUTIONS:
From capital gains		—			(0.13	)		—			—

Total Distributions		—			(0.13	)		—			—

NET INCREASE/(DECREASE) IN NET ASSET VALUE		1.06			(1.46	)		0.66			0.71

NET ASSET VALUE, END OF PERIOD	$	25.97		$	24.91		$	26.37		$	25.71

TOTAL RETURN		4.26	%^(c)		(5.04	)%		2.57	%		2.84	%^(c)
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (in 000s)	$	66,265		$	70,110		$	151,485		$	64,399
RATIOS TO AVERAGE NET ASSETS:
Net investment loss including reimbursement/waiver		(1.26	)%^(d)		(1.14	)%		(0.70	)%		(0.36	)%^(d)
Operating expenses including reimbursement/waiver		1.41	%^(d)		1.45	%^(e)		1.44	%		1.50	%^(d)
Operating expenses excluding reimbursement/waiver		n/a			1.45	%		1.44	%		1.53	%^(d)
PORTFOLIO TURNOVER RATE		151	%^(c)		387	%		762	%		758	%^(c)

(a) The Fund began offering Institutional Class shares on September 14, 2009.

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

(d) Annualized.

(e) Effective May 1, 2011, the Advisor had not agreed to limit the expenses.


See Notes to Financial Statements		161		June 30, 2012

Financial Highlights

For a share outstanding throughout the periods presented.

Forward Tactical Growth Fund


	CLASS A
	SIX MONTHS ENDED JUNE 30, 2012 (UNAUDITED)			YEAR ENDED DECEMBER 31, 2011			PERIOD ENDED DECEMBER 31, 2010^(a)
NET ASSET VALUE, BEGINNING OF PERIOD	$	24.62		$	26.19		$	26.19
INCOME/(LOSS) FROM OPERATIONS:
Net investment loss		(0.23	)^(b)		(0.41	)^(b)		(0.10	)
Net realized and unrealized gain/(loss) on investments		1.22			(1.03	)		0.10

Total from Investment Operations		0.99			(1.44	)		0.00

LESS DISTRIBUTIONS:
From capital gains		—			(0.13	)		—

Total Distributions		—			(0.13	)		—

NET INCREASE/(DECREASE) IN NET ASSET VALUE		0.99			(1.57	)		0.00

NET ASSET VALUE, END OF PERIOD	$	25.61		$	24.62		$	26.19

TOTAL RETURN^(c)		4.02	%^(d)		(5.49	)%		0.00	%^(d)
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (in 000s)	$	147,337		$	161,901		$	74,910
RATIOS TO AVERAGE NET ASSETS:
Net investment loss including reimbursement/waiver		(1.76	)%^(e)		(1.58	)%		(0.99	)%^(e)
Operating expenses including reimbursement/waiver		1.90	%^(e)		1.94	%^(f)		2.00	%^(e)
Operating expenses excluding reimbursement/waiver		n/a			1.94	%		2.00	%^(e)
PORTFOLIO TURNOVER RATE		151	%^(d)		387	%		762	%^(g)

(a) The Fund began offering Class A shares on March 12, 2010.

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

(d) Not Annualized.

(e) Annualized.

(f) Effective May 1, 2011, the Advisor had not agreed to limit the expenses.

(g) Portfolio turnover rate is calculated at the Fund level and represents the year ended December 31, 2010.


June 30, 2012		162		See Notes to Financial Statements

Financial Highlights

For a share outstanding throughout the periods presented.

Forward Tactical Growth Fund


	CLASS C
	SIX MONTHS ENDED JUNE 30, 2012 (UNAUDITED)			YEAR ENDED DECEMBER 31, 2011			YEAR ENDED DECEMBER 31, 2010			PERIOD ENDED DECEMBER 31, 2009^(a)
NET ASSET VALUE, BEGINNING OF PERIOD	$	24.39		$	26.06		$	25.65		$	25.00
INCOME/(LOSS) FROM OPERATIONS:
Net investment loss		(0.28	)^(b)		(0.53	)^(b)		(0.22	)		(0.06	)
Net realized and unrealized gain/(loss) on investments		1.19			(1.01	)		0.63			0.71

Total from Investment Operations		0.91			(1.54	)		0.41			0.65

LESS DISTRIBUTIONS:
From capital gains		—			(0.13	)		—			—

Total Distributions		—			(0.13	)		—			—

NET INCREASE/(DECREASE) IN NET ASSET VALUE		0.91			(1.67	)		0.41			0.65

NET ASSET VALUE, END OF PERIOD	$	25.30		$	24.39		$	26.06		$	25.65

TOTAL RETURN^(c)		3.73	%^(d)		(5.90	)%		1.60	%		2.60	%^(d)
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (in 000s)	$	136,315		$	139,604		$	119,659		$	23,250
RATIOS TO AVERAGE NET ASSETS:
Net investment loss including reimbursement/waiver		(2.21	)%^(e)		(2.04	)%		(1.57	)%		(1.71	)%^(e)
Operating expenses including reimbursement/waiver		2.35	%^(e)		2.39	%^(f)		2.41	%		2.43	%^(e)
Operating expenses excluding reimbursement/waiver		n/a			2.39	%		2.41	%		2.44	%^(e)
PORTFOLIO TURNOVER RATE		151	%^(d)		387	%		762	%		758	%^(d)

(a) The Fund began offering Class C shares on September 14, 2009.

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

(d) Not Annualized.

(e) Annualized.

(f) Effective May 1, 2011, the Advisor had not agreed to limit the expenses.


See Notes to Financial Statements		163		June 30, 2012

Financial Highlights

For a share outstanding throughout the periods presented.

Forward Tactical Growth Fund


	CLASS M
	SIX MONTHS ENDED JUNE 30, 2012 (UNAUDITED)			YEAR ENDED DECEMBER 31, 2011			PERIOD ENDED DECEMBER 31, 2010^(a)
NET ASSET VALUE, BEGINNING OF PERIOD	$	24.92		$	26.37		$	25.58
INCOME/(LOSS) FROM OPERATIONS:
Net investment loss		(0.16	)^(b)		(0.28	)^(b)		(0.07	)
Net realized and unrealized gain/(loss) on investments		1.22			(1.04	)		0.86

Total from Investment Operations		1.06			(1.32	)		0.79

LESS DISTRIBUTIONS:
From capital gains		—			(0.13	)		—

Total Distributions		—			(0.13	)		—

NET INCREASE/(DECREASE) IN NET ASSET VALUE		1.06			(1.45	)		0.79

NET ASSET VALUE, END OF PERIOD	$	25.98		$	24.92		$	26.37

TOTAL RETURN		4.25	%^(c)		(5.00	)%		3.09	%^(c)
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (in 000s)	$	477,691		$	288,948		$	197,655
RATIOS TO AVERAGE NET ASSETS:
Net investment loss including reimbursement/waiver		(1.27	)%^(d)		(1.08	)%		(0.57	)%^(d)
Operating expenses including reimbursement/waiver		1.40	%^(d)		1.44	%^(e)		1.49	%^(d)
Operating expenses excluding reimbursement/waiver		n/a			1.44	%		1.49	%^(d)
PORTFOLIO TURNOVER RATE		151	%^(c)		387	%		762	%^(f)

(a) The Fund began offering Class M shares on February 1, 2010.

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

(d) Annualized.

(e) Effective May 1, 2011, the Advisor had not agreed to limit the expenses.

(f) Portfolio turnover rate is calculated at the Fund level and represents the year ended December 31, 2010.


June 30, 2012		164		See Notes to Financial Statements

Consolidated Financial Highlights

For a share outstanding throughout the periods presented.

Forward Commodity Long/Short Strategy Fund


	INVESTOR CLASS
	SIX MONTHS ENDED JUNE 30, 2012^(a) (UNAUDITED)			YEAR ENDED DECEMBER 31, 2011^(a)(b)
NET ASSET VALUE, BEGINNING OF PERIOD	$	27.02		$	25.00
INCOME/(LOSS) FROM OPERATIONS:
Net investment loss^(c)		(0.11	)		(0.20	)
Net realized and unrealized gain/(loss) on investments		(2.26	)		2.61

Total from Investment Operations		(2.37	)		2.41

LESS DISTRIBUTIONS:
From investment income		—			(0.39	)
Tax return of capital		—			(0.00	)^(d)

Total Distributions		—			(0.39	)

NET INCREASE/(DECREASE) IN NET ASSET VALUE		(2.37	)		2.02

NET ASSET VALUE, END OF PERIOD	$	24.65		$	27.02

TOTAL RETURN		(8.77	)%^(e)		9.66	%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (in 000s)	$	35,852		$	48,141
RATIOS TO AVERAGE NET ASSETS:
Net investment loss including reimbursement/waiver		(0.89	)%^(f)		(0.74	)%
Operating expenses including reimbursement/waiver		1.67	%^(f)(g)		1.87	%
Operating expenses excluding reimbursement/waiver		1.67	%^(f)		1.90	%
PORTFOLIO TURNOVER RATE		45	%^(e)		39	%

(a) Per share amounts and ratios to average net assets include income and expenses of the Forward Commodity Long/Short Strategy (Cayman) Fund Ltd., a wholly-owned Cayman subsidiary, exclusive of the subsidiary’s management fee.

(b) The Fund began offering Investor Class shares on January 3, 2011.

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

(e) Not Annualized.

(f) Annualized.

(g) Effective May 1, 2012, the Advisor had not agreed to limit the expenses.


See Notes to Financial Statements		165		June 30, 2012

Consolidated Financial Highlights

For a share outstanding throughout the periods presented.

Forward Commodity Long/Short Strategy Fund


	INSTITUTIONAL CLASS
	SIX MONTHS ENDED JUNE 30, 2012^(a) (UNAUDITED)			YEAR ENDED DECEMBER 31, 2011^(a)(b)
NET ASSET VALUE, BEGINNING OF PERIOD	$	27.06		$	25.00
INCOME/(LOSS) FROM OPERATIONS:
Net investment loss^(c)		(0.07	)		(0.12	)
Net realized and unrealized gain/(loss) on investments		(2.26	)		2.61

Total from Investment Operations		(2.33	)		2.49

LESS DISTRIBUTIONS:
From investment income		—			(0.43	)
Tax return of capital		—			(0.00	)^(d)

Total Distributions		—			(0.43	)

NET INCREASE/(DECREASE) IN NET ASSET VALUE		(2.33	)		2.06

NET ASSET VALUE, END OF PERIOD	$	24.73		$	27.06

TOTAL RETURN		(8.61	)%^(e)		9.97	%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (in 000s)	$	95,978		$	66,255
RATIOS TO AVERAGE NET ASSETS:
Net investment loss including reimbursement/waiver		(0.52	)%^(f)		(0.46	)%
Operating expenses including reimbursement/waiver		1.32	%^(f)(g)		1.52	%
Operating expenses excluding reimbursement/waiver		1.32	%^(f)		1.55	%
PORTFOLIO TURNOVER RATE		45	%^(e)		39	%

(b) The Fund began offering Institutional Class shares on January 3, 2011.

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

(e) Not Annualized.

(f) Annualized.

(g) Effective May 1, 2012, the Advisor had not agreed to limit the expenses.


June 30, 2012		166		See Notes to Financial Statements

Consolidated Financial Highlights

For a share outstanding throughout the periods presented.

Forward Commodity Long/Short Strategy Fund


	CLASS C
	SIX MONTHS ENDED JUNE 30, 2012^(a) (UNAUDITED)			PERIOD ENDED DECEMBER 31, 2011^(a)(b)
NET ASSET VALUE, BEGINNING OF PERIOD	$	26.95		$	28.49
INCOME/(LOSS) FROM OPERATIONS:
Net investment loss^(c)		(0.19	)		(0.25	)
Net realized and unrealized loss on investments		(2.26	)		(0.97	)

Total from Investment Operations		(2.45	)		(1.22	)

LESS DISTRIBUTIONS:
From investment income		—			(0.32	)
Tax return of capital		—			(0.00	)^(d)

Total Distributions		—			(0.32	)

NET DECREASE IN NET ASSET VALUE		(2.45	)		(1.54	)

NET ASSET VALUE, END OF PERIOD	$	24.50		$	26.95

TOTAL RETURN^(e)		(9.02	)%^(f)		(4.32	)%^(f)
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (in 000s)	$	9,014		$	5,180
RATIOS TO AVERAGE NET ASSETS:
Net investment loss including reimbursement/waiver		(1.47	)%^(g)		(1.40	)%^(g)
Operating expenses including reimbursement/waiver		2.27	%^(g)(h)		2.47	%^(g)
Operating expenses excluding reimbursement/waiver		2.27	%^(g)		2.49	%^(g)
PORTFOLIO TURNOVER RATE		45	%^(f)		39	%⁽ⁱ⁾

(b) The Fund began offering Class C shares on May 4, 2011.

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

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

(f) Not Annualized.

(g) Annualized.

(h) Effective May 1, 2012, the Advisor had not agreed to limit the expenses.

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


See Notes to Financial Statements		167		June 30, 2012

Consolidated Financial Highlights

For a share outstanding throughout the periods presented.

Forward Commodity Long/Short Strategy Fund


	CLASS M
	SIX MONTHS ENDED JUNE 30, 2012^(a) (UNAUDITED)			PERIOD ENDED DECEMBER 31, 2011^(a)(b)
NET ASSET VALUE, BEGINNING OF PERIOD	$	26.99		$	26.66
INCOME/(LOSS) FROM OPERATIONS:
Net investment loss^(c)		(0.06	)		(0.01	)
Net realized and unrealized gain/(loss) on investments		(2.26	)		0.70

Total from Investment Operations		(2.32	)		0.69

LESS DISTRIBUTIONS:
From investment income		—			(0.36	)
Tax return of capital		—			(0.00	)^(d)

Total Distributions		—			(0.36	)

NET INCREASE/(DECREASE) IN NET ASSET VALUE		(2.32	)		0.33

NET ASSET VALUE, END OF PERIOD	$	24.67		$	26.99

TOTAL RETURN		(8.87	)%^(e)		2.91	%^(e)
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (in 000s)	$	27,285		$	1,728
RATIOS TO AVERAGE NET ASSETS:
Net investment loss including reimbursement/waiver		(0.47	)%^(f)		(0.27	)%^(f)
Operating expenses including reimbursement/waiver		1.30	%^(f)(g)		1.52	%^(f)
Operating expenses excluding reimbursement/waiver		1.30	%^(f)		3.19	%^(f)
PORTFOLIO TURNOVER RATE		45	%^(e)		39	%^(h)

(b) The Fund began offering Class M shares on December 7, 2011.

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

(e) Not Annualized.

(f) Annualized.

(g) Effective May 1, 2012, the Advisor had not agreed to limit the expenses.

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


June 30, 2012		168		See Notes to Financial Statements

Consolidated Financial Highlights

For a share outstanding throughout the periods presented.

Forward Commodity Long/Short Strategy Fund


	CLASS Z
	SIX MONTHS ENDED JUNE 30, 2012^(a) (UNAUDITED)			YEAR ENDED DECEMBER 31, 2011^(a)(b)
NET ASSET VALUE, BEGINNING OF PERIOD	$	27.03		$	25.00
INCOME/(LOSS) FROM OPERATIONS:
Net investment loss^(c)		(0.07	)		(0.02	)
Net realized and unrealized gain/(loss) on investments		(2.25	)		2.49

Total from Investment Operations		(2.32	)		2.47

LESS DISTRIBUTIONS:
From investment income		—			(0.44	)
Tax return of capital		—			(0.00	)^(d)

Total Distributions		—			(0.44	)

NET INCREASE/(DECREASE) IN NET ASSET VALUE		(2.32	)		2.03

NET ASSET VALUE, END OF PERIOD	$	24.71		$	27.03

TOTAL RETURN		(8.58	)%^(e)		9.89	%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (in 000s)	$	5,806		$	10,798
RATIOS TO AVERAGE NET ASSETS:
Net investment loss including reimbursement/waiver		(0.54	)%^(f)		(0.06	)%
Operating expenses including reimbursement/waiver		1.31	%^(f)(g)		1.44	%
Operating expenses excluding reimbursement/waiver		1.31	%^(f)		1.45	%
PORTFOLIO TURNOVER RATE		45	%^(e)		39	%

(b) The Fund began offering Class Z shares on January 3, 2011.

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

(e) Not Annualized.

(f) Annualized.

(g) Effective May 1, 2012, the Advisor had not agreed to limit the expenses.


See Notes to Financial Statements		169		June 30, 2012

Consolidated Financial Highlights

For a share outstanding throughout the period presented.

Forward Managed Futures Strategy Fund


	INVESTOR CLASS
	PERIOD ENDED JUNE 30, 2012^(a)(b) (UNAUDITED)
NET ASSET VALUE, BEGINNING OF PERIOD	$	25.00
INCOME/(LOSS) FROM OPERATIONS:
Net investment loss^(c)		(0.20	)
Net realized and unrealized loss on investments		(1.38	)

Total from Investment Operations		(1.58	)

NET DECREASE IN NET ASSET VALUE		(1.58	)

NET ASSET VALUE, END OF PERIOD	$	23.42

TOTAL RETURN		(6.32	)%^(d)
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (in 000s)	$	1,220
RATIOS TO AVERAGE NET ASSETS:
Net investment loss including reimbursement/waiver		(1.86	)%^(e)
Operating expenses including reimbursement/waiver		2.68	%^(e)
Operating expenses excluding reimbursement/waiver		3.44	%^(e)
PORTFOLIO TURNOVER RATE		0	%^(d)

(a) Per share amounts and ratios to average net assets include income and expenses of the Forward Managed Futures Strategy (Cayman) Fund Ltd., a wholly-owned Cayman subsidiary, exclusive of the subsidiary’s management fees.

(b) The Fund began offering Investor Class on January 30, 2012.

(d) Not Annualized.

(e) Annualized.


June 30, 2012		170		See Notes to Financial Statements

Consolidated Financial Highlights

For a share outstanding throughout the period presented.

Forward Managed Futures Strategy Fund


	INSTITUTIONAL CLASS
	PERIOD ENDED JUNE 30, 2012^(a)(b) (UNAUDITED)
NET ASSET VALUE, BEGINNING OF PERIOD	$	25.00
INCOME/(LOSS) FROM OPERATIONS:
Net investment loss^(c)		(0.16	)
Net realized and unrealized loss on investments		(1.39	)

Total from Investment Operations		(1.55	)

NET DECREASE IN NET ASSET VALUE		(1.55	)

NET ASSET VALUE, END OF PERIOD	$	23.45

TOTAL RETURN		(6.20	)%^(d)
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (in 000s)	$	1,002
RATIOS TO AVERAGE NET ASSETS:
Net investment loss including reimbursement/waiver		(1.53	)%^(e)
Operating expenses including reimbursement/waiver		2.33	%^(e)
Operating expenses excluding reimbursement/waiver		3.08	%^(e)
PORTFOLIO TURNOVER RATE		0	%^(d)

(b) The Fund began offering Institutional Class on January 30, 2012.

(d) Not Annualized.

(e) Annualized.


See Notes to Financial Statements		171		June 30, 2012

Consolidated Financial Highlights

For a share outstanding throughout the period presented.

Forward Managed Futures Strategy Fund


	CLASS C
	PERIOD ENDED JUNE 30, 2012^(a)(b) (UNAUDITED)
NET ASSET VALUE, BEGINNING OF PERIOD	$	25.00
INCOME/(LOSS) FROM OPERATIONS:
Net investment loss^(c)		(0.26	)
Net realized and unrealized loss on investments		(1.38	)

Total from Investment Operations		(1.64	)

NET DECREASE IN NET ASSET VALUE		(1.64	)

NET ASSET VALUE, END OF PERIOD	$	23.36

TOTAL RETURN^(d)		(6.56	)%^(e)
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (in 000s)	$	975
RATIOS TO AVERAGE NET ASSETS:
Net investment loss including reimbursement/waiver		(2.48	)%^(f)
Operating expenses including reimbursement/waiver		3.28	%^(f)
Operating expenses excluding reimbursement/waiver		4.03	%^(f)
PORTFOLIO TURNOVER RATE		0	%^(e)

(b) The Fund began offering Class C on January 30, 2012.

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

(e) Not Annualized.

(f) Annualized.


June 30, 2012		172		See Notes to Financial Statements

Consolidated Financial Highlights

For a share outstanding throughout the period presented.

Forward Managed Futures Strategy Fund


	CLASS Z
	PERIOD ENDED JUNE 30, 2012^(a)(b) (UNAUDITED)
NET ASSET VALUE, BEGINNING OF PERIOD	$	25.25
INCOME/(LOSS) FROM OPERATIONS:
Net investment loss^(c)		(0.16	)
Net realized and unrealized loss on investments		(1.63	)

Total from Investment Operations		(1.79	)

NET DECREASE IN NET ASSET VALUE		(1.79	)

NET ASSET VALUE, END OF PERIOD	$	23.46

TOTAL RETURN		(7.09	)%^(d)
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (in 000s)	$	6,318
RATIOS TO AVERAGE NET ASSETS:
Net investment loss including reimbursement/waiver		(1.48	)%^(e)
Operating expenses including reimbursement/waiver		2.28	%^(e)
Operating expenses excluding reimbursement/waiver		3.01	%^(e)
PORTFOLIO TURNOVER RATE		0	%^(f)

(b) The Fund began offering Class Z on January 31, 2012.

(d) Not Annualized.

(e) Annualized.

(f) Portfolio turnover is calculated at the Fund level and represents the period January 30, 2012 through June 30, 2012.


See Notes to Financial Statements		173		June 30, 2012

Notes to Financial Statements (Unaudited)

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 June 30, 2012, the Trust has 33 registered funds. This annual report describes 15 funds offered by the Trust (each a “Fund” and, collectively, the “Funds”). The accompanying financial statements and financial highlights are those of the Forward Credit Analysis Long/Short Fund (“Credit Analysis Long/Short Fund”), the Forward EM Corporate Debt Fund (“EM Corporate Debt Fund”), the Forward Emerging Markets Fund (“Emerging Markets Fund”), the Forward Endurance Long/Short Fund (“Endurance Long/Short Fund”), the Forward Focus Fund (“Focus Fund”), the Forward Global Credit Long/Short Fund (“Global Credit Long/Short Fund”), the Forward International Dividend Fund (“International Dividend Fund”), the Forward International Small Companies Fund (“International Small Companies Fund”), the Forward Large Cap Dividend Fund (“Large Cap Dividend Fund”), the Forward Select EM Dividend Fund (“Select EM Dividend Fund”), the Forward Small Cap Equity Fund (‘”Small Cap Equity”), the Forward Tactical Enhanced Fund (“Tactical Enhanced Fund”), the Forward Tactical Growth Fund (“Tactical Growth Fund”), the Forward Commodity Long/Short Strategy Fund (“Commodity Long/Short Strategy Fund”), and the Forward Managed Futures Strategy Fund (“Managed Futures Strategy Fund”).

The Credit Analysis Long/Short Fund seeks to maximize total return (capital appreciation and income) by investing primarily in a portfolio of municipal bonds, corporate bonds, notes and other debentures, U.S. Treasury and Agency securities, sovereign debt, emerging market debt, floating rate or zero coupon securities and non-convertible preferred securities that are actively traded in the public markets. The EM Corporate Debt Fund seeks to achieve high total return (capital appreciation and income) by investing primarily in fixed income securities of companies located in emerging market countries and seeks to capitalize on the inefficient emerging market corporate bond market by offering exposure primarily to euro- and U.S.-dollar-denominated fixed income securities of emerging market issuers, and related derivatives. The Emerging Markets Fund seeks to achieve long-term growth of capital and invests primarily in the equity securities of emerging market countries. The Focus Fund seeks to achieve high total return and invests primarily in the equity securities of companies that have small to medium market capitalizations. The Global Credit Long/Short Fund seeks to achieve high total return (capital appreciation and income) and invests in a portfolio of fixed income securities. The Endurance Long/Short Fund seeks to provide long-term growth of capital by investing in both long and short, in equity securities of U.S. and non-U.S. issuers, including issuers located in emerging and frontier markets. The International Dividend Fund seeks to achieve high total return (capital appreciation and income) and invests primarily in the equity securities of dividend paying companies located outside of the United States. The International Small Companies Fund seeks to achieve long-term growth of capital and invests in equity securities of companies with small market capitalizations located outside the U.S. The Large Cap Dividend Fund seeks to achieve high total return (capital appreciation and income) and invests primarily in equity securities of dividend paying companies that have large capitalizations. The Select EM Dividend Fund seeks to achieve high total return through capital appreciation and current income and invests primarily in equity securities of dividend paying companies located in emerging market countries. The Small Cap Equity Fund seeks to achieve high total return and invests in equity securities of small capitalization companies. The Tactical Enhanced Fund’s investment objective is to produce above-average, risk-adjusted returns, in any market environment, while exhibiting less downside volatility than the S&P 500 Index and invests primarily in instruments providing exposure to U.S. and non-U.S. equity securities, which represent general asset classes (comprised of futures and options on securities, securities indexes and shares of exchange traded funds (“ETFs”)) including both U.S. and overseas equity markets. The Tactical Growth Fund seeks to


June 30, 2012		174

Notes to Financial Statements (Unaudited)

produce above-average, risk-adjusted returns, in any market environment, while exhibiting less downside volatility than the S&P 500 Index and invests primarily in exchange-traded funds and instruments providing exposure to U.S and non-U.S. equity securities, which represent general asset classes (comprised of futures and options on securities, securities indexes and shares of exchange traded funds (“ETFs”)) including both U.S. and overseas equity markets. The Commodity Long/Short Strategy Fund seeks long term total return and seeks exposure to the commodity markets and returns that correspond to the Credit Suisse Momentum and Volatility Enhanced Return Strategy Index. The Managed Futures Strategy Fund seeks long term total return and seeks exposure to the futures markets by investing in futures-related instruments that track the performance of futures contracts included in the Credit Suisse Multi-Asset Futures Index.

Information presented in the accompanying Funds’ financial statements pertains to the Investor Class, Institutional Class, Class A, Class C, Class M 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.

2. Significant Accounting Policies

The following is a summary of significant accounting policies followed by the 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 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. The financial statements have been prepared as of the close of the New York Stock Exchange (“NYSE”) on June 30, 2012.

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, or, if there have been no sales that day, at the average of the last reported bid and ask price on the valuation day 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 at either the last available sale price or at fair value.

Debt securities (including convertible debt) that have more than 60 days remaining until maturity or that are credit impaired for which market data is readily available are valued on the basis of the average of the latest bid and ask price. Debt securities that mature in less than 60 days and that are not credit impaired are valued at amortized cost, which approximates fair value, if their original maturity was 60 days or less, or by amortizing the value as of the 61st day prior to maturity if the original term to maturity exceeds 60 days (unless the Board of Trustees determines that this method does not represent fair value).


		175		June 30, 2012

Notes to Financial Statements (Unaudited)

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 fair value.

In the event valuation information is not available from independent pricing services for a security held by a Fund, such security may be valued by quotations obtained from dealers that make markets in such securities or otherwise determined based on the fair value of such securities. Because long-term bonds and lower-rated bonds tend to be less liquid, their values may be determined based on fair value (approved by the Board of Trustee) more frequently than portfolio holdings that are more frequently traded or that have relatively higher credit ratings.

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 services or one or more dealers that make markets in such securities.

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. Certain investments including options may trade in the over-the-counter market and generally are valued based on quotes received from an independent pricing service or one or more dealers that make markets in such securities, or at fair value.

Portfolio securities that are primarily traded on foreign securities exchanges are valued at the preceding closing values of such securities on their respective exchanges, except when an occurrence subsequent to the time a value was so established is likely to have changed such value. In such an event, the fair value of those securities are 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. The Funds will use a fair valuation model provided by an independent pricing service, which is intended to reflect fair value when a security’s value or a meaningful portion of the Fund’s portfolio 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 regular trading day on the NYSE. The Funds’ valuation procedures set forth certain triggers which 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 exchange contracts have a market value determined by the prevailing foreign currency exchange daily 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 service. Foreign exchange rates and forward foreign currency exchange rates may generally be obtained at the close of the NYSE, normally 4:00 p.m. Eastern Time.

Redeemable securities issued by open-end registered investment companies and offshore affiliated subsidiaries are valued at the investment company’s or subsidiary’s applicable net asset value, with the


June 30, 2012		176

Notes to Financial Statements (Unaudited)

exception of exchange-traded open-end investment companies, which are priced as equity securities.

All other securities and other assets are carried at their fair value as determined in good faith using methodologies approved by the Board of Trustees. The valuation methodologies include, but are not limited to, the analysis of the effect of any restrictions on the sale of the security, product development and trends of the security’s issuer, changes in the industry and other competing companies, significant changes in the issuer’s financial position and any other event that could have a significant impact on the value of the security.

Securities Transactions and Investment Income: Securities transactions are accounted for on a trade date basis. Net 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.

Collateralized Debt Obligations: Certain Funds may invest in collateralized debt obligations (“CDOs”), which include collateralized loan obligations (“CLOs”) and other similarly structured securities. CLOs are a type of asset-backed security. A CLO is a trust typically collateralized by a pool of loans, which may include, among others, domestic and foreign senior secured loans, senior unsecured loans, and subordinate corporate loans, including loans that may be rated below investment grade or equivalent unrated loans. CDOs may charge management fees and administrative expenses. For CDOs, the cash flows from the trust are split into two or more portions, called tranches, varying in risk and yield. The riskiest portion is the “equity” tranche which bears the bulk of defaults from the bonds or loans in the trust and serves to protect the other, more senior tranches from default in all but the most severe circumstances. Since it is partially protected from defaults, a senior tranche from a CDO trust typically has a higher rating and lower yield than its underlying securities, and can be rated investment grade. Despite the protection from the equity tranche, CDO senior tranches can experience substantial losses due to actual defaults, increased sensitivity to defaults due to collateral default and disappearance of protecting tranches, market anticipation of defaults, as well as aversion to CDO securities as a class. The risks of an investment in a CDO depend largely on the type of the collateral securities and the class of the CDO in which a Fund invests. Normally, CLOs and other CDOs are privately offered and sold, and thus, are not registered under the securities laws. As a result, investments in CDOs may be characterized by the Funds as illiquid securities; however, an active dealer market may exist for CDOs allowing a CDO to qualify for Rule 144A transactions under the Securities Act of 1933. In addition to the normal risks associated with fixed income securities (e.g., interest rate risk and default risk), CDOs carry additional risks including, but not limited to: (i) the possibility that distributions from collateral securities will not be adequate to make interest or other payments; (ii) the quality of the collateral may decline in value or default; (iii) the Funds may invest in CDOs that are subordinate to other classes; and (iv) the complex structure of the security may not be fully understood at the time of investment and may produce disputes with the issuer or unexpected investment results.


		177		June 30, 2012

Notes to Financial Statements (Unaudited)

Exchange-Traded Funds (“ETFs”): Certain Funds may invest in ETFs, which are funds whose shares are traded on a national exchange. ETFs may be based on underlying equity or fixed income securities, as well as commodities or currencies. ETFs do not sell individual shares directly to investors and only issue their shares in large blocks known as “creation units.” The investor purchasing a creation unit then sells the individual shares on a secondary market. Although similar diversification benefits may be achieved through an investment in another investment company, ETFs generally offer greater liquidity and lower expenses. Because an ETF incurs its own fees and expenses, shareholders of a Fund investing in an ETF will indirectly bear those costs. Such Funds will also incur brokerage commissions and related charges when purchasing or selling shares of an ETF. Unlike typical investment company shares, which are valued once daily, shares in an ETF may be purchased or sold on a securities exchange throughout the trading day at market prices that are generally close to the NAV of the ETF.

Foreign Securities: Each Fund may directly purchase securities of foreign issuers. Investing in securities of foreign issuers involves special risks not typically associated with investing in securities of U.S. issuers. The risks include possible revaluation of currencies, the inability to repatriate funds, less complete financial information about companies and possible future adverse political and economic developments. Moreover, securities of many foreign issuers and their markets may be less liquid and their prices more volatile than those of securities of comparable U.S. issuers.

Government-Sponsored Enterprises (“GSEs”): Certain Funds may invest in GSEs. Certain GSEs (such as Freddie Mac, Fannie Mae, and FHLB), although sponsored or chartered by the U.S. Government, are not funded by the U.S. Government and the securities they issue are not guaranteed by the U.S. Government. GSE debt is generally considered to be of high credit quality due to the implied backing of the U.S. Government, but ultimately it is the sole obligation of its issuer. For that reason, securities issued by GSEs are considered to carry somewhat greater credit risk than securities issued by the U.S. Treasury or government agencies that carry the full faith and credit of the U.S. Government.

Master Limited Partnerships (“MLPs”): Each Fund may invest in MLPs, which are limited partnerships in which ownership units are publicly traded. MLPs often own interests in properties or businesses that are related to the oil and gas industries, although MLPs may invest in other types of investments. Generally, an MLP is operated under the supervision of one or more managing general partners. Limited partners (such as a Fund investing in an MLP) are not involved in the day-to-day management of the partnership.

Investments in MLPs are generally subject to many of the risks that apply to partnerships. For example, holders of the units of MLPs may have limited control and limited voting rights on matters affecting the partnership. There may be fewer corporate protections afforded investors in an MLP than investors in a corporation and conflicts of interest may exist among unit holders and the general partner of an MLP. MLPs that concentrate in a particular industry or region are subject to risk associated with such industry or region. Investments held by MLPs may be illiquid. MLP unit prices may be more volatile than securities of larger or more broadly based companies.

Unlike most corporations, MLPs do not pay income tax but instead pass through their taxable income to unitholders who are required to report their allocable share of an MLP's taxable income. An MLP's distribution to unitholders may exceed the unitholder's share of the MLP's taxable income, and a portion of the distribution may represent a return of capital. If a Fund invests in an MLP that makes a return of capital, a portion of the Fund's distribution to shareholders may also represent a return of capital.


June 30, 2012		178

Notes to Financial Statements (Unaudited)

such as mortgage loans, will mature when all the mortgages in the pool mature or are prepaid. Therefore, mortgage-backed securities do not have a fixed maturity, and their expected maturities may vary when interest rates rise or fall.

Mortgage-backed securities are subject to extension risk, which is the risk that a Fund that holds mortgage-backed securities may exhibit additional volatility during periods of rising interest rates. Rising interest rates tend to extend the duration of mortgage-related securities, making them more sensitive to changes in interest rates. In addition, mortgage-backed securities are subject to prepayment risk. When interest rates decline, borrowers may pay off their mortgages sooner than expected. This can reduce the returns of the Fund because a Fund will have to reinvest that money at the lower prevailing interest rates.

A Fund’s investments in asset-backed securities are subject to risks similar to those associated with mortgage-related securities, as well as additional risks associated with the nature of the assets and the servicing of those assets. Asset-backed securities present credit risks that are not presented by mortgage-backed securities because asset-backed securities generally do not have the benefit of a security interest in collateral that is comparable in quality to mortgage assets. If the issuer of an asset-backed security defaults on its payment obligations, there is the possibility that, in some cases, a Fund will be unable to possess and sell the underlying collateral and that a Fund’s recoveries on repossessed collateral may not be available to support payments on the security. In the event of a default, a Fund may suffer a loss if it cannot sell collateral quickly and receive the amount it is owed.

Real Estate Investment Trusts (“REITs”): The Funds may invest a portion of their assets in REITs and are subject to certain risks associated with direct investment in REITs. REITs may be affected by changes in the value of their underlying properties and by defaults by borrowers or tenants. REITs depend generally on their ability to generate cash flow to make distributions to shareowners, and certain REITs have self-liquidation provisions by which mortgages held may be paid in full and distributions of capital returns may be made at any time. In addition, the performance of a REIT may be affected by its failure to qualify for tax-free pass-through of income under the Internal Revenue Code of 1986, as amended (the “Code”), or its failure to maintain exemption from registration under the 1940 Act.

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 market value of that security. To complete such a transaction, a Fund must borrow the security to deliver to the buyer. The Fund then is 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 market value of their respective short positions. The Fund is liable for any dividends or interest payable on securities while those securities are in a short position. The Fund typically intends to hold securities sold short for the short term, therefore, they are excluded from the purchase and sales of investments in Note 8 and the Fund’s Portfolio Turnover Calculation in the Financial Highlights. As of June 30, 2012, the Credit Analysis Long/Short Fund held securities sold short with a market value of $79,393,166. The other Funds held no securities sold short at June 30, 2012.


		179		June 30, 2012

Notes to Financial Statements (Unaudited)

about risk. Inputs may be observable or unobservable. Observable inputs are inputs that reflect the assumptions market participants would use in pricing the asset or liability that are developed based on market data obtained from sources independent of the reporting entity. Unobservable inputs are inputs that reflect the reporting entity’s own assumptions about the assumptions market participants would use in pricing the asset or liability that are developed based on the best information available.

Various inputs are used in determining the value of each Fund’s investments as of the reporting period end. The designated input levels are not necessarily an indication of the risk or liquidity associated with these investments. These inputs are categorized in the following hierarchy under applicable financial accounting standards:

Level 1 — Unadjusted quoted prices in active markets for identical, unrestricted assets or liabilities that a Fund has the ability to access at the measurement date;

Level 2 — Quoted prices 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; and

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 is a summary of the inputs used to value each Fund’s investments as of June 30, 2012.


INVESTMENTS IN SECURITIES	LEVEL 1		LEVEL 2		LEVEL 3		TOTAL

Credit Analysis Long/Short Fund
Preferred Stocks^(a)	$	1,785,950	$	1,220,323		—	$	3,006,273
Corporate Bonds^(a)		—		8,951,977		—		8,951,977
Municipal Bonds^(a)		—		431,689,194		—		431,689,194
Short-Term Bank Debt Instruments		—		27,159,759		—		27,159,759

Total	$	1,785,950	$	469,021,253		—	$	470,807,203


EM Corporate Debt Fund
Common Stocks^(a)	$	752,795		—		—	$	752,795
Foreign Government Obligations^(a)		—	$	2,656,723		—		2,656,723
Asset-Backed Securities^(a)		—		721,275		—		721,275
Convertible Corporate Bonds^(a)		—		1,040,875		—		1,040,875
Corporate Bonds^(a)		—		73,116,881		—		73,116,881
U.S. Treasury Bonds & Notes^(a)		—		1,837,227		—		1,837,227
Short-Term Bank Debt Instruments		—		2,849,966		—		2,849,966

Total	$	752,795	$	82,222,947		—	$	82,975,742


Emerging Markets Fund
Common Stocks
Brazil	$	1,390,140		—		—	$	1,390,140
China		43,463	$	6,498,656		—		6,542,119
Colombia		206,568		—		—		206,568
Hong Kong		—		202,298		—		202,298
Hungary		—		272,957		—		272,957
India		531,916		210,143		—		742,059
Indonesia		—		795,678		—		795,678


June 30, 2012		180

Notes to Financial Statements (Unaudited)


INVESTMENTS IN SECURITIES	LEVEL 1		LEVEL 2		LEVEL 3		TOTAl
Emerging Markets Fund (continued)
Ireland		—	$	333,854		—	$	333,854
Kazakhstan	$	114,444		162,437		—		276,881
Korea		—		6,147,392		—		6,147,392
Malaysia		—		407,024		—		407,024
Mexico		637,134		—		—		637,134
Philippines		—		874,735		—		874,735
Russia		2,414,618		214,434		—		2,629,052
South Africa		77,402		1,824,056		—		1,901,458
Taiwan		—		2,507,357		—		2,507,357
Thailand		—		2,285,407		—		2,285,407
Turkey		—		349,969		—		349,969
Exchange-Traded Funds^(a)		143,729		—		—		143,729
Preferred Stocks^(a)		839,477		—		—		839,477
Short-Term Bank Debt Instruments		—		785,745		—		785,745
Investments Purchased with Cash Collateral From Securities Loaned		457,001		—		—		457,001	��

Total	$	6,855,892	$	23,872,142		—	$	30,728,034


Endurance Long/Short Fund
Common Stocks^(a)	$	3,460,437		—		—	$	3,460,437
Options Purchased		26,855		—		—		26,855
Short-Term Bank Debt Instruments		—	$	237,646		—		237,646

Total	$	3,487,292	$	237,646		—	$	3,724,938


Focus Fund
Common Stocks^(a)	$	7,938,485		—		—	$	7,938,485
Short-Term Bank Debt Instruments		—	$	186,392		—		186,392

Total	$	7,938,485	$	186,392		—	$	8,124,877


Global Credit Long/Short Fund
Common Stocks^(a)	$	106,028		—		—	$	106,028
Foreign Government Obligations^(a)		—	$	292,787		—		292,787
Asset-Backed Securities^(a)		—		514,516		—		514,516
Convertible Corporate Bonds^(a)		—		189,250		—		189,250
Corporate Bonds^(a)		—		3,207,447		—		3,207,447
Short-Term Bank Debt Instruments		—		580,344		—		580,344

Total	$	106,028	$	4,784,344		—	$	4,890,372


International Dividend Fund
Common Stocks
Australia		—	$	197,390		—	$	197,390
Austria		—		564,118		—		564,118
Belgium		—		495,343		—		495,343
Bermuda		—		801,795		—		801,795
Brazil	$	1,888,395		—		—		1,888,395
Britain		465,572		—		—		465,572
Canada		1,370,024		—		—		1,370,024
Cayman Islands		—		405,311		—		405,311
China		530,075		1,555,521		—		2,085,596
Colombia		321,568		—		—		321,568


		181		June 30, 2012

Notes to Financial Statements (Unaudited)


INVESTMENTS IN SECURITIES	LEVEL 1		LEVEL 2		LEVEL 3		TOTAL
International Dividend Fund (continued)
Egypt	$	494,045		—		—	$	494,045
Estonia		—	$	539,174		—		539,174
France		1,722,811		—		—		1,722,811
Germany		721,746		—		—		721,746
Hong Kong		121,104		2,951,303		—		3,072,407
India		32,166		—		—		32,166
Indonesia		—		1,915,963		—		1,915,963
Ireland		1,200,652		522,001		—		1,722,653
Italy		—		1,905,543		—		1,905,543
Japan		577,600		3,809,916		—		4,387,516
Korea		—		502,606		—		502,606
Malaysia		—		574,390		—		574,390
Mexico		499,800		—		—		499,800
Netherlands		799,046		855,730		—		1,654,776
New Zealand		536,567		—		—		536,567
Pakistan		243,100		—		—		243,100
Philippines		—		567,333		—		567,333
Russia		684,176		241,026		—		925,202
Scotland		—		715,547		—		715,547
Singapore		304,472		2,046,271		—		2,350,743
Sri Lanka		493,355		—		—		493,355
Switzerland		1,964,655		—		—		1,964,655
Thailand		—		3,261,473		—		3,261,473
Turkey		—		2,350,386		—		2,350,386
United Kingdom		1,832,302		584,347		—		2,416,649
United States		1,013,360		—		—		1,013,360
Vietnam		29,463		—		—		29,463
Convertible Preferred Stocks^(a)		118,620		—		—		118,620
Participation Notes^(a)		—		73,142		—		73,142
Preferred Stocks^(a)		533,010		—		—		533,010
Warrants^(a)		5,662		—		—		5,662
Agency Pass-Through Securities^(a)		—		467,515		—		467,515
Collateralized Mortgage Obligations^(a)		—		1,144,093		—		1,144,093
Short-Term Bank Debt Instruments		—		504,803		—		504,803

Total	$	18,503,346	$	29,552,040		—	$	48,055,386


International Small Companies Fund
Common Stocks^(a)	$	223,175,586		—		—	$	223,175,586
Exchange-Traded Funds^(a)		12,237,727		—		—		12,237,727
Preferred Stocks^(a)		5,471,793		—		—		5,471,793
Short-Term Bank Debt Instruments		—	$	18,049,319		—		18,049,319
Investments Purchased with Cash Collateral From Securities Loaned		10,815,818		—		—		10,815,818

Total	$	251,700,924	$	18,049,319		—	$	269,750,243


Large Cap Dividend Fund
Common Stocks^(a)	$	13,054,213		—		—	$	13,054,213
Convertible Preferred Stocks^(a)		319,518		—		—		319,518
Preferred Stocks^(a)		146,700		—		—		146,700
Agency Pass-Through Securities^(a)		—	$	116,580		—		116,580


June 30, 2012		182

Notes to Financial Statements (Unaudited)


INVESTMENTS IN SECURITIES	LEVEL 1		LEVEL 2		LEVEL 3		TOTAL
Large Cap Dividend Fund (continued)
Collateralized Mortgage Obligations		—	$	420,346		—	$	420,346
Short-Term Bank Debt Instruments		—		290,458		—		290,458

Total	$	13,520,431	$	827,384		—	$	14,347,815


Select EM Dividend Fund
Common Stocks
Brazil	$	358,044		—		—	$	358,044
Chile		80,010		—		—		80,010
China		91,797	$	375,338		—		467,135
Egypt		70,701		—		—		70,701
Estonia		—		155,649		—		155,649
Hong Kong		187,640		416,996		—		604,636
India		20,978		—		—		20,978
Indonesia		128,871		676,710		—		805,581
Italy		—		227,324		—		227,324
Malaysia		—		251,585		—		251,585
Mexico		208,071		—		—		208,071
Pakistan		29,700		—		—		29,700
Philippines		—		195,110		—		195,110
Poland		—		75,026		—		75,026
Russia		72,904		48,205		—		121,109
Singapore		103,892		83,977		—		187,869
South Africa		60,367		121,354		—		181,721
South Korea		—		60,313		—		60,313
Sri Lanka		124,797		—		—		124,797
Taiwan		—		266,102		—		266,102
Thailand		—		939,696		—		939,696
Turkey		—		589,972		—		589,972
United Kingdom		—		54,307		—		54,307
United States		37,616		—		—		37,616
Participation Notes^(a)		—		73,142		—		73,142
Preferred Stocks^(a)		134,283		—		—		134,283
Warrants^(a)		1,010		—		—		1,010
Collateralized Mortgage Obligations^(a)		—		144,191		—		144,191
Short-Term Bank Debt Instruments		—		265,136		—		265,136

Total	$	1,710,681	$	5,020,133		—	$	6,730,814


Small Cap Equity
Common Stocks^(a)	$	36,467,974		—		—	$	36,467,974
Affiliated Investment Companies		2,000,000		—		—		2,000,000
Short-Term Bank Debt Instruments		—	$	1,478,321		—		1,478,321

Total	$	38,467,974	$	1,478,321		—	$	39,946,295


Tactical Enhanced Fund
Options Purchased	$	13,140		—		—	$	13,140
Short-Term Securities		—	$	25,398,018		—		25,398,018
Short-Term Bank Debt Instruments		—		8,402,105		—		8,402,105

Total	$	13,140	$	33,800,123		—	$	33,813,263


		183		June 30, 2012

Notes to Financial Statements (Unaudited)


INVESTMENTS IN SECURITIES	LEVEl 1		LEVEL 2		LEVEL 3		TOTAL

Tactical Growth Fund
Short-Term Securities		—	$	774,539,581		—	$	774,539,581
Short-Term Bank Debt Instruments		—		254,935,296		—		254,935,296

Total		—	$	1,029,474,877		—	$	1,029,474,877


Commodity Long/Short Strategy Fund
Agency Pass-Through Securities^(a)		—	$	53,207,855		—	$	53,207,855
Asset-Backed Securities		—		1,156,824		—		1,156,824
Collateralized Mortgage Obligations^(a)		—		3,214,374		—		3,214,374
Corporate Bonds^(a)		—		28,089,043		—		28,089,043
Municipal Bonds		—		5,329,791		—		5,329,791
U.S. Treasury Bonds & Notes		—		27,287,522		—		27,287,522
Short-Term Bank Debt Instruments		—		41,000,137		—		41,000,137

Total		—	$	159,285,546		—	$	159,285,546


Managed Futures Strategy Fund
Exchange-Traded Funds	$	6,860,002		—		—	$	6,860,002
Short-Term Bank Debt Instruments		—	$	1,159,241		—		1,159,241

Total	$	6,860,002	$	1,159,241		—	$	8,019,243

(a) For detailed descriptions of sector, industry, country or state, see the accompanying Portfolio of Investments.


OTHER FINANCIAL INSTRUMENTS^(a)	LEVEL 1			LEVEL 2			LEVEL 3		TOTAL

Credit Analysis Long/Short Fund
Liabilities
Securities Sold Short
Corporate Bonds		—		$	(9,126,754	)		—	$	(9,126,754	)
U.S. Treasury Bonds & Notes		—			(70,266,412	)		—		(70,266,412	)

Total		—		$	(79,393,166	)		—	$	(79,393,166	)


EM Corporate Debt Fund
Liabilities
Credit Default Swaps		—		$	(456,751	)		—	$	(456,751	)

Total		—		$	(456,751	)		—	$	(456,751	)


Endurance Long/Short Fund
Liabilities
Securities Sold Short	$	(930,208	)		—			—	$	(930,208	)
Options Written		(33,022	)		—			—		(33,022	)

Total	$	(963,230	)		—			—	$	(963,230	)


Global Credit Long/Short Fund
Liabilities
Credit Default Swaps		—		$	(149,686	)		—	$	(149,686	)

Total		—		$	(149,686	)		—	$	(149,686	)


June 30, 2012		184

Notes to Financial Statements (Unaudited)


OTHER FINANCIAL INSTRUMENTS^(a)	LEVEL 1		LEVEL 2			LEVEL 3		TOTAL

International Small Companies Fund
Assets
Total Return Swap Contracts		—	$	842,247			—	$	842,247

Total		—	$	842,247			—	$	842,247


Small Cap Equity Fund
Assets
Futures Contracts	$	152,874		—			—	$	152,874

Total	$	152,874		—			—	$	152,874


Tactical Enhanced Fund
Assets
Futures Contracts	$	146,796		—			—	$	146,796

Total	$	146,796		—			—	$	146,796


Tactical Growth Fund
Assets
Futures Contracts	$	4,846,745		—			—	$	4,846,745

Total	$	4,846,745		—			—	$	4,846,745


Commodity Long/Short Strategy Fund
Liabilities
Total Return Swap Contracts		—	$	(4,385,611	)		—	$	(4,385,611	)

Total		—	$	(4,385,611	)		—	$	(4,385,611	)


Managed Futures Strategy Fund
Liabilities
Total Return Swap Contracts		—	$	(741,139	)		—	$	(741,139	)

Total		—	$	(741,139	)		—	$	(741,139	)

(a) Other financial instruments are derivative instruments not reflected in the Portfolio of Investments, such as written options, short sales, swap contracts, currency contracts, futures contracts and forward contracts.

The Funds recognize transfers between levels as of the beginning of the annual period in which the transfer occurred. During the six months ended June 30, 2012 there were no transfers between Level 1 and Level 2 securities.

For the six months ended June 30, 2012, the other Funds did not have transfers between the fair value levels designated above 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, they also allow the Funds to enter into various types of derivative contracts, including, but not limited to, futures contracts, swap contracts, forward foreign currency exchange 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


		185		June 30, 2012

Notes to Financial Statements (Unaudited)

underlying security (or securities) to the contract. This may allow the Funds to pursue their objectives more quickly and efficiently than if they were to make direct purchases or sales of securities capable of affecting a similar response to market factors.

Market Risk Factors: In pursuit of their investment objectives, certain Funds may seek to use derivatives to increase or decrease their 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 sell the derivative in the open market in a timely manner, and counterparty credit risk, which is the risk that the counterparty will not fulfill its obligation to the Funds. Associated risks can be different for each type of derivative and are discussed by each derivative type in the notes that follow.

Forward Foreign Currency Exchange Contracts: Certain Funds invest in foreign currency exchange contracts, to reduce the risks of fluctuating exchange rates and to generate returns uncorrelated to the other strategies employed. A forward foreign currency exchange contract involves an obligation to purchase or sell a specific currency at a future date, which may be a fixed number of days from the date of the contract agreed upon by the parties, at a price set at the time of the contract. By entering into a forward foreign currency exchange contract, the Fund “locks in” the exchange rate between the currency it will deliver and


June 30, 2012		186

Notes to Financial Statements (Unaudited)

the currency it will receive for the duration of the contract. As a result, the Fund reduces its exposure to changes in the value of the currency it will deliver and increases its exposure to changes in the value of the currency it will exchange into. The Fund may enter into these contracts for the purpose of hedging against foreign exchange risk arising from the Fund’s investment or anticipated investment in securities denominated in foreign currencies. The Fund also may enter into these contracts for purposes of increasing exposure to a foreign currency or to shift exposure to foreign currency fluctuations from one country to another. The Fund may use one currency (or a basket of currencies) to hedge against adverse changes in the value of another currency (or a basket of currencies) when exchange rates between the two currencies are positively correlated. The unrealized appreciation/(depreciation) is reported in the Statement of Assets and Liabilities as receivable or payable and in the Statement of Operations within the change in unrealized appreciation/(depreciation). At contract close, the difference between the original cost of the contract and the value at the close date is recorded as a realized gain/(loss) in the Statement of Operations. The Funds held no forward foreign currency contracts at June 30, 2012.

Futures: Certain Funds may invest in futures contracts in accordance with their investment objectives. Each Fund does so for a variety of reasons including for cash management, hedging or non-hedging purposes in an attempt to achieve investment returns consistent with the Fund’s investment objective. A futures contract provides for the future sale by one party and purchase by another party of a specified quantity of the security or other financial instrument at a specified price and time. A futures contract on an index is an agreement pursuant to which two parties agree to take or make delivery of an amount of cash equal to the difference between the value of the index at the close of the last trading day of the contract and the price at which the index contract was originally written. Futures transactions may result in losses in excess of the amount invested in the futures contract. There can be no guarantee that there will be a correlation between price movements in the hedging vehicle and in the portfolio securities being hedged. An incorrect correlation could result in a loss on both the hedged securities in a Fund and the hedging vehicle so that the portfolio return might have been greater had hedging not been attempted. There can be no assurance that a liquid market will exist at a time when a Fund seeks to close out a futures contract or a futures option position. Lack of a liquid market for any reason may prevent a Fund from liquidating an unfavorable position, and the Fund would remain obligated to meet margin requirements until the position is closed. In addition, a Fund could be exposed to risk if the counterparties to the contracts are unable to meet the terms of their contracts. With exchange traded futures, there is minimal counterparty credit risk to the Funds since futures are exchange traded and the exchange’s clearinghouse, as counterparty to all exchange traded futures, guarantees the futures against default.

When a purchase or sale of a futures contract is made by a Fund, the Fund is required to deposit with its custodian (or broker, if legally permitted) a specified amount of liquid assets (“initial margin”). The margin required for a futures contract is set by the exchange on which the contract is traded and may be modified during the term of the contract. The initial margin is in the nature of a performance bond or good faith deposit on the futures contract that is returned to a Fund upon termination of the contract, assuming all contractual obligations have been satisfied. Each day a Fund may pay or receive cash, called “variation margin,” equal to the daily change in value of the futures contract. Such payments or receipts are recorded for financial statement purposes as unrealized gains or losses by a Fund. Variation margin does not represent a borrowing or loan by a Fund but is instead a settlement between a Fund and the broker of the amount one would owe the other if the futures contract expired. When the contract is closed, a Fund records a realized gain or loss equal to the difference between the value of the contract at the time it was opened and the value at the time it was closed. As of June 30, 2012, the Small Cap Equity Fund, the Tactical Enhanced Fund and the Tactical Growth


		187		June 30, 2012

Notes to Financial Statements (Unaudited)

Fund held futures contracts outstanding with an unrealized gain of $152,874, $146,796 and $4,846,745 respectively. The other Funds held no futures contracts at June 30, 2012.

Option Writing/Purchasing: Certain Funds may write or purchase option contracts to adjust 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 from unexpected movements in security values. As of June 30, 2012, the Endurance Long/Short Fund held written options with a market value of $(33,022). As of June 30, 2012, the Endurance Long/Short Fund and the Tactical Enhanced Fund held purchased options with a market value of $26,855 and $13,140, respectively. The other Funds held no purchased or written options at June 30, 2012.

Written option activity for the six months ended June 30, 2012 was as follows:


	WRITTEN CALL OPTIONS						WRITTEN PUT OPTIONS
	NUMBER OF CONTRACTS			CONTRACT PREMIUM			NUMBER OF CONTRACTS			CONTRACT PREMIUM
Endurance Long/Short Fund
Outstanding, at beginning of year December 31, 2011		0		$	0			0		$	0
Options written		(384	)		62,362			(583	)		18,956
Options exercised or closed		255			(39,416	)		221			(9,628	)
Options expired		1			(599	)		0			0

Outstanding, June 30, 2012		(128	)	$	22,347			(362	)	$	9,328

Swap Agreements: 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 are two-party contracts entered into primarily by institutional investors for periods ranging 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).


June 30, 2012		188

Notes to Financial Statements (Unaudited)

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.

Total return swap agreements are contracts in which one party agrees to make periodic payments based on the change in market value of underlying assets, which may include a specified security, basket of securities, defined portfolios of bonds, loans and mortgages, or securities indexes during the specified period, in return for periodic payments based on a fixed or variable interest rate or the total return from other underlying assets or indices. Total return swap agreements may be used to obtain exposure to a security or market without owning or taking physical custody of such security index or market. 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 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


		189		June 30, 2012

Notes to Financial Statements (Unaudited)

will be covered in accordance with applicable regulatory requirements to limit any potential leveraging of a Fund’s portfolio. The Fund's maximum risk of loss from counterparty credit risk is generally limited to the net payment to be received by the Funds and/or the termination value at the end of the contract. Obligations under swap agreements so covered will not be construed to be “senior securities” for purposes of the Funds’ investment restriction concerning senior securities.

Whether a Fund’s use of swap agreements will be successful in furthering its investment objective will depend on Forward Management’s ability to correctly predict whether certain types of investments are likely to produce greater returns than other investments. Because they are two-party contracts and because they may have terms of greater than seven days, swap agreements 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. 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). Certain restrictions imposed on the Funds by the Internal Revenue Code of 1986, as amended (the “Code”), may limit a Fund’s ability to use swap agreements. The swap market is a relatively new market and is largely unregulated. It is possible that developments in the swap market, including potential 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 OTC 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 early terminate could be material to the financial statements.

During the six months ended June 30, 2012, the EM Corporate Debt Fund, the Global Credit Long/Short Fund, the International Small Companies Fund, Commodity Long/Short Strategy Fund and Managed Futures Strategy Fund, invested in swap agreements consistent with the Fund’s investment strategies to gain exposure to certain markets or indices. The values in the tables below exclude effects of cash collateral received or posted pursuant to these derivative contracts, and therefore are not representative of the Funds’ net exposure.

The values in the table on the next page exclude the effects of cash collateral received or posted pursuant to these derivative contracts, and therefore are not representative of the Funds’ net exposure.


June 30, 2012		190

Notes to Financial Statements (Unaudited)

Balance Sheet – Fair Value of Derivatives Instruments as of June 30, 2012^(a):


DERIVATIVES NOT ACCOUNTED FOR AS HEDGING INSTRUMENTS	ASSET DERIVATIVES BALANCE SHEET LOCATION	FAIR VALUE		LIABILITIES DERIVATIVES BALANCE SHEET LOCATION	FAIR VALUE
EM Corporate Debt Fund
Credit Contracts (Credit Default Swaps)			—	Swap premiums received	$	215,715
Credit Contracts (Credit Default Swaps)			—	Unrealized loss on swap contracts		456,751

Total			—		$	672,466

Endurance Long/Short Fund
Equity Contracts (Options Written)			—	Options written, at value	$	33,022

Total			—		$	33,022

Global Credit Long/Short Fund
Credit Contracts (Credit Default Swaps)	Swap premiums paid	$	131,133	Swap premiums received	$	43,143
Credit Contracts (Credit Default Swaps)			—	Unrealized loss on swap contracts		149,686

Total		$	131,133		$	192,829

International Dividend Fund
Equity Contracts (Warrants)	Investments, at value	$	5,662			—

Total		$	5,662			—

International Small Companies Fund
Equity Contracts (Total Return Swaps)	Unrealized gain on swap contracts	$	842,247			—

Total		$	842,247			—

Select EM Dividend Fund
Equity Contracts (Warrants)	Investments, at value	$	1,010			—

Total		$	1,010			—

Small Cap Equity Fund
Equity Contracts (Futures Contracts)	Variation margin receivable	$	152,874			—

Total		$	152,874			—

Tactical Enhanced Fund
Equity Contracts (Options Purchased)	Investments, at value	$	13,140			—
Equity Contracts (Futures Contracts)	Variation margin receivable		146,796			—

Total		$	159,936			—

Tactical Growth Fund
Equity Contracts (Futures Contracts)	Variation margin receivable	$	4,846,745			—

Total		$	4,846,745			—

Commodity Long/Short Strategy Fund
Equity Contracts (Total Return Swaps)			—	Unrealized loss on swap contracts	$	4,385,611

Total			—		$	4,385,611

Managed Futures Strategy Fund
Equity Contracts (Total Return Swaps)			—	Unrealized loss on swap contracts	$	741,139

Total			—		$	741,139

(a) For open derivative instruments as of June 30, 2012, see the Portfolio of Investments. The Portfolio of Investments is representative of the activity for the six months ended June 30, 2012 for all Funds.

The gains/(losses) in the table on the next two pages are included in the “Net realized gain/(loss)” or “Net change in unrealized gain/(loss)” on the Statement of Operations.


		191		June 30, 2012

Notes to Financial Statements (Unaudited)

The Effect of Derivatives Instruments on the Statement of Operations for the six months ended June 30, 2012:


DERIVATIVES NOT ACCOUNTED FOR AS HEDGING INSTRUMENTS	LOCATION OF GAINS/(LOSS) ON DERIVATIVES RECOGNIZED IN INCOME	REALIZED GAIN/(LOSS) ON DERIVATIVES RECOGNIZED IN INCOME			CHANGED IN UNREALIZED GAIN/(LOSS) ON DERIVATIVES RECOGNIZED IN INCOME
EM Corporate Debt Fund
Credit Contracts (Credit Default Swaps)	Net realized gain on swap contracts/Net change in unrealized depreciation on swap contracts	$	105,853		$	(453,828	)
Foreign Exchange Contracts (Foreign Currency Hedge Contracts)	Net realized gain/(loss) on foreign currency/Net unrealized depreciation on translation of assets and liabilities in foreign currency		513,573			0

Total		$	619,426		$	(453,828	)

Emerging Markets Fund
Equity Contracts (Warrants)	Net realized gain/(loss) on investments/Net change in unrealized appreciation/(depreciation) on investments	$	56		$	0
Equity Contracts (Futures Contracts)	Net realized gain on futures contracts/Net change in unrealized depreciation on futures contracts		502,734			(137,300	)

Total		$	502,790		$	(137,300	)

Endurance Long/Short Fund
Equity Contracts (Options Purchased)	Net realized gain/(loss) on investments/Net change in unrealized appreciation/(depreciation) on investments	$	36,840		$	(22,898	)
Equity Contracts (Options Written)	Net realized gain on option contracts/Net change in unrealized depreciation on options contracts		23,005			(1,347	)

Total		$	59,745		$	(24,245	)

Global Credit Long/Short Fund
Credit Contracts (Credit Default Swaps)	Net realized loss on swap contracts/Net change in unrealized depreciation on swap contracts	$	(23,280	)	$	(133,531	)
Foreign Exchange Contracts (Foreign Currency Hedge Contracts)	Net realized gain/(loss) on foreign currency/Net unrealized appreciation on translation of assets and liabilities in foreign currency		57,079			0

Total		$	33,799		$	(133,531	)

International Dividend Fund
Equity Contracts (Warrants)	Net change in unrealized appreciation on investments	$	0		$	5,662
Equity Contracts (Futures Contracts)	Net realized loss on futures contracts/Net change in unrealized appreciation on futures contracts		(861,564	)		10,684

Total		$	(861,564	)	$	16,346

International Small Companies Fund
Equity Contracts (Total Return Swaps)	Net realized loss on swap contracts/Net change in unrealized appreciation on swap contracts	$	(171,168	)	$	393,232

Total		$	(171,168	)	$	393,232

Select EM Dividend Fund
Equity Contracts (Warrants)	Net realized gain/(loss) on investments/Net change in unrealized appreciation on investments	$	0		$	1,010
Equity Contracts (Futures Contracts)	Net realized gain on futures contracts/Net change in unrealized appreciation on futures contracts		106,464			0

Total		$	106,464		$	1,010


June 30, 2012		192

Notes to Financial Statements (Unaudited)


DERIVATIVES NOT ACCOUNTED FOR AS HEDGING INSTRUMENTS	LOCATION OF GAINS/(LOSS) ON DERIVATIVES RECOGNIZED IN INCOME	REALIZED GAIN/(LOSS) ON DERIVATIVES RECOGNIZED IN INCOME			CHANGED IN UNREALIZED GAIN/(LOSS) ON DERIVATIVES RECOGNIZED IN INCOME
Small Cap Equity Fund
Equity Contracts (Futures Contracts)	Net realized gain on futures contracts/Net change in unrealized appreciation on futures contracts	$	317,831		$	119,374

Total		$	317,831		$	119,374

Tactical Enhanced Fund
Equity Contracts (Options Purchased)	Net realized gain on investments/Net change in unrealized appreciation/(depreciation) on investments	$	12,959		$	(6,185	)
Equity Contracts (Futures Contracts)	Net realized gain on futures contracts/Net change in unrealized appreciation on futures contracts		1,881,945			45,605

Total		$	1,894,904		$	39,420

Tactical Growth Fund
Equity Contracts (Options Purchased)	Net realized gain on investments/Net change in unrealized appreciation/(depreciation) on investments	$	(856,657	)	$	0
Equity Contracts (Futures Contracts)	Net realized gain on futures contracts/Net change in unrealized appreciation on futures contracts		31,100,993			5,681,917

Total		$	30,244,336		$	5,681,917

Commodity Long/Short Strategy Fund
Equity Contracts (Total Return Swaps)	Net realized gain/(loss) on swap contracts/Net change in unrealized depreciation on swap contracts	$	(9,564,097	)	$	(4,789,995	)

Total		$	(9,564,097	)	$	(4,789,995	)

Managed Futures Strategy Fund
Equity Contracts (Total Return Swaps)	Net realized gain/(loss) on swap contracts/Net change in unrealized depreciation on swap contracts	$	83,534		$	(741,139	)

Total		$	83,534		$	(741,139	)

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 date certain 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. This leveraging effect enables the investor to gain exposure to the underlying security with a relatively low capital investment.


		193		June 30, 2012

Notes to Financial Statements (Unaudited)

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 or 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 June 30, 2012 the International Dividend Fund and Select EM Dividend Fund held warrants with a market value of $5,662 and $1,010, respectively. The other Funds held no warrants at June 30, 2012.

Cash Management Transactions: The Funds may subscribe to the Brown Brothers Harriman & Co. (“BBH”) Cash Management Service (“CMS”). The BBH CMS is an investment product that automatically sweeps the Funds’ cash balances into overnight offshore time deposits with either the BBH Grand Cayman branch or a branch of a pre-approved commercial bank. This fully automated program allows the Funds to earn interest on cash balances while remaining diversified. Excess cash invested with deposit institutions domiciled outside of the U.S., as with any offshore deposit, may be subject to sovereign actions in the jurisdiction of the deposit institution including, but not limited to, freeze, seizure or diminution. The Funds bear the risk associated with the repayment of principal and payment of interest on such instruments by the institution with which the deposit is ultimately placed. Balances in the CMS are accounted for on a cost basis.

Lending of Portfolio Securities: Each Fund from time to time may lend portfolio securities to broker-dealers, banks or institutional borrowers of securities. The loans are secured by collateral in the form of cash that is equal to at least 102% of the fair value of the securities loaned plus accrued interest, if any. Upon lending its securities to third parties, a Fund receives compensation in the form of income on the investment of the cash collateral. Gain or loss in the fair value of the securities loaned that may occur during the term of the loan will be for the account of the Fund. The Fund has the right under the lending agreement to recover the securities from the borrower on demand, and loans are subject to termination by the lending Fund or the borrower at any time. While the lending Fund does not have the right to vote securities on loan, it intends, to the extent practicable, to terminate the loan and regain the right to vote if the matter to be voted upon is considered significant with respect to the investment. Additionally, the Fund does not have the right to sell or repledge collateral received in the form of securities unless the borrower goes into default. Each Fund receives cash collateral which is invested in the Short-Term Investment Trust Liquid Assets Portfolio Institutional Class. The risks to a Fund of securities lending are that the borrower may not provide additional collateral when required or return the securities when due. This collateral must be valued daily and should the market value of the loaned securities increase, the borrower must furnish additional collateral to the lending Fund. The Fund bears the risk of any income or gains and losses from investing and reinvesting cash pledged as collateral. During the time portfolio securities are on loan, the borrower pays the lending Fund the economic equivalent of any dividends or interest paid on such securities. In the event the borrower defaults on its obligation to the lending Fund, the lending Fund could experience delays in recovering its securities and possible capital losses. As of June 30, 2012, the Emerging Markets Fund and the International Small Companies Fund had securities on loan valued at $463,546 and $10,729,535, respectively, and received cash collateral with a value of $457,001 and $10,815,818, respectively. The other Funds had no securities on loan at June 30, 2012.

Leverage: The Select EM Dividend Fund can purchase securities with borrowed money including bank overdrafts (a form of leverage). The Fund may borrow amounts up to one-third of the value of its assets. Leverage exaggerates the effect on the net asset value of any increase or decrease in the market value of the Fund’s portfolio securities. These borrowings will be subject to interest costs, which may or may not be recovered by appreciation of the securities purchased;


June 30, 2012		194

Notes to Financial Statements (Unaudited)

in certain cases, interest costs may exceed the return received on the securities purchased.

The Select EM Dividend Fund maintains a line of credit with BNP Paribas (acting through its New York Branch). Borrowing under this agreement, the Fund is charged interest of 1.20% above the one-month LIBOR rate.

The Select EM Dividend Fund has pledged a portion of its investment securities as the collateral for the line of credit. As of June 30, 2012, the market value of the investment securities pledged as collateral totaled $1,151,862 and the borrowed amounts on the lines of credit are $552,478. The average interest rate charged and the average outstanding demand loan payable for the six months ended June 30, 2012, were as follows:


FUND	AVERAGE INTEREST RATE			AVERAGE OUTSTANDING DEMAND LOAN PAYABLE
Select EM Dividend Fund		1.44	%	$	420,677

Investment in Forward U.S. Government Money Fund: The Funds are permitted to invest daily available cash balances in an affiliated money market fund. The Funds may invest the available cash in Class Z of the Forward U.S. Government Money Fund (“U.S. Government Money Fund”) to seek current income while preserving liquidity. The U.S. Government Money Fund is a registered open-end management investment company, regulated as a money market fund under the Investment Company Act of 1940, as amended. Forward Management is the Investment Advisor (“Advisor”) for the U.S. Government Money Fund. When applicable, the Funds’ investment in the U.S. Government Money Fund is included in the Portfolio of Investments. Shares of the U.S. Government Money Fund are valued at their net asset value per share. As a shareholder, the Funds’ are subject to the proportional share of the U.S. Government Money Fund Class Z expenses, including its management fee. The Advisor will waive fees and/or reimburse expenses in an amount equal to the indirect management fees incurred through the Funds’ investment in the U.S. Government Money Fund.

The Funds that invested in the U.S. Government Money Fund — Class Z shares during the six months ended June 30, 2012, were as follows:


FUND	BEGINNING SHARES		GROSS PURCHASES		GROSS SALES			ENDING SHARES		VALUE 06/30/12		INCOME
International Small Companies Fund		—	$	10,000,000	$	(10,000,000	)		—		—	$	321
Small Cap Equity Fund		—		2,000,000		—			2,000,000	$	2,000,000		152

Total										$	2,000,000	$	473

During the six months ended June 30, 2012, the Advisor waived fees and/or reimbursed the following Funds for U.S. Government Money Fund management fees:


FUND	WAIVED FEES
International Small Companies Fund	$	1,422
Small Cap Equity Fund		411

	$	1,833

Investments in a Wholly-Owned Subsidiary: The Forward Commodity Long/Short Strategy Fund seeks exposure to the commodity markets primarily through investments in commodity-linked derivative instruments, including commodity index-linked notes (sometimes referred to as “structured notes”), swap agreements, commodity options, futures and options on futures, and through investments in the Forward Commodity Long/Short Strategy (Cayman) Fund Ltd., a wholly-owned subsidiary of the Fund organized under the laws of the Cayman Islands (the “Subsidiary”). The Forward Managed Futures Strategy Fund seeks exposure to the futures markets and will generally invest in futures-related instruments that track the performance of futures contracts included in the Credit Suisse Multi-Asset Futures Strategy Index and through investments in the Forward Managed Futures Strategy (Cayman) Fund Ltd., a wholly-owned subsidiary of the Fund organized under


		195		June 30, 2012

Notes to Financial Statements (Unaudited)

the laws of the Cayman Islands (the “Subsidiary”). Forward Management acts as investment advisor to the Funds and the investment advisor to each Subsidiary. Each Fund is the sole shareholder of each respective Subsidiary and it is intended that each Fund will remain the sole shareholder and will continue to control each respective Subsidiary.

Investments in each Subsidiary are expected to provide the Funds with exposure to the commodity markets within the limitations of Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”), and recent IRS rulings.

If the IRS were to change its position or otherwise determine that income derived from certain commodity-linked notes or from a Fund’s investment in the Subsidiary does not constitute qualifying income, and if such positions were upheld, or if future legislation or Treasury regulations were to adversely affect the tax treatment of such investments, a Fund might cease to qualify as a regulated investment company and would be required to reduced its exposure to such investments which might result in difficulty in implementing its investment strategy.

Basis for Consolidation for the Forward Commodity Long/Short Strategy Fund and the Forward Managed Futures Strategy Fund: The Subsidiaries, which are Cayman Islands exempted companies, were incorporated on October 12, 2010 and October 27, 2011, respectively, as wholly owned subsidiaries acting as an investment vehicle for the Funds in order to effect certain investments for the Funds consistent with the Funds’ investment objectives. As wholly-owned subsidiaries of the Funds, all assets and liabilities, income and expenses of the portfolios are consolidated in the financial statements and financial highlights of the Funds. As of June 30, 2012, net assets of the Funds were $173,935,313 and $9,515,794, respectively, of which $31,083,857 and $1,718,144, respectively, or 17.87% and 18.06%, respectively, are represented in the Funds’ ownership of all issued shares and voting rights of the Subsidiaries.

Distributions to Shareholders: Dividends from net investment income, if any, are declared and paid annually for the Commodity Long/Short Strategy Fund, the Emerging Markets Fund, the Endurance Long/Short Strategy Fund, the Focus Fund, the Global Credit Long/Short Fund, the International Small Companies Fund, the Managed Futures Strategy Fund, the Small Cap Equity Fund, the Tactical Enhanced Fund and the Tactical Growth Fund; quarterly for the Credit Analysis Long/Short Fund and the EM Corporate Debt Fund; and monthly for the International Dividend Fund, the Large Cap Dividend Fund and the Select EM Dividend Fund. Prior to May 1, 2012, dividends from net investment income, if any, were declared and paid annually and for the Large Cap Dividend Fund and quarterly for the International Dividend Fund and the Select EM Dividend Fund. For all Funds, net realized capital gains, if any, are distributed annually.

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.

The Funds recharacterize distributions received from REIT investments based on information provided by the REITs 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, recharacterization will be estimated based on available information which 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 year. 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.


June 30, 2012		196

Notes to Financial Statements (Unaudited)

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 Internal Revenue 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 or provided for in accordance with the applicable country’s tax rules and rates.

The Forward Commodity Long/Short Strategy (Cayman) Fund Ltd. and the Forward Managed Futures Strategy (Cayman) Fund Ltd. (the “Subsidiaries”) are classified as a controlled foreign corporation under the Code. Therefore, the Forward Commodity Long/Short Strategy Fund and the Forward Managed Futures Strategy Fund (the “Funds”) are required to increase its taxable income by its share of the Subsidiaries income. Net losses of the Subsidiaries cannot be deducted by the Funds in the current period nor carried forward to offset taxable income in future periods.

As of and during the six months ended June 30, 2012, the Funds did not have a liability for any unrecognized tax benefits in the accompanying financial statements. The Funds recognize the interest and penalties, if any, related to the unrecognized tax benefits as income tax expense in the Statement of Operations. During the period, the Funds did not incur any interest or penalties.

Each of the Fund’s Federal tax returns for the prior three fiscal years remains subject to examination by the Internal Revenue Service.

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) and/or shareholder service plans for a particular class of the Fund are charged to the operations of such class.

ReFlow Transactions: The Funds may participate in ReFlow, a program designed to provide an alternative liquidity source for mutual funds experiencing redemptions of their shares. In order to pay cash to shareholders who redeem their shares on a given day, a mutual fund typically must hold cash in its portfolio, liquidate portfolio securities, or borrow money, all of which impose certain costs on the fund. ReFlow provides participating mutual funds with another source of cash by standing ready to purchase shares from a fund equal to the amount of the fund’s net redemptions on a given day. ReFlow then generally redeems those shares when the fund experiences net sales. In return for this service, the fund will pay a fee to ReFlow at a rate determined by a daily auction with other participating mutual funds. The costs to a Fund for participating in ReFlow are generally expected to be influenced by and comparable to the cost of other sources of liquidity, such as the Fund’s short-term lending arrangements or the costs of selling portfolio securities to meet redemptions. ReFlow is prohibited from acquiring more than 3% of the outstanding voting securities of any Fund, but in no case will ReFlow’s position in any fund exceed $15 million.

ReFlow Services, LLC (“ReFlow Services”), the entity which facilitates the day-to-day operations of ReFlow, is under common control with Forward Management, LLC (“Forward Management”), the investment advisor to the Fund. In light of this, the Board of Trustees has adopted certain procedures to govern the Funds’ participation in ReFlow. ReFlow fees that were incurred by the Funds during the six months ended June 30, 2012 are recorded in the Statement of Operations.


		197		June 30, 2012

Notes to Financial Statements (Unaudited)

3. Investment Management Services

The Trust has entered into an investment management agreement with Forward Management, LLC pursuant to which Forward Management provides investment management services to the Funds and is entitled to receive a fee calculated daily and payable monthly at the following annual rates, as of June 30, 2012, based on each Fund’s average daily net assets:


FUND		ADVISORY FEE
Credit Analysis Long/Short Fund		1.50%

EM Corporate Debt Fund		0.70% up to and including $500 million 0.64% over $500 million up to and including $1 billion 0.58% over $1 billion up to and including $5 billion 0.52% over $5 billion

Emerging Markets Fund		1.25% up to and including $500 million 1.20% over $500 million up to and including $1 billion 1.15% over $1 billion

Endurance Long/Short Fund		1.50%

Focus Fund		0.75%

Global Credit Long/Short Fund		1.50%

International Dividend Fund		0.85% up to and including $250 million 0.75% over $250 million up to and including $1 billion 0.65% over $1 billion

International Small Companies Fund		1.00% up to and including $1 billion 0.95% over $1 billion

Large Cap Dividend Fund		0.80% up to and including $500 million 0.725% over $500 million up to and including $1 billion 0.675% over $1 billion

Select EM Dividend Fund		1.10%

Small Cap Equity Fund		0.85%

Tactical Enhanced Fund		1.75% up to and including $1 billion 1.65% over $1 billion

Tactical Growth Fund		1.15% up to and including $1 billion 1.05% over $1 billion

Commodity Long/Short Strategy Fund		1.00%^(a)

Managed Futures Strategy Fund		1.00%^(a)

(a) The Commodity Long/Short Strategy Fund and the Managed Futures Strategy Fund may invest a portion of its assets in separate wholly-owned Cayman subsidiaries. The Subsidiaries have entered into separate advisory agreements with Forward Management, LLC for the management of the Subsidiaries portfolios’ pursuant to which each Subsidiary is obligated to pay Forward Management a management fee at the same rate that the Fund pays Forward Management for services provided to the Fund. Forward Management is contractually obligated to waive the management fee it receives from the Fund in an amount equal to the management fee paid to Forward Management by the Subsidiary. This waiver arrangement may not be terminated by Forward Management as long as its advisory agreement with the Subsidiary is in place.


June 30, 2012		198

Notes to Financial Statements (Unaudited)

The Trust and Forward Management have entered into investment sub-advisory agreements with Cedar Ridge Partners, LLC (“Cedar Ridge”) for the Credit Analysis Long/Short Fund; SW Asset Management, LLC (“SW”) for the EM Corporate Debt Fund and the Global Credit Long/Short Fund; Pictet Asset Management Ltd (“PAM Ltd”) for the Emerging Markets Fund and the International Small Companies Fund and Broadmark Asset Management, LLC (“Broadmark”) for the Tactical Enhanced Fund and the Tactical Growth Fund (each a “Sub-Advisor” and, collectively, the “Sub-Advisors”). Pursuant to these agreements, the Sub-Advisors provide investment sub-advisory services to the Funds and are entitled to receive a fee from Forward Management calculated daily and payable monthly at the following annual rates, as of June 30, 2012, based on each Fund’s average daily net assets:


FUND		SUB-ADVISORY FEE
Credit Analysis Long/Short Fund		1.00%

EM Corporate Debt Fund		0.35%

Emerging Markets Fund		0.80% up to and including $250 million 0.75% over $250 million

Global Credit Long/Short Fund		1.00%

International Small Companies Fund		0.60%

Tactical Enhanced Fund		1.10% up to and including $1 billion 1.05% over $1 billion

Tactical Growth Fund		0.60% up to and including $1 billion 0.55% over $1 billion

Expense Limitations: Forward Management has entered into Expense Limitation Agreements with certain Funds, which limits the total expenses (exclusive of brokerage costs, interest, taxes, dividends, acquired fund fees and expenses, expenses of the subsidiary and extraordinary expenses) of certain classes of certain Funds, through a specified date. In addition, Forward Management may voluntarily reimburse additional expenses of certain classes of certain Funds. Following are the annual expense limitation rates and expiration dates for the Funds with an Expense Limitation Agreement:


FUND	INVESTOR CLASS			INSTITUTIONAL CLASS			CLASS A			CLASS C			CLASS M			CLASS Z			END DATE
Credit Analysis Long/Short Fund		1.99	%		1.64	%		2.14	%		2.59	%		1.64	%		N/A			April 30, 2013
EM Corporate Debt Fund		1.39	%		0.99	%		N/A			1.94	%		N/A			N/A			April 30, 2013
Emerging Markets Fund^(a)		1.89	%		1.49	%		N/A			N/A			1.49	%		N/A			April 30, 2013
Endurance Long/Short Fund		2.34	%		1.99	%		N/A			N/A			N/A			N/A			April 30, 2013
Focus Fund^(b)		1.39	%		1.04	%		1.54	%		N/A			N/A			N/A			April 30, 2013
Global Credit Long/Short Fund		2.39	%		1.99	%		N/A			2.99	%		1.99	%		N/A			April 30, 2013
International Dividend Fund^(c)		1.34	%		0.99	%		N/A			N/A			0.99	%		N/A			April 30, 2013
Large Cap Dividend Fund^(d)		1.24	%		0.89	%		1.39	%		N/A			N/A			N/A			April 30, 2013
Select EM Dividend Fund		1.79	%		1.39	%		N/A			2.39	%		1.39	%		N/A			April 30, 2013
Small Cap Equity Fund^(e)		1.39	%		1.09	%		1.44	%		N/A			1.09	%		N/A			April 30, 2013
Tactical Enhanced Fund		2.34	%		1.99	%		2.49	%		2.94	%		1.99	%		N/A			April 30, 2013
Managed Futures Strategy Fund		1.70	%		1.35	%		N/A			2.30	%		N/A			1.30	%		April 30, 2013

(a) From January 1, 2012 to April 30, 2012, Forward Management had a contractual obligation to waive any portion of its fees in amounts necessary to limit the Emerging Markets Fund’s Investor Class, Institutional Class and Class M shares’ operating expenses to an annual rate of 1.79%, 1.39% and 1.39%, respectively.

(b) From January 1, 2012 to April 30, 2012, Forward Management had a contractual obligation to waive any portion of its fees in amounts necessary to limit the Focus Fund’s Investor Class, Institutional Class and Class A shares’ operating expenses to an annual rate of 1.34%, 0.99% and 1.49%, respectively.


		199		June 30, 2012

Notes to Financial Statements (Unaudited)

(c) From January 1, 2012 to April 30, 2012, Forward Management had a contractual obligation to waive any portion of its fees in amounts necessary to limit the International Dividend Fund’s Investor Class, Institutional Class and Class M shares’ operating expenses to an annual rate of 1.49%, 1.14% and 1.14%, respectively.

(d) From January 1, 2012 to April 30, 2012, Forward Management had a contractual obligation to waive any portion of its fees in amounts necessary to limit the Large Cap Dividend Fund’s Investor Class, Institutional Class and Class A shares’ operating expenses to an annual rate of 1.34%, 0.99% and 1.49%, respectively.

(e) From January 1, 2012 to April 30, 2012, Forward Management had a contractual obligation to waive any portion of its fees in amounts necessary to limit the Small Cap Equity Fund’s Investor Class, Institutional Class, Class A and Class M shares’ operating expenses to an annual rate of 1.29%, 0.99%, 1.34% and 0.99%, respectively.

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 expense limitation rates in existence at the time the expense was incurred, or at the time of the reimbursement, whichever expense limitation rate is lower, and the reimbursement is made within three years following the year in which the expenses were incurred.

For the six months ended June 30, 2012, the fee waivers and/or reimbursements were as follows:


FUND	FEES WAIVED/ REIMBURSED BY ADVISOR		RECOUPMENT OF PAST WAIVED FEES BY ADVISOR		TOTAL
Credit Analysis Long/Short Fund
Investor Class	$	98,552	$	0	$	98,552
Institutional Class		30,232		0		30,232
Class A		1,785		0		1,785
Class C		8,873		0		8,873
Class M		11,788		0		11,788
EM Corporate Debt Fund
Investor Class		162		0		162
Institutional Class		9,629		0		9,629
Class C		1,440		0		1,440
Emerging Markets Fund
Investor Class		64,161		0		64,161
Institutional Class		98,751		0		98,751
Class M		2,900		0		2,900
Endurance Long/Short Fund
Investor Class		2,640		0		2,640
Institutional Class		24,321		0		24,321
Focus Fund
Investor Class		2,854		0		2,854
Institutional Class		12,499		0		12,499
Class A		5,940		0		5,940
Global Credit Long/Short Fund
Investor Class		8,931		0		8,931
Institutional Class		9,103		0		9,103
Class C		8,557		0		8,557
Class M		8,577		0		8,577
International Dividend Fund
Investor Class		8,233		0		8,233
Institutional Class		35,779		0		35,779
Class M		97		0		97


June 30, 2012		200

Notes to Financial Statements (Unaudited)


FUND	FEES WAIVED/ REIMBURSED BY ADVISOR		RECOUPMENT OF PAST WAIVED FEES BY ADVISOR			TOTAL
Large Cap Dividend Fund
Investor Class	$	184	$	0		$	184
Institutional Class		11,649		0			11,649
Class A		25,324		0			25,324
Select EM Dividend Fund
Investor Class		6,399		0			6,399
Institutional Class		23,021		0			23,021
Class C		3,240		0			3,240
Class M		4,235		0			4,235
Small Cap Equity Fund
Investor Class		62,101		0			62,101
Institutional Class		29,396		0			29,396
Class A		1,510		0			1,510
Class M		6,132		0			6,132
Tactical Enhanced Fund
Investor Class		11,880		0			11,880
Institutional Class		9,811		0			9,811
Class A		2,722		0			2,722
Class C		2,220		0			2,220
Class M		43		0			43
Tactical Growth Fund
Investor		N/A		(1,021	)		(1,021	)
Institutional Class		N/A		(1,483	)		(1,483	)
Class A		N/A		(85	)		(85	)
Class C		N/A		(461	)		(461	)
Class M		N/A		(864	)		(864	)
Managed Futures Strategy Fund
Investor Class		3,572		0			3,572
Institutional Class		3,234		0			3,234
Class C		3,222		0			3,222
Class Z		20,749		0			20,749

As of June 30, 2012, the balances of recoupable expenses for each Fund were as follows:


FUND	2009		2010		2011		2012		TOTAL
Credit Analysis Long/Short Fund
Investor Class	$	131,749	$	224,852	$	224,150	$	98,552	$	679,303
Institutional Class		7,967		20,942		46,411		30,232		105,552
Class A		—		2,641		3,274		1,785		7,700
Class C		3,524		21,242		23,909		8,873		57,548
Class M		—		4,306		7,943		11,788		24,037
EM Corporate Debt Fund
Investor Class		7,844		29,658		44,114		162		81,778
Institutional Class		21,720		84,988		50,200		9,629		166,537
Class C		5,988		15,710		11,700		1,440		34,838
Emerging Markets Fund
Investor Class		47,561		93,403		180,588		64,161		385,713
Institutional Class		253,793		489,489		236,534		98,751		1,078,567
Class M		—		501		873		2,900		4,274


		201		June 30, 2012

Notes to Financial Statements (Unaudited)


FUND	2009			2010		2011		2012		TOTAL
Endurance Long/Short Fund
Investor Class		—			—		—	$	2,640	$	2,640
Institutional Class		—			—		—		24,321		24,321
Focus Fund
Investor Class	$	5,430		$	9,758	$	4,525		2,854		22,567
Institutional Class		10,398			35,885		19,188		12,499		77,970
Class A		18,871			48,395		24,491		5,940		97,697
Global Credit Long/Short Fund
Investor Class		—			—		7,653		8,931		16,584
Institutional Class		—			—		7,717		9,103		16,820
Class C		—			—		7,560		8,557		16,117
Class M		—			—		7,569		8,577		16,146
International Dividend Fund
Investor Class		39,170			96,183		49,213		8,233		192,799
Institutional Class		35,198			23,105		49,662		35,779		143,744
Class M		—			—		201		97		298
Large Cap Dividend Fund
Investor Class		—			—		124		184		308
Institutional Class		18,273			4,291		20,022		11,649		54,235
Class A		53,586			50,187		50,269		25,324		179,366
Select EM Dividend Fund
Investor Class		—			—		6,226		6,399		12,625
Institutional Class		—			—		45,397		23,021		68,418
Class C		—			—		3,980		3,240		7,220
Class M		—			—		4,468		4,235		8,703
Small Cap Equity Fund
Investor Class		6,652	^(a)		—		200,205		62,101		268,958
Institutional Class		28,313	^(a)		—		152,991		29,396		210,700
Class A		—			—		3,247		1,510		4,757
Class M		—			—		212		6,132		6,344
Tactical Enhanced Fund
Investor Class		—			—		14,764		11,880		26,644
Institutional Class		—			—		21,125		9,811		30,936
Class A		—			—		2,220		2,722		4,942
Class C		—			—		3,242		2,220		5,462
Class M		—			—		32		43		75
Commodity Long/Short Strategy Fund
Investor Class		—			—		4,817		—		4,817
Institutional Class		—			—		7,194		—		7,194
Class C		—			—		411		—		411
Class M		—			—		356		—		356
Class Z		—			—		854		—		854
Managed Futures Strategy Fund
Investor Class		—			—		—		3,572		3,572
Institutional Class		—			—		—		3,234		3,234
Class C		—			—		—		3,222		3,222
Class Z		—			—		—		20,749		20,749

(a) The recoupable expense balances include recoupable expenses from the reorganization of the Forward Mini-Cap Fund into the Small Cap Equity Fund.


June 30, 2012		202

Notes to Financial Statements (Unaudited)

4. Distribution and Shareholder Services Plans

The Funds have adopted Distribution Plans (the “Distribution Plans”) pursuant to Rule 12b-1 of the 1940 Act which allow each of the Funds to pay for the sale and distribution of its shares at an annual rate of up to 0.25% of the Fund’s average daily net assets attributable to Investor Class shares, up to 0.35% of the Fund’s average daily net assets attributable to Class A shares, and up to 0.75% of the Fund’s average daily net assets attributable to Class C shares.

The Funds have adopted Shareholder Services Plans (the “Shareholder Services Plans”) that may be used to pay shareholder servicing fees at an annual rate of up to 0.15% of the Fund’s average daily net assets attributable to Investor Class shares, up to 0.05% of the Fund’s average daily net assets attributable to Institutional Class shares, up to 0.20% of the Fund’s average daily net assets attributable to Class A shares, up to 0.25% of the Fund’s average daily net assets attributable to Class C shares and up to 0.10% of the Fund’s average daily net assets attributable to Class M shares.

The expenses of the Distribution Plans and the Shareholder Services Plans are reflected as distribution and service fees in the Statement of Operations.

Effective April 16, 2012, Forward Securities, LLC (the “Distributor”) serves as the Funds’ distributor. The Distributor acts as an agent for the Funds and the distributor of their shares. Prior to April 16, 2012, ALPS Distributors, Inc. served as the Funds’ distributor.

ALPS Fund Services, Inc. (“AFS”) serves as the Funds’ administrator.

AFS serves as the Funds’ transfer agent and dividend paying agent.

BBH is the Funds’ custodian.

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 June 30, 2012, there were six Trustees and one Advisory Board Members, five of whom are not “interested persons” of the Trust within the meaning of that term under the 1940 Act (each, an “Independent Trustee”). The Funds will pay each Independent Trustee and Advisory Board Member a retainer fee in the amount of $35,000 per year, $12,500 each per regular meeting for attendance in person, $9,000 each per regular meeting for attendance by telephone, $3,000 each for attendance in person at each special meeting that is not held in conjunction with a regular meeting, $2,250 each for attendance at a special telephonic meeting, and $1,000 each 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 each receive a special retainer fee in the amount of $10,000, $10,000 and $7,500, respectively per year. The interested Trustee will receive 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.

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.


		203		June 30, 2012

Notes to Financial Statements (Unaudited)

6. Indemnifications

Under the Trust’s organizational documents, its officers and Trustees are indemnified against certain liability arising out of the performance of their duties with respect to the Funds. In addition, in the normal course of business, the Trust, on behalf of the Funds, enters into contracts with vendors and others that provide general indemnification. Each Fund’s maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Trust and/or the Funds. Based on experience, however, the Funds expect the risk of loss to be remote.

7. Shares of Beneficial Interest

The capitalization of the Trust consists of an unlimited number of shares of beneficial interest with no par value per share. The Board of Trustees may establish additional Funds and classes of shares at any time in the future without shareholder approval. Holders of shares of the Funds of the Trust have one vote for each share held and a proportionate fraction of a vote for each fractional share. All shares issued and outstanding are fully paid and are non-assessable, transferable and redeemable at the option of the shareholder. Shares have no pre-emptive rights.

The following entities owned of record or beneficially, as of June 30, 2012, 5% or greater of any class of the Funds’ outstanding equity securities:


FUND		NAME	PERCENTAGE
Credit Analysis Long/Short Fund
Investor		National Financial Services Corp.		26.19	%
		Charles Schwab & Co., Inc.		21.34	%
		LPL Financial Services		13.13	%
	��	Pershing, LLC		5.84	%

Institutional		Pershing, LLC		24.14	%
		National Financial Services Corp.		23.41	%
		Charles Schwab & Co., Inc.		18.59	%
		Forward Management, LLC		10.97	%
		TD Ameritrade, Inc.		7.98	%
		MSCS Financial Services Trust		6.82	%

Class A		Pershing, LLC		33.51	%
		UBS Financial Services Inc.		21.81	%
		Forward Management, LLC		16.13	%
		RBC Capital Markets, LLC		8.09	%
		Merrill Lynch Pierce Fenner & Smith		7.45	%

Class C		National Financial Services Corp.		27.98	%
		Wells Fargo Investments, LLC		23.68	%
		Pershing, LLC		9.77	%
		Merrill Lynch Pierce Fenner & Smith		6.26	%

Class M		Wells Fargo Investments, LLC		78.05	%
		Merrill Lynch Pierce Fenner & Smith		19.17	%

EM Corporate Debt Fund
Investor		National Financial Services Corp.		90.39	%

Institutional		Brown Brothers Harriman & Co.		89.27	%
		Morgan Stanley		7.17	%

Class C		Forward Management, LLC		89.76	%
Emerging Markets Fund
Investor		Charles Schwab & Co., Inc.		35.17	%
		William Blair & Co., LLC		29.08	%
		National Financial Services Corp.		12.99	%

Institutional		Charles Schwab & Co., Inc.		20.89	%
		National Financial Services Corp.		17.09	%
		MSCS Financial Services Trust		16.03	%
		Wells Fargo Investments, LLC		14.29	%
		The Vanguard Group, Inc.		6.71	%
		Pershing, LLC		5.59	%

Class M		Wells Fargo Investments, LLC		75.46	%
		Charles Schwab & Co., Inc.		24.48	%

Endurance Long/Short Fund
Investor		Forward Management, LLC		100.00	%

Institutional		JP Morgan		65.48	%
		Forward Management, LLC		27.46	%

Focus Fund
Investor		Morgan Stanley		93.41	%

Institutional		Morgan Stanley		54.22	%
		MSCS Financial Services Trust		38.02	%
		Charles Schwab & Co., Inc.		7.74	%

Class A		Morgan Stanley		87.00	%
		National Financial Services Corp.		5.10	%

Global Credit Long/Short Fund
Investor		Forward Management, LLC		90.74	%

Institutional		Forward Management, LLC		90.27	%


June 30, 2012		204

Notes to Financial Statements (Unaudited)


FUND	NAME	PERCENTAGE
Global Credit Long/Short Fund (continued)
Class C	Forward Management, LLC		100.00	%

Class M	Forward Management, LLC		100.00	%

International Dividend Fund
Investor	National Financial Services Corp.		33.44	%
	Morgan Stanley		15.17	%
	Charles Schwab & Co., Inc.		11.45	%
	Pershing, LLC		10.96	%

Institutional	Brown Brothers Harriman & Co.		73.45	%
	National Financial Services Corp.		9.45	%
	MSCS Financial Services Trust		6.11	%

Class M	Stifel Nicolaus & Co.		54.86	%
	LPL Financial Services		26.12	%
	Wells Fargo Investments, LLC		19.02	%

International Small Companies Fund
Investor	Charles Schwab & Co., Inc.		33.30	%
	E*Trade Clearing LLC		17.22	%
	National Financial Services Corp.		16.50	%
	Pershing, LLC		5.90	%
	LPL Financial Services		5.86	%

Institutional	National Financial Services Corp.		71.72	%
	Charles Schwab & Co., Inc.		18.56	%

Class A	Pershing, LLC		39.73	%
	LPL Financial Services		18.57	%
	Wells Fargo Investments, LLC		10.67	%
	FSC Securities Corp		7.46	%
	H. Beck, Inc (Broker Dealer)		5.69	%

Class M	Wells Fargo Investments, LLC		99.47	%

Large Cap Dividend Fund
Investor	Pershing, LLC		40.29	%
	JP Turner & Co., LLC		35.57	%
	Forward Management, LLC		12.99	%
	Primevest Financial Services		11.14	%

Institutional	MSCS Financial Services Trust		67.57	%
	SEI Private Trust Co.		26.56	%

Class A	Morgan Stanley		88.92	%

Select EM Dividend Fund
Investor	Forward Management, LLC		52.99	%
	National Financial Services Corp.		23.72	%
	Charles Schwab & Co., Inc.		12.01	%

Institutional	Brown Brothers Harriman & Co.		99.82	%
Select EM Dividend Fund (continued)
Class C	Forward Management, LLC		97.30	%

Class M	Forward Management, LLC		69.24	%
	Charles Schwab & Co., Inc.		28.55	%

Small Cap Equity Fund
Investor	Charles Schwab & Co., Inc.		27.03	%
	National Financial Services Corp.		22.75	%
	Pershing, LLC		9.06	%

Institutional	Charles Schwab & Co., Inc.		51.88	%
	LPL Financial Services		13.12	%
	National Financial Services Corp.		7.09	%
	Wells Fargo Investments, LLC		6.21	%
	Pershing, LLC		5.58	%

Class A	Pershing, LLC		46.74	%
	LPL Financial Services		32.28	%
	National Financial Services Corp.		9.30	%

Class M	Wells Fargo Investments, LLC		94.38	%

Tactical Enhanced Fund
Investor	Charles Schwab & Co., Inc.		59.25	%
	TD Ameritrade, Inc.		15.57	%
	National Financial Services Corp.		15.11	%
	Pershing, LLC		8.02	%

Institutional	Pershing, LLC		33.05	%
	TD Ameritrade, Inc.		26.86	%
	MSCS Financial Services Trust		17.61	%
	National Financial Services Corp.		17.13	%

Class A	National Financial Services Corp.		83.52	%
	Pershing, LLC		14.07	%

Class C	Stifel Nicolaus & Co.		47.19	%
	National Financial Services Corp.		36.96	%
	LPL Financial Services		7.47	%

Class M	LPL Financial Services		53.20	%
	Forward Management, LLC		46.80	%

Tactical Growth Fund
Investor	National Financial Services Corp.		37.22	%
	Charles Schwab & Co., Inc.		24.09	%
	Pershing, LLC		14.84	%
	LPL Financial Services		9.78	%

Institutional	National Financial Services Corp.		33.31	%
	Charles Schwab & Co., Inc.		23.29	%
	Pershing, LLC		14.23	%
	Wells Fargo Investments, LLC		5.84	%
	TD Ameritrade, Inc.		5.44	%


		205		June 30, 2012

Notes to Financial Statements (Unaudited)


FUND	NAME	PERCENTAGE
Tactical Growth Fund (continued)
Class A	Pershing, LLC		13.61	%

Class C	Pershing, LLC		5.96	%
	National Financial Services Corp.		5.62	%
	Wells Fargo Investments, LLC		5.50	%

Class M	Morgan Stanley		55.06	%
	Wells Fargo Investments, LLC		39.91	%

Commodity Long/Short Strategy Fund
Investor	National Financial Services Corp.		47.90	%
	Pershing, LLC		18.01	%
	Charles Schwab & Co., Inc.		15.72	%
	LPL Financial Services		6.16	%

Institutional	MSCS Financial Services Trust		33.90	%
	Charles Schwab & Co., Inc.		25.28	%
	National Financial Services Corp.		23.95	%
Commodity Long/Short Strategy Fund (continued)
Class C	Pershing, LLC		40.43	%
	National Financial Services Corp.		5.68	%

Class M	Morgan Stanley		88.59	%
	Merrill Lynch Pierce Fenner & Smith		7.25	%

Class Z	Brown Brothers Harriman & Co.		100.00	%

Managed Futures Strategy Fund
Investor	Forward Management, LLC		76.76	%
	National Financial Services Corp.		11.80	%
	Charles Schwab & Co., Inc.		10.03	%

Institutional	Forward Management, LLC		93.58	%
	Charles Schwab & Co., Inc.		6.42	%

Class C	Forward Management, LLC		95.88	%

Class Z	Brown Brothers Harriman & Co.		100.00	%

8. Purchases and Sales of Investments

Investment transactions for the six months ended June 30, 2012, excluding U.S Government Obligations, short-term investments, and short sales were as follows:


FUND	COST OF INVESTMENTS PURCHASED		PROCEEDS FROM INVESTMENTS SOLD
Credit Analysis Long/Short Fund	$	271,535,744	$	133,903,530
EM Corporate Debt Fund		103,792,721		38,531,930
Emerging Markets Fund		27,572,097		46,459,191
Endurance Long/Short Fund		5,944,419		2,239,104
Focus Fund		282,616		700,714
Global Credit Long/Short Fund		7,425,456		7,066,856
International Dividend Fund		52,242,443		10,821,670
International Small Companies Fund		150,180,357		221,599,921
Large Cap Dividend Fund		2,645,582		3,164,272
Select EM Dividend Fund		3,301,196		3,335,596
Small Cap Equity Fund		26,568,262		36,674,044
Tactical Enhanced Fund		0		0
Tactical Growth Fund		131,800,684		233,310,515
Commodity Long/Short Strategy Fund		35,875,953		13,998,930
Managed Futures Strategy Fund		6,845,389		0

Investment transactions in U.S. Government Obligations for the six months ended June 30, 2012 were as follows:


FUND	COST OF INVESTMENTS PURCHASED		PROCEEDS FROM INVESTMENTS SOLD
EM Corporate Debt Fund	$	6,014,591	$	3,529,273
Global Credit Long/Short Fund		1,467,398		1,458,541
Commodity Long/Short Strategy Fund		48,596,860		34,817,937


June 30, 2012		206

Notes to Financial Statements (Unaudited)

9. Tax Basis Information

Tax Basis of Investments: As of June 30, 2012, the aggregate cost of investments, gross unrealized appreciation/(depreciation) and net unrealized appreciation/(depreciation) for Federal tax purposes was as follows:


FUND	COST OF INVESTMENTS		GROSS UNREALIZED APPRECIATION		GROSS UNREALIZED (DEPRECIATION)			NET UNREALIZED APPRECIATION / (DEPRECIATION)
Credit Analysis Long/Short Fund	$	452,958,100	$	20,367,554	$	(2,518,451	)	$	17,849,103
EM Corporate Debt Fund		85,872,396		751,618		(3,648,272	)		(2,896,654	)
Emerging Markets Fund		29,892,254		2,984,252		(2,148,472	)		835,780
Endurance Long/Short Fund		3,899,500		110,117		(284,679	)		(174,562	)
Focus Fund		7,392,485		1,106,372		(373,980	)		732,392
Global Credit Long/Short Fund		5,317,478		75,390		(502,496	)		(427,106	)
International Dividend Fund		48,896,571		2,265,613		(3,106,798	)		(841,185	)
International Small Companies Fund		253,271,260		33,820,236		(17,341,253	)		16,478,983
Large Cap Dividend Fund		12,236,572		2,407,170		(295,927	)		2,111,243
Select EM Dividend Fund		7,086,928		585,298		(941,412	)		(356,114	)
Small Cap Equity Fund		38,429,291		4,579,643		(3,062,639	)		1,517,004
Tactical Enhanced Fund		33,818,889		558		(6,184	)		(5,626	)
Tactical Growth Fund		1,029,457,836		17,041		0			17,041
Commodity Long/Short Strategy Fund		158,944,684		481,533		(140,671	)		340,862
Managed Futures Strategy Fund		8,004,630		22,175		(7,562	)		14,613

Capital Losses: As of December 31, 2011, the following Funds had available for Federal income tax purposes unused capital losses as follows:

Pre-Enactment Capital Losses


FUND	EXPIRING IN		EXPIRING IN
FUND	2016		2017
EM Corporate Debt Fund		—	$	51,786
International Dividend Fund^(a)		—		2,145,728
International Small Companies Fund	$	53,537,057		179,253,577
Large Cap Dividend Fund		—		1,991,875
Small Cap Equity Fund^(a)		5,901,099		33,010,654

(a) Subject to limitations under §382 of the Code.

Under the recently enacted Regulated Investment Company Modernization Act of 2010, capital losses incurred by each Fund after January 1, 2011 will not be subject to expiration. In addition, such losses must be utilized prior to the losses incurred in the years preceding enactment.

Post-Enactment Capital Losses*

Capital losses deferred to next tax year were as follows:


FUND	SHORT-TERM		LONG-TERM
Credit Analysis Long/Short Fund	$	4,012,901		—
EM Corporate Debt Fund		650,651		—
Select EM Dividend Fund		1,392,047	$	315,541
Commodity Long/Short Strategy Fund		189,548		—


		207		June 30, 2012

Notes to Financial Statements (Unaudited)

The Fund elects to defer to the period ending December 31, 2012, capital losses recognized during the period November 1, 2011 to December 31, 2011 in the amount of:


	AMOUNT
Credit Analysis Long/Short Fund	$	731,596
EM Corporate Debt Fund		225,535
Emerging Markets Fund		3,934,394
International Dividend Fund		123,077
International Small Companies Fund		15,826,107
Large Cap Dividend Fund		15,076
Select EM Dividend Fund		305,571
Small Cap Equity Fund		1,837,718
Tactical Enhanced Fund		1,116,617
Tactical Growth Fund		24,720,243
Commodity Long/Short Strategy Fund		88,163

The Fund elects to defer to the period ending December 31, 2012, late year ordinary losses recognized during the period November 1, 2011 to December 31, 2011 in the amount of:


	AMOUNT
EM Corporate Debt Fund	$	6,932
Emerging Markets Fund		152,135
International Dividend Fund		2,175
International Small Companies Fund		935,700
Select EM Dividend Fund		597

*Post-Enactment Capital Losses arise in fiscal years beginning after December 22, 2010, and exclude any elective late-year capital losses (during the period November 1st to December 31st) deferred for the current fiscal year. As a result of the enactment of the Regulated Investment Company Act of 2010, pre-enactment capital loss carryforwards may be more likely to expire unused. Additionally, post-enactment capital losses that are carried forward will retain their character as either short-term or long-term losses rather than being considered all short-term as under previous law.

(a) Subject to limitations under §382 of the Code.

Tax Basis 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 amounts and characteristics of tax basis distributions and composition of distributable earnings/(accumulated losses) are finalized at fiscal year end: accordingly, tax basis balances have not been determined as of June 30, 2012.

The tax character of distributions paid for the year ended December 31, 2011, were as follows:


FUND	ORDINARY INCOME TOTAL		LONG-TERM CAPITAL TOTAL		RETURN OF CAPITAL
Credit Analysis Long/Short Fund	$	7,849,892	$	409,851		—
EM Corporate Debt Fund		2,749,836		—		—
Emerging Markets Fund		9,078,057		19,075,980		—
Focus Fund		253,678		670,121		—
Global Credit Long/Short Fund		164,218		—		—
International Dividend Fund		465,617		—		—
International Small Companies Fund		5,151,515		—		—
Large Cap Dividend Fund		561,000		—		—
Select EM Dividend Fund		334,866		—	$	2,543
Tactical Enhanced Fund		—		55,210		—
Tactical Growth Fund		—		5,087,354		—
Commodity Long/Short Strategy Fund		1,762,211		—		15,048


June 30, 2012		208

Notes to Financial Statements (Unaudited)

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. New Accounting Pronouncements

In December 2011, Financial Accounting Standards Board issued an Accounting Standards Update (“ASU”) to enhance disclosures requiring improved information about financial instruments and derivative instruments that are subject to offsetting (“netting”) on the Statements of Assets and Liabilities. This information will enable users of the entity’s financial statements to evaluate the effect or potential effect of netting arrangements on the entity’s financial position. The ASU is effective prospectively during interim or annual periods beginning on or after January 1, 2013. At this time, management is evaluating the implications of these changes on the financial statements.

12. 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 June 30, 2012. However, the following are details relating to the subsequent events through the date the financial statements were issued.

Change in Custodian:

Effective November 1, 2012, Citibank, N.A. will serve as custodian for the Trust.

The following information applies to the Forward Emerging Markets Fund (the “Fund”) only:

On, July 31, 2012 the Board of Trustees, including all of the independent Trustees, approved, on behalf of the Forward Emerging Markets Fund (the “Fund”): (i) changes to the principal investment strategies and principal risks of the Fund; (ii) the termination of the Investment Sub-Advisory Agreement among Forward Management, the Trust and Pictet Asset Management Limited (“Pictet Ltd”); (iii) changes to the advisory arrangement of the Fund; and (iv) a reduction in the management fee and expense limits for the Fund.

Change to Principal Investment Strategies: Effective September 1, 2012, the Fund’s Principal Investment Strategies will be as follows:

Principal Investment Strategies: Under normal conditions, the Fund invests at least 80% of its net assets plus borrowings for investment purposes, if any, in the equity securities of emerging market companies. The Fund normally invests in not fewer than eight emerging market countries. An issuer of a security generally will be considered to be located in a particular emerging market country if it meets one or more of the following criteria: (i) the issuer is organized under the laws of, or maintains its principal place of business in, the country; (ii) during the issuer’s most recent fiscal year, it derived at least 50% of its revenues or profits from goods or services produced or sold, investments made or services performed in the country; or (iii) the issuer has at least 50% of its assets in the country. The Fund may invest in securities of any market capitalization.

Forward Management selects investments based on their fundamental quality, dividend yield, dividend growth potential, valuation and anticipated price appreciation. The Advisor typically employs a proprietary statistical measurement of relative dividend yield to identify attractive investment opportunities. The Advisor draws on both internal and external resources to assess country factors, industry dynamics, business franchise/management strategy, financial analysis and valuation. The Fund invests a substantial amount of its assets in foreign securities which are denominated in foreign currencies. The Advisor generally chooses not to hedge the Fund’s currency exposure.


		209		June 30, 2012

Notes to Financial Statements (Unaudited)

In order to reduce transaction costs, the Advisor will purchase futures and ETFs to manage the Fund’s cash holdings by gaining exposure to equity securities of emerging markets companies. The Advisor may purchase high grade short term fixed income securities to serve as collateral for futures purchased.

Termination of Pictet Ltd as Sub-Advisor: Effective September 1, 2012, Pictet Ltd will cease serving as the Fund’s sub-advisor and Forward Management will assume direct management responsibility with respect to the Fund.

Reduction in Management Fee and Expense Limits: Effective September 1, 2012, the management fee Forward Management receives from the Fund is permanently reduced from an annual rate (as a percentage of the Fund’s average daily net assets) of 1.25% on the first $500 million of the Fund’s average daily net assets, 1.20% on the second $500 million of the Fund’s average daily net assets and 1.15% on the Fund’s average daily net assets in excess of $1 billion to an annual rate of 1.10% on the Fund’s average daily net assets. Additionally, effective September 1, 2012, the expense limit (as a percentage of the applicable class of the Fund’s average daily net assets) applicable to each class of the Fund is permanently reduced as follows:


Class	Expense Limit Prior to September 1, 2012			Expense Limit Effective September 1, 2012
Investor Class		1.89	%		1.79	%
Institutional Class		1.49	%		1.39	%
Class C		2.49	%		2.39	%
Class M		1.49	%		1.39	%

The Funds file a complete schedule of portfolio holdings with the 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 March 31, 2012. 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 Commission'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, 2012 are available (i) without charge, upon request, by calling 1-800-999-6809 and (ii) on the Securities and Exchange Commission's website at www.sec.gov.


June 30, 2012		210

Approval of the Investment Management Agreements and Investment Sub-Advisory Agreements (Unaudited)

APPROVAL OF THE INVESTMENT MANAGEMENT AGREEMENT

The Board of Trustees (the “Board”) of the Trust oversees the management of each series of the Trust and, as required by law, initially approves, and determines annually whether to renew, the investment advisory and sub-advisory agreements for management of each series of the Trust.

At an in-person meeting of the Board held on December 14-15, 2011, the Board, including all of the Independent Trustees, approved an Amended and Restated Investment Management Agreement (a “New Series Advisory Agreement”) between Forward Management, LLC (“Forward Management” or the “Advisor”) and the Trust on behalf of each of the Forward Endurance Long/Short Fund and Forward Managed Futures Strategy Fund (each a “Fund” and together the “Funds” or “New Series”).

In connection with this meeting, the Board, through counsel to the Trust and Independent Trustees and through the administrator of the Funds, requested information to enable the Board to evaluate the terms of the New Series Advisory Agreements. In response, Forward Management provided materials to the Board for its evaluation. In considering whether to initially approve the New Series Advisory Agreements, the Board also reviewed supplementary information, including: portfolio composition; advisory fee and expense comparisons; financial information regarding Forward Management; descriptions of Forward Management’s compliance programs; portfolio trading practices and information about the personnel proposed to provide investment management and administrative services to the New Series; and the nature of services to be provided under the New Series Advisory Agreements.

Discussed below are the factors the Board considered in approving the New Series Advisory Agreements. This discussion is not intended to be all-inclusive. The Board reviewed a variety of factors and considered a significant amount of information, including information received on an ongoing basis at Board and committee meetings. The approval determinations were made on the basis of each Board member’s business judgment after consideration of all of the information taken as a whole. Individual Board members may have given different weights to certain factors and assigned various degrees of materiality to information in connection with the approval process.

In evaluating the New Series Advisory Agreements, the Board, including the Independent Trustees, principally considered the following factors, among others: (i) the nature, extent and quality of the services to be provided by Forward Management; (ii) the ability of Forward Management to provide high quality investment management services (iii) the reasonableness of investment advisory compensation to be paid and a comparative analysis of expense ratios of, and advisory fees paid by, similar funds; (iv) the profits to be realized by Forward Management from its relationships with the New Series; (v) the extent to which the fees to be paid to Forward Management reflect economies of scale; and (vi) if applicable, any benefits to be derived by Forward Management from its relationship with the New Series, such as soft dollar arrangements. The Board also considered the ability of Forward Management to provide an appropriate level of support and resources to the New Series and whether Forward Management has sufficiently qualified personnel. The Board also considered the overall financial soundness of Forward Management as it relates to their ability to provide services to the New Series.

Additional discussion of certain of these factors follows:

Nature, Extent and Quality of the Services

The Board considered the nature of the services expected to be provided under the New Series Advisory Agreements. The Board considered the ability of Forward Management to provide an appropriate level of support and resources to the New Series and whether Forward Management has sufficiently qualified personnel. The Board noted the background and experience of Forward Management’s senior management and


		211		June 30, 2012

Approval of the Investment Management Agreements and Investment Sub-Advisory Agreements (Unaudited)

investment personnel. The Board also noted that because the series of the Trust are Forward Management’s principal investment advisory clients, the expertise of, and amount of attention expected to be given to the New Series by Forward Management’s team is substantial. The Board considered Forward Management’s ability to attract and retain qualified business professionals, including recent enhancements to Forward Management’s portfolio management and risk management capabilities. The Board also determined that Forward Management has made a commitment to maintain the financial and operational resources reasonably necessary to manage the New Series. The Board also favorably considered Forward Management’s entrepreneurial commitment to the management and success of the New Series, which entails a substantial financial and professional commitment.

The Board also considered Forward Management’s compliance operations with respect to the Trust, including measures taken by Forward Management to assist the Trust, including the New Series, in complying with Rule 38a-1 under the 1940 Act. The Board noted that personnel at Forward Management represented that the firm had no significant compliance or administrative problems over the past year and that no material deficiencies were found by any independent audit. The Board also noted that no material compliance issues were found by the U.S. Securities and Exchange Commission in its recent routine examination of Forward Management and the series of the Trust.

The Board concluded that it was satisfied with the nature, extent and quality of the services expected to be provided by Forward Management under the New Series Advisory Agreements.

Investment Performance

The Board noted that the New Series have yet to commence operations, and the Board concluded that Forward Management has the ability to provide high quality investment management services to the New Series over the long-term, subject to ongoing review of each Fund’s performance by the Board.

Profitability and Reasonableness of Advisory Compensation

The Board considered the costs of services to be provided and profits to be realized by Forward Management from its relationship with the New Series, including the overall financial soundness of Forward Management. The Board considered financial information previously provided by Forward Management, which showed an operating loss for the year ended December 31, 2010, but a strong balance sheet for the first half of 2011 and a demonstrated commitment to the Funds and new product support. The Board noted Forward Management’s corporate structure and ownership interests and the commitment to Forward Management by the controlling entities of Forward Management. The Board noted that Forward Management has been responsive to inquiries over time regarding the firm’s financial resources and ability to serve as the investment advisor to the Funds, and the Board has been satisfied with this information. The Board further noted that with respect to the New Series, it generally is difficult to estimate or evaluate the expected profitability of newly organized funds, and that typically newly organized funds are not initially profitable to an investment adviser.

The Board also considered information regarding the investment management fees expected to be charged to the New Series by Forward Management and those Forward Management charges to other series of the Trust. The Trustees also compared the estimated investment management fees and operating expenses for the New Series with those of other comparable mutual funds, noting that the proposed investment management fee for each Fund is within the range of the fees of the comparable funds presented in a universe of peers most similar to each Fund. The Board also noted how the New Series may differ in certain ways from the comparable funds presented in its universe of peers.

The Board noted that Forward Management’s business currently consists primarily of managing the series of the Trust. The Board noted that Forward Management


June 30, 2012		212

Approval of the Investment Management Agreements and Investment Sub-Advisory Agreements (Unaudited)

does not currently manage investment accounts with a strategy similar to the Forward Managed Futures Strategy Fund, and so it is not possible to compare the fees to be charged to the Fund with fees charged to other non-investment company clients of Forward Management. The Board noted that Forward Management currently manages an investment account with a strategy similar to the Forward Endurance Long/Short Fund. The Board considered the fees to be charged to the Forward Endurance Long/Short Fund and the investment account and noted differences in the management of the Fund and account and the level of services required to be provided by Forward Management to the Fund and account. The Board also noted that the overall expense ratios of the New Series are currently limited by Forward Management pursuant to contractual expense limitation agreements.

The Board also concluded that the expected profitability of Forward Management with respect to the New Series was not excessive and that the advisory fee to be charged to the New Series was reasonable in light of the services to be provided.

Economies of Scale

The Board considered the potential of Forward Management and the New Series to experience economies of scale as the New Series grows in size, but recognized that, at the outset, the New Series would have relatively small asset levels. The Board noted that Forward Management has typically subsidized series of the Trust at smaller asset levels. The Board concluded that, considering the fee and financial information considered by the Board, the current fee structures reflected in the New Series Advisory Agreements are appropriate. The Board also noted that it would have the opportunity to periodically re-examine whether the New Series have achieved economies of scale and the appropriateness of advisory fees payable to Forward Management in the future.

Any Additional Benefits and other Considerations

The Board considered ancillary benefits to be received by Forward Management as a result of Forward Management’s proposed relationship with the New Series, including the fees to be paid by the New Series, to ReFlow Management Co., LLC, a company that is affiliated with Forward Management, for the New Series’ participation in ReFlow, a program designed to provide an alternative liquidity source for mutual funds experiencing redemptions of their shares. In addition, the Board also took into consideration the potential benefits that may be derived by Forward Management as a result of the establishment of Forward Securities, LLC, an affiliated broker-dealer that serves as distributor for the Funds. The Board also considered any benefits to be derived by Forward Management from soft dollar arrangements, and noted that the Board will receive regular reports from Forward Management regarding its soft dollar policies and usage. The Board concluded that any potential benefits to be derived by Forward Management from its proposed relationship with the New Series include potential for larger assets under management and reputational benefits, which are consistent with those generally derived by investment advisors to mutual funds.

Based on the Trustees’ deliberations and their evaluation of the information described above, the Board, including all of the Independent Trustees, found that: (i) the compensation payable under each New Series Advisory Agreement is fair and bears a reasonable relationship to the services to be rendered; and (ii) the approval of each New Series Advisory Agreement is in the best interests of each respective New Series and its shareholders. Based on the Trustees’ deliberations and their evaluation of the information described above, the Trustees, including all of the Independent Trustees, unanimously approved each New Series Advisory Agreement.


		213		June 30, 2012

Investment Advisor

Forward Management, LLC

Administrator

ALPS Fund Services, Inc.

Distributor

Forward Securities, LLC

Counsel

Dechert LLP

Independent Registered Public Accounting Firm

PricewaterhouseCoopers LLP

Custodian

Brown Brothers Harriman & Co.

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 CorePlus Fund

Forward Credit Analysis Long/Short Fund

Forward EM Corporate Debt Fund

Forward Emerging Markets Fund

Forward Endurance Long/Short Fund

Forward Extended MarketPlus Fund

Forward Focus Fund

Forward Frontier Strategy Fund

Forward Global Credit Long/Short 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 Large Cap Dividend Fund

Forward Managed Futures Strategy Fund

Forward Real Estate Fund

Forward Real Estate Long/Short Fund

Forward Select EM Dividend Fund

Forward Select Income Fund

Forward Small Cap Equity Fund

Forward Strategic Alternatives Fund

Forward Tactical Enhanced Fund

Forward Tactical Growth Fund

Forward U.S. Government Money Fund

Allocation Funds

Forward Aggressive Growth Allocation Fund

Forward Balanced Allocation Fund

Forward Growth & Income Allocation Fund

Forward Growth Allocation Fund

Forward Income & Growth Allocation Fund

Forward Income Builder Fund

LOGO


Printed on paper containing recycled content using soy-based inks.			SAR FWD 004180 083113

Semi-Annual Report

June 30, 2012

Forward Global Infrastructure Fund

Forward International Real Estate Fund

Forward Real Estate Fund

Forward Real Estate Long/Short Fund

Forward Select Income Fund


FORWARD FUNDS:		Table of Contents



Shareholder Update			2

Fund Performance			5

Disclosure of Fund Expenses			8

Summary of Portfolio Holdings			12

Portfolio of Investments			14

Statement of Assets and Liabilities			31

Statement of Operations			35

Statement of Changes in Net Assets			37

Statement of Cash Flows			47

Financial Highlights			48

Notes to Financial Statements			75

Tax Information			93

Forward Funds are distributed by Forward Securities, LLC,

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

June 30, 2012


		1


Shareholder Update		June 30, 2012

A MESSAGE FROM:

J. Alan Reid, Jr.

Chief Executive Officer

LOGO

Dear Shareholder:

Where to look for growth?

How to deal with unabated volatility and elevated correlations?

What’s the answer to income needs?

With 10-year Treasuries at record lows—and no assurance that we’ve reached the market bottom yet—traditional bond strategies are failing to meet investors’ income needs.


June 30, 2012		2

We also invite you to explore the fwd thinking section of our website, where we regularly post our latest white papers and webcasts on timely investment topics.

Sincerely,

LOGO

J. Alan Reid, Jr.

Chief Executive Officer

Forward

RISKS

Diversification does not assure profit or protect against risk.


		3		June 30, 2012