Forward Funds’ Board of Trustees approved a proposal to liquidate the Sierra Club Equity Income Fund on September 21, 2007. In light of the planned liquidation, shares of the Sierra Club Equity Income Fund will no longer be offered for sale effective immediately.

This liquidation does not affect the Sierra Club Stock Fund, which will remain open to all investors.

Since we launched the Sierra Club Mutual Funds in partnership with the Sierra Club in January 2003, the Sierra Club Equity Income Fund has been challenged to deliver both current income, in the form of income and/or capital gains dividend payments, as well as competitive performance or returns, for our investors.

The Sierra Club Equity Income Fund has an investment universe of environmentally qualified companies that meet the Sierra Club’s strict environmental and social criteria. As such, specific industries like Energy and Utilities, which typically pay dividends, are excluded from consideration for investment. With respect to the candidates in the investment universe that have paid regular dividends, if the Sierra Club Equity Income Fund were to favor these investment options, this would cause the fund to tilt toward a sector strategy and this could additionally compromise the performance of the fund.

Forward Funds and the Sierra Club do encourage you to consider the Sierra Club Stock Fund, which is focused on high total return and is not limited by the same requirements for income and return. The fund invests in companies that are proactively seeking to minimize their carbon footprint and their impact on the environment by employing an index-like approach to investing in the top 100 large cap companies in the environmentally and socially qualified investment universe, as determined by more than 20 separate environmental and social screens.

Please review the following options you have regarding your investment in the Sierra Club Equity Income Fund:

If you have an IRA or other tax-deferred account:

• You can continue to maintain your Forward Funds’ tax-deferred account with Colorado State Bank as custodian by exchanging your shares for shares of the same class of the Sierra Club Stock Fund or another Forward Fund or for our money market option, BlackRock FedFund Cash Reserve Shares, before September 21, 2007. Any redemption fees you might incur will be waived.
• If you take no action, your liquidation proceeds will be invested in our money market option, BlackRock FedFund Cash Reserve Shares, in your Forward Funds’ IRA or tax-deferred account on September 21, 2007.
• Shareholders may be subject to federal, state, local or foreign taxes on exchanges, redemptions or liquidations of shares. You should contact your tax advisor for more information about the tax consequences of these options. If you choose to receive the proceeds from the sale of your shares by taking a distribution from your retirement account, the distributed amount must be rolled into another Individual Retirement Account within 60 days in order to avoid interest and penalties on the distribution unless you meet certain age requirements.

For all other account types:

• Prior to the Sierra Club Equity Income Fund's liquidation on September 21, 2007, you can exchange your shares for shares of the same class of the Sierra Club Stock Fund or another Forward Fund, or for our money market option, BlackRock FedFund Cash Reserve Shares. You also can redeem your shares, and any redemption fees you might incur will be waived.
• You can continue to hold your shares until the liquidation date when the then current value of your investment will be sent to you.
• Shareholders may be subject to federal, state, local or foreign taxes on exchanges, redemptions or liquidations of shares. You should contact your tax advisor for more information about the tax consequences of these options.

Click here for a general overview about the liquidation of the Sierra Club Equity Income Fund.

An investment in a money market fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although the Fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the Fund.