SCHEDULE (RULE 14a-101) 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. )
Filed by Registrant [ X ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Sec. 240.14a-11(c) or Sec. 240.14a-12
. . . . . . . . . . . . . . . . . . . . . . . FORWARD FUNDS, INC. . . .. .
. . .
(Name of Registrant as Specified In Its Charter)
Julie A. Tedesco, Assistant Secretary
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[ X ] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
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. . . . . .
2) Aggregate number of securities to which transaction applies:
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . .
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11(set forth the amount on which the
filing fee is calculated and state how it was determined):
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . .
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2) Form, Schedule or Registration Statement No.:
Schedule 14A; 811-8419
3) Filing Party:
FORWARD FUNDS, INC.
4) Date Filed:
June 15, 1999
<PAGE>
FORWARD FUNDS, INC.
433 California Street, Ste. 1010
San Francisco, California 94104
The Small Capitalization Equity Fund
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
July 27, 1999
To the Shareholders:
Notice is hereby given that a Special Meeting of Shareholders of The Small
Capitalization Equity Fund (the "Fund"), a series of Forward Funds, Inc. (the
"Company"), that consists of an Investor Class of shares ("Investor Class") and
an Institutional Class of shares ("Institutional Class"), to be held at the
offices of Webster Investment Management Company, LLC, 433 California Street,
Suite 1010, San Francisco, California 94104, on July 27, 1999 at 10:00 a.m., San
Francisco time, for the following purposes:
PROPOSALS:
1. To approve or disapprove a proposed Distribution Plan for the Investor
Class of shares of the Fund. (Investor Class only)
2. To approve or disapprove implementation of a structure for the Company
which would permit the Board of Directors to replace or appoint investment
sub-advisers for the Fund without the necessity of seeking shareholder approval.
(Investor Class and Institutional Class)
3. To consider and act upon any other matters which may properly come
before the meeting or any adjournment thereof.
By Order of the Directors of the Company,
Julie A. Tedesco
Assistant Secretary
June 23, 1999
YOUR VOTE IS IMPORTANT
PLEASE FILL IN, DATE, SIGN AND RETURN THE ENCLOSED
PROXY PROMPTLY IN THE ENCLOSED POSTAGE-PAID
ENVELOPE WHETHER OR NOT YOU PLAN TO BE PRESENT AT THE SPECIAL MEETING
<PAGE>
Instructions for Signing Proxy Cards
The following general rules for signing proxy cards may be of assistance to
you and will avoid the time and expense involved in validating your vote if you
fail to sign your proxy card properly.
1. Individual Accounts: Sign your name exactly as it appears in the
registration on the proxy card.
2. Joint Accounts: Either party may sign, but the name of the party signing
should conform exactly to a name shown in the registration.
3. All Other Accounts: The capacity of the individual signing the proxy
card should be indicated unless it is reflected in the form of registration. For
example:
Registration Valid Signature
Corporate Accounts
(1) ABC Corp...........................................John Doe, Treasurer
(2) ABC Corp...........................................John Doe
c/o John Doe, Treasurer
(3) ABC Corp. Profit Sharing Plan......................John Doe, Trustee
Trust Accounts
(1) ABC Trust..........................................Jane B. Doe, Trustee
(2) Jane B. Doe, Trustee Jane B. Doe
u/t/d 12/28/78
Custodial or Estate Accounts
(1) John B. Smith, Cust................................John B. Smith
f/b/o John B. Smith, UGMA
(2) John B. Smith...................................John B. Smith, Executor
<PAGE>
FORWARD FUNDS, INC.
433 California Street, Ste. 1010
San Francisco, California 94104
The Small Capitalization Equity Fund
PROXY STATEMENT
This proxy statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Forward Funds, Inc. (the "Company") to be
voted at the Special Meeting of Shareholders of The Small Capitalization Equity
Fund (the "Fund"), a series of the Company, that consists of an Investor Class
of shares ("Investor Class") and an Institutional Class of shares
("Institutional Class"), to be held at the offices of Webster Investment
Management Company, LLC, 433 California Street, Suite 1010, San Francisco,
California 94104, on July 27, 1999 at 10:00 a.m., San Francisco time, and at any
adjournment or adjournments thereof (the "Meeting"). This Proxy Statement and
its enclosures are being mailed to shareholders of the Fund beginning on or
about June 23, 1999.
GENERAL
The Fund's shareholders of record on June 11, 1999, the record date for
determining shareholders entitled to vote at the Meeting (the "Record Date"),
are entitled to one vote for each whole share of common stock (and a
proportionate fractional vote for each fractional share) of the Fund held as of
that date. The number of shares of the Fund issued and outstanding as of the
Record Date was as follows:
Number of
Fund/Classes Shares Outstanding
The Small Capitalization Equity Fund
Investor Class......
Institutional Class _______________
Total Fund Shares..........
Timely, properly executed proxies will be voted as you instruct. If you
return your proxy card and no choice is indicated, your shares will be voted in
favor of the proposal set forth in the attached Notice of Special Meeting of
Shareholders. At any time before it has been voted, the enclosed proxy may be
revoked by the signer by (i) a written revocation received by the Assistant
Secretary of the Company prior to the exercise of the proxy, (ii) properly
executing a later-dated proxy or (iii) attending the Meeting, requesting return
of any previously delivered proxy and voting in person.
<PAGE>
A copy of the Fund's annual report for the fiscal year ending December 31,
1998, may be obtained without charge by writing to First Data Investor Services
Group, Inc., P.O. Box 5184, Westborough, Massachusetts 01581-5184, or by calling
toll free 1-800-999-6809.
The costs of solicitation of proxies will be borne by the Fund.
Solicitation of proxies by personal interview, mail, telephone and telegraph may
be made by officers and Directors of the Company and employees of the Fund's
investment adviser, Webster Investment Management Company, LLC ("Webster" or the
"Adviser"), or First Data Distributors, Inc. (the "Distributor"), the Fund's
principal underwriter.
This Proxy Statement solicits votes on proposals affecting the Investor
Class and Institutional Class of shares of the Fund as set forth below.
Shareholders are requested to vote only on those proposals affecting the
respective Class of shares of the Fund of which they are shareholders.
Proposals: Classes:
1. To approve or disapprove a Distribution Plan for the Investor Class
Investor Class of shares
2. To approve or disapprove the implementation of a Investor Class and
structure for the Company which would permit the Institutional Class
Board of Directors to replace or appoint investment
sub-advisers for the Fund without the necessity of
seeking shareholder approval
PROPOSAL 1:
TO APPROVE OR DISAPPROVE A PROPOSED DISTRIBUTION PLAN RELATING TO THE
INVESTOR CLASS OF SHARES OF THE FUND
At the Special Meeting, it is proposed that the Investor Class shareholders
of the Fund approve a Plan of Distribution pursuant to Rule 12b-1 (the
"Distribution Plan") under the Investment Company Act of 1940, as amended (the
"1940 Act"). Proposal 1 in the Notice of Special Meeting of Shareholders (the
"Proposal") relates to the approval or disapproval of the Distribution Plan for
the Investor Class of shares. The Directors have approved the Distribution Plan
and recommend that shareholders approve the Distribution Plan, primarily because
the Distribution Plan will provide the Fund's Investor Class with greater
flexibility to provide both distribution and administrative services to
shareholders without increasing the contractual expense level of the Fund's
Investor Class. As is discussed below in greater detail the Directors propose to
reduce the fee level of the existing Shareholder Services Plan by the amount of
the Distribution Plan fee.
The Distribution Plan has been approved by the Directors of the Company
pursuant to Rule 12b-1 of the 1940 Act, and, if approved by the Investor Class
shareholders of the Fund, would supplement the Shareholder Services Plan of the
Fund of the Company (the "Shareholder Services Plan") as it relates to the
Investor Class. The Distribution Plan is similar to the Shareholder Services
Plan in that both plans permit the Company to pay fees as compensation for
shareholder services relating to the Fund's Investor Class (which shareholder
services are in addition to the general services provided to the Fund as a
whole). However, unlike the Shareholder Services Plan, the Distribution Plan
also permits the Fund's Investor Class to pay fees as compensation for (i)
activities and/or expenses primarily intended to result in the sale of shares of
the Fund's Investor Class and (ii) additional personal services to the Fund's
Investor Class shareholders, for administrative services and the maintenance of
shareholder accounts. Both the Distribution Plan and the Shareholder Services
Plan authorize the Fund's Investor Class to pay an annual fee for these
services. The Distribution Plan authorizes the Fund on behalf of the Investor
Class to pay, on an annual basis, aggregate fees not to exceed 0.25% of the
Fund's Investor Class' average daily net assets. The Shareholder Services Plan
previously approved authorized the Fund's Investor Class to pay, on an annual
basis, up to 0.35% of the Fund's Investor Class' average daily net assets as
fees for services rendered and expenses borne under such plan. The maximum
amount payable by the Fund's Investor Class under the Shareholder Services Plan,
however, will be reduced to 0.10% of the Fund's Investor Class' average daily
net assets if the Distribution Plan is adopted.
<PAGE>
At a Meeting held on February 25, 1999, the Directors of the Company,
including all of the Directors who are not interested persons of the Company (as
defined in the 1940 Act) and have no direct or indirect financial interest in
the operation of the Distribution Plan or any agreements related to it (the
"Independent Directors"), unanimously approved the Distribution Plan.
Current Shareholder Services Plan
The Shareholder Services Plan was adopted on February 6, 1998 by the
Directors of the Company. Under the Shareholder Services Plan, the Company, on
behalf of the Fund, is authorized to pay banks and their affiliates and other
institutions, including broker-dealers ("Participating Organizations"), an
aggregate fee at an annual rate not to exceed on an annual basis 0.35% of the
average daily net asset value of the shares of the Fund attributable to or held
in the name of a Participating Organization for its clients as compensation for
providing "service activities" pursuant to an agreement with a Participating
Organization. The fees may be paid for activities in connection with: (i) the
provision of personal and continuing services to investors in the Fund; (ii)
receiving, aggregating and processing purchase and redemption orders; (iii)
providing and maintaining retirement plan records; (iv) communicating
periodically with shareholders and answering questions and handling
correspondence from shareholders about accounts; (v) acting as the sole
shareholder of record and nominee for shareholders; (vi) maintaining account
records and providing beneficial owners with account statements; (vii)
processing dividend payments; (viii) issuing shareholder reports and transaction
confirmations; (ix) providing sub-accounting services for Fund shares held
beneficially; (x) forwarding shareholder communications to beneficial owners;
(xi) receiving, tabulating and transmitting proxies executed by beneficial
owners; and (xii) general account administration activities. Overhead and other
expenses of a Participating Organization related to its "service activities,"
including telephone and other communications expenses, may be included in the
information regarding amounts expended for such activities.
During the Fund's fiscal year ended December 31, 1998, the Fund paid no
fees to Participating Organizations under the Shareholder Services Plan.
Proposed Distribution Plan
The Directors of the Company have determined that it would be appropriate
for the Fund's Investor Class to adopt a Distribution Plan. In determining to
recommend the Distribution Plan for shareholder approval the Directors
considered, among other things, the different possible arrangements for, as well
as the costs associated with, providing distribution services, shareholder and
administrative services and account maintenance services. The Directors of the
Company believe that the Distribution Plan will provide benefits to the Fund's
Investor Class by economies of scale through increased assets for the Fund's
Investor Class from expanded distribution and marketing channels. The Directors
of the Company believe that the Distribution Plan is likely to result in greater
sales and/or fewer redemptions of the Fund's Investor Class, and thus higher
asset levels in the Fund's Investor Class, although it is impossible to know for
certain the level of sales and redemptions of the Fund's Investor Class shares
that would occur in the absence of the Distribution Plan or under alternative
distribution arrangements. The Directors of the Company believe that higher
asset levels could benefit the Fund's Investor Class by reducing Investor Class
expense ratios and/or by affording greater investment flexibility to the
Investor Class. With respect to the Fund's Investor Class, the Distribution Plan
authorizes the Company to pay on an annual basis up to 0.25% of the Investor
Class' average daily net assets ("Distribution Plan Fees") as fees for
shareholder, administrative and distribution services rendered and expenses
borne under the Distribution Plan.
<PAGE>
Under the Distribution Plan, the Company would be authorized to pay to the
Distributor or other persons or entities (which may but need not be affiliated
with the Company or any of its investment advisers or other service providers),
Distribution Plan Fees for services rendered and expenses borne in connection
with the provision of shareholder services, account maintenance services,
administrative services and/or distribution services with respect to Investor
Class shares of the Fund.
Under the Distribution Plan, the Distribution Plan Fees may be paid as
compensation for activities and/or expenses primarily intended to result in the
sale of Investor Class shares of the Fund, including, but not limited to: (i)
compensation to, and expenses (including overhead and telephone expenses) of,
underwriters, dealers, brokers, banks and other selling entities (including the
Distributor) and sales and marketing personnel or any of them for printing of
prospectuses and reports for other than existing shareholders and the
preparation, production and dissemination of sales, marketing and shareholder
servicing materials information of the Company relating to the Fund; (ii)
compensating underwriters, dealers, brokers, banks and other financial
institutions who aid in the processing of purchase or redemption requests for
shares or the processing of dividend payments with respect to shares, who
provide information periodically to shareholders showing their positions in
shares, who forward communications from the Company to shareholders, who render
ongoing advice concerning the suitability of particular investment opportunities
offered by the Company in light of the shareholders' needs, who respond to
inquiries from shareholders relating to such services, or who train personnel in
the provision of services; and (iii) services qualifying for the payment of
"service fees" under the rules of the National Association of Securities
Dealers, Inc.
The Distribution Plan Fees may also be paid as compensation for activities
and/or expenses for administrative services to the shareholders of the Company,
which may include (and are in addition to any such general services provided to
shareholders as a whole): (i) transfer agency and sub-transfer agent services
for beneficial owners of shares, (ii) aggregating and processing purchase and
redemption orders of shareholders, (iii) providing beneficial owners of shares
who are not record owners with statements showing their positions in Fund
shares, (iv) processing dividend payments for shares held beneficially, (v)
providing sub-accounting services for shares held beneficially, (vi) forwarding
shareholder communications, such as proxies, shareholder reports, dividend and
tax notices, and updating prospectuses to beneficial owners of shares who are
not record owners and (vii) receiving, tabulating and transmitting proxies
executed by beneficial owners of shares who are not record owners.
<PAGE>
If approved, the Distribution Plan will continue in effect for a period of
more than one year after it takes effect only so long as such continuance is
specifically approved at least annually by votes of the majority of both (a) the
Directors of the Company and (b) the Independent Directors of the Company cast
in person at a meeting called for the purpose of voting on continuance of the
Distribution Plan.
Under the Distribution Plan or any related agreement, any person authorized
to direct the disposition of monies paid or payable by the Company will be
required to provide to the Directors of the Company, and the Directors will
review, at least quarterly, a written report of the amounts so expended and the
purposes for which such expenditures were made.
The Distribution Plan may be terminated at any time as to the Fund's
Investor Class by vote of a majority of the Independent Directors, or by vote of
a majority of the outstanding voting securities of the Fund's Investor Class (as
defined in the 1940 Act).
Under the Distribution Plan, all agreements with any person relating to
implementation of the Distribution Plan with respect to the Fund's Investor
Class will be in writing, and any agreement related to the Distribution Plan
with respect to the Fund's Investor Class will provide (a) that such agreement
may be terminated at any time, without payment of any penalty, by vote of a
majority of the Independent Directors, or by vote of a majority of the
outstanding voting securities of the Fund's Investor Class (as defined in the
1940 Act), on not more than 60 days' written notice to any other party to the
agreement and (b) that such agreement shall terminate automatically in the event
of its assignment. Any change in the Distribution Plan that would materially
increase the cost to the shares of the Fund's Investor Class to which the
Distribution Plan relates requires approval by the shareholders of the Fund's
Investor Class. All material amendments to the Distribution Plan requires a vote
of the Directors of the Company, including a majority of the Independent
Directors, cast in person at a meeting called for such purpose.
The foregoing discussion of the Distribution Plan is qualified in its
entirety by the full text of the form of the Distribution Plan attached as
Exhibit A to this Proxy Statement.
Comparison of the Current and Proposed Arrangements
The Company currently maintains a Shareholder Services Plan pursuant to
which the Fund may pay on an annual basis up to 0.35% of its average daily net
assets for certain shareholder services. The Company proposes to adopt the
Distribution Plan, pursuant to which the Fund's Investor Class may pay on an
annual basis up to 0.25% of its average daily net assets as service and
distribution fees, and to reduce the amount payable by the Fund's Investor Class
under the Shareholder Services Plan on an annual basis up to 0.10% of its
average daily net assets.
<PAGE>
The major differences between the proposed Distribution Plan and the
Shareholder Services Plan include:
1. The Shareholder Services Plan authorizes the Company to pay fees only
for services rendered and expenses borne in connection with the provision of
shareholder services (which are in addition to any general services provided to
the Fund as a whole), but the Distribution Plan authorizes the Company, on
behalf of the Fund, to pay fees for services rendered and expenses borne in
connection with the provision of any or all of (i) activities or expenses
primarily intended to result in the sale of the Fund's Investor Class, (ii)
shareholder services to the Fund's Investor Class (which are in addition to any
general services provided to the Fund's Investor Class as a whole) and (iii)
personal services to the Company's shareholders and/or for the maintenance of
shareholder accounts; and
2. The Distribution Plan may be terminated at any time as to the Fund's
Investor Class by vote of a majority of the outstanding voting securities of the
Fund's Investor Class (as defined in the 1940 Act).
Expense Comparison Table
Set forth below is a table comparing the Fund's Investor Class expenses
currently payable, and proposed to be paid, under the Shareholder Services Plan
and the Distribution Plan.
Current Fund Expenses
Annual Fund Operating Expenses (as a percentage of average
net assets annualized)1
Small Capitalization
Equity Fund
(Investor Class)
- ---------------------------- --------------------------------------------------
Management Fee 1.05%
- --------------------------- --------------------------------------------------
Distribution and Service (12b-1) Fees 0%
- --------------------------- --------------------------------------------------
- --------------------------- --------------------------------------------------
Other Expenses 0.55%
- ---------------------------- --------------------------------------------------
- ---------------------------- --------------------------------------------------
Total Annual Fund Operating Expenses 1.60%
- --------------------------- --------------------------------------------------
- --------------------------- --------------------------------------------------
Fee Waiver2 0.15%
- ---------------------------- --------------------------------------------------
- ---------------------------- --------------------------------------------------
Net Expenses 1.45%
- ---------------------------- --------------------------------------------------
1 "Annual Fund Operating Expenses" are paid out of the Fund's Investor
Class assets. Expenses are factored into the Fund's Investor Class share
price or dividends, and are not charged directly to shareholder accounts.
2 Webster has agreed to temporarily waive a portion of its fees for
the Fund's Investor Class for the current fiscal year. With the investment
advisory fee waiver, "Investment Advisory Fees" as a percentage of the
average daily net assets would be 0.90% for the Fund's Investor Class.
<PAGE>
Proposed Fund Expenses
Annual Fund Operating Expenses (as a percentage of average net assets
annualized)3
Small Capitalization Equity Fund
(Investor Class)
- --------------------------- --------------------------------------------------
Management Fee 1.05%
- --------------------------- --------------------------------------------------
- ---------------------------- --------------------------------------------------
Distribution and Service (12b-1) Fees4 0.25%
- ---------------------------- --------------------------------------------------
- ---------------------------- --------------------------------------------------
Other Expenses 0.43%
- ---------------------------- --------------------------------------------------
- ---------------------------- --------------------------------------------------
Total Annual Fund Operating Expenses 1.60%
- ----------------------------------------------------------------- -------------
- ----------------------------------------------------------------- -------------
Fee Waiver5 0.15%
- ----------------------------------------------------------------- ------------
- ----------------------------------------------------------------- -------------
Net Expenses 1.45%
- ----------------------------------------------------------------- ------------
3 These expenses are paid directly out of the Fund's Investor Class
assets. Expenses are factored into the share price or dividends and are not
charged directly to shareholder accounts.
4 These are Distribution Plan expenses pursuant to which up to 0.25%
of the Fund's Investor Class' average daily net assets may be used to pay
shareholder servicing and distribution fees. The Distribution Plan in part
replaces a Shareholder Servicing Plan pursuant to which up to 0.35% of the
Fund's Investor Class' average net assets could be used to pay shareholder
servicing fees. The Shareholder Servicing Plan will continue at an annual
rate of 0.10% of the Fund's Investor Class' average net assets. (This Note
4 relates to Proposal Number 1 herein).
5 Webster has agreed to temporarily waive a portion of its fees for
the Fund's Investor Class for the current fiscal year. With the investment
advisory fee waiver, "Investment Advisory Fees" as a percentage of the
average daily net assets would be 0.90% for the Fund's Investor Class.
Director Action; Required Shareholder Vote
At a Meeting held on February 25, 1999, the Directors of the Company
voted unanimously to approve the Distribution Plan with respect to the
Fund's Investor Class. If the shareholders of the Fund's Investor Class
approve the Distribution Plan at the Special Meeting of Shareholders, the
Distribution Plan will become effective with respect to the Fund's Investor
Class on or about such date.
The required vote for approval of the Distribution Plan with respect
to the Fund's Investor Class is the lesser of (1) 67% of the shares of the
Fund's Investor Class represented at the Meeting if more than 50% of the
shares of the Fund's Investor Class are represented at the Meeting, or (2)
more than 50% of the outstanding shares of the Fund's Investor Class. If
shareholders of the Fund's Investor Class do not approve the Distribution
Plan, the Shareholder Services Plan will remain in effect with respect to
the Fund's Investor Class.
THE DIRECTORS OF THE COMPANY UNANIMOUSLY RECOMMEND THAT SHAREHOLDERS
OF THE FUND'S INVESTOR CLASS VOTE TO APPROVE THE PROPOSED DISTRIBUTION
PLAN.
<PAGE>
PROPOSAL 2:
TO APPROVE OR DISAPPROVE A PROPOSAL WHICH WOULD AUTHORIZE THE BOARD OF
DIRECTORS TO REPLACE OR APPOINT INVESTMENT SUB-ADVISERS FOR THE FUND
WITHOUT THE NECESSITY OF SEEKING SHAREHOLDER APPROVAL.
Approval of this Proposal would permit the Board of Directors to
replace or appoint investment sub-advisers for the Fund without obtaining
shareholder approval of the Fund's shareholders. This Proposal is being
submitted to the shareholders of the Fund for approval as required by the
terms of an exemptive application to be filed with the Securities and
Exchange Commission (the "SEC") and will not become effective with respect
to the Fund unless and until (1) the SEC has granted the relief requested
in the exemptive application and (2) this Proposal has been approved by a
majority vote of the Fund's shareholders.
If approved, it is anticipated that the implementation of this
Proposal will enable the Company to achieve a higher degree of management
efficiency and will reduce the need for costly and perfunctory shareholder
meetings. If shareholders approve this Proposal, and an SEC order is
obtained, the Board would be able, upon the recommendation of Webster, and
without shareholder approval, to replace an investment sub-adviser and/or
appoint additional sub-advisers to the Fund, and to utilize investment
sub-advisory agreements for the Fund whose terms are different from those
currently used by the Company.
The Investment Management Structure
Webster serves as the investment adviser to the Fund and, as a
registered investment adviser, has engaged the services of a sub-adviser to
manage the day-to-day investment activities of the Fund.
Subject to the general supervision of the Company's Board of Directors
and in accordance with the investment objective, policies and restrictions
of the Fund, Webster has the authority to manage the Fund and to make
decisions with respect to, and place orders for, all purchases and sales of
the Fund's securities. It also provides the Fund with ongoing investment
guidance and policy direction which involves evaluating the performance of
the sub-adviser in light of selected benchmarks and the needs of the Fund,
evaluating potential, additional or replacement sub-advisers, recommending
changes to the Board where appropriate and reporting to the Board and
shareholders on the foregoing matters.
Webster, in turn, has delegated the daily investment decisions to the
Fund's sub-adviser. The Fund is managed by a sub-adviser. Subject to the
general supervision of the Company's Board of Directors and the Adviser and
in accordance with the investment objective, policies and restrictions of
the Fund, the sub-adviser manages the Fund and makes decisions with respect
to, and place orders for, all purchases and sales of the Fund's securities.
SEC Exemptive Relief
Section 15(a) of the 1940 Act requires that all contracts pursuant to
which persons serve as investment advisers to investment companies be
approved by shareholders. As interpreted, this requirement applies to the
appointment of investment sub-advisers to the Fund of the Company for which
Webster currently or in the future acts as an investment adviser. The SEC
has previously granted exemptions from the shareholder approval
requirements for funds that operate within a similar investment management
structure and, therefore, the Company will apply for such an exemption. If
the SEC approves the Company's application and shareholders approve this
Proposal, the Board, without shareholder approval, would be able to appoint
additional or replacement sub-advisers without having to unnecessarily seek
shareholder acquiescence. The Board would not, however, be able to replace
the Adviser without receiving shareholder approval, as required by the 1940
Act and applicable regulations governing mutual fund advisory contracts.
There can be no assurance that the exemptive order will be granted.
Director Considerations
This Proposal is intended to facilitate the efficient operation of the
current investment management structure of the Company, afford the Company
increased management flexibility and allow the Adviser to perform to the
fullest extent the principal functions the Company is paying the Adviser to
perform with respect to the investment sub-adviser - continuously
monitoring the performance of the sub-adviser and, from time to time,
recommending that the Board replace sub-advisers or appoint additional
sub-advisers, depending on the Adviser's assessment of the sub-adviser's
performance and the probability of such investment sub-adviser achieving
the Fund's investment objective. The Board would make the decision as to
whether a sub-adviser should be replaced or additional sub-advisers
appointed without necessitating a shareholder meeting in each instance. In
addition, the Proposal, if approved, would avoid the need to seek
shareholder approval of new investment sub-advisory agreements when an
agreement has been terminated as a result of a change in control of a
sub-adviser. While there is no way of knowing exactly how often the Adviser
may recommend, and the Board approve, the termination and replacement of a
particular sub-adviser, or the selection of an additional sub-adviser, each
of which would typically require a shareholder meeting, industry practice
has shown that the use of sub-advisers results in more frequent shareholder
meetings than would otherwise be the case. Because shareholder meetings
result in substantial costs to shareholders which could reduce the desired
benefits of the investment management structure, the Board believes that
approval of this Proposal would benefit shareholders.
In reaching this conclusion the Directors compared the costs of
shareholder meetings against the benefits of shareholder scrutiny of
proposed contracts with additional or replacement sub-advisers. The
Directors considered in their analysis that, even in the absence of
shareholder approval, any proposal to add or replace a sub-adviser would
receive careful review. First, the Adviser would assess the Fund's needs
and, if it believed additional or replacement sub-advisers could benefit
the Fund, would methodically search the relevant universe of available
investment managers. Second, any recommendations made by the Adviser would
have to be approved by a majority of the Board, including a majority of the
"Independent Directors" of the Company. Finally, any selections of
additional or replacement sub-advisers would have to comply with conditions
in the SEC exemptive order, if it is granted. In seeking the exemptive
order, the Company, among other things, would: (i) agree to disclose its
ability to hire and fire sub-advisers without shareholder approval; (ii)
provide quarterly information to the Board about the Adviser's
profitability and the impact of hiring and firing any such sub-adviser on
profitability; and (iii) furnish information to shareholders within a
certain period of time about any new sub-advisers hired.
Required Shareholder Vote
The required vote for approval of the Proposal with respect to the
Fund is the lesser of (1) 67% of the shares of the Fund represented at the
Meeting if more than 50% of the shares of the Fund are represented at the
Meeting, or (2) more than 50% of the outstanding shares of the Fund. If a
majority of the Fund's shareholders do not approve this Proposal and if the
SEC does not grant the relief requested in the exemptive application then
the current arrangement for replacing and appointing sub-advisers will
remain in place.
<PAGE>
THE DIRECTORS UNANIMOUSLY RECOMMEND THAT THE SHAREHOLDERS OF THE FUND
OF THE COMPANY VOTE FOR THIS PROPOSAL.
ADDITIONAL INFORMATION
Information About the Company
The Company is a diversified, open-end management investment company
incorporated in Maryland on October 3, 1997. The Company is a series type
company with six investment portfolios. The address of the Company is 433
California Street, Suite 1010, San Francisco, California 94104.
Information About the Adviser, Sub-Adviser, Administrator and Distributor
Webster is the investment adviser of the Fund. The Fund's investment
portfolio is managed on a day-to-day basis by the Fund's sub-adviser, under
the general oversight of Webster and the Board of Directors of the Company.
The address of Webster is 433 California Street, Suite 1010, San Francisco,
California 94104. Hoover Capital Management, LLC, 655 Montgomery Street,
Suite 800, San Francisco, California 94111, is the sub-adviser to the Fund.
First Data Investor Services Group, Inc. provides administration
services for the Fund and First Data Distributors Inc. acts as the
principal underwriter of the Company's shares. The address of First Data
Investor Services Group, Inc. and First Data Distributors, Inc. is 4400
Computer Drive, Westborough, Massachusetts 01581.
Shareholders as of the Record Date
As of the Record Date, the following persons owned of record or
beneficially more than five percent of the outstanding shares of the Fund:
- --------------------- ---------------------------- ----------------------------
Name and Address
of Beneficial Amount and Nature of
Fund/Classes Owners Beneficial Ownership Percentage of Shares
- --------------------- ---------------------------- ----------------------------
The Small Capitalization Equity Fund
Investor Class
Institutional Class
[As of June 11, 1999, the officers and Directors of the Company as a
group owned less than 1% of the shares of the Fund.]
Other Matters
One-third or 33.3% of the Fund's Investor Class of shares (Proposal 1)
and the Fund's aggregate shares (Proposal 2) outstanding on the Record
Date, present in person or represented by proxy, constitutes a quorum with
respect to the Fund for the transaction of business at the Meeting. Votes
cast by proxy or in person at the Meeting will be counted by persons
appointed by the Company as tellers for the Meeting. The tellers will count
the total number of votes cast "for" approval of a Proposal for purposes of
determining whether sufficient affirmative votes have been cast. The
tellers will count all shares represented by proxies that reflect
abstentions and "broker non-votes" (i.e., shares held by brokers or
nominees as to which instructions have not been received from the
beneficial owners or the persons entitled to vote) for purposes of
determining the presence of a quorum. Assuming the presence of a quorum for
a Fund, abstentions and broker non-votes have the effect of a negative vote
on a Proposal.
With respect to the Fund's Investor Class of shares and the Fund's
aggregate shares, in the event that a quorum is not present for purposes of
acting on a Proposal, or if sufficient votes in favor of a Proposal are not
received by July 27, 1999, the persons named as proxies may vote on those
matters for which a quorum is present and as to which sufficient votes have
been received and may propose one or more adjournments of the Meeting with
respect to the Fund to permit further solicitation of proxies. Any such
adjournment will require the affirmative vote of a majority of the shares
present in person or represented by proxy at the session of the Meeting to
be adjourned. The persons named as proxies will vote in favor of such
adjournment those proxies which they are entitled to vote in favor of the
Proposal. They will vote against any such adjournment those proxies
required to be voted against the Proposal and will not vote any proxies
that direct them to abstain from voting on such Proposal.
Although the Meeting is called to transact any other business that may
properly come before it, the only business that management intends to
present or knows that others will present are the Proposals mentioned in
the Notice of Special Meeting of Shareholders. However, you are being asked
on the enclosed proxy to authorize the persons named therein to vote in
accordance with their judgment with respect to any additional matters which
properly come before the Meeting, and on all matters incidental to the
conduct of the Meeting.
Shareholder Proposals at Future Meetings
The Fund does not hold annual or other regular meetings of
shsareholders. Shareholder proposals to be presented at any future
meeting of shareholders of the Fund must be received by the Company at
a reasonable time before the Company's solicitation of proxies for
that meeting in order for such proposals to be considered for
inclusion in the proxy materials relating to that meeting.
June 23, 1999
<PAGE>
[x]
PLEASE MARK VOTES
AS IN THIS EXAMPLE
- ------------------------------------------------------------------
FORWARD FUNDS, INC.
- ------------------------------------------------------------------
1. To approve a proposed Distribution Plan
(Investor Class, only):
For Against Abstain
___ ___ ___
2. To approve implementation of a structure for the Company
which would permit the Board of Directors to replace or
appoint investment sub-advisers for the Fund without the
necessity of seeking shareholder approval (Investor Class
and Institutional Class):
For Against Abstain
___ ___ ___
3. To consider and act upon any other matter which may
properly come before the meeting or any adjournment thereof:
For Against Abstain
___ ___ ___
Mark box at right if an address change or
comment has been noted on the reverse side of ___
this card.
RECORD DATE SHARES:
DATE:
SIGNATURE:
<PAGE>
FORWARD FUNDS, INC.
FORWARD FUNDS, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE DIRECTORS
The undersigned hereby appoints Ronald Pelosi, Julie Tedesco and
Jeffrey Steele, and each of them, attorneys and proxies of the
undersigned, with full powers of substitution and revocation, to
represent the undersigned and to vote on behalf of the undersigned all
shares of Forward Funds, Inc. (the "Company") which the undersigned is
entitled to vote at the Special Meeting of Shareholders of the Company
to be held at The Park Hyatt Hotel, 333 Battery Street, San Francisco,
California 94105 on Tuesday, July 27, 1999 at 8:00 a.m., San Francisco
time, and at any adjournments thereof. The undersigned hereby
acknowledges receipt of the Notice of Meeting and Proxy Statement and
hereby instructs said attorneys and proxies to vote said shares as
indicated herein. In their discretion, the proxies are authorized to
vote upon such other business as may properly come before the Special
Meeting.
Any one of the above referenced proxies present and acting at the
Special Meeting in person shall have and may exercise all of the power
and authority of said proxies hereunder. The undersigned hereby
revokes any proxy previously given.
This proxy, if properly executed, will be voted in the manner
directed by the undersigned shareholder. If no direction is made, this
proxy will be voted FOR Proposals 1 and 2 in the discretion of the
proxy holder as to any other matter that may properly come before the
Special Meeting. Please refer to the Proxy Statement for a discussion
of the Proposals.
PLEASE VOTE, DATE, AND SIGN ON OTHER SIDE AND RETURN PROMPTLY IN
THE ENCLOSED ENVELOPE.
Please sign this proxy exactly as your name(s) appear(s) on the
books of Forward Funds, Inc. If joint owners, either may sign.
Trustees and other fiduciaries should indicate the capacity in which
they sign, and where more than one name appears, a majority must sign.
If a corporation, this signature should be that of an authorized
officer who should state his or her title.
HAS YOUR ADDRESS CHANGED?
DO YOU HAVE ANY COMMENTS?
<PAGE>
EXHIBIT A
FORWARD FUNDS, INC.
SERVICE AND DISTRIBUTION PLAN UNDER RULE 12b-1
Forward Funds, Inc. (the "Company") is an open-end management
investment company registered as such under the Investment Company Act
of 1940, as amended (the "Act"). This Plan relates to the shares of
each of the portfolios of the Company identified in Appendix A hereto
(each, a "Portfolio"). Appendix A may be amended from time to time as
provided herein.
Section 1. This Plan authorizes the Company to pay to one or more
persons or entities (which may but need not be affiliated with the
Company or any or its investment advisers or other service providers),
pursuant to agreements executed on behalf of the Company, fees
("Fees") for services rendered and expenses borne in connection with
the provision of shareholder services or distribution services with
respect to the shares of the Company. On an annual basis, the
aggregate amount of Fees with respect to each Portfolio paid under
this Plan shall not exceed 0.25% of the Portfolio's average daily net
assets attributable to its shares.
Section 2. The Fees may be paid by the Company under this Plan
for the purpose of financing or assisting in the financing of any
activity which is primarily intended to result in the sale of shares
of the Company and for servicing accounts of holders of shares. The
scope of the foregoing shall be interpreted by the Board, whose
decision shall be conclusive except to the extent it contravenes
established legal authority. Without in any way limiting the
discretion of the Board, the Fees may be paid for the following:
(a) activities primarily intended to result in the sale of shares
of the Company, including, but not limited to (i) compensation to, and
expenses (including overhead and telephone expenses) of, underwriters,
dealers, brokers, banks and other selling entities (including the
Distributor) and sales and marketing personnel of any of them for
printing of prospectuses and reports for other than existing
shareholders of a Portfolio and the preparation, production and
dissemination of sales, marketing and shareholder servicing materials
information of the Company; and (ii) compensating underwriters,
dealers, brokers, banks and other financial institutions who aid in
the processing of purchase or redemption requests for shares or the
processing of dividend payments with respect to shares, who provide
information periodically to shareholders showing their positions in a
Portfolio's shares, who forward communications from the Company to
shareholders, who render ongoing advice concerning the suitability of
particular investment opportunities offered by the Company in light of
the shareholders' needs, who respond to inquiries from shareholders
relating to such services, or who train personnel in the provision of
services;
(b) administrative services to the shareholders of the Company,
which may include (and are in addition to any such general services
provided to a Portfolio as a whole): (i) transfer agency and
sub-transfer agent services for beneficial owners of shares, (ii)
aggregating and processing purchase and redemption orders of
shareholders, (iii) providing beneficial owners of shares who are not
record owners with statements showing their positions in the
Portfolio, (iv) processing dividend payments for shares held
beneficially, (v) providing sub-accounting services for shares held
beneficially, (vi) forwarding shareholder communications, such as
proxies, shareholder reports, dividend and tax notices, and updating
prospectuses to beneficial owners of shares who are not record owners
and (vii) receiving, tabulating and transmitting proxies executed by
beneficial owners of shares who are not record owners; and
(c) additional personal services to the Company's shareholders
and/or for the maintenance of shareholder accounts and any other
services qualifying for the payment of "service fees" under the rules
of the National Association of Securities Dealers, Inc.
Section 3. This Plan and each related agreement must be approved
by a majority of the Board ("Board Approval") and by a majority of the
Directors who are not interested persons of the Company
("Disinterested Director Approval") and have no direct or indirect
financial interest in the operation of this Plan or any such
agreement, by vote cast in person at a meeting called for the purposes
of voting on such agreement. All determinations or authorizations of
the Board hereunder shall be made by Board Approval and Disinterested
Director Approval. Each agreement relating to the implementation of
this Plan must contain the provisions required by Rule 12b-1 under the
Act.
Section 4. The officers, investment adviser or Distributor of the
Company, as appropriate, shall provide to the Board and the Board
shall review, at least quarterly, a written report of the amounts
expended pursuant to this Plan and the purposes for which such
payments were made.
Section 5. To the extent any activity is covered by Section 2 and
is also an activity which the Company may pay for on behalf of a
Portfolio without regard to the existence or terms and conditions of a
plan of distribution under Rule 12b-1 of the Act, this Plan shall not
be construed to prevent or restrict the Company from paying such
amounts outside of this Plan and without limitation hereby and without
such payments being included in calculation of Payments subject to the
limitation set forth in Section 1.
Section 6. This Plan shall not take effect with respect to any
Portfolio until it has been approved by a vote of at least a majority
of the outstanding voting securities of the Portfolio, unless this
Plan is adopted prior to any public offering of the voting securities
of that Portfolio or the sale of such securities to persons who are
not affiliated persons of that Portfolio, affiliated persons of such
persons, promoters of that Portfolio or affiliated persons of such
promoters. This Plan shall be deemed to have been effectively approved
with respect to any Portfolio if a majority of the outstanding voting
securities of that Portfolio votes for the approval of the Plan.
Section 7. This Plan may not be amended in any material respect
(including any amendment to add a Portfolio to Appendix A) without
Board Approval and Disinterested Director Approval and may not be
amended to increase materially the amount to be spent for distribution
hereunder without such approvals and further approval by a vote of at
least a majority of the outstanding shares of the Company.
Section 8. This Plan may continue in effect for longer than one
year after its approval by the shareholders of the Company only as
long as such continuance is specifically approved at least annually by
Board Approval and by Disinterested Director Approval, cast in person
at a meeting called for the purpose of voting on this Plan.
<PAGE>
Section 9. This Plan may be terminated at any time by a vote of
the Directors who are not interested persons of the Company and have
no direct or indirect financial interest in the operation of the Plan
or any agreement related to the implementation of the Plan, cast in
person at a meeting called for the purposes of voting on such
termination, or by a vote of at least a majority of the outstanding
shares of the Company.
Section 10. While this Plan is in effect, the selection and
nomination of Directors who are not interested persons of the Company
shall be committed to the discretion of the Directors who are not such
interested persons.
Section 11. As used in this Plan, the terms "interested person"
and "related agreement" shall have the meanings ascribed to them in
the Act and the rules adopted by the Securities and Exchange
Commission ("SEC") thereunder and the term "vote of a majority of the
outstanding shares" of the Company shall mean the lesser of the 67% or
the 50% voting requirements specified in clauses (A) and (B),
respectively, of the third sentence of Section 2(a)(42) of the Act,
all subject to such exemptions as may be granted by the SEC.
<PAGE>
APPENDIX A
THE INTERNATIONAL EQUITY FUND
THE U.S. EQUITY FUND
THE GLOBAL BOND FUND
THE GLOBAL ASSET ALLOCATION FUND
THE REAL ESTATE INVESTMENT FUND
THE SMALL CAPITALIZATION EQUITY FUND
<PAGE>
