Document ID: SEC-2012-0466-0001
Agency: sec
Document Type: Notice
Title: Applications: Forward Funds, et al.
Posted Date: 2012-03-22T04:00Z

[Federal Register Volume 77, Number 56 (Thursday, March 22, 2012)]
[Notices]
[Pages 16871-16872]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-6864]

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SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 29982; File No. 812-13996]

Forward Funds, et al.; Notice of Application

March 15, 2012.
AGENCY:  Securities and Exchange Commission (``Commission'').

ACTION: Notice of an application under section 6(c) of the Investment 
Company Act of 1940 (``Act'') for an exemption from rule 12d1-2(a) 
under the Act.

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Summary of Application:  Applicants request an order to permit open-end 
management investment companies relying on rule 12d1-2 under the Act to 
invest in certain financial instruments.

Applicants: Forward Funds (the ``Trust''), Forward Management, LLC (the 
``Adviser''), and Forward Securities, LLC (``Forward Securities'').

DATES: Filing Dates: The application was filed on January 4, 2012.
    Hearing or Notification of Hearing: An order granting the 
application will be issued unless the Commission orders a hearing. 
Interested persons may request a hearing by writing to the Commission's 
Secretary and serving applicants with a copy of the request, personally 
or by mail. Hearing requests should be received by the Commission by 
5:30 p.m. on April 9, 2012, and should be accompanied by proof of 
service on applicants, in the form of an affidavit or, for lawyers, a 
certificate of service. Hearing requests should state the nature of the 
writer's interest, the reason for the request, and the issues 
contested. Persons who wish to be notified of a hearing may request 
notification by writing to the Commission's Secretary.

ADDRESSES: Elizabeth M. Murphy, Secretary, Securities and Exchange 
Commission, 100 F Street NE., Washington, DC 20549-1090;

[[Page 16872]]

Applicants, 101 California Street, Suite 1600, San Francisco, CA 94111.

FOR FURTHER INFORMATION CONTACT: Lewis B. Reich, Senior Counsel, at 
(202) 551-6919, or Jennifer L. Sawin, Branch Chief, at (202) 551-6821 
(Division of Investment Management, Office of Investment Company 
Regulation).

SUPPLEMENTARY INFORMATION: The following is a summary of the 
application. The complete application may be obtained via the 
Commission's Web site by searching for the file number, or an applicant 
using the Company name box, at http://www.sec.gov/search/search.htm or 
by calling (202) 551-8090.

Applicants' Representations

    1. The Trust is organized as a Delaware statutory trust and is 
registered under the Act as an open-end series management investment 
company. The Adviser, a Delaware limited liability company, is an 
investment adviser registered under the Investment Advisers Act of 
1940, as amended (the ``Advisers Act'') and serves as investment 
adviser to the current series of the Trust. Forward Securities, a 
Delaware limited liability company, is a registered broker-dealer under 
the Securities Exchange Act of 1934, as amended (``1934 Act'') and is 
expected to become the Funds' distributor before the issuance of the 
requested order.
    2. Applicants request the exemption to the extent necessary to 
permit any existing or future series of the Trust and any other 
existing or future registered open-end investment company or series 
thereof that (i) is advised by the Adviser or any entity controlling, 
controlled by or under common control the Adviser and is in the same 
group of investment companies, as defined in section 12(d)(1)(G) of the 
Act, as the Trust; (ii) invests in other registered open-end investment 
companies (``Underlying Funds'') in reliance on section 12(d)(1)(G) of 
the Act; and (iii) is also eligible to invest in securities (as defined 
in section 2(a)(36) of the Act) in reliance on rule 12d1-2 under the 
Act (each a ``Fund of Funds''), to also invest, to the extent 
consistent with its investment objectives, policies, strategies and 
limitations, in financial instruments that may not be securities within 
the meaning of section 2(a)(36) of the Act (``Other Investments'').\1\
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    \1\ Every existing entity that currently intends to rely on the 
requested order is named as an applicant. Any existing or future 
entity that relies on the requested order will do so only in 
accordance with the terms and condition in the application.
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    3. Consistent with its fiduciary obligations under the Act, each 
Fund of Funds' board of directors will review the advisory fees charged 
by the Fund of Funds' investment adviser to ensure that they are based 
on services provided that are in addition to, rather than duplicative 
of, services provided pursuant to the advisory agreement of any 
investment company in which the Fund of Funds may invest.

Applicants' Legal Analysis

    1. Section 12(d)(1)(A) of the Act provides that no registered 
investment company (``acquiring company'') may acquire securities of 
another investment company (``acquired company'') if such securities 
represent more than 3% of the acquired company's outstanding voting 
stock or more than 5% of the acquiring company's total assets, or if 
such securities, together with the securities of other investment 
companies, represent more than 10% of the acquiring company's total 
assets. Section 12(d)(1)(B) of the Act provides that no registered 
open-end investment company may sell its securities to another 
investment company if the sale will cause the acquiring company to own 
more than 3% of the acquired company's voting stock, or cause more than 
10% of the acquired company's voting stock to be owned by investment 
companies and companies controlled by them.
    2. Section 12(d)(1)(G) of the Act provides, in part, that section 
12(d)(1) will not apply to securities of an acquired company purchased 
by an acquiring company if: (i) The acquired company and acquiring 
company are part of the same group of investment companies; (ii) the 
acquiring company holds only securities of acquired companies that are 
part of the same group of investment companies, government securities, 
and short-term paper; (iii) the aggregate sales loads and distribution-
related fees of the acquiring company and the acquired company are not 
excessive under rules adopted pursuant to section 22(b) or section 
22(c) of the Act by a securities association registered under section 
15A of the 1934 Act, or by the Commission; and (iv) the acquired 
company has a policy that prohibits it from acquiring securities of 
registered open-end investment companies or registered unit investment 
trusts in reliance on section 12(d)(1)(F) or (G) of the Act.
    3. Rule 12d1-2 under the Act permits a registered open-end 
investment company or a registered unit investment trust that relies on 
section 12(d)(1)(G) of the Act to acquire, in addition to securities 
issued by another registered investment company in the same group of 
investment companies, government securities, and short-term paper: (i) 
Securities issued by an investment company that is not in the same 
group of investment companies, when the acquisition is in reliance on 
section 12(d)(1)(A) or 12(d)(1)(F) of the Act; (ii) securities (other 
than securities issued by an investment company); and (iii) securities 
issued by a money market fund, when the investment is in reliance on 
rule 12d1-1 under the Act. For the purposes of rule 12d1-2, 
``securities'' means any security as defined in section 2(a)(36) of the 
Act.
    4. Section 6(c) of the Act provides that the Commission may exempt 
any person, security, or transaction from any provision of the Act, or 
from any rule under the Act, if such exemption is necessary or 
appropriate in the public interest and consistent with the protection 
of investors and the purposes fairly intended by the policies and 
provisions of the Act.
    5. Applicants state that the Funds of Funds will comply with rule 
12d1-2 under the Act, but for the fact that they may invest a portion 
of their assets in Other Investments. Applicants request an order under 
section 6(c) of the Act for an exemption from rule 12d1-2(a) to allow 
the Funds of Funds to invest in Other Investments while investing in 
Underlying Funds. Applicants assert that permitting the Funds of Funds 
to invest in Other Investments as described in the application would 
not raise any of the concerns that the requirements of section 12(d)(1) 
were designed to address.

Applicants' Condition

    Applicants agree that any order granting the requested relief will 
be subject to the following condition:
    Applicants will comply with all provisions of rule 12d1-2 under the 
Act, except for paragraph (a)(2) to the extent that it restricts any 
Fund of Funds from investing in Other Investments as described in the 
application.

    For the Commission, by the Division of Investment Management, 
under delegated authority.
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-6864 Filed 3-21-12; 8:45 am]
BILLING CODE 8011-01-P