EXHIBIT 23(D)(1)
FORWARD FUNDS
INVESTMENT MANAGEMENT AGREEMENT
AGREEMENT, effective as of [___________], 2005, between Forward
Management, LLC ("Forward Management" or the "Investment Adviser") and the
Forward Funds (the "Trust") on behalf of the series of the Trust listed on
Exhibit A (the "Funds").
WHEREAS, the Trust is a Delaware Trust of the series type organized
under Declaration of Trust dated February 1, 2005 (the "Declaration") and is
registered under the Investment Company Act of 1940, as amended (the "1940
Act"), as an open-end, diversified management investment company, and the Funds
are series of the Trust; and
WHEREAS, the Investment Adviser is registered as an investment adviser
under the Investment Advisers Act of 1940, as amended ("Advisers Act"); and
NOW THEREFORE, in consideration of the promises and mutual covenants
herein contained, it is agreed between the Trust and the Investment Adviser as
follows:
1. Appointment. The Investment Adviser is hereby appointed to act as
investment adviser to the Funds for the periods and on the terms set forth in
this Agreement. The Investment Adviser accepts such appointment and agrees to
furnish the services herein set forth, for the compensation herein provided.
2. Investment Advisory Duties. Subject to the supervision of the
Trustees of the Trust, the Investment Adviser will: (a) provide a program of
continuous investment management for the Funds with regard to the Funds'
investment of their assets (the "Portfolios") in accordance with the Funds'
investment objectives, policies and limitations as stated in the Funds'
prospectus and statement of additional information included as part of the
registration statement (the "Registration Statement") filed with the Securities
and Exchange Commission (the "SEC"), as they may be amended from time to time,
copies of which shall be provided to the Investment Adviser by the Trust; (b)
make investment decisions for the Funds with regard to the Portfolios,
including, but not limited to, the selection and management of investment
sub-advisers for the Funds, in which case any of the duties of the Investment
Adviser set forth herein may be delegated to such investment sub-advisers
subject to approval by the Board of Trustees; (c) if investment sub-advisers are
appointed with respect to the Funds, monitor and evaluate the performance of the
investment sub-advisers under their respective sub-Advisory agreements in light
of the investment objectives and policies of the respective Fund, and render to
the Trustees such periodic and special reports related to such performance
monitoring as the Trustees may reasonably request, and analyze and recommend
changes in investment sub-advisers as the Investment Adviser may deem
appropriate; (d) place orders to purchase and sell investments in the Portfolios
for the Funds; (e) furnish to the Funds the services of its employees and agents
in the management and conduct of the corporate business and affairs of the
Funds; (f) if requested, and subject to Section 6 of this Agreement with respect
to the Chief Compliance Officer of the Funds, provide the services of its
officers as officers or administrative executives of the Funds (including, but
not limited to the Chief Compliance Officer of the Funds) and the services of
any trustees of the Trust who are "interested persons" of the Trust or its
affiliates, as that term is defined in the 1940 Act, subject in each case to
their individual consent to serve and to applicable legal limitations; and (g)
provide office space, secretarial and clerical services and wire and telephone
services (not including toll charges, which will be reimbursed by the Funds),
and monitor and review Fund contracted services and expenditures pursuant to the
distribution plans of the Funds.
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In performing its investment management services to the Funds under the
terms of this Agreement, the Investment Adviser will provide the Funds with
ongoing investment guidance and policy direction.
The Investment Adviser further agrees that, in performing its duties
hereunder, it will:
(a) comply with the 1940 Act and all rules and regulations thereunder, the
Advisers Act, the Internal Revenue Code of 1986, as amended (the "Code") and all
other applicable federal and state laws and regulations, and with any applicable
procedures adopted by the Board of Trustees;
(b) use reasonable efforts to manage the Portfolios so that the Funds will
qualify, and continue to qualify, as regulated investment companies under
Subchapter M of the Code and regulations issued thereunder;
(c) place orders pursuant to its investment determinations for the Funds in
accordance with applicable policies expressed in the Funds' Prospectus and/or
Statement of Additional Information, established through written guidelines
determined by the Trust and provided to the Investment Adviser, and in
accordance with applicable legal requirements;
(d) furnish to the Trust whatever statistical information the Trust may
reasonably request with respect to the Portfolios. In addition, the Investment
Adviser will keep the Trust and the Trustees informed of developments materially
affecting the Portfolios and shall, on the Investment Adviser's own initiative,
furnish to the Trust from time to time whatever information the Investment
Adviser believes appropriate for this purpose;
(e) make available to the Trust's administrator (the "Administrator"), and
the Trust, promptly upon their request, such copies of its investment records
and ledgers with respect to the Portfolios as may be required to assist the
Administrator and the Trust in their compliance with applicable laws and
regulations. The Investment Adviser will furnish the Trustees with such periodic
and special reports regarding the Funds as they may reasonably request;
(f) meet quarterly with the Trust's Board of Trustees to explain its
investment management activities, and any reports related to the Portfolios as
may reasonably be requested by the Trust;
(g) immediately notify the Trust in the event that the Investment Adviser or
any of its affiliates: (1) becomes aware that it is subject to a statutory
disqualification that prevents the Investment Adviser from serving as investment
adviser pursuant to this Agreement; or (2) becomes aware that it is the subject
of an administrative proceeding or enforcement action by the SEC or other
regulatory authority. The Investment Adviser further agrees to notify the Trust
immediately of any material fact known to the Investment Adviser respecting or
relating to the Investment Adviser that is not contained in the Registration
Statement regarding the Funds, or any amendment or supplement thereto, but that
is required to be disclosed therein, and of any statement contained therein that
becomes untrue in any material respect; and
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(h) in making investment decisions for the Portfolios, use no material
non-public information that may be in its possession or in the possession of any
of its affiliates, nor will the Investment Adviser seek to obtain any such
information.
3. Investment Guidelines. The Trust shall supply the Investment Adviser
with such information as the Investment Adviser shall reasonably require
concerning the Funds' investment policies, restrictions, limitations, tax
position, liquidity requirements and other information useful in managing the
Portfolios.
4. Use of Securities Brokers and Dealers. The Investment Adviser is
responsible for decisions to buy and sell securities and other investments for
the Funds, broker-dealer selection, and negotiation of brokerage commission
rates. The Investment Adviser's primary consideration in effecting a security
transaction will be to obtain the best execution for the Funds, taking into
account the factors specified in the Registration Statement, or other factors
that may be specified by the Board. The price to a Fund in any transaction may
be less favorable than that available from another broker-dealer if the
difference is reasonably justified, in the judgment of the Investment Adviser in
the exercise of its fiduciary obligations to the Fund, by other aspects of the
portfolio execution services offered. Subject to such policies as the Board may
determine and consistent with Section 28(e) of the Securities Exchange Act of
1934, as amended (the "1934 Act") or other applicable law, the Investment
Adviser shall not be deemed to have acted unlawfully or to have breached any
duty created by this Agreement or otherwise solely by reason of its having
caused a Fund to pay a broker-dealer for effecting a portfolio investment
transaction in excess of the amount of commission another broker-dealer would
have charged for effecting that transaction, if the Investment Adviser
determines in good faith that such amount of commission was reasonable in
relation to the value of the brokerage and research services provided by such
broker-dealer, viewed in terms of either that particular transaction or the
Investment Adviser's overall responsibilities with respect to a Fund and to its
other clients as to which it exercises investment discretion. To the extent
consistent with these standards and in accordance with Section 11(a) of the 1934
Act and Rule 11a2-2(T) thereunder and Section 17(e) of the 1940 Act and Rule
17e-1 thereunder, the Investment Adviser is further authorized to allocate the
orders placed by it on behalf of a Fund to the Investment Adviser if it is
registered as a broker-dealer with the Securities and Exchange Commission
("SEC"), to an affiliated broker-dealer, or to such brokers and dealers who also
provide research or statistical material or other services to the Fund, the
Investment Adviser or an affiliate of the Investment Adviser. Such allocation
shall be in such amounts and proportions as the Investment Adviser shall
determine consistent with the above standards, and the Investment Adviser will
report on said allocation regularly to the Board if and as required under
applicable law or regulation, indicating the broker-dealers to which such
allocations have been made and the basis therefor.
5. Compensation. For its investment Advisory services specified in
Section 2 of this Agreement, the Trust agrees to pay annual fees to the
Investment Adviser equal to the amounts listed opposite the respective Fund on
Exhibit A. Fees shall be computed and accrued daily and paid monthly based on
the average daily net asset value of shares of the Funds as determined according
to the manner provided in the then-current prospectus of the Funds. The
Investment Adviser shall be responsible for compensating or directing
compensation by the Funds to any investment sub-advisers employed by the Funds.
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6. Fees and Expenses. The Investment Adviser shall not be required to
pay any expenses of the Funds other than those specifically allocated to the
Investment Adviser in this Agreement. In particular, but without limiting the
generality of the foregoing, the Investment Adviser shall not be responsible for
the following expenses of the Funds: organization and certain offering expenses
of the Funds (including out-of-pocket expenses, but not including the Investment
Adviser's overhead and employee costs); fees payable to the Investment Adviser
and to any other of the Funds' advisers or consultants; legal expenses; auditing
and accounting expenses; interest expenses; taxes and governmental fees; fees,
dues and expenses incurred by or with respect to the Funds in connection with
membership in investment company trade organizations; cost of insurance relating
to fidelity coverage for the Trust's officers and employees; fees and expenses
of the Funds' Administrator or of any custodian, subcustodian, transfer agent,
registrar, or dividend disbursing agent of the Funds; expenses of establishing
or implementing the Funds' compliance program; payments to the Administrator for
maintaining the Funds' financial books and records and calculating its daily net
asset value; other payments for portfolio pricing or valuation services to
pricing agents, accountants, bankers and other specialists, if any; expenses of
preparing share certificates; other expenses in connection with the issuance,
offering, distribution or sale of securities issued by the Funds; expenses
relating to investor and public relations; expenses of registering and
qualifying shares of the Funds for sale; freight, insurance and other charges in
connection with the shipment of the Funds' portfolio securities; brokerage
commissions or other costs of acquiring or disposing of any portfolio securities
or other assets of the Funds, or of entering into other transactions or engaging
in any investment practices with respect to the Funds; expenses of printing and
distributing prospectuses, Statements of Additional Information, reports,
notices and dividends to shareholders; costs of stationery or other office
supplies; any litigation expenses; costs of shareholders' and other meetings;
the compensation and all expenses (specifically including travel expenses
relating to the Funds' businesses) of officers, Trustees and employees of the
Trust who are not interested persons of the Investment Adviser; and travel
expenses (or an appropriate portion thereof) of officers or Trustees of the
Trust who are officers, trustees or employees of the Investment Adviser to the
extent that such expenses relate to attendance at meetings of the Board of
Trustees of the Trust with respect to matters concerning the Funds, or any
committees thereof or advisers thereto.
Notwithstanding anything herein to the contrary, the Investment Adviser may, if
requested: provide the services of one of its officers as the Chief Compliance
Officer of the Funds provided that the Investment Adviser may be compensated
and/or reimbursed for the cost of providing the services of the Chief Compliance
Officer of the Funds and any compliance staff from time to time as agreed to
between the Investment Adviser and the Trust pursuant to a support services or
similar agreement.
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7. Books and Records. The Investment Adviser agrees to maintain such
books and records with respect to its services to the Funds as are required by
Section 31 under the 1940 Act, and rules adopted thereunder, and by other
applicable legal provisions, and to preserve such records for the periods and in
the manner required by that Section, and those rules and legal provisions. The
Investment Adviser also agrees that records it maintains and preserves pursuant
to Rules 31a-1 and Rule 31a-2 under the 1940 Act and otherwise in connection
with its services hereunder are the property of the Trust and will be
surrendered promptly to the Trust upon its request. The Investment Adviser
further agrees that it will furnish to regulatory authorities having the
requisite authority any information or reports in connection with its services
hereunder which may be requested in order to determine whether the operations of
the Funds are being conducted in accordance with applicable laws and
regulations.
8. Aggregation of Orders. Provided the investment objectives, policies
and restrictions of the Funds are adhered to, the Trust agrees that the
Investment Adviser may aggregate sales and purchase orders of securities held in
the Funds with similar orders being made simultaneously for other accounts
managed by the Investment Adviser or with accounts of the affiliates of the
Investment Adviser, if in the Investment Adviser's reasonable judgment such
aggregation shall result in an overall economic benefit to the respective Fund
taking into consideration the advantageous selling or purchase price, brokerage
commission and other expenses. The Trust acknowledges that the determination of
such economic benefit to the Funds by the Investment Adviser represents the
Investment Adviser's evaluation that the Funds are benefited by relatively
better purchase or sales prices, lower commission expenses and beneficial timing
of transactions or a combination of these and other factors.
9. Liability. The Investment Adviser shall not be liable to the Trust
for the acts or omissions of any other fiduciary or other person respecting the
funds or for anything done or omitted by the Investment Adviser under the terms
of this Agreement if the Investment Adviser shall have acted in good faith and
shall have exercised the degree of prudence, competence and expertise
customarily exhibited by managers of institutional portfolios. Nothing in this
Agreement shall in any way constitute a waiver or limitation of any rights which
may not be so limited or waived in accordance with applicable law.
10. Services Not Exclusive. It is understood that the services of the
Investment Adviser are not exclusive, and that nothing in this Agreement shall
prevent the Investment Adviser from providing similar services to other
investment companies or to other series of investment companies, including the
Trust (whether or not their investment objectives and policies are similar to
those of the Funds) or from engaging in other activities, provided such other
services and activities do not, during the term of this Agreement, interfere in
a material manner with the Investment Adviser's ability to meet its obligations
to the Funds hereunder. When the Investment Adviser recommends the purchase or
sale of a security for other investment companies and other clients, and at the
same time the Investment Adviser recommends the purchase or sale of the same
security for the Funds, it is understood that in light of its fiduciary duty to
the Funds, such transactions will be executed on a basis that is fair and
equitable to the Funds. If the Investment Adviser provides any advice to its
clients concerning the shares of the Funds, the Investment Adviser shall act
solely as investment counsel for such clients and not in any way on behalf of
the Trust or the Funds.
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11. Duration and Termination. This Agreement shall become effective as
of 12:01 a.m. on May 1, 2005 and shall continue with respect to each of the
Funds, until April 30, 2007, and thereafter shall continue automatically for
successive annual periods, provided such continuance is specifically approved at
least annually by (i) the Trustees or (ii) a vote of a "majority" (as defined in
the 0000 Xxx) of a Fund's outstanding voting securities (as defined in the 1940
Act), provided that in either event the continuance is also approved by a
majority of the Trustees who are not parties to this Agreement or "interested
persons" (as defined in the 0000 Xxx) of any party to this Agreement, by vote
cast in person at a meeting called for the purpose of voting on such approval.
Notwithstanding the foregoing, this Agreement may be terminated: (a) at any time
without penalty with respect to a Fund upon the vote of a majority of the
Trustees or by vote of the majority of that Fund's outstanding voting
securities, upon sixty (60) days' written notice to the Investment Adviser or
(b) by the Investment Adviser at any time without penalty, upon sixty (60) days'
written notice to the Trust. This Agreement will also terminate automatically in
the event of its assignment (as defined in the 1940 Act). Any termination of
this Agreement will be without prejudice to the completion of transactions
already initiated by the Investment Adviser on behalf of the Funds at the time
of such termination. The Investment Adviser shall take all steps reasonably
necessary after such termination to complete any such transactions and is hereby
authorized to take such steps.
12. Amendments. This Agreement may be amended at any time but only by
the mutual agreement of the parties, and consistent with the requirements of the
1940 Act.
13. Proxies. Unless the Trust gives written instructions to the
contrary, the Investment Adviser shall vote all proxies solicited by or with
respect to the issuers of securities in the Portfolios. The Investment Adviser
shall maintain a record of how the Investment Adviser voted and such record
shall be available to the Trust upon its request. The Investment Adviser shall
use its best good faith judgment to vote such proxies in a manner which best
serves the interests of the Funds' shareholders.
14. Notices. Any written notice required by or pertaining to this
Agreement shall be personally delivered to the party for whom it is intended, at
the address stated below, or shall be sent to such party by prepaid first class
mail or facsimile.
If to the Trust:
Forward Funds:
000 Xxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, XX 00000
If to the Investment Adviser:
Forward Management, LLC
000 Xxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, XX 00000
15. Confidential Information. The Investment Adviser shall maintain the
strictest confidence regarding the business affairs of the Funds. Written
reports furnished by the Investment Adviser to the Trust shall be treated by the
Trust and the Investment Adviser as confidential and for the exclusive use and
benefit of the Trust except as disclosure may be required by applicable law.
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16. Use of Names. It is understood that the names "Forward" and
"Forward Management" or any derivative thereof or logo associated with those
names are the valuable property of the Investment Adviser and its affiliates,
and that the Trust and/or the Funds have the right to use such names (or
derivatives or logos) only so long as this Agreement shall continue with respect
to such Trust and/or Funds. Upon termination of this Agreement, the Trust (or
Fund) shall forthwith cease to use such names (or derivatives or logos) and, in
the case of the Fund, shall promptly amend its Agreement and Declaration of
Trust to change its name (if such name is included therein) and remove Forward
logos.
17. Trust Obligation. A copy of the Trust's Certificate of Trust, as
amended, is on file with the State of Delaware and notice is hereby given that
this Agreement has been executed on behalf of the Trust by a Trustee or officer
of the Trust in his or her capacity as such and not individually. The
obligations of this Agreement shall only be binding upon the assets and property
of the Trust and shall not be binding upon any trustee, officer or shareholder
of the Trust individually. The debts, liabilities, obligations and expenses
incurred, contracted for or otherwise existing with respect to a particular Fund
shall be enforceable against the assets and property of that Fund only, and not
against the assets or property of any other series of the Trust, or against any
of the Trustees, officers, employees, agents or shareholders of the Trust
individually.
18. Miscellaneous.
(a) This Agreement shall be governed by the laws of the State of
Delaware, provided that nothing herein shall be construed in a manner
inconsistent with the 1940 Act, the Advisers Act, or rules or orders of the SEC
thereunder.
(b) Concurrently with the execution of this Agreement, the Investment
Adviser is delivering to the Trust a copy of Part II of its Form ADV, as
revised, on file with the Securities and Exchange Commission. The Trust hereby
acknowledges receipt of such copy.
(c) The captions of this Agreement are included for convenience only
and in no way define or limit any of the provisions hereof or otherwise affect
their construction or effect.
(d) If any provision of this Agreement shall be held or made invalid by
a court decision, statute, rule or otherwise, the remainder of this Agreement
shall not be affected hereby and, to this extent, the provisions of this
Agreement shall be deemed to be severable.
(e) Nothing herein shall be construed as constituting the Investment
Adviser as an agent of the Trust or the Funds.
[Signature Page Follows]
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IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their officers designated below as of [_________], 2005.
FORWARD FUNDS
By:
---------------------------
Name:
Title:
FORWARD MANAGEMENT, LLC
By:
---------------------------
Name:
Title:
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EXHIBIT A
ADVISORY FEE
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FUND NET ASSETS FEE
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Forward Emerald Growth Fund Up to and including $250,000,000 0.75%
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In excess of $250,000,000 up to and 0.65%
including $500,000,000
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In excess of $500,000,000 up to and 0.55%
including $750,000,000
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In excess of $750,000,000 0.45%
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Forward Emerald Banking Up to and including $100,000,000 1.00%
and Finance Fund
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In excess of 100,000,000 0.90%
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Forward Emerald Technology Up to and including $100,000,000 1.00%
Fund
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In excess of 100,000,000 0.90%
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