<PAGE>
FORWARDFUNDS(TM)
----------------
- --------------------------------------------------------------------------------
-------------------
SEMI ANNUAL
REPORT
JUNE 30, 1999
-------------------
<PAGE>
- --------------------------------------------------------------------------------
Table of Contents
Shareholder Letter ............................. 2
Portfolios of Investments ...................... 3
Statement of Assets and Liabilities ............ 40
Statement of Operations ........................ 44
Statements of Changes in Net Assets ............ 46
Financial Highlights ........................... 50
Notes to Financial Statements .................. 54
Forward Funds are distributed by First Data Distributors, Inc. For more complete
information about Forward Funds, including obtaining a prospectus, please visit
our Web site at www.forwardfunds.com or call 1-800-999-6809. Read it carefully
before investing money.
- --------------------------------------------------------------------------------
June 30, 1999
<PAGE>
- --------------------------------------------------------------------------------
Dear Shareholders,
We are pleased to present the semi-annual report for Forward Funds for the
period ending June 30, 1999.
Forward Funds offers investment opportunities in U.S. and international
equities, global bonds, U.S. small-capitalization stocks, real estate
securities and in a global asset allocation fund. We have seclected the
following advisor and sub-advisors to manage our Funds:
The Small Capitalization Equity Fund: Hoover Capital Management, LLC
The International Equity Fund: Templeton Investment Counsel, Inc.
The U.S. Equity Fund: Barclays Global Fund Advisors, Inc.
The Global Bond Fund: Pacific Investment Management Co. (PIMCO)
The Real Estate Investment Fund: Uniplan, Inc.
The Global Asset Allocation Fund: Webster Investment Management Co., LLC
Thank you for your interest in Forward Funds. Our primary objective is to
continue to serve our clients.
Sincerely,
Forward Funds, Inc.
Investment Advisor: Webster Investment Management Company, LLC, San Francisco,
CA
Note: The views expressed in this report reflect those of the Advisor and/or
Sub-Advisors only through the period of this report as stated on the cover.
Their views are subject to change at any time based on market and other
conditions.
- --------------------------------------------------------------------------------
June 30, 1999
<PAGE>
- --------------------------------------------------------------------------------
The Small Capitalization Stock Fund
Portfolio of Investments (Unaudited)
VALUE
SHARES (NOTE 2)
- -------- -----------
COMMON STOCKS - 95.16%
BASIC MATERIALS - 1.25%
49,300 Oregon Steel Mills, Inc. ............................. $ 656,306
-----------
CAPITAL GOODS AND CONSTRUCTION - 14.90%
30,300 Applied Power, Inc. .................................. 827,569
17,500 Elcor Corp. .......................................... 764,531
34,300 Granite Construction, Inc. ........................... 1,005,419
44,600 Justin Industries, Inc. .............................. 621,612
62,900 Mobile Mini, Inc. * .................................. 1,230,481
18,600 NCI Building Systems, Inc. * ......................... 397,575
17,000 SLI, Inc. * .......................................... 459,000
19,100 Tecumseh Products Co., Class A ....................... 1,156,744
27,100 United Stationers, Inc. .............................. 596,200
21,400 Wallace Computer Services, Inc. ...................... 535,000
18,100 White Cap Industries, Inc. * ......................... 213,806
-----------
7,807,937
-----------
CONSUMER CYCLICAL - 24.79%
17,900 American Woodmark Corp. .............................. 630,975
18,800 Anchor Gaming * ...................................... 903,575
24,800 Building Materials Holding Corp. * ................... 285,200
34,700 Callaway Golf Co. .................................... 507,488
30,700 Cost Plus, Inc. * .................................... 1,396,850
36,900 Cunningham Graphics International, Inc. * ............ 613,463
23,700 Ethan Allen Interiors, Inc. * ........................ 894,675
40,700 Finish Line, Inc. * .................................. 457,875
39,200 Gymboree Corp. * ..................................... 411,600
18,100 Hibbett Sporting Goods, Inc. * ....................... 398,200
18,500 Lands' End, Inc. ..................................... 897,250
19,100 McClatchy Co. ........................................ 632,688
29,500 Michaels Stores, Inc. * .............................. 903,438
18,800 Midas, Inc. .......................................... 533,450
14,400 National Presto Industries, Inc. * ................... 550,800
39,600 OfficeMax, Inc. * .................................... 475,200
86,300 Park Place Entertainment Corp. * ..................... 836,031
60,100 Pier 1 Imports, Inc. * ............................... 676,125
25,300 Saucony, Inc., Class B * ............................. 572,412
15,500 Steinway Musical Instruments * ....................... 410,750
-----------
12,988,045
-----------
CONSUMER STAPLES - 16.02%
25,400 Ames Department Stores, Inc. * ....................... 1,158,875
19,000 CEC Entertainment, Inc. * ............................ 802,750
25,000 Foodmaker, Inc. * .................................... 709,375
32,400 Helen of Troy, Ltd. * ................................ 581,175
30,200 International Multifoods Corp. ....................... 681,388
40,800 Luby's, Inc. ......................................... 612,000
22,100 Sonic Corp. * ........................................ 721,012
12,800 Steiner Leisure, Ltd. * .............................. 388,000
69,500 PETCO Animal Supplies, Inc. * ........................ 1,094,625
60,700 Taco Cabana, Class A * ............................... 618,381
9,200 Whole Foods Market, Inc. * ........................... 442,175
16,700 Williams-Sonoma, Inc. * .............................. 581,369
-----------
8,391,125
-----------
ENERGY - 9.14%
29,800 Basin Exploration, Inc. * ............................ $597,862
25,500 Brown (Tom), Inc. * .................................. 396,844
13,800 Forest Oil Corp. * ................................... 173,363
17,200 Marine Drilling Cos., Inc. * ......................... 235,425
58,800 Newpark Resources, Inc. * ............................ 521,850
11,400 Smith International, Inc. ............................ 495,188
13,300 Stone Energy Corp. * ................................. 563,588
37,300 Tuboscope, Inc. * .................................... 510,544
37,900 Varco International, Inc. * .......................... 414,531
24,000 Weatherford International, Inc. * .................... 879,000
-----------
4,788,195
-----------
FINANCE - 9.26%
33,300 CNA Surety Corp. ..................................... 509,906
29,000 Cullen/Frost Bankers, Inc. ........................... 799,312
16,500 Greater Bay Bancorp .................................. 548,625
10,700 Legg Mason, Inc. ..................................... 411,950
16,700 Radian Group, Inc. ................................... 815,169
31,700 Waddell & Reed Financial, Inc., Class A .............. 869,769
24,600 Westamerica Bancorporation ........................... 897,900
-----------
4,852,631
-----------
HEALTH CARE - 4.34%
21,400 Renal Care Group, Inc. * ............................. 553,725
17,500 Schein (Henry), Inc. * ............................... 554,531
13,800 Sunrise Assisted Living, Inc. * ...................... 481,275
57,000 U.S. Oncology, Inc. * ................................ 684,000
-----------
2,273,531
-----------
REAL ESTATE - 1.82%
31,600 Catellus Development Corp. * ......................... $ 489,800
19,500 Webb (Del E.) Corp. .................................. 465,562
-----------
955,362
-----------
TECHNOLOGY - 10.89%
17,200 Autodesk, Inc. * ..................................... 508,475
22,100 Kroll-O'Gara Co. * ................................... 487,581
26,850 Kronos, Inc. * ....................................... 1,221,675
18,200 National Data Corp. .................................. 778,050
48,400 Personnel Group of America, Inc. * ................... 484,000
7,700 Plantronics, Inc. * .................................. 501,462
42,600 Security Dynamics Technology, Inc. * ................. 905,250
21,400 Tech Data Corp. * .................................... 818,550
-----------
5,705,043
-----------
TRANSPORTATION - 2.75%
33,300 ABC-NACO, Inc. * ..................................... 682,650
17,500 Convergys Corp. * .................................... 336,875
16,800 Skywest, Inc. ........................................ 418,950
-----------
1,438,475
-----------
TOTAL COMMON STOCKS .................................. 49,856,650
(Cost $41,560,210) -----------
TOTAL INVESTMENTS - 95.16% ....................................... 49,856,650
(Cost $41,560,210) -----------
NET OTHER ASSETS AND LIABILITIES - 4.84% ......................... 2,535,583
-----------
NET ASSETS - 100.00% ............................................. $52,392,233
===========
- --------------------------
* Non income producing security
- --------------------------------------------------------------------------------
See Notes to Financial Statements June 30, 1999
<PAGE>
The International Equity Fund
Portfolio of Investments (Unaudited)
VALUE
SHARES (NOTE 2)
-------- -----------
COMMON STOCKS - 92.36%
ARGENTINA - 2.07%
42,194 Perez Companc SA, Class B .......................... $ 242,648
7,578 Telefonica de Argentina SA ......................... 237,760
------------
480,408
------------
AUSTRALIA - 8.22%
36,100 Australia & New Zealand Banking Group, Ltd. ........ 265,104
26,230 Broken Hill Proprietary Co., Ltd. .................. 303,438
64,052 Cable & Wireless Optus, Ltd. * ..................... 145,655
152,152 HIH Insurance, Ltd. ................................ 188,085
17,190 Lend Lease Corp., Ltd. ............................. 235,712
57,062 Mayne Nickless, Ltd. ............................... 195,017
21,642 National Australia Bank, Ltd. ...................... 357,661
85,976 Pioneer International, Ltd., ADR ................... 219,100
------------
1,909,772
------------
AUSTRIA - 1.12%
2,880 VA Technologie AG .................................. 260,687
------------
BELGIUM - 0.61%
3,445 Union Miniere SA ................................... 141,982
------------
BERMUDA - 0.84%
3,463 XL Capital, Ltd., Class A .......................... 195,660
------------
BRAZIL - 2.65%
23,241 Banco Bradesco SA, ADR ............................. 116,668
13,115 Centrais Electricas Brasileiras SA (Electrobras), ADR 130,494
10,005 Companhia Vale do Rio Doce, ADR .................... 197,599
2,961 Telecomunicacoes Brasileiras SA (Telebras), ADR .... 185
7,400 Telesp Participacoes SA * .......................... 169,275
------------
614,221
------------
CANADA - 1.70%
33,858 Methanex Corp. * ................................... 128,676
9,257 Newbridge Networks Corp. * ......................... 266,139
------------
394,815
------------
CHILE - 1.51%
6,525 Cia de Telecomunicaciones de Chile SA, ADR ......... 161,494
10,710 Gener SA, ADR ...................................... 190,102
------------
351,596
------------
DENMARK - 1.28%
4,485 Unidanmark A/S, Class A ............................ 298,296
------------
EGYPT - 0.84%
12,759 Commercial International Bank, GDR ................. 115,788
5,673 Suez Cement Co., GDR (B) ........................... 78,908
------------
194,696
------------
FINLAND - 3.82%
23,030 Kemira Oyj ......................................... 139,052
51,055 MeritaNordbanken Oyj ............................... 289,851
15,255 Rauma Oyj .......................................... 180,757
26,012 Stora Enso Oyj, R Shares ........................... 278,735
------------
888,395
------------
FRANCE - 7.85%
12,998 Alcatel SA ......................................... 368,818
2,120 Compagnie Financiere de Paribas .................... 237,438
3,635 Elf Aquitaine SA, ADR .............................. 267,400
6,040 Eramet SLN ......................................... 240,842
5,180 Rhone-Poulenc SA ................................... 236,492
5,790 Scor ............................................... 286,951
2,930 Sylea SA ........................................... 186,570
------------
1,824,511
------------
GERMANY - 5.65%
6,269 BASF AG ............................................ 276,779
3,557 Deutsche Bank AG ................................... 216,782
986 Muenchener Rueckversicherungs-Gesellschaft AG
Register Shares (A) .............................. 182,359
986 Muenchener Rueckversicherungs-Gesellschaft AG New
Registered Shares * .............................. 179,819
4,446 Veba AG, ADR ....................................... 263,425
14,982 Volkswagen AG, ADR ................................. 193,347
------------
1,312,511
------------
HONG KONG - 6.47%
291,000 Axa China Region, Ltd. ............................. 232,542
26,100 Cheung Kong (Holdings), Ltd. ....................... 232,117
141,031 Hong Kong Telecom, Ltd. ............................ 366,274
107,500 Hongkong Electric Holdings, Ltd. ................... 346,390
91,500 SmarTone Telecommunications Holdings, Ltd. ......... 325,497
------------
1,502,820
------------
ISRAEL - 1.40%
6,655 Teva Pharmaceutical Industries, Ltd., ADR .......... 326,095
------------
JAPAN - 8.64%
15,000 Kurita Water Industries, Ltd. ...................... 269,119
121,000 Mitsubishi Paper Mills, Ltd. ....................... 227,094
23,664 Nintendo Co., Ltd. ................................. 411,796
4,833 Nippon Telegraph & Telephone Corp., ADR ............ 302,667
24,000 Nomura Securities Co., Ltd. ........................ 281,174
4,206 Sony Corp., ADR .................................... 464,237
7,000 Yamato Kogyo Co., Ltd. ............................. 50,988
------------
2,007,075
------------
KOREA - 0.41%
2,400 Korea Telecom Corp., ADR * ......................... 96,000
------------
MEXICO - 3.00%
42,625 Alfa SA ............................................ 176,870
175,542 Desc SA de CV ...................................... 191,636
4,072 Telefonos de Mexico SA, ADR, Class L ............... 329,068
------------
697,574
------------
NETHERLANDS - 4.20%
6,856 Akzo Nobel NV, ADR ................................. 290,523
4,641 ING Groep NV ....................................... 251,047
4,402 Koninklijke (Royal) Philips Electronics NV ......... 433,850
------------
975,420
------------
NEW ZEALAND - 1.00%
86,018 Fletcher Challenge Energy .......................... 233,176
------------
NORWAY - 0.54%
7,917 Kvaerner ASA, B Shares ............................. 124,570
------------
PERU - 1.06%
11,093 Credicorp, Ltd. .................................... 122,023
8,239 Telefonica del Peru S.A.A., ADR .................... 124,615
------------
246,638
------------
SOUTH AFRICA - 0.38%
79,083 Illovo Sugar, Ltd. ................................. 87,156
------------
SPAIN - 2.53%
16,007 Iberdrola SA ....................................... 243,599
16,834 Repsol SA .......................................... 343,429
------------
587,028
------------
SWEDEN - 4.33%
8,200 Autoliv, Inc., Swedish Depositary Receipt .......... 250,205
9,474 Mo och Domsjoe AB (MoDo), B Shares ................. 220,994
26,014 Saab AB, B Shares .................................. 202,271
8,526 Volvo AB, A Shares ................................. 246,089
2,958 Volvo AB, B Shares ................................. 85,901
------------
1,005,460
------------
SWITZERLAND - 1.52%
622 Zurich Allied AG ................................... 353,486
------------
THAILAND - 0.82%
51,000 Bangkok Bank Public Co., Ltd. ...................... 190,861
------------
UNITED KINGDOM - 17.90%
7,617 Ace, Ltd. .......................................... 215,180
75,058 Caradon, Plc ....................................... 176,874
52,205 Hogg Robinson, Plc ................................. 186,383
66,566 Inchcape, Plc ...................................... 71,349
40,111 Invensys, Plc ...................................... 189,991
67,433 Laird Group, Plc ................................... 280,609
42,544 Marks & Spencer, Plc ............................... 246,110
29,886 McKechnie, Plc ..................................... 228,708
6,612 National Power, Plc, ADR ........................... 203,319
13,964 National Westminster Bank, Plc ..................... 296,045
26,908 Next, Plc .......................................... 326,798
31,200 Northern Foods, Plc ................................ 64,178
16,539 Peninsular and Oriental Steam Navigation Co. ....... 248,313
124,552 Pilkington, Plc .................................... 170,803
69,084 Safeway, Plc ....................................... 276,862
5,994 Shell Transport & Trading Co., ADR ................. 277,972
68,294 Storehouse, Plc .................................... 146,940
38,703 Tate & Lyle, Plc ................................... 242,650
73,755 The Weir Group, Plc ................................ 309,242
------------
4,158,326
------------
TOTAL COMMON STOCKS ................................ 21,459,235
(Cost $23,160,282) ------------
PREFERRED STOCK - 1.15%
BRAZIL - 1.15%
2,980 Telecomunicacoes Brasileiras SA (Telebras), ADR * .. 268,759
------------
TOTAL PREFERRED STOCK .............................. 268,759
------------
(Cost $380,703)
WARRANT - 0.01%
GERMANY - 0.01%
43 Muenchener Rueckversicherungs-Gesellschaft AG ...... 1,285
------------
TOTAL WARRANT ...................................... 1,285
------------
(Cost $724)
U.S. GOVERNMENT OBLIGATIONS - 4.24%
1,000,000 U.S. Treasury Bill 4.46%, 10/28/99 .................. 984,960
------------
TOTAL U.S. GOVERNMENT OBLIGATIONS .................. 984,960
------------
(Cost $984,464)
TIME DEPOSIT - 0.92%
213,000 Chase Manhattan Bank Time Deposit 5.00%, 07/01/99 .. 213,000
------------
TOTAL TIME DEPOSITS ................................ 213,000
------------
(Cost $213,000)
TOTAL INVESTMENTS - 98.68% ..................................... 22,927,239
(Cost $24,739,173) ------------
NET OTHER ASSETS AND LIABILITIES - 1.32% ....................... 307,684
------------
NET ASSETS - 100.00% ........................................... $ 23,234,923
============
- --------------------------
* Non income producing security
(A) Ownership may only be transferred at the permission of the issuer.
(B) Security exempt from registration pursuant to Rule 144A under the
Securities Act of 1933, as amended. This security may be resold, in
transactions exempt from registration, to qualified institutional buyers.
At June 30, 1999, this security amounted to $78,908, or 0.34% of net
assets.
ADR American Depositary Receipt
GDR Global Depositary Receipt
- --------------------------------------------------------------------------------
June 30, 1999 See Notes to Financial Statements
<PAGE>
The International Equity Fund
Portfolio of Investments (Unaudited)
At June 30, 1999 sector diversificaion was as follows:
% of the
Sector Diversification Portfolio Value
- ---------------------- --------- -----------
Finance .......................................... 23.3% $ 5,341,934
Services ......................................... 18.8 4,300,043
Materials ........................................ 16.2 3,721,580
Consumer Goods ................................... 14.6 3,355,706
Energy ........................................... 10.6 2,421,358
Capital Equipment ................................ 7.0 1,613,659
Short-Term & Other Investments ................... 5.2 1,197,959
Multi-Industry ................................... 4.3 975,000
---- -----------
TOTAL INVESTMENTS ................................ 100.0% $22,927,239
===== ===========
- --------------------------------------------------------------------------------
See Notes to Financial Statements June 30, 1999
<PAGE>
- --------------------------------------------------------------------------------
The U.S. Equity Fund
Portfolio of Investments (Unaudited)
VALUE
SHARES (NOTE 2)
- -------- -----------
U.S. COMMON STOCKS - 99.29%
AEROSPACE / AIRLINES - 1.21%
100 AMR Corp. * .......................................... $ 6,825
1,000 Amtran, Inc. * ....................................... 24,625
2,800 Delta Air Lines, Inc. ................................ 161,350
200 Goodrich (B.F.) Co. .................................. 8,500
200 Gulfstream Aerospace Corp. * ......................... 13,513
5,300 Lockheed Martin Corp. ................................ 197,425
700 Nichols Research Corp. * ............................. 15,312
400 Raytheon Co., Class B ................................ 28,150
-----------
455,700
-----------
AGRICULTURE - 0.48%
10,200 IMC Global, Inc. ..................................... 179,775
-----------
AUTO REPAIR / AUTO PARTS - 1.22%
200 Arvin Industries, Inc. ............................... 7,575
1,398 Delphi Automotive Systems Corp. ...................... 25,947
1,900 Eaton Corp. .......................................... 174,800
1,400 Standard Products Co. ................................ 35,875
3,900 TRW, Inc. ............................................ 214,013
-----------
458,210
-----------
BASIC MATERIALS - 1.69%
1,100 ACX Technologies, Inc. * ............................. 17,875
600 Alcoa, Inc. .......................................... 37,125
800 Caraustar Industries, Inc. ........................... 19,750
300 Commercial Metals Co. ................................ 8,550
2,400 Minnesota Mining and Manufacturing Co. ............... 208,650
300 Newmont Mining Corp. ................................. 5,962
800 Quanex Corp. ......................................... 22,800
750 Shorewood Packaging Corp. ............................ 13,828
5,900 Timken Co. ........................................... 115,050
3,900 Vulcan Materials Co. ................................. 188,175
-----------
637,765
-----------
BUSINESS SERVICES - 2.70%
4,000 America Online, Inc. * ............................... 442,000
1,700 Cadence Design Systems, Inc. * ....................... 21,675
7,300 Cendant Corp. * ...................................... 149,650
2,000 Donnelley (R.R.) & Sons Co. .......................... 74,125
2,000 Electronic Data Systems Corp. ........................ 113,125
2,200 FirstMerit Corp. ..................................... 61,737
4,400 Newpark Resources, Inc. * ............................ 39,050
900 Pride International, Inc. * .......................... 9,506
800 Safety-Kleen Corp. * ................................. 14,500
900 Sterling Software, Inc. * ............................ 24,019
1,200 SunGard Data Systems, Inc. * ......................... 41,400
100 Superior Services, Inc. * ............................ 2,669
1,000 United Stationers, Inc. * ............................ 22,000
-----------
1,015,456
-----------
CHEMICALS AND DRUGS - 8.39%
4,000 Abbott Laboratories .................................. 182,000
2,000 Albemarle Corp. ...................................... 46,250
4,000 American Home Products Corp. ......................... 230,000
500 Bausch & Lomb, Inc. .................................. 38,250
1,200 Becton, Dickinson and Co. ............................ 36,000
8,200 Bristol-Myers Squibb Co. ............................. 577,588
900 Cambrex Corp. ........................................ 23,625
1,200 duPont (E.I.) deNemours & Co. ........................ 81,975
5,500 Ferro Corp. .......................................... 151,250
100 FMC Corp. * .......................................... 6,831
2,800 Grace (W.R.) & Co. * ................................. 51,450
2,100 Great Lakes Chemical Corp. ........................... 96,731
5,300 Mallinckrodt, Inc. ................................... 192,787
8,800 Merck & Co., Inc. .................................... 651,200
400 Owens & Minor, Inc. .................................. 4,400
1,000 Pharmacia & Upjohn, Inc. ............................. 56,813
8,300 Philip Morris Cos., Inc. ............................. 333,556
7,400 Schering-Plough Corp. ................................ 392,200
400 Solutia, Inc. ........................................ 8,525
-----------
3,161,431
-----------
CONSTRUCTION - 0.36%
900 Centex Construction Products, Inc. ................... 30,712
500 Lennar Corp. ......................................... 12,000
1,240 NVR, Inc. * .......................................... 64,713
500 USG Corp. ............................................ 28,000
-----------
135,425
-----------
CONSUMER CYCLICAL - 7.09%
2,300 ADVO, Inc. * ......................................... 47,725
3,900 Best Buy Co., Inc. * ................................. 263,250
400 Brunswick Corp. ...................................... 11,150
6,900 Coca-Cola Co. ........................................ 431,250
1,600 Darden Restaurants, Inc. ............................. 34,900
900 Dole Food Co., Inc. .................................. 26,438
2,500 Earthgrains Co. ...................................... 64,531
3,500 Ford Motor Co. ....................................... 197,531
2,000 General Motors Corp. ................................. 132,000
600 Hannaford Brothers Co. ............................... 32,100
800 Herbalife International, Inc., Class A ............... 8,750
1,400 Hormel Foods Corp. ................................... 56,350
2,000 Interstate Bakeries Corp. ............................ 44,875
2,000 McDonald's Corp. ..................................... 82,625
5,600 Nabisco Group Holdings Corp. ......................... 109,550
800 NPC International, Inc. * ............................ 12,300
2,100 PepsiCo, Inc. ........................................ 81,244
5,900 Procter & Gamble Co. ................................. 526,575
1,867 R.J. Reynolds Tobacco Holdings, Inc. * ............... 58,800
4,200 Ryan Family Steak Houses, Inc. * ..................... 48,825
300 Sanderson Farms, Inc. ................................ 4,275
8,400 Sara Lee Corp. ....................................... 190,575
4,200 SUPERVALU, INC. ...................................... 107,888
100 Suiza Foods Corp. * .................................. 4,188
1,700 Tricon Global Restaurants, Inc. * .................... 92,012
-----------
2,669,707
-----------
CONSUMER PRODUCTS - 2.27%
2,500 Anheuser-Busch Cos., Inc. ............................ 177,344
2,800 CDI Corp. * .......................................... 95,375
2,600 Chattem, Inc. ........................................ 82,712
11,800 Chiquita Brands International, Inc. .................. 106,200
500 Colgate-Palmolive Co. ................................ 49,375
2,500 Dal-Tile International, Inc. * ....................... 28,438
400 Fort James Corp. ..................................... 15,150
500 Georgia-Pacific Group ................................ 23,688
4,500 Kimberly-Clark Corp. ................................. 256,500
600 Polaroid Corp. ....................................... 16,575
300 Trans World Entertainment Corp. * .................... 3,375
-----------
854,732
-----------
DURABLE GOODS - 0.74%
1,100 Caterpillar, Inc. .................................... 66,000
300 Corning, Inc. ........................................ 21,037
2,500 Maytag Corp. ......................................... 174,219
1,200 Oakwood Homes Corp. .................................. 15,750
-----------
277,006
-----------
ELECTRONICS - 1.27%
600 Avnet, Inc. .......................................... 27,900
300 Credence Systems Corp. * ............................. 11,137
300 Dallas Semiconductor Corp. ........................... 15,150
6,300 Integrated Device Technology, Inc. * ................. 68,512
800 National Semiconductor Corp. * ....................... 20,250
900 Pioneer-Standard Electronics, Inc. ................... 10,800
700 Read-Rite Corp. * .................................... 4,342
1,700 Technitrol, Inc. ..................................... 54,825
3,900 Tektronix, Inc. ...................................... 117,731
3,500 UCAR International, Inc. * ........................... 88,375
2,750 Vishay Intertechnology, Inc. * ....................... 57,750
-----------
476,772
-----------
ENERGY - 4.81%
1,200 Chevron Corp. ........................................ 114,225
1,900 ENSCO International, Inc. ............................ 37,881
8,800 Exxon Corp. .......................................... 678,700
500 Global Industries, Ltd. * ............................ 6,406
300 Global Marine, Inc. * ................................ 4,631
300 Kerr-McGee Corp. ..................................... 15,056
4,100 Mobil Corp. .......................................... 405,900
2,500 Nabors Industries, Inc. * ............................ 61,094
1,200 Noble Affiliates, Inc. ............................... 33,825
500 Phillips Petroleum Co. ............................... 25,156
5,000 Sunoco, Inc. ......................................... 150,938
500 Texaco, Inc. ......................................... 31,250
1,100 Tidewater, Inc. ...................................... 33,550
2,700 Tosco Corp. .......................................... 70,031
6,600 Ultramar Diamond Shamrock Corp. ...................... 143,962
-----------
1,812,605
-----------
FINANCE - 16.33%
200 Alfa Corp. ........................................... 4,000
800 Allstate Corp. ....................................... 28,700
200 Ambac Financial Group, Inc. .......................... 11,425
1,200 American Express Co. ................................. 156,150
800 American Financial Group, Inc. ....................... 27,250
3,100 American General Corp. ............................... 233,663
5,200 American International Group, Inc. ................... 608,725
2,000 AMRESCO, INC. * ...................................... 12,875
200 Arthur J. Gallagher & Co. ............................ 9,900
6,096 Bank One Corp. ....................................... 363,093
7,860 BankAmerica Corp. .................................... 576,236
500 BankWest Corp. ....................................... 18,563
1,800 Capital One Financial Corp. .......................... 100,238
630 Charter One Financial, Inc. .......................... 17,522
4,900 Chase Manhattan Corp. ................................ 424,463
1,500 CIGNA Corp. .......................................... 133,500
11,925 Citigroup, Inc. ...................................... 566,437
4,641 Conseco, Inc. ........................................ 141,260
800 ContiFinancial Corp. * ............................... 2,850
600 Equifax, Inc. ........................................ 21,413
600 E*TRADE Group, Inc. * ................................ 23,963
1,200 EVEREN Capital Corp. ................................. 35,775
2,900 Fannie Mae ........................................... 198,287
600 Firstar Corp. ........................................ 16,800
6,100 First Union Corp. .................................... 286,700
2,400 Fleet Financial Group, Inc. .......................... 106,500
100 Franklin Resources, Inc. ............................. 4,063
600 Hartford Financial Services Group, Inc. .............. 34,987
3,800 Long Beach Financial Corp. * ......................... 55,813
1,500 Marsh & McLennan Cos., Inc. .......................... 113,250
1,000 Merrill Lynch & Co., Inc. ............................ 79,937
3,600 Morgan Stanley Dean Witter & Co. ..................... 369,000
3,400 National City Corp. .................................. 222,700
709 Old Kent Financial Corp. ............................. 29,679
3,150 Old Republic International Corp. ..................... 54,534
200 One Valley Bancorp, Inc. ............................. 7,500
4,000 PNC Bank Corp. ....................................... 230,500
1,200 Resource Bancshares Mortgage Group, Inc. ............. 12,300
100 Schwab (Charles) Corp. ............................... 10,988
1,300 SEI Investments Co. .................................. 114,725
900 SLM Holding Corp. .................................... 41,231
600 SouthTrust Corp. ..................................... 23,025
3,500 Sovereign Bancorp, Inc. .............................. 42,438
4,200 St. Paul Cos., Inc. .................................. 133,612
1,100 The PMI Group, Inc. .................................. 69,094
800 Trustmark Corp. ...................................... 18,300
800 United Bankshares, Inc. .............................. 21,200
4,000 U.S. Bancorp ......................................... 136,000
3,450 Washington Mutual, Inc. .............................. 122,044
1,800 Wells Fargo Co. ...................................... 76,950
-----------
6,150,158
-----------
HEALTH CARE - 3.97%
4,100 Amgen, Inc. * ........................................ 249,588
4,100 Apria Healthcare Group, Inc. * ....................... 69,700
300 HCR Manor Care, Inc. * ............................... 7,256
1,700 HEALTHSOUTH Corp. * .................................. 25,394
4,200 Invacare Corp. ....................................... 112,350
3,900 Johnson & Johnson .................................... 382,200
1,200 Lilly (Eli) and Co. .................................. 85,950
500 Magellan Health Services, Inc. * ..................... 5,000
2,000 Pediatrix Medical Group, Inc. * ...................... 42,500
2,300 Pfizer, Inc. ......................................... 252,425
2,400 Quest Diagnostics, Inc. * ............................ 65,700
600 Tenet Healthcare Corp. * ............................. 11,138
1,000 United Healthcare Corp. .............................. 62,625
400 UNUM Corp. ........................................... 21,900
1,500 Warner-Lambert Co. ................................... 104,062
-----------
1,497,788
-----------
LEISURE AND ENTERTAINMENT - 2.69%
1,300 Anchor Gaming * ...................................... 62,481
12,500 Arctic Cat, Inc. ..................................... 111,719
1,000 Ascent Entertainment Group, Inc. * ................... 14,125
9,072 Disney (Walt) Co. .................................... 279,531
4,900 GTECH Holdings Corp. * ............................... 115,456
4,200 MediaOne Group, Inc. * ............................... 312,375
1,200 Metro-Goldwyn-Mayer, Inc. * .......................... 21,900
800 Powerhouse Technologies, Inc. * ...................... 15,600
800 TCA Cable TV, Inc. ................................... 44,400
1,600 Trendwest Resorts, Inc. * ............................ 35,700
-----------
1,013,287
-----------
MANUFACTURING - 0.81%
700 Applied Materials, Inc. * ............................ 51,713
800 Gerber Scientific, Inc. .............................. 17,650
1,300 Harsco Corp. ......................................... 41,600
500 Honeywell, Inc. ...................................... 57,938
1,100 Olin Corp. ........................................... 14,506
100 PPG Industries, Inc. ................................. 5,906
3,500 Trinity Industries, Inc. ............................. 117,250
-----------
306,563
-----------
MEDIA - 0.49%
300 Gannet, Inc. ......................................... 21,412
200 Tribune Co. .......................................... 17,425
500 True North Communications, Inc. ...................... 15,000
2,000 Univision Communications, Inc. * ..................... 132,000
-----------
185,837
-----------
MEDICAL PRODUCTS - 0.57%
249 Cardinal Health, Inc. ................................ 15,967
600 Haemonetics Corp. * .................................. 12,038
5,800 ICN Pharmaceuticals, Inc. ............................ 186,687
-----------
214,692
-----------
PRINTING AND PUBLISHING - 1.48%
200 Banta Corp. .......................................... 4,200
3,300 Deluxe Corp. ......................................... 128,494
2,100 Dow Jones & Co., Inc. ................................ 111,431
1,075 Dun & Bradstreet Corp. ............................... 38,095
1,200 Houghton Mifflin Co. ................................. 56,475
3,000 Time Warner, Inc. .................................... 220,500
-----------
559,195
-----------
REAL ESTATE - 0.12%
2,500 Fairfield Communities, Inc. * ........................ 40,312
400 Taubman Centers, Inc. ................................ 5,275
-----------
45,587
-----------
REAL ESTATE INVESTMENT TRUST - 0.99%
400 Apartment Investment & Management Co. ................ 17,100
200 Avalonbay Communities, Inc. .......................... 7,400
200 CarrAmerica Realty Corp. ............................. 5,000
1,733 Equity Residential Properties Trust .................. 78,093
3,152 Host Marriott Corp. .................................. 37,430
800 Mack-Cali Realty Corp. ............................... 24,750
6,600 Public Storage, Inc. ................................. 184,800
550 Starwood Hotels & Resorts Worldwide, Inc. ............ 16,809
-----------
371,382
-----------
RETAIL - 5.18%
200 Abercrombie & Fitch Co., Class A * ................... 9,600
378 Albertson's, Inc. .................................... 19,491
3,300 Federated Department Stores, Inc. * .................. 174,694
2,200 Footstar, Inc. * ..................................... 81,812
1,100 Fruit of the Loom, Inc. * ............................ 10,725
3,000 Gap, Inc. (The) ...................................... 151,125
1,300 Great Atlantic & Pacific Tea Company, Inc. ........... 43,956
7,100 Heilig-Meyers Co. .................................... 48,369
5,900 Hollywood Entertainment Corp. * ...................... 115,419
1,400 Home Depot, Inc. ..................................... 90,213
3,600 Kroger Co. ........................................... 100,575
4,000 May Department Stores Co. ............................ 163,500
2,200 Musicland Stores Corp. * ............................. 19,525
1,900 PETCO Animal Supplies, Inc. * ........................ 29,925
1,000 Rite Aid Corp. ....................................... 24,625
400 Ross Stores, Inc. .................................... 20,150
500 Russell Corp. ........................................ 9,750
5,800 Sunglass Hut International, Inc. * ................... 99,687
3,000 Tandy Corp. .......................................... 146,625
600 TJX Cos., Inc. ....................................... 19,988
2,300 Toys "R" Us, Inc. * .................................. 47,581
10,900 Wal-Mart Stores, Inc. ................................ 525,925
-----------
1,953,260
-----------
TECHNOLOGY - 19.00%
800 Amazon.com, Inc. * ................................... 100,100
1,000 American Management Systems, Inc. * .................. 32,063
2,400 Apple Computer, Inc. ................................. 111,150
1,800 Autodesk, Inc. ....................................... 53,212
1,600 Avant! Corp. * ....................................... 20,200
2,500 BancTec, Inc. * ...................................... 44,844
900 BMC Software, Inc. * ................................. 48,600
300 CMGI, Inc. * ......................................... 34,219
200 CNET, Inc. * ......................................... 11,525
6,606 Compaq Computer Corp. ................................ 156,480
4,800 Computer Associates International, Inc. .............. 264,000
3,700 Computer Task Group, Inc. ............................ 62,900
600 Compuware Corp. * .................................... 19,087
1,500 Data Transmission Network Corp. * .................... 42,188
10,400 Dell Computer Corp. * ................................ 384,800
1,000 Gateway 2000, Inc. * ................................. 59,000
11,600 General Electric Corp. ............................... 1,310,800
200 Go2Net, Inc. * ....................................... 18,375
900 Harris Corp. ......................................... 35,269
2,800 Hewlett-Packard Co. .................................. 281,400
12,200 Intel Corp. .......................................... 725,900
5,800 International Business Machines Corp. ................ 749,650
800 Lexmark International Group, Inc., Class A * ......... 52,850
1,200 Mentor Graphics Corp. * .............................. 15,375
2,200 Metromedia Fiber Network, Inc. * ..................... 79,063
900 Micron Technology, Inc. .............................. 36,281
10,000 Microsoft Corp. * .................................... 901,875
200 MindSpring Enterprises, Inc. * ....................... 8,862
4,800 Oracle Corp. * ....................................... 178,200
400 Parametric Technology Corp. * ........................ 5,550
6,100 Seagate Technology, Inc. * ........................... 156,312
2,000 Structural Dynamics Research Corp. * ................. 37,125
4,400 Sun Microsystems, Inc. * ............................. 303,050
2,100 Symantec Corp. * ..................................... 53,550
1,000 Tellabs, Inc. * ...................................... 67,563
2,500 Texas Instruments, Inc. .............................. 362,500
2,700 Unisys Corp. * ....................................... 105,131
2,000 United Technologies Corp. ............................ 143,375
500 Yahoo!, Inc. * ....................................... 86,125
-----------
7,158,549
-----------
TELECOMMUNICATIONS - 8.68%
300 Adaptive Broadband Corp. * ........................... 6,562
2,000 Aliant Communications, Inc. .......................... 92,375
1,300 Allen Telecom, Inc. .................................. 13,975
9,578 AT&T Corp. ........................................... 534,574
1,710 AT&T Corp. - Liberty Media Group * ................... 62,865
6,800 BellSouth Corp. ...................................... 318,750
1,300 Century Communications Corp. * ....................... 59,800
7,800 Cisco Systems, Inc. * ................................ 503,100
4,000 Digital Microwave Corp. * ............................ 51,000
4,100 GTE Corp. ............................................ 310,575
1,000 Level 3 Communications, Inc. * ....................... 60,063
8,854 Lucent Technologies, Inc. ............................ 597,075
600 NTL, Inc. * .......................................... 51,712
4,364 Qwest Communications International, Inc. * ........... 144,285
3,027 SBC Communications, Inc. ............................. 175,566
400 SkyTel Communications, Inc. * ........................ 8,375
300 Transaction Network Services, Inc. * ................. 8,775
4,600 US WEST, Inc. ........................................ 270,250
-----------
3,269,677
-----------
TRANSPORTATION - 0.93%
400 Airborne Freight Corp. ............................... 11,075
5,500 Burlington Northern Santa Fe Corp. ................... 170,500
4,100 Ryder System, Inc. ................................... 106,600
600 Swift Transportation Co., Inc. * ..................... 13,200
800 US Freightways Corp. ................................. 37,050
700 Yellow Corp. * ....................................... 12,425
-----------
350,850
-----------
UTILITIES - 5.82%
1,400 Allegheny Energy, Inc. ............................... 44,887
400 Allied Waste Industries, Inc. * ...................... 7,900
3,300 Ameritech Corp. ...................................... 242,550
7,800 Bell Atlantic Corp. .................................. 509,925
7,200 Edison International ................................. 192,600
1,600 Florida Progress Corp. ............................... 66,100
3,500 FPL Group, Inc. ...................................... 191,188
3,900 MCI WorldCom, Inc. ................................... 335,644
3,200 NICOR, Inc. .......................................... 121,800
1,100 PG&E Corp. ........................................... 35,750
3,200 Pinnacle West Capital Corp. .......................... 128,800
4,400 Public Service Enterprise Group, Inc. ................ 179,850
300 Reliant Energy, Inc. ................................. 8,288
4,800 Rochester Gas and Electric Corp. ..................... 127,500
-----------
2,192,782
-----------
TOTAL U.S. COMMON STOCKS ............................. 37,404,191
-----------
(Cost $30,937,719)
TOTAL INVESTMENTS - 99.29% ....................................... 37,404,191
(Cost $30,937,719) -----------
NET OTHER ASSETS AND LIABILITIES - 0.71% ......................... 267,843
-----------
NET ASSETS - 100.00% ............................................. $37,672,034
===========
- --------------------------
* Non income producing security
- --------------------------------------------------------------------------------
See Notes to Financial Statements June 30, 1999
<PAGE>
- --------------------------------------------------------------------------------
The Global Bond Fund
Portfolio of Investments (Unaudited)
VALUE
PAR VALUE (NOTE 2)
- --------------- -----------
U.S. GOVERNMENT AND AGENCY OBLIGATIONS - 38.62% (17.62%(1))
FEDERAL HOME LOAN BANK - 1.43% (0.65%(1))
USD 440,000 5.95%, 03/16/09, Series DX09 .................... $ 423,034
-----------
FEDERAL HOME LOAN MORTGAGE
CORP. - 1.68% (0.77%(1))
USD 300,000 4.81%, 07/14/99 ................................. 299,479
USD 200,000 4.83%, 07/16/99 ................................. 199,597
-----------
499,076
-----------
FEDERAL NATIONAL MORTGAGE
ASSOCIATION - 3.60% (1.64%(1))
GBP 190,000 6.88%, 06/07/02, EMTN ........................... 307,279
NZD 980,000 7.25%, 06/20/02 ................................. 530,798
AUD 200,000 6.50%, 07/10/02, EMTN ........................... 134,079
USD 93,625 6.81%, 10/01/27, ARM, Pool #403715 .............. 94,854
-----------
1,067,010
-----------
GOVERNMENT NATIONAL MORTGAGE
ASSOCIATION - 1.92% (0.88%(1))
USD 362,499 6.63%, 08/20/23, Pool # 008269 .................. 370,169
USD 28,205 6.13%, 12/20/25, Pool # 008770 .................. 28,628
USD 34,831 6.63%, 09/20/26, Pool # 008971 .................. 35,530
USD 48,338 6.13%, 11/20/26, Pool # 080010 .................. 49,114
USD 84,660 6.13%, 12/20/26, Pool # 080022 .................. 86,012
-----------
569,453
-----------
U.S. TREASURY NOTES - 29.99% (13.68%(1))
USD 6,135,703 3.63%, 07/15/02 (A) ............................. 6,078,181
USD 1,020,000 4.75%, 02/15/04 ................................. 980,475
USD 300,000 7.50%, 02/15/05 ................................. 323,156
USD 1,320,000 6.13%, 08/15/07 ................................. 1,334,850
USD 170,000 5.50%, 05/15/09 ................................. 166,069
-----------
8,882,731
-----------
TOTAL U.S. GOVERNMENT AND
AGENCY OBLIGATIONS .............................. 11,441,304
(Cost $11,422,792) -----------
FOREIGN GOVERNMENT BONDS - 62.17% (28.36%(1))
ARGENTINA - 2.54% (1.16%(1))
Republic of Argentina (F)
ARS 753,298 2.88%, 04/01/01 ................................. 682,477
ARS 108,247 2.88%, 04/01/07 ................................. 70,709
-----------
753,186
-----------
CANADA - 5.46% (2.49%(1))
Canadian Government Bond
CAD 330,000 5.25%, 09/01/03 ................................. 223,005
CAD 550,000 6.50%, 06/01/04 ................................. 390,237
NZD 1,010,000 6.63%, 10/03/07 ................................. 520,387
CAD 690,000 6.00%, 06/01/08, Series WH31 .................... 485,645
-----------
1,619,274
-----------
DENMARK - 1.68% (0.77%(1))
Kingdom of Denmark
DKK 2,200,000 6.00%, 11/15/02 ................................. 324,071
DKK 800,000 7.00%, 11/15/07 ................................. 127,848
DKK 300,000 6.00%, 11/15/09 ................................. 45,060
-----------
496,979
-----------
FRANCE - 0.74% (0.34%(1))
Government of France, OAT (B)
EUR 105,399 3.00%, 07/25/09 ................................. 109,841
EUR 103,957 3.00%, 07/25/09 ................................. 108,338
-----------
218,179
-----------
GERMANY - 4.18% (1.90%(1))
Bundesrepublik Deutschland
EUR 580,000 5.25%, 01/04/08, Series 98 ...................... 627,901
EUR 610,000 4.13%, 07/04/08, Series 98 ...................... 608,967
-----------
1,236,868
-----------
ITALY - 3.55% (1.62%(1))
Buoni Poliennali del Tesoro
EUR 80,000 7.25%, 11/01/26 ................................. 101,444
EUR 820,000 6.50%, 11/01/27 ................................. 950,025
-----------
1,051,469
-----------
JAPAN - 12.97% (5.91%(1))
Japan (10 Year Issue)
JPY 71,000,000 4.10%, 12/22/03, Series 164 ..................... 665,093
JPY 67,300,000 4.50%, 12/20/04, Series 175 ..................... 651,744
JPY 28,800,000 4.00%, 06/20/05, Series 179 ..................... 274,125
JPY 28,800,000 3.40%, 06/20/05, Series 181 ..................... 265,989
JPY 72,000,000 3.30%, 06/20/06, Series 187 ..................... 668,210
JPY 108,100,000 0.90%, 12/22/08, Series 207 ..................... 827,798
JPY 58,000,000 2.00%, 03/20/09, Series 209 ..................... 489,483
-----------
3,842,442
-----------
MEXICO - 1.92% (0.87%(1))
United Mexican States
GBP 150,000 8.75%, 05/30/02, EMTN ........................... 236,201
USD 180,000 6.52%, 06/27/02 (C) (D) (F)...................... 173,250
USD 100,000 9.06%, 04/07/04 (C) (D) (F)...................... 100,250
EUR 100,000 10.38%, 01/29/03 ................................ 57,949
-----------
567,650
-----------
MIDDLE EAST - 0.32% (0.15%(1))
QA 100,000 State of Qatar (C) (D) (F)
6.20%, 02/18/04 ................................. 95,125
-----------
NEW ZEALAND - 5.55% (2.54%(1))
New Zealand Government Bond
NZD 2,720,000 10.00%, 03/15/02, Series 302 .................... 1,593,492
NZD 100,000 4.50%, 02/15/16, Series 216 (B) ................. 53,774
-----------
1,647,266
-----------
NORWAY - 2.53% (1.15%(1))
NOR 5,960,000 Norwegian Government Bond
5.50%, 05/15/09 ................................. 748,403
-----------
PHILIPPINES - 0.55% (0.25%(1))
EUR 150,000 Republic of Philippines
8.00%, 09/17/04 ................................. 164,027
-----------
SINGAPORE - 1.40% (0.64%(1))
SGD 700,000 Singapore Government
4.38%, 10/15/05 ................................. 413,707
-----------
SPAIN - 4.12% (1.88%(1))
Bonos y Oblig del Estado
EUR 4,000 6.00%, 01/31/08 ................................. 4,496
EUR 1,010,000 5.15%, 07/30/09 ................................. 1,065,421
EUR 138,002 6.00%, 01/31/29 ................................. 151,837
-----------
1,221,754
-----------
SWEDEN - 4.32% (1.97%(1))
Swedish Government Bond
SEK 300,000 5.50%, 04/12/02, Series 1039 .................... 36,554
SEK 7,300,000 6.50%, 05/05/08, Series 1040 .................... 950,625
SEK 1,900,000 9.00%, 04/20/09, Series 1034 .................... 291,530
-----------
1,278,709
-----------
UNITED KINGDOM - 10.34% (4.72%(1))
United Kingdom Treasury Bond
GBP 600,000 7.00%, 06/07/02 ................................. 985,472
GBP 1,210,000 8.00%, 06/10/03 ................................. 2,076,437
-----------
3,061,909
-----------
TOTAL FOREIGN BONDS ............................. 18,416,949
-----------
(Cost $18,693,273)
ASSET-BACKED AND MORTGAGE-BACKED
SECURITIES - 20.40% (9.31%(1))
GERMANY - 0.54% (0.25%(1))
USD 160,000 Daimler-Benz Vehicle Trust, ABS
Series 1998-A, Class A2
5.23%, 12/20/01 ................................. 160,038
-----------
JAPAN - 0.71% (0.33%(1))
USD 95,937 Nissan Auto Receivables Grantor Trust, ABS
Series 1998-A, Class A
5.45%, 04/15/04 ................................. 95,759
USD 9,000,000 SHL (D)
Series 1999-1, Class A1
0.54%, 12/25/24 ................................. 74,434
USD 5,000,000 SHL (D)
Series 1999-1, Class A2
0.79%, 12/25/24 ................................. 41,352
-----------
211,545
-----------
UNITED STATES - 19.15% (8.73%(1))
USD 700,000 ARG Funding Corp., ABS (C) (F)
Series 1999-1A, Class A1
5.28%, 05/20/03 ................................. 699,781
USD 35,798 Banc One Auto Grantor Trust, ABS
Series 1997-A, Class A
6.27%, 11/20/03 ................................. 36,054
USD 22,935 Chase Manhattan Grantor Trust, ABS
Series 1996-B, Class A
6.61%, 09/15/02 ................................. 23,123
USD 180,000 Chase Mortgage Finance Corp., CMO
Series 1998-S4, Class A3
6.55%, 08/25/28 ................................. 180,061
Citicorp Mortgage Securities, Inc., CMO
USD 210,000 Series 1998-6, Class A1
6.50%, 07/25/28 ................................. 209,624
USD 10,000 Series 1999-1, Class A2
6.50%, 03/25/29 ................................. 9,302
USD 50,292 Comed Transitional Funding Trust, ABS
Series 1998-1, Class A1
5.38%, 03/25/02 ................................. 50,339
USD 461,527 Contimortgage Home Equity Loan Trust, CMO
Series 1999-1, Class A1
6.01%, 12/25/13 ................................. 461,089
USD 106,583 Emergent Home Equity Loan Trust, ABS
Series 1997-2, Class A2
6.75%, 05/15/12 ................................. 106,797
USD 453,763 EQCC Home Equity Loan Trust, CMO
Series 1999-1, Class A1F
5.77%, 05/20/10 ................................. 453,023
USD 20,508 Fannie Mae, CMO
Series 1994-100, Class A
5.50%, 02/25/05 ................................. 20,453
USD 86,820 Fannie Mae, Whole Loan, CMO
Series 1998-W2, Class A1
6.50%, 06/25/09 ................................. 86,601
USD 1,000,000 First Security Auto Owner Trust, ABS
Series 1999-1, Class A2
5.31%, 04/15/02 ................................. 1,000,640
USD 278,430 Freddie Mac, CMO
Series 2114, Class PS
6.00%, 08/15/28 ................................. 255,790
USD 39,473 Illinois Power Special Purpose Trust, ABS
Series 1998-1, Class A1
5.39%, 06/25/02 ................................. 39,407
USD 20,000 The Money Store Home Equity Trust, CMO
Series 1997-D, Class AV2
6.49%, 10/15/26 ................................. 19,957
USD 207,880 Premier Auto Trust, ABS
Series 1997-1, Class A3
6.25%, 08/06/01 ................................. 208,715
USD 80,000 PSB Lending Home Loan Owner Trust, CMO
Series 1997-3, Class A3
6.83%, 05/20/18 ................................. 80,442
SLMA, Student Loan Trust, ABS (F)
USD 381,574 Series 1997-4, Class A1
5.26%, 07/25/06 ................................. 381,726
USD 1,190,021 Series 1998-2, Class A1
5.19%, 04/25/07 ................................. 1,189,009
USD 159,757 Structured Asset Mortgage Investments, Inc., ABS
Series 1999-1, Class 1A
6.58%, 06/25/29 ................................. 160,057
-----------
5,671,990
-----------
TOTAL ASSET-BACKED AND
MORTGAGE-BACKED SECURITIES ...................... 6,043,573
(Cost $6,067,260) -----------
FOREIGN CORPORATE BONDS - 16.59% (7.57%(1))
BERMUDA - 0.06% (0.03%(1))
USD 19,000 Flag, Ltd.
8.25%, 01/30/08 ................................. 17,955
-----------
CANADA - 0.46% (0.21%(1))
CAD 170,000 Beneficial Canada, Inc., Series DMTN
6.35%, 04/01/02 ................................. 116,352
USD 19,000 Rogers Cantel, Inc.
8.30%, 10/01/07 ................................. 18,858
-----------
135,210
-----------
DENMARK - 7.16% (3.26%(1))
DKK 3,400,000 Danske Credit, Series ANN
5.00%, 10/01/29 ................................. 419,869
DKK 6,830,000 Nykredit, Series ANN
5.00%, 10/01/29 ................................. 843,222
DKK 3,910,000 Realkredit Danmark, Series ANN
5.00%, 10/01/29 ................................. 484,348
DKK 3,019,000 Unikredit Realkredit, Series ANN
5.00%, 10/01/29 ................................. 372,721
-----------
2,120,160
-----------
GERMANY - 2.50% (1.14%(1))
EUR 100,000 Depfa Pfandbriefbank, Series G5
3.75%, 01/15/09 ................................. 94,854
EUR 627,000 Hypothekenbk in Essen, Series 497 (F)
2.66%, 01/07/00 ................................. 646,223
-----------
741,077
-----------
GREECE - 4.21% (1.92%(1))
USD 1,250,000 CSFP Credit Linked-Greece
5.28%, 11/19/04 ................................. 1,248,438
-----------
CAYMAN ISLANDS - 0.29% (0.13%(1))
JPY 10,000,000 Banco Nacional Com Ext, EMTN
5.30%, 09/21/00 ................................. 85,366
-----------
NETHERLANDS - 0.86% (0.39%(1))
EUR 250,000 KPNQWEST BV (C) (D)
7.13%, 06/01/09 ................................. 255,684
-----------
SOUTH KOREA - 1.00% (0.45%(1))
USD 300,000 Export-Import Bank of Korea
7.13%, 09/20/01 ................................. 295,260
-----------
UNITED KINGDOM - 0.05% (0.02%(1))
GBP 15,000 Orange, Plc
8.00%, 08/01/08 ................................. 14,438
-----------
TOTAL CORPORATE BONDS ........................... 4,913,588
(Cost $5,164,990) -----------
DISCOUNT COMMERCIAL PAPER (E) - 5.65% (2.58%(1))
UNITED STATES - 5.65% (2.58%(1))
USD 400,000 Ameritech Corp.
4.92%, 07/07/99 ................................. 399,672
USD 200,000 MCI Worldcom, Inc.
5.36%, 01/27/00 ................................. 193,747
USD 600,000 Procter & Gamble Co., Series J
4.85%, 07/12/99 ................................. 599,111
USD 200,000 Texas Utilities Co.
6.16%, 01/21/00 ................................. 194,061
USD 300,000 U.S. West Capital Finance Corp.
5.96%, 03/24/00 ................................. 286,746
-----------
TOTAL COMMERCIAL PAPER .......................... 1,673,337
(Cost $1,673,337) -----------
DOMESTIC CORPORATE BONDS AND NOTES - 13.80% (6.30%(1))
USD 15,000 AES Corp.
10.25%, 07/15/06 ................................ 15,412
USD 300,000 Associates Corp. NA (F)
5.15%, 08/27/01 ................................. 299,770
USD 400,000 Bear Stearns Co., Inc., MTN (F)
5.24%, 05/07/02 ................................. 399,464
USD 16,000 Beckman Instruments, Inc.
7.10%, 03/04/03 ................................. 15,712
USD 15,000 Buckeye Technologies, Inc.
8.00%, 10/15/10 ................................. 14,287
USD 9,000 Building Materials Corp., Series B
7.75%, 07/15/05 ................................. 8,460
USD 9,000 Building Materials Corp., Series B
8.00%, 10/15/07 ................................. 8,438
USD 19,000 CMS Energy Corp.
8.13%, 05/15/02 ................................. 19,191
USD 19,000 CSC Holdings, Inc.
9.88%, 04/01/23 ................................. 20,377
USD 19,000 Calpine Corp.
7.88%, 04/01/08 ................................. 18,050
USD 19,000 Century Communications
0.00%, 03/15/03 ................................. 13,371
USD 19,000 Echostar DBS Corp. (C) (D)
9.25%, 02/01/06 ................................. 19,309
USD 12,000 Garden State Newspapers, Series B
8.75%, 10/01/09 ................................. 11,820
USD 900,000 General Motors Acceptance Corp. (F)
5.55%, 04/05/04 ................................. 898,113
USD 15,000 Hollinger International Publishing
8.63%, 03/15/05 ................................. 15,263
USD 19,000 Jones Intercable, Inc.
8.88%, 04/01/07 ................................. 20,314
USD 19,000 K Mart Corp., Series 95K4
9.35%, 01/02/20 ................................. 20,047
USD 600,000 Lehman Brothers (D) (F)
5.81%, 11/30/06 ................................. 510,000
USD 19,000 Mcleodusa, Inc. (C) (D)
8.18%, 02/15/09 ................................. 17,670
USD 370,000 Merrill Lynch & Co., Series B, MTN (F)
5.08%, 11/01/01 ................................. 369,732
USD 10,000 MGM Grand, Inc.
6.95%, 02/01/05 ................................. 9,361
USD 12,000 Navistar International
8.00%, 02/01/08 ................................. 11,820
USD 100,000 Occidental Petroleum, Series B, MTN
8.50%, 09/15/04 ................................. 99,889
USD 12,000 Polymer Group, Inc., Series B
9.00%, 07/01/07 ................................. 11,700
USD 794,526 Salomon Smith Barney Holdings (B)
3.65%, 02/14/02 ................................. 761,021
USD 12,000 Silgan Holdings, Inc.
9.00%, 06/01/09 ................................. 11,700
USD 30,000 Sprint Capital Corp.
5.88%, 05/01/04 ................................. 28,944
USD 400,000 Texas Utilities (C) (D) (F)
5.73%, 06/25/01 ................................. 400,000
USD 12,000 TV Guide, Inc. (C) (D)
8.13%, 03/01/09 ................................. 11,415
USD 19,000 Unisys Corp.
12.00%, 04/15/03 ................................ 20,805
USD 7,000 World Color Press, Inc.
8.38%, 11/15/08 ................................. 7,000
-----------
TOTAL DOMESTIC CORPORATE BONDS AND NOTES ........ 4,088,455
(Cost $4,129,404) -----------
SUPRANATIONAL AGENCIES - 10.19% (4.64%(1))
AUD 1,000,000 Asian Development Bank
5.38%, 09/15/03 ................................. 644,979
-----------
European Investment Bank
GBP 200,000 7.00%, 12/08/03 ................................. 325,401
GBP 320,000 6.00%, 11/26/04 ................................. 502,206
-----------
827,607
-----------
GBP 90,000 Inter-American Development Bank
7.13%, 11/26/04 ................................. 147,963
-----------
International Bank of Reconstruction
& Development
GBP 100,000 6.88%, 07/14/00, EMTN ........................... 159,847
NZD 300,000 7.00%, 09/18/00, EMTN ........................... 161,662
NZD 991,000 7.25%, 04/09/01 ................................. 536,884
GBP 100,000 7.00%, 06/07/02 ................................. 161,503
NZD 700,000 7.25%, 05/27/03, EMTN ........................... 379,825
-----------
1,399,721
-----------
TOTAL SUPRANATIONAL AGENCIES .................... 3,020,270
(Cost $3,038,701) -----------
CERTIFICATES OF DEPOSIT - 1.18% (0.53%(1))
JAPAN - 1.18%
Bank of Tokyo - Mitsubishi
USD 350,000 5.24%, 07/30/99 ................................. $ 350,000
-----------
TOTAL CERTIFICATES OF DEPOSIT ................... 350,000
(Cost $350,000) -----------
NUMBER OF EXPIRATION STRIKE VALUE
CONTRACTS DATE PRICE (NOTE 2)
- --------------- ---------- ------ -----------
PUT OPTIONS PURCHASED - 0.04% (0.02%(1))
JAPAN - 0.04%
JPY 46 JPY 125 Put November ..... 11/29/99 $125 $ 5,759
JPY 46 JPY 125 Put November ..... 11/29/99 $125 5,759
-----------
11,518
-----------
TOTAL PUT OPTIONS ........ 11,518
(Cost $13,961) -----------
TOTAL INVESTMENTS - 168.64% (76.93%(1))........................... 49,958,994
(Cost $50,553,718) -----------
NET OTHER ASSETS AND LIABILITIES - (68.64%) ...................... (20,334,348)
-----------
NET ASSETS - 100.00% ............................................. $29,624,646
===========
- --------------------------------------------------------------------------------
See Notes to Financial Statements June 30, 1999
<PAGE>
- --------------------------------------------------------------------------------
The Global Bond Fund
Portfolio of Investments (Unaudited)
(1) Amount represents a percentage of Total Assets, which can be found in the
Statement of Assets and Liabilities.
(A) Inflation Index Treasury Notes
(B) Index linked
(C) Security exempt from registration under 144A of the Securities Act of 1933,
as amended. This security may be resold, in transactions exempt from
registration, to qualified institutional buyers. At June 30, 1999 these
securities amounted to $1,772,484 or 5.98% of net assets.
(D) Private Placement
(E) Effective yield at time of purchase
(F) Variable rate security. Rate shown reflects rate currently in effect.
ABS Asset-backed security
ANN Annuitetslaan
ARM Adjustable Rate Mortgage
ARS Argentinian Austral
AUD Australian Dollar
CAD Canadian Dollar
CMO Collateralized Mortgage Obligation
DEM German Deutschemark
DKK Danish Kroner
EMTN Euro Medium-term Note
EUR Euro
FNMA Federal National Mortgage Association
GBP British Pound
JPY Japanese Yen
MTN Medium-term Note
NOR Norwegian Kroner
NZD New Zealand Dollar
OAT Obligations Assimilables du Tresor
QA Qatar
SEK Swedish Kroner
SGD Singapore Dollar
SLMA Student Loan Marketing Association
USD United States Dollar
- --------------------------------------------------------------------------------
See Notes to Financial Statements June 30, 1999
<PAGE>
- --------------------------------------------------------------------------------
The Global Bond Fund
Portfolio of Investments (Unaudited)
<TABLE>
<CAPTION>
LONG FORWARD FOREIGN CURRENCY CONTRACTS OUTSTANDING:
CONTRACTS TO RECEIVE UNREALIZED
------------------------------------------------------------- APPRECIATION/
EXPIRATION VALUE IN IN EXCHANGE (DEPRECIATION)
DATE LOCAL CURRENCY U.S. $ FOR U.S. $ OF CONTRACTS
-------- ------------------------- ------ ------- --------
<S> <C> <C> <C> <C> <C>
07/19/99 AUD 960,000 634,731 623,602 $11,129
08/24/99 AUD 167,000 110,463 110,091 372
07/21/99 CAD 28,000 19,008 19,191 (183)
07/22/99 CHF 205,760 132,609 132,925 (316)
07/23/99 CHF 703,294 453,320 457,195 (3,875)
08/03/99 DKK 260,000 36,105 36,917 (812)
07/09/99 EUR 596,000 614,434 634,814 (20,380)
07/13/99 EUR 201,000 207,283 214,467 (7,184)
07/15/99 EUR 321,000 331,087 334,486 (3,399)
08/31/99 EUR 181,000 187,383 190,376 (2,993)
07/13/99 GBP 303,000 477,639 490,151 (12,512)
07/15/99 GBP 597,000 941,103 958,103 (17,000)
07/14/99 JPY 17,802,000 147,464 146,976 488
07/19/99 JPY 68,790,000 570,274 564,507 5,767
08/05/99 JPY 4,315,000 35,867 36,081 (214)
08/12/99 JPY 2,807,000 23,357 23,648 (291)
07/02/99 NZD 1,741,000 921,773 923,775 (2,002)
08/05/99 NZD 176,000 93,248 94,034 (786)
07/23/99 SEK 6,282,000 741,104 742,165 (1,061)
--------
$(55,252)
--------
</TABLE>
- --------------------------------------------------------------------------------
June 30, 1999 See Notes to Financial Statements
<PAGE>
- --------------------------------------------------------------------------------
The Global Bond Fund
Portfolio of Investments (Unaudited)
<TABLE>
<CAPTION>
SHORT FORWARD FOREIGN CURRENCY CONTRACTS OUTSTANDING:
CONTRACTS TO RECEIVE UNREALIZED
------------------------------------------------------------- APPRECIATION/
EXPIRATION VALUE IN IN EXCHANGE (DEPRECIATION)
DATE LOCAL CURRENCY U.S. $ FOR U.S. $ OF CONTRACTS
-------- ------------------------- ------ ------- -------
<S> <C> <C> <C> <C> <C>
07/12/99 AUD (504,000) (333,207) (320,686) $ (12,521)
07/19/99 AUD (870,000) (575,225) (565,635) (9,590)
08/03/99 AUD (169,000) (111,758) (112,253) 495
08/17/99 AUD (504,000) (333,346) (329,220) (4,126)
07/14/99 CAD (174,000) (118,108) (119,178) 1,070
07/21/99 CAD (14,000) (9,504) (9,553) 49
07/22/99 CHF (910,000) (586,482) (601,852) 15,370
07/06/99 DKK (368,000) (51,005) (53,116) 2,111
07/13/99 DKK (506,000) (70,166) (72,741) 2,575
07/20/99 DKK (1,081,500) (150,041) (154,505) 4,464
07/27/99 DKK (989,500) (137,344) (141,432) 4,088
08/03/99 DKK (1,415,500) (196,565) (204,481) 7,916
08/10/99 DKK (1,415,500) (196,655) (204,555) 7,900
08/24/99 DKK (1,362,000) (189,395) (198,768) 9,373
08/31/99 DKK (920,000) (127,990) (134,336) 6,346
09/07/99 DKK (1,358,000) (189,010) (195,264) 6,254
09/14/99 DKK (1,211,000) (168,627) (174,821) 6,194
09/21/99 DKK (1,365,000) (190,157) (195,538) 5,381
09/28/99 DKK (192,000) (26,760) (27,216) 456
10/05/99 DKK (3,751,000) (523,051) (523,590) 539
10/12/99 DKK (1,128,000) (157,371) (158,739) 1,368
10/19/99 DKK (1,505,000) (210,074) (212,841) 2,767
07/09/99 EUR (549,500) (566,495) (585,393) 18,898
07/13/99 EUR (715,500) (737,866) (760,099) 22,233
07/15/99 EUR (1,084,000) (1,118,065) (1,129,486) 11,421
07/22/99 EUR (215,000) (221,881) (222,110) 229
08/31/99 EUR (68,000) (70,398) (70,744) 346
07/13/99 GBP (106,000) (167,095) (170,782) 3,687
07/15/99 GBP (20,000) (31,528) (32,200) 672
07/22/99 GBP (790,000) (1,245,405) (1,277,422) 32,017
08/31/99 GBP (672,000) (1,059,776) (1,079,770) 19,994
07/14/99 JPY (120,885,000) (1,001,357) (1,000,214) (1,143)
07/02/99 NZD (1,741,000) (921,773) (980,354) 58,581
07/22/99 NZD (2,293,000) (1,214,529) (1,212,147) (2,382)
07/29/99 NZD (369,000) (195,476) (194,231) (1,245)
08/05/99 NZD (1,741,000) (922,413) (924,262) 1,849
07/23/99 SEK (3,432,000) (404,882) (409,980) 5,098
07/30/99 SEK (2,589,000) (305,571) (305,538) (33)
07/14/99 SGD (727,000) (427,706) (424,898) (2,808)
---------
$ 225,893
---------
Net Unrealized Appreciation of Forward Foreign Currency Contracts .................. $ 170,641
=========
AUD Australian Dollar GBP British Pound
CAD Canadian Dollar JPY Japanese Yen
CHF Swiss Franc NZD New Zealand Dollar
DKK Danish Kroner SEK Swedish Kroner
EUR Euro SGD Singapore Dollar
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements June 30, 1999
<PAGE>
- --------------------------------------------------------------------------------
The Real Estate Investment Fund
Portfolio of Investments (Unaudited)
VALUE
SHARES (NOTE 2)
- -------- -----------
COMMON STOCKS - 84.50%
APARTMENTS - 12.78%
3,800 Apartment Investment & Management Co. ................ $ 162,450
4,400 Avalonbay Communities, Inc. .......................... 162,800
3,000 Equity Residential Properties Trust .................. 135,188
5,900 Home Properties of New York, Inc. .................... 162,987
----------
623,425
----------
DIVERSIFIED - 16.18%
7,700 Capital Automotive ................................... 102,025
6,500 Duke-Weeks Realty Corp. .............................. 146,656
5,000 Entertainment Properties Trust ....................... 88,125
4,000 Golf Trust of America, Inc. .......................... 97,750
4,300 Liberty Property Trust ............................... 106,963
4,600 Pacific Gulf Properties, Inc. ........................ 104,075
3,700 Spieker Properties, Inc. ............................. 143,837
----------
789,431
----------
HEALTH CARE - 3.10%
7,200 Healthcare Realty Trust, Inc. ........................ 151,200
----------
HOTELS/RESTAURANTS - 2.56%
4,600 Hospitality Properties Trust ......................... 124,775
----------
INDUSTRIAL - 7.33%
2,800 CenterPoint Properties Corp. ......................... 102,550
3,700 First Industrial Realty Trust, Inc. .................. 101,519
6,300 PS Business Parks, Inc. .............................. 153,563
----------
357,632
----------
MANUFACTURED HOMES - 2.08%
3,400 Chateau Communities, Inc. ............................ 101,787
----------
OFFICE PROPERTIES - 15.03%
5,300 Alexandria Real Estate Equities, Inc. ................ 165,625
4,500 Boston Properties, Inc. .............................. 161,438
4,000 CarrAmerica Realty Corp. ............................. 100,000
7,000 Equity Office Properties Trust ....................... 179,375
7,800 Great Lakes REIT, Inc. ............................... 126,750
----------
733,188
----------
OUTLET CENTERS - 2.21%
2,900 Chelsea GCA Realty, Inc. ............................. 107,662
----------
REGIONAL MALLS - 6.03%
4,000 General Growth Properties, Inc. ...................... 142,000
6,000 Simon Property Group, Inc. ........................... 152,250
----------
294,250
----------
SHOPPING CENTERS - 13.56%
5,000 JDN Realty Corp. ..................................... 111,875
3,800 Kimco Realty Corp. ................................... 148,674
6,300 New Plan Excel Realty Trust .......................... 113,400
4,000 Vornado Realty Trust ................................. 141,250
3,500 Weingarten Realty Investors .......................... 146,125
----------
661,324
----------
STORAGE - 3.64%
4,400 Public Storage, Inc. ................................. 123,200
2,000 Shurgard Storage Centers, Inc. ....................... 54,250
----------
177,450
----------
TOTAL COMMON STOCKS .................................. 4,122,124
----------
(Cost $4,248,124)
TOTAL INVESTMENTS - 84.50% ....................................... 4,122,124
(Cost $4,248,124) ----------
NET OTHER ASSETS AND LIABILITIES - 15.50% ........................ 755,953
----------
NET ASSETS - 100.00% ............................................. $4,878,077
==========
- --------------------------
REIT Real Estate Investment Trust
- --------------------------------------------------------------------------------
See Notes to Financial Statements June 30, 1999
<PAGE>
- --------------------------------------------------------------------------------
The Global Asset Allocation Fund
Portfolio of Investments (Unaudited)
VALUE
SHARES (NOTE 2)
- -------- -----------
INVESTMENT COMPANIES - 99.48%
2,801,059 Forward Funds - The U.S. Equity Fund ................ $ 37,562,200
2,969,333 Forward Funds - The Global Bond Fund ................ 29,099,467
1,826,947 Forward Funds - The International Equity Fund ....... 23,202,219
914,167 Forward Funds - The Small Capitalization Equity Fund 11,481,941
500,000 Forward Funds - The Real Estate Investment Fund ..... 4,880,000
TOTAL INVESTMENT COMPANIES........................... 106,225,827
------------
(Cost $100,842,661)
TOTAL INVESTMENTS - 99.48% ....................................... 106,225,827
(Cost $100,842,661) ------------
NET OTHER ASSETS AND LIABILITIES - 0.52% ......................... 556,139
------------
NET ASSETS - 100.00% ............................................. $106,781,966
============
- --------------------------------------------------------------------------------
June 30, 1999 See Notes to Financial Statements
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK.]
- --------------------------------------------------------------------------------
See Notes to Financial Statements June 30, 1999
<PAGE>
- --------------------------------------------------------------------------------
Statement of Assets and Liabilities (Unaudited)
SMALL
CAPITALIZATION
EQUITY FUND
----------------
ASSETS:
Investments
Investments at cost (Note 2) ....................... $ 41,560,210
Net unrealized appreciation/(depreciation) on
investments ...................................... 8,296,440
-------------
Total investments at value ....................... 49,856,650
Cash ............................................... 3,074,785
Receivable for investments sold .................... --
Receivable for shares sold ......................... 101,777
Interest and dividend receivable ................... 21,925
Prepaid expenses ................................... 21,751
Net unrealized appreciation on forward foreign
currency contracts ............................... --
Other assets ....................................... 6,018
-------------
Total Assets ..................................... 53,082,906
-------------
LIABILITIES:
Payable for investments purchased .................... 591,963
Payable for shares redeemed .......................... --
Payable for dividends ................................ --
Payable for option contracts written (Proceeds
$14,132) ........................................... --
Payable to custodian ................................. --
Advisory fee payable ................................. 43,374
Payable to Administrator ............................. 8,262
Accrued expenses and other payables .................. 47,074
-------------
Total Liabilities ................................ 690,673
-------------
NET ASSETS ............................................. $ 52,392,233
=============
- --------------------------------------------------------------------------------
June 30, 1999 See Notes to Financial Statements
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GLOBAL ASSET
INTERNATIONAL U.S. EQUITY GLOBAL REAL ESTATE ALLOCATION
EQUITY FUND FUND BOND FUND FUND FUND
------------- ------------- ------------- ------------ -------------
<S> <C> <C> <C> <C>
$ 24,739,173 $ 30,937,719 $ 50,553,718 $ 4,248,124 $ 100,842,661
(1,811,934) 6,466,472 (594,724) (126,000) 5,383,166
------------- ------------- ------------- ------------ -------------
22,927,239 37,404,191 49,958,994 4,122,124 106,225,827
24,819 286,657 1,047,837 748,828 --
66,172 246,692 13,169,416 -- --
-- -- -- -- --
289,192 41,466 570,935 36,849 541,957
15,926 18,777 17,603 -- 26,245
-- -- 170,641 -- --
9,139 -- 2,110 27,145 25,772
------------- ------------- ------------- ------------ -------------
23,332,487 37,997,783 64,937,536 4,934,946 106,819,801
------------- ------------- ------------- ------------ -------------
32,409 247,051 34,648,390 -- --
-- -- 513,742 -- --
-- -- -- 37,170 --
-- -- 28,600 -- --
-- -- -- -- 9,365
17,895 18,675 14,911 4,060 4,313
3,767 5,976 4,970 609 11,910
43,493 54,047 102,277 15,030 12,247
------------- ------------- ------------- ------------ -------------
97,564 325,749 35,312,890 56,869 37,835
------------- ------------- ------------- ------------ -------------
$ 23,234,923 $ 37,672,034 $ 29,624,646 $ 4,878,077 $ 106,781,966
============= ============= ============= ============ =============
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements June 30, 1999
<PAGE>
- --------------------------------------------------------------------------------
Statement of Assets and Liabilities (Unaudited) (continued)
<TABLE>
<CAPTION>
SMALL
CAPITALIZATION
EQUITY FUND
----------------
<S> <C>
NET ASSETS CONSIST OF:
Paid-in capital ...................................... $ 45,515,991
Undistributed/(distributions in excess of) net
investment income .................................. (34,476)
Accumulated net realized gain/(loss) on investments
sold ............................................... (1,385,722)
Net unrealized appreciation/(depreciation) of
investments and assets and liabilities denominated
in foreign currency ................................ 8,296,440
-------------
TOTAL NET ASSETS ....................................... $ 52,392,233
=============
SHARES OF BENEFICIAL INTEREST OUTSTANDING .............. 4,170,970
=============
NET ASSET VALUE,
offering and redemption price per share
(Net Assets / Shares Outstanding) .................... $ 12.56
=============
</TABLE>
- --------------------------------------------------------------------------------
June 30, 1999 See Notes to Financial Statements
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GLOBAL ASSET
INTERNATIONAL U.S. EQUITY GLOBAL REAL ESTATE ALLOCATION
EQUITY FUND FUND BOND FUND FUND FUND
- --------------- --------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
$ 25,332,242 $ 32,033,490 $ 30,086,577 $ 5,000,000 $ 100,944,557
436,227 958 (72,581) 4,077 289,011
(715,182) (828,886) 943,386 -- 165,233
(1,818,364) 6,466,472 (1,332,736) (126,000) 5,383,165
------------- ------------- ------------- ------------ --------------
$ 23,234,923 $ 37,672,034 $ 29,624,646 $ 4,878,077 $ 106,781,966
============= ============= ============= ============ ==============
1,829,614 2,808,210 3,022,011 500,000 10,096,877
============= ============= ============= ============ ==============
$ 12.70 $ 13.41 $ 9.80 $ 9.76 $ 10.58
============= ============= ============= ============ ==============
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements June 30, 1999
<PAGE>
- --------------------------------------------------------------------------------
Statement of Operations (Unaudited)
<TABLE>
<CAPTION>
SMALL
CAPITALIZATION
EQUITY FUND
----------------
<S> <C>
INVESTMENT INCOME:
Interest ............................................. $ 122,577
Dividends ............................................ 144,921
Less net foreign taxes withheld ...................... --
------------
Total investment income ............................ 267,498
------------
EXPENSES:
Investment advisory fee .............................. 220,246
Administration fee ................................... 41,952
Custodian fee ........................................ 15,824
Fund accounting fee .................................. 18,261
Legal and audit fee .................................. 13,578
Transfer agent fee ................................... 13,303
Directors' fees and expenses ......................... 978
Registration/filing fees ............................. 9,049
Report to shareholder fees ........................... 2,510
Service fee .......................................... 42,165
Insurance expense .................................... 2,681
Amortization of offering costs ....................... 8,659
Miscellaneous ........................................ 1,011
------------
Total expenses before waiver ....................... 390,217
Less fees waived/reimbursed by investment advisor and/
or business manager ................................ (86,068)
------------
Total expenses net of waiver ......................... 304,149
------------
NET INVESTMENT INCOME ................................ (36,651)
------------
Net realized gain/(loss) on investments sold
and option contracts written ....................... (763,331)
Net realized gain/(loss) on forward foreign currency
transactions and foreign currency .................. --
Net change in unrealized appreciation/(depreciation)
of assets and liabilities denominated in foreign
currencies (Note 7) ................................ --
Net change in unrealized appreciation/(depreciation)
of investments and option contracts written (Note 7) 5,669,693
------------
NET REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS,
FOREIGN CURRENCY AND NET OTHER ASSETS ................ 4,906,362
------------
NET INCREASE/(DECREASE) IN NET ASSETS RESULTING FROM
OPERATIONS ........................................... $ 4,869,711
============
</TABLE>
- ----------------------
(1) The Fund commenced operations on May 10, 1999.
- --------------------------------------------------------------------------------
June 30, 1999 See Notes to Financial Statements
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GLOBAL ASSET
INTERNATIONAL U.S. EQUITY GLOBAL REAL ESTATE ALLOCATION
EQUITY FUND FUND BOND FUND FUND(1) FUND
------------ ------------ ---------- ---------- ------------
<S> <C> <C> <C> <C>
$ 10,979 $ 3,875 $ 743,672 $ 5,507 $ 925
677,551 252,548 -- 48,201 541,957
(66,836) -- (17,728) -- --
------------ ------------ ---------- ---------- -----------
621,694 256,423 725,944 53,708 542,882
------------ ------------ ---------- ---------- -----------
111,413 115,064 91,067 6,923 25,387
23,455 36,821 30,356 1,038 69,108
27,181 11,628 49,926 245 10,055
32,003 20,570 29,232 5,100 951
14,247 13,531 14,895 1,703 36,647
9,731 12,769 11,436 3,662 27,160
551 1,056 944 245 3,169
6,962 20,177 7,077 1,734 31,366
1,535 2,485 1,979 714 6,480
12,223 11,961 11,901 3,927 11,901
2,152 3,344 2,881 -- 9,215
7,352 7,352 7,352 -- 13,727
583 985 776 244 8,705
------------ ------------ ---------- ---------- -----------
249,388 257,743 259,822 25,535 253,871
(61,745) -- (47,332) (13,074) --
------------ ------------ ---------- ---------- -----------
187,643 257,743 212,490 12,461 253,871
------------ ------------ ---------- ---------- -----------
434,051 (1,320) 513,454 41,247 289,011
------------ ------------ ---------- ---------- -----------
(70,361) 159,701 (1,152,859) -- 165,233
(25,752) -- 2,254,799 -- --
(4,780) -- (917,207) -- --
2,635,999 3,761,492 (713,038) (126,000) 7,117,412
------------ ------------ ---------- ---------- -----------
2,535,106 3,921,193 (528,305) (126,000) 7,282,645
------------ ------------ ---------- ---------- -----------
$ 2,969,157 $ 3,919,873 $ (14,851) $ (84,753) $ 7,571,656
============ ============ ========== ========== ===========
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements June 30, 1999
<PAGE>
- --------------------------------------------------------------------------------
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
SMALL CAPITALIZATION
EQUITY FUND(1)
----------------------------------------
SIX MONTHS
ENDED PERIOD ENDED
JUNE 30, 1999 DECEMBER 31,
(UNAUDITED) 1998
------------- -------------
<S> <C> <C>
NET ASSETS AT BEGINNING OF PERIOD ........................ $ 31,837,506 $ --
INCREASE IN NET ASSETS RESULTING FROM OPERATIONS:
Net investment income/(loss) ........................... (36,651) 7,585
Net realized gain/(loss) on investments sold ........... (763,331) (622,391)
Net realized gain/(loss) on forward foreign currency
contracts and foreign currency ....................... -- --
Net change in unrealized appreciation/(depreciation) of
investments and assets and liabilities in denominated
foreign currency (Note 7) ............................ 5,669,693 2,626,747
------------- -------------
Net increase/(decrease) in net assets resulting from
operations ........................................... 4,869,711 2,011,940
------------- -------------
DIVIDENDS TO SHAREHOLDERS:
From net investment income ............................. -- (7,584)
In excess of net investment income ..................... -- (15,269)
In excess of net realized gain on investments, forward
foreign currency contracts and foreign currency ...... -- --
Tax return of capital .................................. -- --
SHARE TRANSACTIONS:
Net proceeds from sales of shares ...................... 20,205,560 30,557,799
Issued in exchange for certain net assets of The Global
Asset Allocation Fund (Note 8) ....................... -- --
Issued to shareholders in reinvestment of distributions 22,758 --
Cost of shares repurchased ............................. (4,543,302) (709,380)
------------- -------------
Net increase/(decrease) from share transactions ........ 15,685,016 29,848,419
------------- -------------
Net increase/(decrease) in net assets .................. 20,554,727 31,837,506
------------- -------------
NET ASSETS AT END OF PERIOD .............................. $ 52,392,233 $ 31,837,506
============= =============
Undistributed/(distributions in excess of) net investment
income ................................................. $ (34,476) $ 2,175
============= =============
OTHER INFORMATION:
SHARE TRANSACTIONS:
Sold ................................................... 1,785,035 2,856,891
Issued in exchange for certain net assets of The Global
Asset Allocation Fund (Note 8) ....................... -- --
Issued to shareholders in reinvestment of distributions 1,996 --
Repurchased ............................................ (408,420) (64,532)
------------- -------------
Net increase/(decrease) in shares outstanding .......... 1,378,611 2,792,359
============= =============
- ----------------------
(1) The Fund commenced operations on October 1, 1998.
(2) The Fund commenced operations on April 1, 1998.
(3) The Fund commenced operations on May 10, 1999.
(A) Amount represents initial seed money. Initial seed shares issued were 10,000.
</TABLE>
- --------------------------------------------------------------------------------
June 30, 1999 See Notes to Financial Statements
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------
INTERNATIONAL U.S.
EQUITY FUND(1) EQUITY FUND(1)
---------------------------------- --------------------------------
SIX MONTHS SIX MONTHS
ENDED PERIOD ENDED ENDED PERIOD ENDED
JUNE 30, 1999 DECEMBER 31, JUNE 30, 1999 DECEMBER 31,
(UNAUDITED) 1998 (UNAUDITED) 1998
------------- ------------- ------------- ------------
<S> <C> <C> <C>
$ 23,169,618 $ -- $ 36,406,766 $ --
434,051 48,557 (1,320) 21,146
(70,361) (558,084) 159,701 (988,587)
(25,752) 1,072 -- --
2,631,219 3,210,719 3,761,492 7,526,957
------------- ------------- ------------- ------------
2,969,157 2,702,264 3,919,873 6,559,516
------------- ------------- ------------- ------------
-- (48,557) -- (21,146)
-- (18,968) -- (18,322)
-- -- -- --
-- -- -- --
40,530 12,276 21,091 71,683
-- 20,522,689 -- 36,820,117
67,525 -- 39,468 --
(3,011,907) (86) (2,715,164) (7,005,082)
------------- ------------- ------------- ------------
(2,903,852) 20,534,879 (2,654,605) 29,886,718
------------- ------------- ------------- ------------
65,305 23,169,618 1,265,268 36,406,766
------------- ------------- ------------- ------------
$ 23,234,923 $ 23,169,618 $ 37,672,034 $ 36,406,766
============= ============= ============= ============
$ 436,227 $ 2,176 $ 958 $ 2,278
============= ============= ============= ============
2,668 184 1,853 6,288
-- 2,952,269 -- 3,682,012
5,981 -- 3,267 --
(231,479) (8) (209,745) (65,465)
------------- ------------- ------------- ------------
(222,830) 2,052,445 (204,625) 3,012,835
============= ============= ============= ============
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements June 30, 1999
<PAGE>
- --------------------------------------------------------------------------------
Statements of Changes in Net Assets (continued)
<TABLE>
<CAPTION>
GLOBAL BOND FUND(1)
----------------------------------------
SIX MONTHS
ENDED PERIOD ENDED
JUNE 30, 1999 DECEMBER 31,
(UNAUDITED) 1998
------------- -------------
<S> <C> <C>
NET ASSETS AT BEGINNING OF PERIOD ........................ $ 29,744,226 $ --
INCREASE IN NET ASSETS RESULTING FROM OPERATIONS:
Net investment income .................................. 513,454 337,679
Net realized gain/(loss) on investments sold and option
contracts written .................................... (1,152,859) 940,421
Net realized gain/(loss) on forward foreign currency
contracts and foreign currency ....................... 2,254,799 (1,607,126)
Net change in unrealized appreciation/(depreciation) of
investments, option contracts written and assets and
liabilities in denominated foreign currency (Note 7) . (1,630,245) 161,835
------------- -------------
Net increase/(decrease) in net assets resulting from
operations ........................................... (14,851) (167,191)
------------- -------------
DIVIDENDS TO SHAREHOLDERS:
From net investment income ............................. (513,742) --
In excess of net investment income ..................... -- --
In excess of net realized gain on investments, forward
foreign currency contracts and foreign currency ...... -- --
Tax return of capital .................................. -- --
SHARE TRANSACTIONS:
Net proceeds from sales of shares ...................... 597,909 159,528
Issued in exchange for certain net assets of The Global
Asset Allocation Fund (Note 8) ....................... -- 32,251,889
Issued to shareholders in reinvestment of distributions -- --
Cost of shares repurchased ............................. (188,896) (2,500,000)
------------- -------------
Net increase/(decrease) from share transactions ........ 409,013 29,911,417
------------- -------------
Net increase/(decrease) in net assets .................. (119,580) 29,744,226
------------- -------------
NET ASSETS AT END OF PERIOD .............................. $ 29,624,646 $ 29,744,226
============= =============
Undistributed/(distributions in excess of) net investment
income ................................................. $ (72,581) $ (72,293)
============= =============
OTHER INFORMATION:
SHARE TRANSACTIONS:
Sold ................................................... 59,467 11,724
Issued in exchange for certain net assets of The Global
Asset Allocation Fund (Note 8) ....................... -- 3,225,189
Issued to shareholders in reinvestment of distributions -- --
Repurchased ............................................ (18,484) (255,885)
------------- -------------
Net increase/(decrease) in shares outstanding .......... 40,983 2,981,028
============= =============
</TABLE>
- --------------------------------------------------------------------------------
June 30, 1999 See Notes to Financial Statements
<PAGE>
- --------------------------------------------------------------------------------
REAL ESTATE FUND(3) GLOBAL ASSET ALLOCATION FUND(2)
------------------- -----------------------------------
SIX MONTHS SIX MONTHS
ENDED ENDED PERIOD ENDED
JUNE 30, 1999 JUNE 30, 1999 DECEMBER 31,
(UNAUDITED) (UNAUDITED) 1998
------------ -------------- -------------
$ -- $ 98,387,850 $ 100,000(A)
41,247 289,011 1,252,669
-- 165,233 80,493
-- -- (594,857)
(126,000) 7,117,412 (1,734,247)
------------ -------------- -------------
(84,753) 7,571,656 (895,942)
------------ -------------- -------------
(37,170) -- (692,930)
-- -- --
-- -- (80,493)
-- -- (2,589)
5,000,000 50,775 100,257,316
-- -- --
-- 776,012 --
-- (4,327) (197,512)
------------ -------------- -------------
5,000,000 822,460 100,059,804
------------ -------------- -------------
4,878,077 8,394,116 98,287,850
------------ -------------- -------------
$ 4,878,077 $ 106,781,966 $ 98,387,850
============ ============== =============
$ 4,077 $ 289,012 $ --
============ ============== =============
500,000 4,992 10,026,011
-- -- --
-- 78,943 --
-- (417) (22,652)
------------ -------------- -------------
500,000 83,518 10,003,359
============ ============== =============
- --------------------------------------------------------------------------------
See Notes to Financial Statements June 30, 1999
<PAGE>
- --------------------------------------------------------------------------------
Financial Highlights
For a Share outstanding throughout the periods presented.
<TABLE>
<CAPTION>
SMALL CAPITALIZATION EQUITY FUND(1)
--------------------------------------------
SIX MONTHS
ENDED PERIOD ENDED
JUNE 30, 1999 DECEMBER 31,
(UNAUDITED) 1998
-------------- ------------
<S> <C> <C>
Net Asset Value, Beginning of Period .................... $ 11.40 $ 10.00
Income from Investment Operations:
Net investment income (A) ............................. (0.01) 0.00+
Net realized and unrealized gain/(loss) on investments 1.17 1.41
---------- ----------
Total from Investment Operation ..................... 1.16 1.41
---------- ----------
Less Dividends:
From net investment income (A) ........................ -- 0.00+
In excess of net investment income .................... -- (0.01)
In excess of net realized capital gains ............... -- --
Tax return of capital ................................. -- --
---------- ----------
Total Dividends: .................................... -- (0.01)
---------- ----------
Net increase/(decrease) in net asset value .............. 1.16 1.40
---------- ----------
Net Asset Value, End of Period .......................... $ 12.56 $ 11.40
========== ==========
Total Return (B) ........................................ 10.27% 13.99%
Ratios/Supplemental Data:
Net Assets, End of Period (000's) ....................... $ 52,392 $ 31,838
Ratios to average net assets: (C)
Net investment income including
reimbursement/waiver ................................ (0.17%)* 0.21%*
Operating expenses including
reimbursement/waiver ................................ 1.45%* 1.45%*
Operating expenses excluding
reimbursement/waiver ................................ 1.86%* 3.19%*
Portfolio turnover rate ................................. 60% 23%
- ----------------------
* Annualized. + Amount represents less than $0.01 per share.
(1) The Fund commenced operations on October 1, 1998.
(2) The Fund commenced operations on April 1, 1998.
(3) The Fund commenced operations on May 10, 1999.
(A) Net investment income/(loss) per share before fees waived/reimbursed by investment
advisor and/or business manager was $(0.02) for The Small Capitalization Equity Fund,
less than $0.01 for The International Equity Fund, less than $0.01 for The U.S. Equity
Fund, $0.10 for The Global Bond Fund, and $(0.11) for The Global Asset Allocation Fund,
for the period ended December 31, 1998. (See note 4)
(B) Assumes investment at the net asset value at the beginning of the period, reinvestment
of all distributions and a complete redemption of the investment at the net asset value
at the end of the period.
(C) The annualized net investment income ratios excluding reimbursement/waiver would have
been as follows: (0.58%) for The Small Capitalization Equity Fund, 3.17% for The
International Equity Fund, (0.01%) for the U.S. Equity Fund, 3.07% for The Global Bond
Fund, 4.07% for The Real Estate Fund and 0.57% for The Global Asset Allocation Fund,
for the six months ended June 30, 1999 (See Note 4).
</TABLE>
- --------------------------------------------------------------------------------
June 30, 1999 See Notes to Financial Statements
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INTERNATIONAL
EQUITY FUND(1) U.S. EQUITY FUND(1)
------------------------------------------ ------------------------------------------
SIX MONTHS SIX MONTHS
ENDED PERIOD ENDED ENDED PERIOD ENDED
JUNE 30, 1999 DECEMBER 31, JUNE 30, 1999 DECEMBER 31,
(UNAUDITED) 1998 (UNAUDITED) 1998
------------- ------------ ------------- ------------
<S> <C> <C> <C>
$ 11.29 $ 10.00 $ 12.08 $ 10.00
0.23 0.02 0.00 0.01
1.18 1.30 1.33 2.08
--------- --------- --------- ---------
1.41 1.32 1.33 2.09
--------- --------- --------- ---------
-- (0.02) -- (0.01)
-- (0.01) -- 0.00+
-- -- -- --
-- -- -- --
--------- --------- --------- ---------
-- (0.03) -- (0.01)
--------- --------- --------- ---------
1.41 1.29 1.33 2.08
--------- --------- --------- ---------
$ 12.70 $ 11.29 $ 13.41 $ 12.08
========= ========= ========= =========
12.49% 13.23% 11.01% 20.93%
$ 23,235 $ 23,170 $ 37,672 $ 36,407
3.70%* 0.87%* (0.01)%* 0.24%*
1.60%* 1.60%* N/A 1.40%*
2.13%* 2.46%* 1.40% 1.60%*
18% 8% 12% 26%
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements June 30, 1999
<PAGE>
- --------------------------------------------------------------------------------
Financial Highlights (continued)
<TABLE>
<CAPTION>
GLOBAL BOND FUND(1)
--------------------------------------------
SIX MONTHS
ENDED PERIOD ENDED
JUNE 30, 1999 DECEMBER 31,
(UNAUDITED) 1998
------------- ------------
<S> <C> <C>
Net Asset Value, Beginning of Period .................... $ 9.98 $ 10.00
Income from Investment Operations:
Net investment income (A) ............................. 0.17 0.11
Net realized and unrealized gain/(loss) on investments (0.18) (0.13)
--------- ---------
Total from Investment Operation ..................... (0.01) (0.02)
--------- ---------
Less Dividends:
From net investment income (A) ........................ (0.17) --
In excess of net investment income .................... -- --
In excess of net realized capital gains ............... -- --
Tax return of capital ................................. -- --
--------- ---------
Total Dividends: .................................... (0.17) --
--------- ---------
Net increase/(decrease) in net asset value .............. (0.18) (0.02)
--------- ---------
Net Asset Value, End of Period .......................... $ 9.80 $ 9.98
========= =========
Total Return (B) ........................................ (0.10)% (0.20)%
Ratios/Supplemental Data:
Net Assets, End of Period (000's) ....................... $ 29,625 $ 29,744
Ratios to average net assets: (C)
Net investment income including
reimbursement/waiver ................................ 3.38%* 4.48%*
Operating expenses including
reimbursement/waiver ................................ 1.40%* 1.40%*
Operating expenses excluding
reimbursement/waiver ................................ 1.71%* 1.89%*
Portfolio turnover rate ................................. 376% 209%
</TABLE>
- --------------------------------------------------------------------------------
June 30, 1999 See Notes to Financial Statements
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
REAL ESTATE GLOBAL ASSET
FUND(3) ALLOCATION FUND(2)
------------- --------------------------------------
SIX MONTHS SIX MONTHS
ENDED ENDED PERIOD ENDED
JUNE 30, 1999 JUNE 30, 1999 DECEMBER 31,
(UNAUDITED) (UNAUDITED) 1998
------------- ------------- ------------
<S> <C> <C> <C>
$ 10.00 $ 9.83 $ 10.00
0.16 0.03 0.13
(0.25) 0.72 (0.22)
-------- ---------- ---------
(0.09) 0.75 (0.09)
-------- ---------- ---------
(0.15) -- (0.07)
-- -- --
-- -- (0.01)
-- -- 0.00+
-------- ---------- ---------
(0.15) -- (0.08)
-------- ---------- ---------
(0.24) 0.75 (0.17)
-------- ---------- ---------
$ 9.76 $ 10.58 $ 9.83
======== ========== =========
(1.66)% 8.20% (1.55)%
$ 4,878 $ 106,782 $ 98,388
5.96%* 0.57%* 1.73%*
1.80%* N/A 1.02%*
3.69%* 0.50%* 1.24%*
0% 5% 154%
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements June 30, 1999
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (Unaudited)
1. ORGANIZATION
Forward Funds, Inc. (the "Company"), a Maryland Corporation, is registered
under the Investment Company Act of 1940, as amended (the "1940 Act"), as an
open-end management investment company. At June 30, 1999, the Company offered
six managed investment portfolios. The accompanying financial statements and
financial highlights are those of The Small Capitalization Equity Fund ("Small
Cap"), The International Equity Fund ("International Equity"), The U.S. Equity
Fund ("Equity"), The Global Bond Fund ("Global Bond"), The Real Estate
Investment Fund ("Real Estate") and The Global Asset Allocation Fund ("Asset
Allocation") (formerly The Global Fund) (collectively the "Funds").
The Small Cap, International Equity, Equity, and Asset Allocation Funds seek
high total return (capital appreciation and income). Real Estate Fund seeks
income only, while Global Bond Fund seeks total return. Small Cap Fund seeks
its objective by investing primarily in equity securities of companies having
small market capitalization that offer future growth. Equity Fund seeks its
objective by investing primarily in equity securities of companies located in
the United States. International Equity Fund seeks its objective by investing
primarily in equity securities of companies located outside the United States.
Global Bond Fund seeks its objective by investing primarily in debt securities
of companies and governments located throughout the world. Real Estate Fund
seeks its objective by investing in equity securities of real-estate focused
companies. Asset Allocation Fund seeks its objective by investing primarily in
a diversified portfolio of shares of the other funds.
2. SIGNIFICANT ACCOUNTING POLICIES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of income and expenses during the reporting period.
Actual results could differ from those estimates. The following is a summary
of the significant accounting policies consistently followed by the Funds in
the preparation of its financial statements. These policies are in conformity
with generally accepted accounting principles.
PORTFOLIO VALUATION: Portfolio securities which are traded on a national
securities exchange or on NASDAQ are valued at the last sale price on the
securities exchange on which such securities are primarily traded, or in the
event that no sale has occurred, at the average of the bid and ask price.
Securities traded on over-the-counter markets are valued at the average of the
last bid and ask price. Portfolio securities, which are primarily traded on
foreign securities exchanges, other than the London Stock Exchange, are
generally valued at the preceding business day's closing values of such
securities on their respective exchanges. Short-term obligations that mature
in 60 days or less are valued at amortized cost, which approximates fair
value. All other securities and other assets are appraised at their fair value
as determined in good faith by or under the direction of the Board of
Directors. The Fund generally values its holdings through the use of
independent pricing agents, except for securities for which a ready market
does not exist, which are valued under the direction of the Board of Directors
or which are valued by the Sub-Advisors using methodologies approved by the
Board of Directors.
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 are recorded as soon as
the Funds are informed of the ex-dividend date, if the ex-dividend date has
passed.
OPTIONS: Premiums received by the Fund upon writing put or call options are
recorded as an asset with a corresponding liability which is subsequently
adjusted to the current market value of the option. When an option expires, is
exercised, or is closed, the Fund realizes a gain or loss, and the liability
is eliminated. The risk in writing a call option is that the Funds may forego
the opportunity of profit if the market value of the underlying security
increases and the option is exercised, although any potential loss would be
reduced by the amount of option premium received.
INTEREST-RATE SWAP CONTRACTS: The Funds may use interest-rate swap contracts
to help manage interest-rate risk. Interest-rate swaps represent an agreement
between counterparties to exchange cash flows based on the difference between
two interest rates, applied to a notional principal amount for a specified
period. The most common type of interest-rate swap involves the exchange of
fixed-rate cash flows for variable-rate cash flows. Interest-rate swaps do not
involve the exchange of principal between the parties. The Funds will not
enter into interest-rate swap contracts unless the unsecured commercial paper,
unsecured senior debt or the claims-paying ability of the counterparty is
rated either AA or A or better by Standard & Poor's Corporation, or Aa or P-1
or better by Moody's Investors Service, Inc. (or is otherwise acceptable to
either agency) at the time of entering into such a transaction. If the
counterparty to the swap transaction defaults, the Funds will be limited to
contractual remedies pursuant to the agreements governing the transaction.
There is no assurance that interest-rate swap contract counterparties will be
able to meet their obligations under the swap contracts or that, in the event
of default, the Funds will succeed in pursuing contractual remedies. The Funds
may thus assume the risk that payments owed the Funds under a swap contract
will be delayed, or not received at all. Should interest rates move
unexpectedly, the Funds may not achieve the anticipated benefits of the
interest-rate swaps, and may realized a loss. The Funds recognize gains and
losses under interest-rate swap contracts as realized gains or losses on
investments upon sale of the swap contracts.
As of June 30, 1999, the Global Bond Fund has two open interest-rate swap
contracts. In each of the contracts, the Global Bond Fund has agreed to pay a
fixed rate and receive a floating rate. The Global Bond Fund's interest-rate
swap contracts have been entered into on a net basis, i.e., the two payment
streams are netted out, with the Global Bond Fund receiving or paying, as the
case may be, only the net amount of the two payments. The floating rate on the
contracts resets quarterly and is the three-month London Inter-Bank Offered
Rate ("LIBOR"). The Global Bond Fund's interest payable on the interest-rate
swap contracts as of June 30, 1999 was $60,381. No collateral is required
under these contracts.
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS: The Funds may enter into forward
foreign currency exchange contracts whereby a Fund agrees to buy or sell a
specific currency at a specified price at a future date in an attempt to hedge
against fluctuations in the value of the underlying currency of certain
portfolio instruments. Forward foreign currency exchange contracts are valued
at the daily exchange rate of the underlying currency. Purchases and sales of
forward foreign currency exchange contracts having the same settlement date
and broker are offset and presented on a net basis in the "Statements of
Assets and Liabilities" herein. Gains or losses on the purchase or sale of
forward foreign currency exchange contracts having the same settlement date
and broker are recognized on the date of offset, otherwise gains or losses are
recognized on the settlement date. The use of forward contracts involves the
risk that anticipated currency movements will not be accurately predicted. A
forward contract would limit the risk of loss due to a decline in the value of
a particular currency; however, it also would limit any potential gain that
might result should the value of the currency increase instead of decrease.
These contracts may involve market risk in excess of the unrealized gain or
loss reflected in the Statement of Assets and Liabilities. In addition, a Fund
could be exposed to risks if counterparties of the contracts are unable to
meet the terms of their contracts. The counterparty risk exposure is,
therefore, closely monitored and contracts are only executed with high credit
quality financial institutions.
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. Purchases
and sales of foreign investments and income and expenses are converted into
U.S. dollars based upon exchange rates prevailing on the respective dates of
such transactions. That portion of unrealized gains or losses on investments
due to fluctuations in foreign currency exchange rates is not separately
disclosed.
DIVIDENDS TO SHAREHOLDERS: Dividends from net investment income are declared
and paid annually for Small Cap, International Equity, Equity and Asset
Allocation, quarterly for Real Estate Fund and semi-annually for Global Bond
Fund. Net realized capital gains, if any, are distributed at least annually.
Income dividends and capital gain distributions are determined in accordance
with income tax regulations, which may differ from generally accepted
accounting principles. 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.
FEDERAL INCOME TAXES: The company treats each Fund as a separate entity for
federal income tax purposes. Each Fund intends to qualify each year as a
"regulated investment company" under Subchapter M of the Internal Revenue Code
of 1986, as amended. 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 for federal income or excise taxes. Withholding taxes on foreign
dividends have been paid or provided for in accordance with the applicable
country's tax rules and rates.
ORGANIZATION COSTS: The Funds bear all costs in connection with their
organization, including the fees and expenses of registering and qualifying
their initial shares for distribution under federal and state securities laws.
Such costs for Asset Allocation are being amortized using the straight-line
method over a period of five years beginning with the commencement of its
operations. The organization costs for Small Cap, International Equity,
Equity, Global Bond and Real Estate Funds have been expensed as incurred in
the current year.
WHEN-ISSUED AND DELAYED-DELIVERY TRANSACTIONS: The Funds may purchase
securities on a when-issued or delayed-delivery basis. A Fund will engage in
when-issued and delayed-delivery transactions only for the purpose of
acquiring portfolio securities consistent with its investment objective and
policies, not for investment leverage. When-issued securities are securities
purchased for delivery beyond the normal settlement date at a stated price and
yield and thereby involve a risk that the yield obtained in the transaction
will be less than that available in the market when delivery takes place. A
Fund will not pay for such securities or start earning interest on them until
they are received. When a Fund agrees to purchase securities on a when-issued
basis, the custodian will set aside cash or liquid securities equal to the
amount of the commitment in a segregated account. Securities purchased on a
when-issued basis are recorded as an asset and are subject to changes in value
based upon changes in the general level of interest rates. In when-issued and
delayed-delivery transactions, a Fund relies on the seller to complete the
transaction; the seller's failure to do so may cause the Fund to miss an
advantageous price or yield.
3. INVESTMENT ADVISORY, ADMINISTRATION AND OTHER FEES
The Company has entered into an investment advisory agreement with Webster
Investment Management Company, LLC ("Webster," or the "Advisor") pursuant to
which Webster provides investment advisory services to the Funds and is
entitled to receive a fee calculated daily and payable monthly at the
following annual rates based on each Fund's average daily net assets: Asset
Allocation, 0.05%; Small Cap, 1.05%; International Equity, 0.95% for the first
$25 million, 0.80% for the next $25 million, 0.75% for the next $50 million,
0.65% for the next $150 million, 0.60% for the next $250 million, and 0.55% on
net assets over $500 million; Equity, 0.625% for the first $100 million, 0.55%
for the next $400 million, and 0.50% on net assets over $500 million; Global
Bond, 0.60% for the first $200 million and 0.55% on net assets over $200
million; Real Estate Fund, 1.00% for the first $100 million, 0.85% for the
next $400 million, and 0.70% on net assets over $500 million.
Webster has entered into sub-advisory agreements with Barclays Global Fund
Advisors ("BGI") for The Equity Fund, Templeton Investment Counsel, Inc.
("Templeton") for The International Equity Fund, Hoover Capital Management,
LLC ("Hoover") for The Small Cap Fund, Pacific Investment Management Company
("PIMCO") for The Global Bond Fund and Uniplan, Inc. ("Uniplan") for the Real
Estate Fund (each, a "Sub-Advisor"). Pursuant to these agreements, the Sub-
Advisers provide sub-investment advisory services to the Funds and are
entitled to receive a fee from Webster calculated daily and payable monthly at
the following annual rates based on each Fund's average daily net assets as
follows: Small Cap, 0.80% for the first $500 million and 0.70% on net assets
over $500 million; International Equity, 0.70% for the first $25 million,
0.55% for the next $25 million, 0.50% for the next $50 million, 0.40% for the
next $150 million, 0.35% for the next $250 million, and 0.30% on net assets
over $500 million; Equity, 0.375% for the first $100 million, 0.30% for the
next $400 million, and 0.25% on net assets over $500 million; Global Bond,
0.35% for the first $200 million and 0.30% on net assets over $200 million;
Real Estate Fund, 0.60% for the first $100 million, 0.55% on net assets over
$100 million and up to $500 million, and 0.45% on net assets over $500
million. There is no sub-advisor for Asset Allocation.
Prior to October 1, 1998, BGI, Templeton and PIMCO each served as investment
advisors to Asset Allocation (then known as "The Global Fund"). BGI advised
the Fund's investments in U.S equities, Templeton advised the Fund's
investments in foreign equities and PIMCO advised the Fund's investments in
fixed income and other debt securities. Each sub-advisor received fees
calculated daily and payable monthly based on The Global Fund's net assets
over which they had investment management responsibility, at the same rates as
they currently receive in their capacity as sub-advisors of International
Equity, Equity and Global Bond, respectively.
Also prior to October 1, 1998, Sutton Place Management Co., Inc. ("Sutton")
served as Business Manager to the Global Fund and provided certain general
administrative functions now performed by Webster. Pursuant to an agreement
with the Company, Sutton received business management fees, calculated daily
and payable monthly, at the annual rate of 0.30% of the Fund's daily net
assets.
First Data Investor Services Group, Inc. ("Investor Services Group"), a
wholly-owned subsidiary of First Data Corporation, serves as the Funds'
administrator and receives fees for its services. Investor Services Group also
provides certain fund accounting, transfer agency and dividend dispersing
services to the Funds pursuant to certain fee arrangements.
First Data Distributors, Inc. (the "Distributor") serves as the Funds
distributor. The Distributor acts as an agent for the Funds and the
distributor of their shares.
Overall responsibility for oversight of the Funds rests with the Directors of
the Company, who are elected by the shareholders of the Company. There are
currently three Directors, two of whom are not "interested persons" of the
Company within the meaning of that term under the 1940 Act. Both disinterested
Directors receive an annual retainer fee of $8,000 for their services.
4. WAIVER OF FEES
The Adviser (and prior to October 1, 1998 the Business Manager) has agreed to
voluntarily waive a portion of its fees and/or reimburse certain expenses.
These voluntary waivers and/or reimbursements will continue until at least
February 25, 2000 for the International Equity, Equity, Global Bond, Real
Estate and Asset Allocation Funds and the Investor class shares of Small Cap
Fund. For the period ended June 30, 1999, the fee waivers and/or
reimbursements were as follows:
FEES FEES
WAIVED BY REIMBURSED
FUND ADVISOR BY ADVISOR TOTAL
- ------------ --------- ----------- -------
Small Cap $86,068 $ -- $86,068
International Equity 61,745 -- 61,745
Equity -- -- --
Global Bond 47,332 -- 47,332
Real Estate 6,923 6,151 13,074
Asset Allocation -- -- --
5. SHARES OF BENEFICIAL INTEREST
The Company's Articles of Incorporation authorize the Directors to issue an
unlimited number of shares of beneficial interest. The Funds currently offer a
single class of shares. Each share represents an equal proportionate interest
in the Fund with other shares of the Fund, and each is entitled to such
dividends and distributions out of the income earned on the assets belonging
to the Fund as are declared at the discretion of the Directors.
6. PURCHASES AND SALES OF SECURITIES
The cost of purchases and proceeds from sales of securities, excluding U.S.
Government and short-term investments, for the period ended June 30, 1999 were
as follows:
FUND PURCHASES SALES
- ------------ ---------------- ----------------
Small Cap $ 41,334,321 $ 22,133,597
International Equity 4,020,563 7,620,588
Equity 4,564,339 7,265,772
Global Bond 177,430,422 169,821,423
Real Estate 4,248,124 0
Asset Allocation 5,114,950 5,704,568
The cost of purchases and proceeds from sales of long-term U.S. Government
securities for the period ended June 30, 1999 were as follows:
FUND PURCHASES SALES
- ------------ ---------------- ----------------
Small Cap $ -- $ --
International Equity -- --
Equity -- --
Global Bond 40,564,506 47,566,583
Real Estate -- --
Asset Allocation -- --
At June 30, 1999 the aggregate cost of investments, gross unrealized
appreciation and depreciation and net unrealized appreciation/(depreciation)
for federal tax purposes was as follows:
<TABLE>
<CAPTION>
NET
GROSS GROSS UNREALIZED
UNREALIZED UNREALIZED APPRECIATION/
FUND COST APPRECIATION DEPRECIATION (DEPRECIATION)
- ------------ ---------- ------------------ ------------------- --------------------
<S> <C> <C> <C> <C>
Small Cap $ 41,560,210 $ 8,819,043 $(522,603) $ 8,296,440
International Equity 24,739,173 2,065,465 (3,877,399) (1,811,934)
Equity 30,937,719 8,112,366 (1,645,894) 6,466,472
Global Bond 50,553,718 146,114 (740,838) (594,724)
Real Estate 4,248,124 36,924 (162,924) (126,000)
Asset Allocation 100,842,661 7,858,657 (2,475,492) 5,383,165
</TABLE>
At June 30, 1999 the following Funds had capital loss carryforwards:
FUND AMOUNT EXPIRATION
- ------------ ----- -------
Small Cap $ 402,268 2006
International Equity 619,069 2006
Equity 854,754 2006
7. FOREIGN SECURITIES
Each Fund (except The Asset Allocation 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, 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.
On January 1, 1999, the European Monetary Union ("EMU") introduced a new
single currency, the Euro, which will replace the national currencies of the
participating members countries. Until 2002, the national currencies will
continue to exist, but exchange rates will be tied to the Euro. The
introduction of the Euro is likely to affect all stages of the investment
process, including trading, foreign exchange and accounting. Because this
change to a single currency is new, the introduction of the Euro may result in
market volatility and may affect the business or financial conditions of
European issuers or of a Portfolio investing in European issuers. In addition,
while the conversion will eliminate currency risk among the participating
nations, currency risk between the Euro and the U.S. dollar remains a factor.
8. RISK FACTORS OF THE ASSET ALLOCATION FUND
Investing in the Small Cap, International Equity, Equity, Global Bond and Real
Estate Funds (the "Underlying Funds") through Asset Allocation involves
certain additional expenses that would not be present in a direct investment
in the Underlying Funds.
The officers and directors of the Company also serve as officers and directors
of both the Underlying Funds and Asset Allocation. Conflicts may arise as the
officers and directors seek to fulfill their fiduciary responsibilities to
both Asset Allocation and the Underlying Funds.
From time to time, one or more of the Underlying Funds used for investment by
Asset Allocation may experience relatively large investments or redemptions
due to reallocations or rebalancings by Asset Allocation as recommended by
Webster. These transactions will affect the Underlying Funds, since the
Underlying Funds that experience redemptions as a result of the reallocations
or rebalancings may have to sell portfolio securities and the Underlying Funds
that receive additional cash will have to invest such cash. While it is
impossible to predict the overall impact of these transactions over time,
there could be adverse effects on portfolio management to the extent that the
Underlying Funds may be required to sell securities or invest cash at times
when they would not otherwise do so. These transactions could also have tax
consequences if sales of securities resulted in gains and could also increase
transaction costs. Webster, representing the interests of the Underlying
Funds, is committed to minimizing the impact of Asset Allocation transactions
on the Underlying Funds to the extent it is consistent with pursuing the
investment objectives of Asset Allocation. Webster may, nevertheless, face
conflicts in fulfilling its responsibilities to both Asset Allocation and the
Underlying Funds.
9. SPECIAL MEETING OF SHAREHOLDERS (UNAUDITED)
A special meeting of shareholders of the following Funds was held on
May 3, 1999 to vote on the proposals listed below. The results were as
follows:
PROPOSAL 1: Adoption of a 12b-1 Distribution Plan for the Funds.
FUND VOTES FOR VOTES AGAINST
- ------------ -------------- -----------------
Global Asset Allocation Fund 10,082,853 0
Global Bond Fund 2,918,825 0
International Equity Fund 2,054,132 0
U.S. Equity Fund 2,971,809 0
PROPOSAL 2: Amend the Global Bond Fund's investment objective.
FUND VOTES FOR VOTES AGAINST
- ------------ -------------- -----------------
Global Bond Fund 2,969,303 0
PROPOSAL 3: Arrangement for the Funds' investment adviser to hire or terminate
sub-advisers to the Funds without shareholder approval.
FUND VOTES FOR VOTES AGAINST
- ------------ -------------- -----------------
Global Asset Allocation Fund 10,082,853 0
Global Bond Fund 2,918,825 0
International Equity Fund 2,054,132 0
U.S. Equity Fund 2,971,809 0
All proposals were approved for the Funds listed above. There was an
insufficient quorum for the Small Cap Fund at the meeting. The Small Cap Fund
held a separate special shareholder meeting on July 27, 1999, the results of
which will be included in the Annual Report.
- --------------------------------------------------------------------------------
June 30, 1999
<PAGE>
THE FORWARD FUNDS
- --------------------------------------------------------------------------------
ALL NO-LOAD
FORWARD FUNDS-SMALL CAPITALIZATION EQUITY FUND primarily seeks long-term capital
appreciation by investing in U.S. small-cap stocks. The Fund's sub-advisor is
Hoover Capital Management.
FORWARD FUNDS-EQUITY FUND seeks long-term capital appreciation by purchasing
U.S. stocks. The Fund's sub-advisor is BARCLAYS GLOBAL FUND ADVISORS.
FORWARD FUNDS-INTERNATIONAL EQUITY FUND seeks long-term capital appreciation by
investing in international (non-U.S.) stocks. The Fund's sub-advisor is
TEMPLETON INVESTMENT COUNSEL.
FORWARD FUNDS-GLOBAL BOND FUND seeks to maximize total return by investing in
corporate and government fixed-income securities across global markets,
including U.S. bonds. The Fund's sub-advisor is PACIFIC INVESTMENT MANAGEMENT
COMPANY.
FORWARD FUNDS-REAL ESTATE INVESTMENT FUND seeks income with capital appreciation
as a secondary goal by investing in real estate securities. The Fund's
sub-advisor is UNIPLAN, INC.
FORWARD FUNDS-GLOBAL ASSET ALLOCATION FUND seeks high total return, capital
appreciation and income by investing primarily in a diversified portfolio of the
other Funds offered by the company: Equity, International Equity, Global Bond,
Real Estate Investment and Small Capitalization Stock.
Shares of each Fund may be exchanged for shares of any other Forward Fund or
with a money market fund, the Vista U.S. Government Money Market Fund, a
portfolio of Mutual Fund Trust. The Chase Manhattan Bank acts as investment
advisor to the money market fund. There will be no fees for exchanges.
- --------------------------------------------------------------------------------
All Forward Funds are 100% no load (though Forward Funds sold through
intermediaries may require a transaction fee).
<PAGE>
FOWARDFUNDS
Investment Advisor Webster Investment Management Company, LLC,
San Francisco, CA
Legal Counsel Dechert, Price & Rhoads, Washington, D.C.
Auditors Arthur Anderson, LLP, San Francisco, CA
Custodian Brown Brothers Harriman & Co., Boston, MA
Distributor First Data Distributors, Inc., Westborough, MA
FF-100
