As filed with the Securities and Exchange Commission on June 1, 2020
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act file number 811-22842
FORUM FUNDS II
Three Canal Plaza, Suite 600
Portland, Maine 04101
Jessica Chase, Principal Executive Officer
Three Canal Plaza, Suite 600
Portland, Maine 04101
207-347-2000
Date of fiscal year end: September 30
Date of reporting period: October 1, 2019 – March 31, 2020
ITEM 1. REPORT TO STOCKHOLDERS.
Semi-Annual
Report
March
31,
2020
(Unaudited)
Advised
by:
SKBA
Capital
Management,
LLC
www.baywoodfunds.com
Beginning
in
January
2021,
as
permitted
by
regulations
adopted
by
the
Securities
and
Exchange
Commission,
paper
copies
of
the
Funds’
shareholder
reports
will
no
longer
be
sent
by
mail,
unless
you
specifically
request
paper
copies
of
the
reports
from
the
Funds
or
from
your
financial
intermediary,
such
as
a
broker-dealer
or
bank.
Instead,
the
reports
will
be
made
available
on
a
website,
and
you
will
be
notified
by
mail
each
time
a
report
is
posted
and
provided
with
a
website
link
to
access
the
report.
If
you
already
elected
to
receive
shareholder
reports
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and
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Baywood
Funds.
BAYWOOD
VALUE
PLUS
FUND
A
MESSAGE
TO
OUR
SHAREHOLDERS
March
31,
2020
1
Dear
Shareholders,
We
are
pleased
to
report
our
economic
and
financial
market
perspectives
and
the
investment
activities
for
the
Baywood
Value
Plus
Fund
(the
“Fund”)
for
the
six
months
ended
March
31,
2020.
The
Fund
is
a
large
capitalization
value-oriented
portfolio
of
stock
holdings
selected
from
a
universe
of
dividend-paying
companies
traded
on
U.S.
exchanges.
SKBA
attempts
to
identify
candidates
for
purchase
that
appear
to
have
low
expectations
and
pessimism
already
reflected
in
their
current
valuations
by
using
its
Relative
Dividend
Yield
(RDY)
discipline,
which
compares
each
stock’s
yield
history
to
SKBA’s
own
yield
index
of
500
large
dividend-paying
companies.
A
high
RDY
compared
to
a
stock’s
own
history
that
captures
such
pessimism
provides
a
useful
starting
point
for
research
into
each
stock’s
underlying
fundamentals.
It’s
hard
to
describe
the
entire
six
months
as
a
unified
period.
One
needs
to
write
a
tale
of
two
quarters,
entirely
different
from
one
another,
with
markets
moving
in
opposite
directions.
In
such
strong
stock
markets
as
2019
turned
out
to
be,
we
always
caution
that
we
tend
to
lag
on
the
upside
as
out-of-favor
stocks
rarely
lead
the
market
higher.
Whereas
interest-sensitive
sectors
(utilities)
and
consumer
staples
were
market
leaders
for
much
of
the
first
eight
months
of
the
calendar
year,
in
the
last
four
months
the
leadership
shifted
in
favor
of
financials,
healthcare,
and
information
technology.
In
contrast,
utilities
reversed
course
and
produced
their
weakest
quarter
of
the
year.
These
shifts
benefited
the
absolute
returns
of
the
fund
in
the
quarter.
Information
technology
led
for
the
year
as
a
whole
in
both
the
broad
market
and
in
Value
benchmarks,
while
returns
in
industrials
and
financials
were
not
far
behind.
Those
that
lagged
the
most
included
energy
stocks
along
with
healthcare
and
materials,
although
each
sector
also
performed
well
on
an
absolute
basis.
Only
in
a
year
of
stellar
gains
by
the
overall
market
would
their
short
term
results
be
considered
“weak.”
Our
energy
overweight
and
utilities
underweight
have
been
the
Fund’s
greatest
challenge
recently;
yet
in
the
fourth
quarter,
Baywood
Value
Plus
’
energy
holdings
gained
nearly
11%
while
benchmark
utilities
languished.
Finding
the
best
mix
in
the
unloved
and
undervalued
energy
sector
was
challenging
for
the
year
as
a
whole,
and
in
the
fourth
quarter
we
initiated
a
position
in
Equinor,
the
renamed
Norwegian
state
oil
company.
In
Equinor,
we
found
an
attractive
combination
of
unpriced,
operational-led
upside
with
a
conservatively
managed
balance
sheet.
Years
ago
we
purchased
BP
for
similar
reasons,
though
changing
circumstances
since
then
resulted
in
exiting
the
security
in
the
quarter.
Despite
current
prices
now
in
the
$20s,
we
continue
to
believe
the
normal
range
for
WTI
should
be
above
$60
per
barrel
and
that
normal
earning
power
is
higher
than
the
sector
earned
in
2019.
When
combined
with
still-depressed
valuations,
we
were
overweight
energy
stocks
at
the
end
of
the
year.
Our
consumer
discretionary
companies
were
standouts
in
the
period.
Retail
has
been
a
minefield
for
anyone
swayed
simply
by
cheap
valuations.
The
landscape
has
undergone
such
enormous
competitive
disruption
from
Amazon
that
seeking
valuation
attraction
without
the
underpinning
of
fundamental
and
competitive
strength
is
a
recipe
for
disaster.
We
have
not
always
been
immune
from
this
and
made
some
mistakes
as
well.
Nevertheless,
two
of
our
largest
holdings,
Target
and
Walmart,
have
been
successful
competing
online.
For
the
year
Walmart
gained
30%
and
Target,
surprising
investors
with
its
same-store-sales
growth,
rocketed
higher
by
100%!
20%
of
this
gain
came
in
the
4th
quarter.
Given
the
magnitude
of
these
moves,
we
took
gains
in
the
4th
quarter
but
still
own
both
stocks.
Over
half
of
the
healthcare
sector’s
full
year
return
came
in
the
4th
quarter.
Fundamental
perceptions
of
the
sector
have
continued
to
be
battered
by
fears
of
bipartisan
price
controls
on
both
drugs
and
hospital
services.
Nevertheless,
at
the
end
of
2019,
healthcare
represented
the
second
largest
weight
in
Value
Plus
,
after
financials
as
both
valuations
and
fundamentals
are
extraordinarily
attractive—
the
stocks
are
very
much
out
of
favor.
Even
select
pharmaceuticals/biotech
firms
with
pipeline
challenges
remain
attractive,
and
AbbVie,
Amgen,
and
CVS
Health
posted
returns
in
the
high
teens
and
low
20%’s.
By
year
end,
we
initiated
a
modest
position
in
VICI
Properties,
the
only
other
new
stock
added
to
the
portfolio
at
the
end
of
2019.
Considering
how
poorly
REIT’s
performed
in
the
first
quarter
of
2020,
we
much
prefer
the
valuations
in
REIT’s
to
those
of
utilities,
and
at
the
same
time,
we
recognize
the
financial
hardship
many
of
them
find
themselves
in.
With
the
closing
of
2019,
growth
benchmarks
outperformed
value
benchmarks
for
the
7th
time
in
the
decade.
The
longer
term
record
is
nowhere
nearly
as
skewed.
The
powerful
rally
in
technology
stocks
in
2019
along
with
slowing
world
economic
growth
due
to
the
trade
war
with
China
that
hurt
many
cyclical
value
stocks,
contributed
to
this
difference.
Yet,
as
we
have
pointed
out
in
prior
quarterly
reviews,
the
cumulative
differences
in
valuation
appear
to
have
vastly
overshot
the
long-term
underlying
fundamentals
across
the
stock
market.
Although
we
don’t
profess
to
know
exactly
when
a
turn
in
favor
of
value
will
take
place,
current
valuations
on
existing
holdings
are
at
BAYWOOD
VALUE
PLUS
FUND
A
MESSAGE
TO
OUR
SHAREHOLDERS
March
31,
2020
2
times
unprecedented.
Many
such
valuations
have
only
been
seen
at
market
bottoms.
With
respect
to
the
growth
versus
value
debate,
we
surmise
that
this
coming
decade
will
not
be
a
repeat
of
the
last.
Unlike
the
strong
end
to
2019,
the
first
quarter
was
unlike
any
other
in
any
of
our
lifetimes.
In
the
three
months
ended
March,
the
U.S.
transitioned
from
the
longest
economic
expansion
in
history
to
one
of
the
most
severe
economic
contractions
in
history.
While
only
some
first
quarter
economic
data
has
been
reported,
the
slowdown
driven
by
national
and
global
stay-at-home
policies
and
travel
restrictions
has
undeniably
been
the
cause
of
the
slowdown.
We
expect
the
downturn
will
continue
in
the
second
quarter
where
its
full
effect
will
be
felt.
Markets
act
as
forecasting
mechanisms
and
it
is
therefore
not
surprising
to
have
experienced
such
a
precipitous
decline
in
stocks.
The
lesson
always
re-learned
during
downturns
is
that
in
liquidity
crises,
asset
correlations
tend
to
go
to
one,
meaning
most
stock
markets
decline
simultaneously.
This
is
precisely
what
took
place
in
March.
While
the
global
COVID-19
pandemic
is
not
the
sole
cause
of
the
stock
market
decline,
it
has
certainly
been
the
trigger.
At
SKBA,
we
have
long
lamented
excesses
in
valuations
as
well
as
those
taken
by
individual
companies,
in
particular
as
it
relates
to
their
balance
sheets.
As
with
the
Global
Financial
Crisis
(GFC)
of
a
decade
ago,
and
all
stock
market
meltdowns
of
the
past
for
that
matter,
those
most
financially
levered
suffer
the
most,
as
they
should.
And
what
an
environment
we’ve
been
in
over
the
last
few
years
with
unprecedented
dovish
monetary
policies.
Most
developed
countries
and
economic
blocs
have
for
years
out-competed
one
another
for
the
privilege
of
having
the
lowest
rates.
Central
banks
have
not
simply
been
complicit
in
this
debacle;
in
fact,
they
have
orchestrated
it.
The
banks
clearly
have
a
different
view
on
the
matter
and
this
statement
may
admittedly
be
overly
simplistic.
Central
banks
may
argue
they
had
no
choice
and
perhaps
this
is
the
case,
but
perhaps
not.
At
the
same
time,
the
utter
dysfunction
between
fiscal
policy
and
monetary
policy
coordination
recently
has
been
staggering.
Why
does
it
require
a
crisis
for
better
coordinated
action
to
take
place?
Rahm
Emanuel
put
it
best,
and
we
paraphrase,
when
he
stated
years
ago
that
one
should
not
let
a
good
crisis
go
to
waste.
Policy
makers
need
to
seriously
ask
themselves
whether
they
are
taking
appropriate
steps
to
reverse
the
destruction
of
the
long-term
health
of
capital
markets
or
whether
they
are
perpetuating
it.
Our
sense
is
that
they
are
still
doing
the
latter.
What
needed
to
be
accomplished
earlier
during
the
last
recovery
was
to
tighten
credit
and
dampen
the
appetite
for
risk
assets.
The
exact
opposite
took
place
and
subsequently
resulted
in
a
vicious
rather
than
a
virtuous
one.
By
definition,
vicious
cycles
are
called
so
for
a
reason—they
don’t
often
end
well.
The
Fed
recognized
this
quandary
when
Chairman
Powell
was
forced
to
reverse
his
policy
stance
in
early
2019.
Some
may
remember
his
2018
attempt
to
restore
normal
monetary
policy
by
raising
rates
and
reducing
the
Fed’s
balance
sheet,
a
policy
which
caused
U.S.
stocks
to
only
decline
slightly,
an
effect
which
we
now
view
with
some
fondness.
2018
was
an
ominous
prelude
to
what
was
to
take
place
this
quarter.
At
some
point,
the
medicine,
if
it
does
not
treat
the
underlying
cause,
no
longer
works.
The
underlying
cause
of
the
problem
points
to
financial
leverage
on
the
part
of
central
banks
and
many
corporations.
Individuals
around
the
world
as
well
as
many
banks
have
been
relatively
disciplined
this
time
around,
although
we
question
European
banks’
viability.
Central
banks
and
sovereign
Treasuries
have
been
the
culprits.
By
itself,
this
bodes
ill
for
prospective
GDP
growth.
As
long
as
the
U.S.
can
maintain
competitive
tax
rates,
sensible
regulations
and
end
the
trade
war
of
the
last
two
years,
this
current
crisis
should
be
overcome
and
economic
growth
restored.
With
asset
correlations
going
towards
one,
places
to
hide
in
the
first
quarter
proved
elus
ive.
Treasury
bonds,
cash
and
gold
proved
to
be
the
few
stores
of
value
during
the
downdraft.
Defensive
sectors
as
well
as
economically
sensitive
sectors
declined
in
unison.
Even
many
heretofore
bond
proxies
lost
their
correlation
to
interest
rate
moves.
Early
stages
of
significant
declines
tend
to
be
indiscriminate
in
their
selling.
This
is
what
took
place
in
the
first
calendar
quarter.
As
investors
assess
the
damage,
however,
increased
discrimination
takes
place
as
the
wheat
gets
separated
from
the
chaff.
In
other
words,
those
that
took
on
undue
risk
continue
to
suffer
while
those
with
greater
capital
discipline
begin
to
outperform.
The
Baywood
Value
Plus
Fund
tends
to
favor
companies
with
capital
discipline;
this
is
a
hallmark
of
the
strategy.
For
example,
despite
our
outlook
towards
energy,
which
we’ll
address
next,
when
Occidental
Petroleum
purchased
Anadarko
Petroleum
at
what
we
believed
to
be
the
wrong
time
and
at
too
high
a
price,
we
exited
the
stock.
Operating
leverage
and
financial
leverage
is
a
combination
we
are
rarely
fond
of.
Throw
in
questionable
management
incentives
and
one
has
a
recipe
for
disaster
which
Occidental
typifies.
Chevron
in
contrast,
passed
when
given
the
opportunity
to
outbid
Occidental,
reflecting
capital
discipline.
We
prefer
to
own
unexciting
companies,
companies
that
are
prudent
with
their
shareholders’
capital,
companies
that
don’t
take
risks
without
thinking
about
the
consequences.
Owning
such
companies
is
typically
not
viewed
as
exciting
during
bull
markets.
This
is
acceptable
to
us,
perhaps
even
desirable.
As
we
look
at
our
portfolio
in
early
April,
we
do
not
have
any
doubts
about
the
ability
of
our
holdings
to
withstand
if
not
thrive
during
and
subsequent
to
this
downturn.
We
have
gone
through
each
company
once
again
in
order
to
lower
the
risk
that
we
may
be
“missing
BAYWOOD
VALUE
PLUS
FUND
A
MESSAGE
TO
OUR
SHAREHOLDERS
March
31,
2020
3
something”.
At
the
portfolio
level,
we
don’t
take
undue
company
specific
risk
nor
do
we
take
undue
sector
level
risk.
We
do,
however,
differ
from
major
indexes
if
we
feel
that
certain
risks
or
opportunities
are
not
being
evaluated
appropriately.
Historically,
our
decisions
tied
to
energy
have
not
meaningfully
detracted
from
overall
performance;
more
recently
they
have.
The
downturn
in
energy
is
unprecedented
and
unsustainable,
however.
Just
as
central
banks
have
sown
the
seeds
of
the
current
economic
crisis,
energy
producing
countries
are
on
a
destructive
path
that
will
result
in
much
higher
prices
in
the
not-too-distant
future.
Let’s
detail
what
we
mean
by
unprecedented.
Oil
production
in
terms
of
its
importance
on
the
global
economy
can
be
traced
back
to
the
beginning
of
the
20th
century.
Modest
albeit
important
use
and
production
of
asphalt,
paraffins,
tar
and
kerosene
took
place
as
far
back
as
centuries
ago
yet
oil
dependent
economies
and
the
massive
global
adoption
of
oil
for
transportation,
electricity
generation
and
industrial
production
did
not
surface
until
the
20th
century.
As
a
result,
global
consumption
has
generally
increased
since
then.
This
remains
the
case
today.
Growth
at
this
point
in
time
is
not
strong,
but
it
still
exists.
Substitution
has
not
yet
resulted
in
oil
consumption
declines
and
is
unlikely
to
for
some
time
to
come.
Whether
there
is
an
expansion
or
a
contraction,
global
consumption
has
rarely
been
volatile.
Demand
tends
to
be
a
mostly
stable
factor.
Supply,
on
the
other
hand,
is
not.
The
United
States
has
recently
experienced
a
resurgence
in
production
after
the
widespread
use
of
hydraulic
fracturing,
otherwise
known
as
fracking.
Russia
has
also
become
one
of
the
three
largest
producers
while
Mexico
has
experienced
significant
declines
in
its
primary
fields.
The
combination
of
a
demand
shock,
driven
by
the
coordinated
global
economic
shutdown,
and
a
supply
shock,
driven
by
the
Saudi
Prince’s
and
Russia’s
decision
to
flood
the
market,
has
rarely
occurred
in
tandem.
Demand
slowdowns
are
not
unprecedented,
although
they
tend
to
be
mild,
and
neither
are
supply
shocks.
The
simultaneity
of
both
is
incredibly
unusual.
It
is
this
perfect
storm
that
has
resulted
in
oil
declining
to
$20
a
barrel
on
West
Texas
Intermediate.
If
we
are
amidst
a
perfect
storm
and
storms
eventually
pass,
doesn’t
it
behoove
us
to
look
at
and
invest
in
select
energy
companies?
We
believe
so.
We
need
to
consider
that
Saudi
Arabia’s
economy
is
entirely
dependent
on
oil
revenues.
It
is
not
diversified
as
are
the
United
States,
Russia
or
even
Mexico.
We
also
remind
ourselves
that
the
Saudi
Prince
is
young,
newly
crowned
and
may
be
exhibiting
an
impulsive
nature.
Reckless
behavior
from
an
inexperienced
regal
would
not
be
unprecedented.
We
nevertheless
doubt
whether
playing
economic
chess
with
Russia
is
a
prudent
move
knowing
that
Vladimir
Putin
is
the
antithesis
of
impulsive.
The
battle
of
wills
will
inevitably
fall
to
economic
hardship
in
the
very
near
future.
Saudi
Arabia
cannot
afford
to
flood
the
market
for
very
long
at
prices
a
fourth
of
what
it
requires.
In
the
meantime,
the
U.S.
has
also
been
complicit
in
flooding
the
market
with
supply.
Production
has
increased
from
approximately
7
million
BOE
(Barrels
of
Oil
Equivalent
per
day)
a
mere
few
years
ago
to
approximately
13
million
BOE
today.
Since
we
expect
global
consumption
to
decline
by
20%
in
the
short-term
due
to
the
global
economic
shutdown,
6
million
additional
barrels
only
adds
fuel
to
the
fire
(pun
intended).
The
U.S.
is
primarily
driven
by
economic
motives,
however,
and
we
would
not
be
surprised
to
see
swift
production
declines
in
most
of
our
domestic
fields
this
year.
In
addition,
public
companies
worldwide
are
also
driven
by
economic
factors
and
we
should
not
ignore
the
fact
that
all
super-major
oil
companies,
Chevron,
Exxon,
Royal
Dutch
and
the
like,
are
reducing
their
capital
projects
by
30%
to
50%
or
so
in
many
cases.
Such
declines
in
spending
are
unprecedented
and
will
play
a
significant
role
in
forthcoming
supply
shortfalls.
Smaller
producers,
companies
we
pay
little
attention
to,
are
likely
to
shut
down
completely.
In
summary,
the
seeds
have
now
been
sown
for
an
increase
in
oil
prices.
From
current
levels,
it
is
not
unreasonable
to
see
a
doubling
if
not
a
tripling
in
prices
over
the
next
few
years,
perhaps
more.
We
believe
few
asset
classes
have
such
upside
potential.
For
the
quarter
as
well
as
the
six-month
period,
our
overweight
negatively
impacted
relative
returns
yet
the
performance
of
our
companies
outperformed
those
of
our
benchmark.
Might
there
come
a
time
when
both
our
sector
weight
and
our
companies
outperform?
We
think
so.
The
precipitous
decline
in
energy
related
securities
has
also
resulted
in
all
major
global
indexes
no
longer
having
meaningful
representation
in
the
sector.
We
are
therefore
overweight.
As
a
percent
of
the
overall
Baywood
Value
Plus
fund,
we
don’t
own
more
than
we
did
a
few
months
ago
but
it
makes
absolutely
no
sense
for
us
to
own
less.
We
have
modestly
shifted
among
the
companies
we
own
and
we
are
diversified
across
the
complex.
We
own
a
select
few
of
the
best
capitalized
production
companies,
the
two
largest
refiners
and
recently
initiated
a
position
in
Kinder
Morgan,
the
largest
pipeline
company
in
the
United
States.
These
companies
are
all
pricing
in
the
current
environment
as
though
it
will
be
permanent.
It
will
undoubtedly
be
a
difficult
operating
environment
for
some
time
to
come,
yet
we
own
companies
with
the
greatest
financial
flexibility
among
their
peers.
We
also
don’t
mean
to
entirely
dismiss
the
possibility
that
there
will
be
dividend
cuts.
This
is
a
possibility.
Yet
at
current
prices,
cuts
will
not
meaningfully
alter
the
dividend
component
on
the
overall
fund
which
is
at
a
multi-year
high.
BAYWOOD
VALUE
PLUS
FUND
A
MESSAGE
TO
OUR
SHAREHOLDERS
March
31,
2020
4
Outside
of
energy,
we
have
been
generally
underweight
financials,
another
sector
that
has
recently
declined
meaningfully.
In
our
opinion,
price
declines
are
overdone
and
as
such
we
have
been
adding
to
existing
positions.
We
are
somewhat
underweight
consumer
staples
and
increased
healthcare
meaningfully
earlier
in
the
six-month
period
and
are
equal
weight
information
technology.
These
three
sectors
have
performed
reasonably
well,
a
very
relative
term
in
such
a
broad
market
decline.
The
Baywood
Value
Plus
Fund
is
also
overweight
basic
materials
in
companies
whose
fundamentals
appear
to
not
be
unduly
suffering
from
the
economic
downturn.
We
expect
them
to
maintain
their
business
momentum
as
the
year
progresses.
We
have
also
added
to
the
Fund’s
industrial
exposure
with
purchases
of
3M
and
Parker
Hannifin.
Should
their
stock
prices
continue
to
languish,
we
will
eagerly
add
to
our
positions.
We
also
initiated
a
position
in
Genuine
Parts,
a
company
with
counter-cyclical
attributes.
We
have
owned
this
well-run
capital-disciplined
operator
in
the
past
and
are
very
pleased
to
do
so
again.
The
rebound
at
the
end
of
the
March
notwithstanding,
if
past
is
precedent,
we’d
expect
continued
volatility
for
a
number
of
months.
Similar
to
2008-2009
as
well
as
2000-2002,
an
investor
does
not
need
to
try
to
pick
the
ultimate
bottom.
Bottoms
are
established
over
periods
of
weeks
and
months.
As
such,
we
are
not
reacting
to
the
daily
excess
of
headlines,
headlines
which
are
prone
to
shorten
investor
time
horizons
and
result
in
poor
decision-making.
We
will
continue
to
ask
the
difficult
questions,
rely
on
what
we
believe
companies
can
earn
over
a
complete
cycle
and
under
what
methods.
We
will
continue
to
ask
whether
their
business
models
are
being
disrupted
and
whether
they
will
be
able
to
take
advantage
of
the
distress
that
their
peers
may
be
experiencing.
Asking
those
questions
so
far
during
the
downturn
has
resulted
in
us
purchasing
what
we
think
are
good
companies
at
rarely
available
prices.
We
expect
to
continue
to
do
so
as
we
believe
markets
will
increasingly
recognize
that
many
companies
have
been
unduly
discounted
and
underlying
fundamentals
could
improve.
Current
and
future
portfolio
holdings
are
subject
to
change
and
risk.
The
Morningstar
category
is
used
to
compare
fund
performance
to
its
peers.
It
is
not
possible
to
invest
directly
into
an
index
or
category.
Past
performance
is
no
guarantee
of
future
results.
Risk
Considerations:
Mutual
fund
investing
involves
risk,
including
the
possible
loss
of
principal.
The
Fund
primarily
invests
in
undervalued
securities,
which
may
not
appreciate
in
value
as
anticipated
by
the
Advisor
or
remain
undervalued
for
longer
than
anticipated.
The
Fund
may
invest
in
American
Depositary
Receipts
(ADRs),
which
involves
risks
relating
to
political,
economic
or
regulatory
conditions
in
foreign
countries
and
may
cause
greater
volatility
and
less
liquidity.
The
Fund
may
also
invest
in
convertible
securities
and
preferred
stock,
which
may
be
adversely
affected
as
interest
rates
rise.
BAYWOOD
VALUE
PLUS
FUND
PERFORMANCE
CHART
AND
ANALYSIS
March
31,
2020
5
The
following
chart
reflects
the
change
in
the
value
of
a
hypothetical
$10,000
investment,
including
reinvested
dividends
and
distributions,
in
the
Baywood
Value
Plus
Fund
(the
“Fund”)
compared
with
the
performance
of
the
benchmark,
Morningstar
US
Large
Value
TR
Index,
since
inception.
The
Morningstar
US
Large
Value
TR
Index
measures
the
performance
of
large-cap
stocks
with
relatively
low
prices
given
anticipated
per
share
earnings,
book
value,
cash
flow,
sales
and
dividends.
The
total
return
of
the
index
includes
the
reinvestment
of
dividends
and
income.
The
total
return
of
the
Fund
includes
operating
expenses
that
reduce
returns,
while
the
total
return
of
the
index
does
not
include
expenses.
The
Fund
is
professionally
managed,
while
the
index
is
unmanaged
and
is
not
available
for
investment.
Comparison
of
Change
in
Value
of
a
$10,000
Investment
Baywood
Value
Plus
Fund
vs.
Morningstar
US
Large
Value
TR
Index
Performance
data
quoted
represents
past
performance
and
is
no
guarantee
of
future
results.
Current
performance
may
be
lower
or
higher
than
the
performance
data
quoted.
Investment
return
and
principal
value
will
fluctuate
so
that
shares,
when
redeemed,
may
be
worth
more
or
less
than
original
cost.
As
stated
in
the
Fund’s
prospectus,
the
annual
operating
expense
ratio
(gross)
is
8.13%.
However,
the
Fund’s
advisor has
contractually
agreed
to
waive
its
fee
and/or
reimburse
Fund
expenses
to
limit
Total
Annual
Fund
Operating
Expenses
After
Fee
Waiver
and/or
Expense
Reimbursement
(excluding
all
taxes,
interest,
portfolio
transaction
expenses,
acquired
fund
fees
and
expenses,
proxy
expenses
and
extraordinary
expenses)
to
0.70%,
through
January
31,
2021
(the
“Expense
Cap”).
The
Expense
Cap
may
be
raised
or
eliminated
only
with
the
consent
of
the
Board
of
Trustees.
The
advisor
may
be
reimbursed
by
the
Fund
for
fees
waived
and
expenses
reimbursed
by
the
advisor
pursuant
to
the
Expense
Cap
if
such
payment
is
approved
by
the
Board,
made
within
three
years
of
the
fee
waiver
or
expense
reimbursement
and
does
not
cause
the
Total
Annual
Fund
Operating
Expenses
After
Fee
Waiver
and/or
Expense
Reimbursement
to
exceed
the
lesser
of
(i)
the
then-current
Expense
Cap
and
(ii)
the
Expense
Cap
in
place
at
the
time
the
fees/expenses
were
waived/reimbursed.
Total
Annual
Fund
Operating
Expenses
After
Fee
Waiver
and/or
Expense
Reimbursement
will
increase
if
exclusions
from
the
Expense
Cap
apply.
During
the
period,
certain
fees
were
waived
and/or
expenses
reimbursed;
otherwise,
returns
would
have
been
lower.
The
performance
table
and
graph
do
not
reflect
the
deduction
of
taxes
that
a
shareholder
would
pay
on
Fund
distributions
or
the
redemption
of
Fund
shares.
Returns
greater
than
one
year
are
annualized.
For
the
most
recent
month-end
performance,
please
call
(855)
409-2297.
The
Fund
recently
experienced
significant
negative
short-term
performance
due
to
market
volatility
associated
with
the
COVID-19
pandemic.
Average
Annual
Total
Returns
Periods
Ended
March
31,
2020
One
Year
Five
Year
Ten
Year
Since
Inception
06/27/08
Baywood
Value
Plus
Fund
-22.05%
0.34%
6.30%
5.89%
Morningstar
US
Large
Value
TR
Index
-14.66%
3.93%
7.74%
5.65%
*
The
Fund’s
Institutional
Shares
performance
for
periods
prior
to
the
commencement
of
operations
(12/2/13)
is
that
of
a
collective
investment
trust
managed
by
the
Fund’s
Advisor
and
portfolio
management
team.
The
Institutional
Shares
of
the
collective
investment
trust
commenced
operations
on
June
27,
2008.
BAYWOOD
VALUE
PLUS
FUND
SCHEDULE
OF
INVESTMENTS
March
31,
2020
6
See
Notes
to
Financial
Statements.
The
following
is
a
summary
of
the
inputs
used
to
value
the
Fund's instruments
as
of
March
31,
2020.
The
inputs
or
methodology
used
for
valuing
securities
are
not
necessarily
an
indication
of
the
risks
associated
with
investing
in
those
securities.
For
more
information
on
valuation
inputs,
and
their
aggregation
into
the
levels
used
in
the
table
below,
please
refer
to
the
Security
Valuation
section
in
Note
2
of
the
accompanying
Notes
to
Financial
Statements.
The
Level
1
value
displayed
in
this
table
is
Common
Stock.
The
Level
2
value
displayed
in
this
table
is
a
Money
Market
Fund.
Refer
to
this
Schedule
of
Investments
for
a
further
breakout
of
each
security
by
industry.
Shares
Security
Description
Value
Common
Stock
-
95.8%
Basic
Materials
-
5.4%
1,766
Corteva,
Inc.
$
41,501
1,460
Nutrien,
Ltd.
49,552
800
Westrock
Co.
22,608
113,661
Capital
Goods
/
Industrials
-
7.6%
200
3M
Co.
27,302
600
Cummins,
Inc.
81,192
500
Eaton
Corp.
PLC
38,845
100
Parker-Hannifin
Corp.
12,973
160,312
Communication
Services
-
6.1%
1,600
Comcast
Corp.,
Class A
55,008
1,400
Verizon
Communications,
Inc.
75,222
130,230
Consumer
Discretionary
-
7.4%
300
Genuine
Parts
Co.
20,199
1,200
Kontoor
Brands,
Inc.
23,004
700
Lear
Corp.
56,875
600
Target
Corp.
55,782
155,860
Consumer
Staples
-
8.3%
200
Kimberly-Clark
Corp.
25,574
1,100
Molson
Coors
Beverage
Co.,
Class B
42,911
500
Mondelez
International,
Inc.,
Class A
25,040
300
PepsiCo.,
Inc.
36,030
400
Walmart,
Inc.
45,448
175,003
Energy
-
10.4%
400
Chevron
Corp.
28,984
1,500
ConocoPhillips
46,200
3,700
Equinor
ASA,
ADR
45,066
1,700
Kinder
Morgan,
Inc.
23,664
600
Phillips
66
32,190
1,000
Valero
Energy
Corp.
45,360
221,464
Financials
-
14.9%
2,500
American
International
Group,
Inc.
60,625
400
Ameriprise
Financial,
Inc.
40,992
700
BOK
Financial
Corp.
29,792
1,200
Citigroup,
Inc.
50,544
1,500
MetLife,
Inc.
45,855
600
Morgan
Stanley
20,400
100
Northern
Trust
Corp.
7,546
900
Prosperity
Bancshares,
Inc.
43,425
1,200
Radian
Group,
Inc.
15,540
314,719
Health
Care
-
16.0%
800
AbbVie,
Inc.
60,952
300
Amgen,
Inc.
60,819
700
AstraZeneca
PLC,
ADR
31,262
500
Cardinal
Health,
Inc.
23,970
600
CVS
Health
Corp.
35,598
500
Gilead
Sciences,
Inc.
37,380
1,100
Koninklijke
Philips
NV,
ADR
44,176
500
Medtronic
PLC
45,090
339,247
Real
Estate
-
4.9%
2,400
Brookfield
Property
REIT,
Inc.,
Class A
20,376
6,230
VEREIT,
Inc.
REIT
30,465
1,300
VICI
Properties,
Inc.
REIT
21,632
1,900
Weyerhaeuser
Co.
REIT
32,205
104,678
Shares
Security
Description
Value
Technology
-
9.5%
1,800
Cisco
Systems,
Inc.
$
70,758
600
Intel
Corp.
32,472
1,200
NetApp,
Inc.
50,028
600
TE
Connectivity,
Ltd.
37,788
100
Texas
Instruments,
Inc.
9,993
201,039
Transportation
-
3.6%
4,400
Atlas
Corp.
33,836
300
Union
Pacific
Corp.
42,312
76,148
Utilities
-
1.7%
500
Dominion
Energy,
Inc.
36,095
Total
Common
Stock
(Cost
$2,393,876)
2,028,456
Shares
Security
Description
Value
Money
Market
Fund
-
3.9%
83,506
Federated
Government
Obligations
Fund,
Institutional
Class,
0.32%
(a)
(Cost
$83,506)
83,506
Investments,
at
value
-
99.7%
(Cost
$2,477,382)
$
2,111,962
Other
Assets
&
Liabilities,
Net
-
0.3%
5,531
Net
Assets
-
100.0%
$
2,117,493
ADR
American
Depositary
Receipt
PLC
Public
Limited
Company
REIT
Real
Estate
Investment
Trust
(a)
Dividend
yield
changes
daily
to
reflect
current
market
conditions.
Rate
was
the
quoted
yield
as
of
March
31,
2020.
Valuation
Inputs
Investments
in
Securities
Level
1
-
Quoted
Prices
$
2,028,456
Level
2
-
Other
Significant
Observable
Inputs
83,506
Level
3
-
Significant
Unobservable
Inputs
–
Total
$
2,111,962
BAYWOOD
VALUE
PLUS
FUND
SCHEDULE
OF
INVESTMENTS
March
31,
2020
7
See
Notes
to
Financial
Statements.
PORTFOLIO
HOLDINGS
%
of
Total
Investments
Basic
Materials
5.4%
Capital
Goods
/
Industrials
7.6%
Communication
Services
6.2%
Consumer
Discretionary
7.4%
Consumer
Staples
8.3%
Energy
10.5%
Financials
14.9%
Health
Care
16.0%
Real
Estate
4.9%
Technology
9.5%
Transportation
3.6%
Utilities
1.7%
Money
Market
Fund
4.0%
100.0%
BAYWOOD
VALUE
PLUS
FUND
STATEMENT
OF
ASSETS
AND
LIABILITIES
March
31,
2020
8
See
Notes
to
Financial
Statements.
ASSETS
Investments,
at
value
(Cost
$2,477,382)
$
2,111,962
Receivables:
Fund
shares
sold
1,885
Investment
securities
sold
7,004
Dividends
4,909
From
investment
advisor
7,937
Prepaid
expenses
14,069
Total
Assets
2,147,766
LIABILITIES
Payables:
Investment
securities
purchased
13,889
Accrued
Liabilities:
Trustees’
fees
and
expenses
18
Fund
services
fees
3,926
Other
expenses
12,440
Total
Liabilities
30,273
NET
ASSETS
$
2,117,493
COMPONENTS
OF
NET
ASSETS
Paid-in
capital
$
2,493,897
Distributable
earnings
(376,404)
NET
ASSETS
$
2,117,493
SHARES
OF
BENEFICIAL
INTEREST
AT
NO
PAR
VALUE
(UNLIMITED
SHARES
AUTHORIZED)
169,898
NET
ASSET
VALUE,
OFFERING
AND
REDEMPTION
PRICE
PER
SHARE
$
12.45
BAYWOOD
VALUE
PLUS
FUND
STATEMENT
OF
OPERATIONS
SIX
MONTHS
ENDED
MARCH
31,
2020
9
See
Notes
to
Financial
Statements.
INVESTMENT
INCOME
Dividend
income
(Net
of
foreign
withholding
taxes
of
$735)
$
45,093
Total
Investment
Income
45,093
EXPENSES
Investment
advisor
fees
6,984
Fund
services
fees
28,885
Transfer
agent
fees
8,815
Custodian
fees
2,426
Registration
fees
9,467
Professional
fees
13,396
Trustees'
fees
and
expenses
1,841
Other
expenses
9,799
Total
Expenses
81,613
Fees
waived
and
expenses
reimbursed
(71,835)
Net
Expenses
9,778
NET
INVESTMENT
INCOME
35,315
NET
REALIZED
AND
UNREALIZED
GAIN
(LOSS)
Net
realized
loss
on
investments
(865)
Net
change
in
unrealized
appreciation
(depreciation)
on
investments
(732,204)
NET
REALIZED
AND
UNREALIZED
LOSS
(733,069)
DECREASE
IN
NET
ASSETS
RESULTING
FROM
OPERATIONS
$
(697,754)
BAYWOOD
VALUE
PLUS
FUND
STATEMENTS
OF
CHANGES
IN
NET
ASSETS
10
See
Notes
to
Financial
Statements.
For
the
Six
Months
Ended
March
31,
2020
For
the
Year
Ended
September
30,
2019
OPERATIONS
Net
investment
income
$
35,315
$
64,034
Net
realized
gain
(loss)
(865)
30,295
Net
change
in
unrealized
appreciation
(depreciation)
(732,204)
(139,596)
Decrease
in
Net
Assets
Resulting
from
Operations
(697,754)
(45,267)
DISTRIBUTIONS
TO
SHAREHOLDERS
Investor
Shares
-
(113,003)
Institutional
Shares
(69,411)
(72,133)
Total
Distributions
Paid
(69,411)
(185,136)
CAPITAL
SHARE
TRANSACTIONS
Sale
of
shares
Investor
Shares
-
7,750
Institutional
Shares
42,269
2,204,983
Reinvestment
of
distributions
Investor
Shares
-
112,658
Institutional
Shares
69,276
72,102
Redemption
of
shares
Investor
Shares
-
(1,805,831)
Institutional
Shares
(29,167)
(435,150)
Increase
in
Net
Assets
from
Capital
Share
Transactions
82,378
156,512
Decrease
in
Net
Assets
(684,787)
(73,891)
NET
ASSETS
Beginning
of
Period
2,802,280
2,876,171
End
of
Period
$
2,117,493
$
2,802,280
SHARE
TRANSACTIONS
Sale
of
shares
Investor
Shares
-
477
Institutional
Shares
2,846
137,725
Reinvestment
of
distributions
Investor
Shares
-
7,217
Institutional
Shares
4,256
4,519
Redemption
of
shares
Investor
Shares
-
(112,284)
Institutional
Shares
(1,710)
(27,993)
Increase
in
Shares
5,392
9,661
BAYWOOD
VALUE
PLUS
FUND
FINANCIAL
HIGHLIGHTS
11
See
Notes
to
Financial
Statements.
These
financial
highlights
reflect
selected
data
for
a
share
outstanding
throughout
each
year
or
period
presented.
For
the
Six
Months
Ended
March
31,
2020
For
the
Year
Ended
September
30,
2019
For
the
Year
Ended
September
30,
2018
For
the
Period
Ended
September
30,
2017
For
the
Year
Ended
September
30,
2016
(a)
For
the
Year
Ended
November
30,
2015
INSTITUTIONAL
SHARES
NET
ASSET
VALUE,
Beginning
of
Period
$
17.03
$
18.63
$
17.36
$
15.59
$
17.00
$
19.42
INVESTMENT
OPERATIONS
Net
investment
income
(b)
0.21
0.44
0.38
0.38
0.29
0.39
Net
realized
and
unrealized
gain
(loss)
(4.37)
(0.84)
1.76
2.02
0.94
(1.06)
Total
from
Investment
Operations
(4.16)
(0.40)
2.14
2.40
1.23
(0.67)
DISTRIBUTIONS
TO
SHAREHOLDERS
FROM
Net
investment
income
(0.20)
(0.39)
(0.35)
(0.36)
(2.27)
(0.35)
Net
realized
gain
(0.22)
(0.81)
(0.52)
(0.27)
(0.37)
(1.40)
Total
Distributions
to
Shareholders
(0.42)
(1.20)
(0.87)
(0.63)
(2.64)
(1.75)
NET
ASSET
VALUE,
End
of
Period
$
12.45
$
17.03
$
18.63
$
17.36
$
15.59
$
17.00
TOTAL
RETURN
(25.00)%
(1.55)%
12.57%
15.60%
8.65%(c)
(3.58)%
RATIOS/SUPPLEMENTARY
DATA
Net
Assets
at
End
of
Period
(000s
omitted)
$
2,116
$
2,802
$
936
$
711
$
536
$
426
Ratios
to
Average
Net
Assets:
Net
investment
income
2.52%
2.66%
2.10%
2.28%
2.30%(d)
2.23%
Net
expenses
0.70%
0.70%
0.70%
0.70%
0.70%(d)
0.70%
Gross
expenses
(e)
5.84%
8.13%
8.83%
11.16%
14.43%(d)
2.09%
PORTFOLIO
TURNOVER
RATE
23%
49%
34%
48%
22%(c)
32%
(a)
Effective
March
24,
2016,
the
Fund
changed
its
fiscal
year
end
from
November
30
to
September
30.
The
information
presented
is
for
the
period
December
1,
2015
to
September
30,
2016.
(b)
Calculated
based
on
average
shares
outstanding
during
each
period.
(c)
Not
annualized.
(d)
Annualized.
(e)
Reflects
the
expense
ratio
excluding
any
waivers
and/or
reimbursements.
BAYWOOD
SOCIALLY
RESPONSIBLE
FUND
A
MESSAGE
TO
OUR
SHAREHOLDERS
March
31,
2020
12
Dear
Shareholder,
We
are
pleased
to
report
our
economic
and
financial
market
perspectives
and
the
investment
activities
for
the
Baywood
Socially
Responsible
Fund
(the
“Fund”)
for
the
six
months
ended
March
31,
2020.
The
Fund
is
a
mid-to-large
capitalization
value-oriented
portfolio
of
stock
holdings
selected
from
a
universe
of
stocks
created
through
the
application
of
inclusionary
and
exclusionary
social
screens
and
assessments
of
the
Environmental,
Social
and/or
Governance
(“ESG”)
profile
of
each
company.
Among
these
stocks,
we
further
evaluate
and
assess
each
prospective
holding’s
valuation
and
fundamental
business
attraction
to
determine
the
current
portfolio
holdings.
In
selecting
investments,
we
consider
social
criteria
such
as
an
issuer’s
community
relations,
corporate
governance,
employee
diversity,
employee
relations,
environmental
impact
and
sustainability,
human
rights
record
and
product
safety.
Our
thoughts
go
out
to
those
whose
lives
have
been
taken
and
uprooted
by
this
virus.
While
we
add
our
thoughts
on
what
this
means
for
the
economy
and
the
markets
in
the
following
review
of
the
Baywood
Socially
Responsible
Fund,
please
keep
in
mind
that
the
most
important
factors
in
our
individual
lives
are
those
that
we
share
it
with.
Moments
like
these
tend
to
bring
what
is
truly
important
to
the
forefront
and
little
else
seems
to
matter.
The
first
two
quarters
of
our
new
decade
will
likely
have
more
written
about
it
than
any
other
in
our
lifetime
and
we
will
focus
our
attention
on
the
first
quarter
of
2020
before
discussing
the
fourth
quarter
of
2019.
A
global
pandemic
of
unprecedented
size
is
sweeping
across
the
world
causing
massive
disruptions
in
our
daily
lives,
economy,
markets
and
collective
psyche.
For
those
who
have
the
ability
and
resources
to
withstand
the
impact
of
a
sudden
halt
in
economic
activity,
and
who
can
just
merely
complain
about
a
shelter-in-place
should
consider
themselves
lucky.
For
many
others
the
effects
will
be
painful
and
lasting.
For
the
economy
and
the
markets,
the
effects
will
be
mostly
transitory,
however,
there
will
be
devastating
consequences
for
companies
that
lack
the
discipline
and
incentives
to
plan
for
the
long-term.
Socially
Responsible
investing
is
not
defined
by
any
single
perspective.
Efforts
are
and
have
been
taking
place
to
define
and
perhaps
standardize
the
concept
but
it
is
not
possible
to
capture
the
different
points
of
view
in
a
singular
manner.
That
is
because
Socially
Responsible
investing
is
truly
in
the
eye
of
the
beholder.
Therefore,
we
will
limit
our
conversation
to
what
it
means
to
us
here
at
SKBA
Capital
Management
and
how
it
influences
our
point
of
view
about
what
is
going
on
in
the
world
today.
We
believe
that
the
best
run
corporations
are
those
that
take
stakeholders
into
consideration,
not
just
shareholders.
Corporate
governance
is
the
signal
that
this
effect
is
lasting.
Corporations
themselves
are
not
just
an
aggregation
of
individual
decisions;
they
are,
over
time,
many
different
people,
many
different
faces.
The
prevailing
feature
about
a
corporation
is
its
governance.
Companies
with
virtuous
governance
practices
tend
to
interact
with
society
in
a
more
respectful
and
sustainable
manner.
Sustainability
in
this
case
is
defined
as
a
company
that
invests
in
its
people,
systems,
partners
and
products
for
the
long-term
and
this
can
only
be
accomplished
repeatedly
with
proper
governance.
Incentives
play
a
major
role
in
this
as
well,
and
through
proper
governance,
the
proper
incentives
should
arise.
What
this
means
for
our
holdings
is
that,
over
time,
the
companies
that
we
invest
in
can
survive
and
possibly
thrive
in
environments
such
as
this.
Companies
with
proper
governance
will
likely
have
taken
on
less
debt
to
expand
an
earnings
base
to
hit
compensation
targets
or
to
repurchase
shares
to
hit
said
targets.
They
will
also
have
likely
invested
in
longer-cycle
capital
projects
that
may
decrease
reported
earnings
today
but
will
put
themselves
in
a
stronger
position
in
the
future.
This
sacrifice
probably
won’t
be
shared
by
management
teams
that
are
only
motivated
by
compensation
and
compensation
structures,
which
for
the
most
part,
are
short-term
in
nature.
We
construct
a
portfolio
of
companies
that
strives
to
offer
these
attributes.
As
a
result,
the
strategy
has
compounded
wealth
since
its
inception.
We
have
been
managing
Socially
Responsible
portfolios
since
the
inception
of
the
company
and
are
now
in
our
30th
year
of
doing
so.
We
are
not
a
“Johnny-come-lately”
when
it
comes
to
investing
on
behalf
of
our
clients
socially
responsible
desires
and
wishes.
We
believe
it
is
our
approach,
our
relentless
focus
on
the
long-term
that
has
allowed
us
to
be
successful
for
so
long.
Speaking
of
time
frames,
the
response
we
have
seen
in
the
market
to
this
pandemic
is
so
far
nothing
short
of
panic.
And
it
is
easy
to
fall
into
panic
responses;
after
all,
we
have
not
witnessed
anything
like
this
in
our
lifetimes.
Yet,
as
value
investors,
we
deal
with
fear
and
panic
and
their
effects
on
markets
on
a
somewhat
regular
basis;
one
could
say
that
is
the
nature
of
being
a
value
investor.
It
has
been
our
experience
that
at
the
onset
of
panic-driven
markets
asset
class
correlations
tend
to
converge
towards
one.
Only
after
a
period
of
time
do
market
participants’
sense
of
reason
return
and
become
more
discerning.
It
is
usually
then—after
investors
stop
letting
the
headlines
drive
irrational,
short-term
decisions
and
start
to
widen
their
time
horizon—that
those
who
have
the
wherewithal
are
able
to
take
advantage
of
this
environment.
Those
who
have
the
assets
that
have
been
damaged
by
poor
decision-making
and
short
time
horizons
will
see
them
continue
to
depreciate.
We
believe
strongly
that
we
are
in
the
former
group.
BAYWOOD
SOCIALLY
RESPONSIBLE
FUND
A
MESSAGE
TO
OUR
SHAREHOLDERS
March
31,
2020
13
In
the
short
term,
we
cannot
control
the
vicissitudes
of
market
participants.
When
correlations
go
to
one
and
everything
declines
simultaneously,
there
are
few
places
to
hide.
Once
again,
we
believe
this
will
be
sorted
out
with
time,
but
for
now,
relative
performance
shortfalls
for
the
first
quarter
of
2020
can
be
largely
attributed
to
our
holdings
in
financials,
real
estate
and
industrials.
Nearly
all
of
the
panic
in
the
market
is
focused
on
the
short-term
impacts
to
economically
sensitive
companies.
REIT’s,
whose
asset
prices
usually
tend
to
be
negatively
correlated
to
interest
rates
(interest
rates
go
down,
REIT
prices
go
up),
were
hit
unusually
hard.
The
shutdown
can
have
a
large
impact
on
tenants’
ability
to
pay
rent
and
therefore
the
REIT’s
ability
to
service
its
debt.
Due
to
the
typical
capital
structure
of
a
REIT,
which
is
funded
by
debt
rather
than
equity,
a
crisis
like
this
will
have
an
impact
on
a
large
swath
of
REIT’s
ability
to
service
debt,
and
we
are
evaluating
our
holdings.
The
market’s
myopia
seems
most
pronounced
in
the
industrial
sector.
The
perspectives
taken
on
the
companies
we
own
in
this
industry
are
short-sighted
at
best.
The
companies
we
own
have
business
models
which
are
designed
to
position
themselves
for
longer
term
success.
For
example,
Union
Pacific
is
one
of
the
best
managed
railroads
in
the
United
States.
It
is
also
nearly
10
times
more
energy-
efficient
than
other
modes
of
transportation
and
is
highly
unlikely
to
be
disintermediated.
When,
not
if,
economic
activity
resumes,
sellers
of
this
company
are
likely
to
regret
their
decision.
In
the
financial
sector
we
share
the
market’s
concern
of
higher
default
rates
and
continued
net
interest
margin
compression,
yet
we
do
not
agree
with
the
magnitude.
After
a
short
spell
the
yield
curve
has
returned
to
a
more
normal
shape
and
economic
activity
will
eventually
resume.
For
the
companies
we
own,
a
short-term
spike
in
defaults
does
not
permanently
impair
the
asset,
yet
a
longer-term
lower
level
of
interest
rates
does.
We
have
adjusted
our
holdings
accordingly.
Having
a
long-term
perspective
and
the
mandate
to
purchase
like-minded
companies
is
a
benefit
in
environments
like
this.
From
our
perspective,
stock
valuations
in
general
are
approaching
extreme
lows
not
seen
since
the
last
financial
crisis
and
in
some
cases
even
before
then.
We
are
therefore
using
this
opportunity,
as
we
have
in
the
past,
to
reallocate
our
investment
capital
towards
companies
with
attractive
prospective
returns
on
capital
where
valuations
would
have
precluded
us
from
doing
so
until
recently.
During
the
first
quarter
of
2020
we
initiated
positions
in
Genuine
Parts,
Berkshire
Hathaway
and
TE
Connectivity.
These
are
companies
we
classify
as
“quality
upgrades”
to
the
portfolio.
These
stocks
rarely
trade
at
low
earnings
multiples
and
opportunities
for
us
to
own
them
in
the
portfolio
are
few.
Given
the
declines
in
the
overall
market
in
the
first
quarter,
we
have
continued
in
our
effort
to
“high-grade”
the
holdings
in
the
portfolio,
positioning
us
with
the
opportunity
for
long-term
success.
Berkshire
Hathaway
is
the
most
under-represented
company
of
its
size
in
any
of
the
ESG
indexes.
We
do
not
think
this
is
due
to
its
poor
ESG
scores.
As
with
any
data,
one
can
use
it
to
make
any
point
one
wishes
and
so
it
is
with
Berkshire
Hathaway.
Let’s
assess
what
appears
to
be
the
general
disregard
towards
Berkshire
from
two
different
angles.
The
first
relates
to
corporate
governance
and
the
second
relates
to
its
participation
in
energy.
On
the
first,
common
perception
is
such
that
the
board
lacks
independence
and
suffers
from
an
elevated
average
age.
On
the
surface
this
is
indisputable.
Yet
we
must,
emphasis
on
must,
caution
against
accepting
the
standard
definition
of
independence.
Corporate
America
has
succeeded
in
establishing
independent
boards;
Sarbanes
Oxley
accelerated
the
change.
This
common
definition
is
nevertheless
altogether
different
than
concluding
that
corporate
America
has
created
qualified
boards,
particularly
when
members
show
up
to
board
meetings
a
few
times
a
year,
the
service
or
presence
for
which
they
receive
significant
compensation.
Such
compensation
can
come
with
a
significant
and
hidden
cost—the
cost
of
acquiescence.
It
can
be
opined
that
board
members
are
essentially
bought
off
by
management.
In
consultants’
“qualified”
opinion,
managers
must
be
paid
in-line
with
their
peers
in
order
to
remain
competitive.
Given
the
short-term
tenure
of
the
average
CEO,
however,
compensation
is
often
based
on
reaching
short-term
milestones
with
no
regard
to
the
company’s
long-term
success.
We
encourage
the
reader
to
peruse
Berkshire
Hathaway’s
most
recent
letter
to
shareholders
for
a
more
succinct
perspective
on
the
topic.
The
travesty
that
the
typical
board
has
become
is
anathema
to
Berkshire
Hathaway’s
management.
Few
managements
have
as
long
a
tenure
as
Warren
Buffett
and
Charlie
Munger.
Few
managements
have
as
much
vested
in
the
long-term
well-being
of
their
companies
as
do
Warren
and
Charlie.
As
such
we
clearly
are
alone
in
viewing
corporate
governance
under
a
different
lens
than
our
peers,
indexers
in
particular.
As
it
relates
to
age,
Mr.
Buffett
and
Mr.
Munger
skew
the
average
of
the
entire
up
significantly.
Excluding
them
results
in
the
average
age
not
noticeably
different
than
the
average
board.
We’d
caution
against
attempting
to
remove
either
Mr.
Buffett
or
Mr.
Munger
from
the
board
and
are
therefore
also
apparently
of
a
different
mindset
than
most.
We
believe
that
in
this
business,
ability
and
capacity
is
BAYWOOD
SOCIALLY
RESPONSIBLE
FUND
A
MESSAGE
TO
OUR
SHAREHOLDERS
March
31,
2020
14
much
more
important
than
age.
As
far
as
capital
allocators
go,
few
are
as
adept
as
Mr.
Buffett
and
Mr.
Munger.
We
strongly
suggest
that
proper
capital
allocation
goes
hand
in
hand
with
proper
corporate
governance,
something
we
appreciate.
Secondly,
energy
has
experienced
significant
disdain
from
many
ESG
investors.
We
do
not
question
the
motive
behind
such
perceptions.
Yet,
any
company
the
size
of
Berkshire
Hathaway,
or
Apple
or
Microsoft
or
Alphabet
for
that
matter,
make
use
of
energy
and
also
need
to
be
viewed
objectively.
Berkshire
has
modest
participation
within
energy
due
to
its
electric
utility
and
generating
assets.
What
goes
unspoken
yet
should
be
lauded
by
the
ESG
community,
however,
is
the
fact
that
Berkshire
Hathaway
is
among
the
largest
renewable
energy
companies
in
the
United
States.
Yet
sometimes,
when
they
don’t
fit
into
an
overall
narrative,
it
is
simply
more
convenient
to
omit
positive
attributes.
Weighing
positives
against
negatives,
analyzing
improvements
in
overall
corporate
citizenship
and
making
an
independent
judgement
is
what
we
do,
a
point
which
is
sorely
lacking
in
passive
strategies.
So
in
the
first
quarter
of
2020
we
purchased
Berkshire
Hathaway.
We
believe
it
should
have
one
of
the
highest
corporate
governance
scores
among
many
of
its
peers
plus
it
operates
one
of
the
largest
renewable
businesses
in
the
United
States.
Our
purchase
rationale
was
also
based
on
SKBA’s
fundamental
and
valuation
frameworks.
Berkshire
has
one
of
the
safest
balance
sheets—a
desirable
attribute
that
is
not
widely
considered—and
we
believe
it
is
currently
selling
at
a
significant
discount
to
fair
value.
We
are
not
ignoring
possible
difficulties
the
company
will
face
over
the
next
few
months.
We
are
saying
that
from
our
very
different
than
consensus
vantage
point,
the
company
represents
a
desirable
investment
opportunity.
During
the
quarter
we
eliminated
CenturyLink
and
Sensata.
Although
it
owns
very
attractive
and
unique
assets,
CenturyLink’s
financial
leverage
means
that
its
priorities
are
limited
and
it
may
not
be
able
to
grow
amidst
the
economic
decline.
Given
the
pause
in
economic
activity,
financially
levered
companies
end
up
with
less
flexibility,
and
we
decided
to
exit
in
favor
of
other,
less
leveraged
companies.
We
decided
to
swap
our
holdings
in
Sensata
with
TE
Connectivity.
TE
Connectivity
is
a
leader
in
connectors
and
sensors
in
every
market
it
competes
in.
Its
products
are
increasingly
being
utilized
as
more
applications
require
harsh
environment
connectors
and
sensors.
While
its
end-markets
will
be
affected
by
the
halt
in
economic
activity,
the
effect
should
prove
to
be
temporary
and
this
company
has
the
financial
capacity
to
withstand
a
slowdown.
Both
had
declined
meaningfully.
While
Comcast
has
held
up
well
in
the
decline
due
to
the
consistent
nature
of
its
revenues,
its
price
recently
declined
to
a
point
that
allowed
us
to
add
to
our
position
in
this
company
with
attractive
content
generating
assets
along
with
a
dominant
position
in
the
U.S.
cable
industry.
The
decline
in
the
price
of
Royal
Phillips
was
simply
more
than
deserved,
like
many
in
this
volatile
market.
Once
again,
with
Phillips,
the
decline
allowed
us
to
increase
our
position
in
this
healthcare
company
with
dominant
global
market
share.
Furthermore,
one
of
its
main
competitors,
GE,
is
facing
severe
financial
distress
and
should
allow
Phillips
to
accelerate
its
advance
on
GE’s
market
share.
In
contrast
to
the
first
quarter
of
2020,
the
fourth
quarter
of
2019
was
in
many
ways
a
mirror
image
of
the
period
a
year
ago,
not
just
in
the
level
of
stock
returns,
but
also
in
some
of
the
contributors.
Utilities,
consumer
staples,
communication
services
and
real
estate,
all
top
performing
sectors
in
the
fourth
quarter
of
2018,
were
the
worst
performing
sectors
in
the
Russell
1000
Value
respectively
in
last
quarter
of
2019.
The
reasons
for
this
see-saw
have
little
to
do
with
actual
fundamentals
and
more
about
how
certain
sectors
or
stocks
have
behaved
in
the
past
under
similar
circumstances,
which
may
seem
to
work
in
the
short-run;
however,
fundamentals
matter
more
in
the
long-run.
When
markets
crashed
in
the
fourth
quarter
of
2018,
trade
tensions
were
at
their
most
extreme
and
the
Federal
Reserve
was
in
a
balance
sheet
reduction
and
credit
tightening
mode;
investors
feared
the
worst
with
a
global
recession
brought
on
by
an
imminent
trade
war.
Sectors
considered
safe
had
been
highly
preferred
as
bond
substitutes
over
the
last
ten
years
and
so
when
the
markets
grew
fearful
and
interest
rates
declined,
these
“safe
sectors”
benefitted.
A
year
later,
however,
following
the
announcement
of
a
trade
deal,
amidst
signs
that
the
global
economy
is
bottoming
and
as
interest
rates
slowly
begin
to
rise
for
economic
reasons,
the
market
has
shown
its
preference
for
more
cyclical
stocks
and
as
a
result,
last
year’s
“safe
sectors”
have
held
the
index
back.
This
back
and
forth
preference
between
safe
and
cyclical
stocks
while
ignoring
fundamentals
all
in
a
year’s
time
just
goes
to
show
how
irrationally
the
market
can
behave
and
also
provided
a
little
insight
into
what
would
happen
in
the
first
quarter
of
2020.
It
is
times
like
these,
where
short-term
noise
overshadows
long-term
fundamentals,
where
we
get
great
opportunities
to
buy.
In
the
fourth
quarter
of
2019,
we
initiated
positions
in
Amgen
and
NetApp.
Amgen
added
to
what
we
view
as
an
incredibly
undervalued
healthcare
sector.
NetApp’s
recent
stock
decline
resulted
in
us
eliminating
our
long
held
position
in
Hewlett
Packard
on
relative
strength
into
what
we
feel
is
a
better
run
company
with
less
uncertainty.
Oaktree
was
finally
acquired
by
Brookfield
Asset
Management
(BAM),
itself
already
a
top
position
in
the
strategy.
We
feel
that
the
acquisition
further
strengthens
BAM’s
business
model
and
adds
desirable
counter-cyclical
revenues.
We
also
eliminated
M&T
Bank.
We
admire
M&T
as
an
operator;
nevertheless,
at
this
point
in
the
economic
cycle,
we
have
discovered
companies
even
more
depressed
in
price
with
better
full-cycle
return
opportunities.
BAYWOOD
SOCIALLY
RESPONSIBLE
FUND
A
MESSAGE
TO
OUR
SHAREHOLDERS
March
31,
2020
15
The
rebound
at
the
end
of
the
quarter
notwithstanding,
if
past
is
precedent,
we’d
expect
continued
volatility
for
a
number
of
months.
Similar
to
2008-2009
as
well
as
2000-2002,
an
investor
does
not
need
to
try
to
pick
the
ultimate
bottom.
Bottoms
are
established
over
periods
of
weeks
and
months.
As
such,
we
are
not
reacting
to
the
daily
excess
of
headlines,
headlines
which
are
prone
to
shorten
investor
time
horizons
and
result
in
poor
decision-making.
We
will
continue
to
ask
the
difficult
questions,
rely
on
what
we
believe
companies
can
earn
over
a
complete
cycle
and
relentlessly
pursue
superior
governance
structure.
We
will
continue
to
ask
whether
their
business
models
are
being
disrupted
and
whether
they
will
be
able
to
take
advantage
of
the
distress
that
their
peers
may
be
experiencing.
Asking
those
questions
so
far
during
the
downturn
has
resulted
in
us
purchasing
good
companies
at
rarely
available
prices.
We
expect
to
continue
to
do
so
as
we
believe
markets
may
increasingly
recognize
that
many
companies
have
been
unduly
discounted
and
underlying
fundamentals
should
improve.
____________________________________________________________________________
Current
and
future
portfolio
holdings
are
subject
to
change
and
risk.
The
Morningstar
Category
is
used
to
compare
fund
performance
to
its
peers.
It
is
not
possible
to
invest
directly
into
an
index
or
category.
Past
performance
is
no
guarantee
of
future
results.
Risk
Considerations:
Mutual
fund
investing
involves
risk,
including
the
possible
loss
of
principal.
Socially
responsible
investment
criteria
may
limit
the
number
of
investment
opportunities
available
to
the
Fund
or
it
may
invest
a
larger
portion
of
its
assets
in
certain
sectors
which
could
be
more
sensitive
to
market
conditions,
economic,
regulatory
and
environmental
developments.
These
factors
could
negatively
impact
the
Fund’s
returns.
The
Fund
primarily
invests
in
undervalued
securities,
which
may
not
appreciate
in
value
as
anticipated
by
the
Advisor
or
remain
undervalued
for
longer
than
anticipated.
The
Fund
may
invest
in
American
Depositary
Receipts
(ADRs),
which
involves
risks
relating
to
political,
economic
or
regulatory
conditions
in
foreign
countries
and
may
cause
greater
volatility
and
less
liquidity.
The
Fund
may
also
invest
in
convertible
securities
and
preferred
stock,
which
may
be
adversely
affected
as
interest
rates
rise.
BAYWOOD
SOCIALLY
RESPONSIBLE
FUND
PERFORMANCE
CHART
AND
ANALYSIS
March
31,
2020
16
The
following
chart
reflects
the
change
in
the
value
of
a
hypothetical
$10,000
investment,
including
reinvested
dividends
and
distributions,
in
the
Baywood
Socially
Responsible
Fund
(the
“Fund”)
compared
with
the
performance
of
the
benchmark,
Morningstar
U.S.
Large
Value
TR
Index,
since
inception.
The
Morningstar
US
Large
Value
TR
Index
measures
the
performance
of
large-cap
stocks
with
relatively
low
prices
given
anticipated
per
share
earnings,
book
value,
cash
flow,
sales
and
dividends.
The
total
return
of
the
index
includes
the
reinvestment
of
dividends
and
income.
The
total
return
of
the
Fund
includes
operating
expenses
that
reduce
returns,
while
the
total
return
of
the
index
does
not
include
expenses.
The
Fund
is
professionally
managed,
while
the
index
is
unmanaged
and
is
not
available
for
investment.
Comparison
of
Change
in
Value
of
a
$10,000
Investment
Baywood
Socially
Responsible
Fund
vs.
Morningstar
US
Large
Value
TR
Index
Performance
data
quoted
represents
past
performance
and
is
no
guarantee
of
future
results.
Current
performance
may
be
lower
or
higher
than
the
performance
data
quoted.
Investment
return
and
principal
value
will
fluctuate
so
that
shares,
when
redeemed,
may
be
worth
more
or
less
than
original
cost.
As
stated
in
the
Fund’s
prospectus,
the
annual
operating
expense
ratio
(gross)
is
5.78%.
However,
the
Fund’s
advisor has
contractually
agreed
to
waive
its
fee
and/or
reimburse
Fund
expenses
to
limit
Total
Annual
Fund
Operating
Expenses
After
Fee
Waiver
and/or
Expense
Reimbursement
(excluding
all
taxes,
interest,
portfolio
transaction
expenses,
acquired
fund
fees
and
expenses,
proxy
expenses
and
extraordinary
expenses)
to
0.89%,
through
January
31,
2021
(the
“Expense
Cap”).
The
Expense
Cap
may
be
raised
or
eliminated
only
with
the
consent
of
the
Board
of
Trustees.
The
advisor
may
be
reimbursed
by
the
Fund
for
fees
waived
and
expenses
reimbursed
by
the
advisor
pursuant
to
the
Expense
Cap
if
such
payment
is
approved
by
the
Board,
made
within
three
years
of
the
fee
waiver
or
expense
reimbursement
and
does
not
cause
the
Total
Annual
Fund
Operating
Expenses
After
Fee
Waiver
and/or
Expense
Reimbursement
to
exceed
the
lesser
of
(i)
the
then-current
Expense
Cap
and
(ii)
the
Expense
Cap
in
place
at
the
time
the
fees/expenses
were
waived/reimbursed.
Total
Annual
Fund
Operating
Expenses
After
Fee
Waiver
and/or
Expense
Reimbursement
will
increase
if
exclusions
from
the
Expense
Cap
apply.
During
the
period,
certain
fees
were
waived
and/or
expenses
reimbursed;
otherwise,
returns
would
have
been
lower.
The
performance
table
and
graph
do
not
reflect
the
deduction
of
taxes
that
a
shareholder
would
pay
on
Fund
distributions
or
the
redemption
of
Fund
shares.
Returns
greater
than
one
year
are
annualized.
For
the
most
recent
month-end
performance,
please
call
(855)
409-2297.
The
Fund
recently
experienced
significant
negative
short-term
performance
due
to
market
volatility
associated
with
the
COVID-19
pandemic.
Average
Annual
Total
Returns
Periods
Ended
March
31,
2020
One
Year
Five
Year
Ten
Year
Since
Inception
01/03/05
Baywood
Socially
Responsible
Fund
-21.43%
-1.35%
4.30%
2.96%
Morningstar
US
Large
Value
TR
Index
-14.66%
3.93%
7.74%
5.14%
*
Performance
for
Institutional
Shares
for
periods
prior
to
January
8,
2016,
reflects
the
performance
and
expenses
of
City
National
Rochdale
Socially
Responsible
Equity
Fund,
a
series
of
City
National
Rochdale
Funds
(the
“Predecessor
Fund”).
BAYWOOD
SOCIALLY
RESPONSIBLE
FUND
SCHEDULE
OF
INVESTMENTS
March
31,
2020
17
See
Notes
to
Financial
Statements.
The
following
is
a
summary
of
the
inputs
used
to
value
the
Fund's instruments
as
of
March
31,
2020.
The
inputs
or
methodology
used
for
valuing
securities
are
not
necessarily
an
indication
of
the
risks
associated
with
investing
in
those
securities.
For
more
information
on
valuation
inputs,
and
their
aggregation
into
the
levels
used
in
the
table
below,
please
refer
to
the
Security
Valuation
section
in
Note
2
of
the
accompanying
Notes
to
Financial
Statements.
The
Level
1
value
displayed
in
this
table
is
Common
Stock.
The
Level
2
value
displayed
in
this
table
is
a
Money
Market
Fund.
Refer
to
this
Schedule
of
Investments
for
a
further
breakout
of
each
security
by
industry.
Shares
Security
Description
Value
Common
Stock
-
97.2%
Basic
Materials
-
4.4%
3,200
Nutrien,
Ltd.
$
108,608
2,600
The
Mosaic
Co.
28,132
136,740
Capital
Goods
/
Industrials
-
2.2%
500
Cummins,
Inc.
67,660
Communication
Services
-
11.4%
2,300
Comcast
Corp.,
Class A
79,074
3,800
Discovery,
Inc.,
Class C
(a)
66,652
900
The
Walt
Disney
Co.
86,940
2,200
Verizon
Communications,
Inc.
118,206
350,872
Consumer
Discretionary
-
5.8%
1,700
Aptiv
PLC
83,708
700
Genuine
Parts
Co.
47,131
2,500
Kontoor
Brands,
Inc.
47,925
178,764
Consumer
Staples
-
5.6%
2,000
Mondelez
International,
Inc.,
Class A
100,160
600
PepsiCo.,
Inc.
72,060
172,220
Energy
-
2.0%
4,800
Devon
Energy
Corp.
33,168
2,100
Schlumberger,
Ltd.
28,329
61,497
Financials
-
20.5%
3,500
Air
Lease
Corp.
77,490
1,300
American
Express
Co.
111,293
3,300
American
International
Group,
Inc.
80,025
3,900
Bank
of
America
Corp.
82,797
300
Berkshire
Hathaway,
Inc.,
Class B
(a)
54,849
1,600
BOK
Financial
Corp.
68,096
2,789
Brookfield
Asset
Management,
Inc.,
Class A
123,413
2,600
Radian
Group,
Inc.
33,670
631,633
Health
Care
-
21.4%
300
Amgen,
Inc.
60,819
1,200
AstraZeneca
PLC,
ADR
53,592
600
Becton
Dickinson
and
Co.
137,862
900
Gilead
Sciences,
Inc.
67,284
2,000
Koninklijke
Philips
NV,
ADR
80,320
400
Laboratory
Corp.
of
America
Holdings
(a)
50,556
700
Medtronic
PLC
63,126
300
Regeneron
Pharmaceuticals,
Inc.
(a)
146,487
660,046
Real
Estate
-
3.6%
3,500
Brookfield
Property
Partners
LP
28,210
9,300
VEREIT,
Inc.
REIT
45,477
2,300
Weyerhaeuser
Co.
REIT
38,985
112,672
Technology
-
13.9%
3,000
Cisco
Systems,
Inc.
117,930
4,400
Corning,
Inc.
90,376
1,300
Intel
Corp.
70,356
1,100
NetApp,
Inc.
45,859
900
NXP
Semiconductors
NV
74,637
500
TE
Connectivity,
Ltd.
31,490
430,648
Shares
Security
Description
Value
Transportation
-
6.4%
6,600
AP
Moller
-
Maersk
A/S,
ADR
$
29,502
12,800
Atlas
Corp.
98,432
500
Union
Pacific
Corp.
70,520
198,454
Total
Common
Stock
(Cost
$3,341,483)
3,001,206
Shares
Security
Description
Value
Money
Market
Fund
-
0.9%
27,855
Morgan
Stanley
Institutional
Liquidity
Funds
Government
Portfolio,
Institutional
Class,
0.23%
(b)
(Cost
$27,855)
27,855
Investments,
at
value
-
98.1%
(Cost
$3,369,338)
$
3,029,061
Other
Assets
&
Liabilities,
Net
-
1.9%
58,297
Net
Assets
-
100.0%
$
3,087,358
ADR
American
Depositary
Receipt
LP
Limited
Partnership
PLC
Public
Limited
Company
REIT
Real
Estate
Investment
Trust
(a)
Non-income
producing
security.
(b)
Dividend
yield
changes
daily
to
reflect
current
market
conditions.
Rate
was
the
quoted
yield
as
of
March
31,
2020.
Valuation
Inputs
Investments
in
Securities
Level
1
-
Quoted
Prices
$
3,001,206
Level
2
-
Other
Significant
Observable
Inputs
27,855
Level
3
-
Significant
Unobservable
Inputs
–
Total
$
3,029,061
PORTFOLIO
HOLDINGS
%
of
Total
Investments
Basic
Materials
4.5%
Capital
Goods
/
Industrials
2.2%
Communication
Services
11.6%
Consumer
Discretionary
5.9%
Consumer
Staples
5.7%
Energy
2.0%
Financials
20.9%
Health
Care
21.8%
Real
Estate
3.7%
Technology
14.2%
Transportation
6.6%
Money
Market
Fund
0.9%
100.0%
BAYWOOD
SOCIALLY
RESPONSIBLE
FUND
STATEMENT
OF
ASSETS
AND
LIABILITIES
March
31,
2020
18
See
Notes
to
Financial
Statements.
ASSETS
Investments,
at
value
(Cost
$3,369,338)
$
3,029,061
Receivables:
Fund
shares
sold
1,527
Investment
securities
sold
42,930
Dividends
10,002
From
investment
advisor
8,080
Prepaid
expenses
14,843
Total
Assets
3,106,443
LIABILITIES
Payables:
Fund
shares
redeemed
190
Accrued
Liabilities:
Trustees’
fees
and
expenses
27
Fund
services
fees
4,657
Other
expenses
14,211
Total
Liabilities
19,085
NET
ASSETS
$
3,087,358
COMPONENTS
OF
NET
ASSETS
Paid-in
capital
$
3,465,812
Distributable
earnings
(378,454)
NET
ASSETS
$
3,087,358
SHARES
OF
BENEFICIAL
INTEREST
AT
NO
PAR
VALUE
(UNLIMITED
SHARES
AUTHORIZED)
374,827
NET
ASSET
VALUE,
OFFERING
AND
REDEMPTION
PRICE
PER
SHARE
$
8.24
BAYWOOD
SOCIALLY
RESPONSIBLE
FUND
STATEMENT
OF
OPERATIONS
SIX
MONTHS
ENDED
MARCH
31,
2020
19
See
Notes
to
Financial
Statements.
INVESTMENT
INCOME
Dividend
income
(Net
of
foreign
withholding
taxes
of
$802)
$
49,445
Total
Investment
Income
49,445
EXPENSES
Investment
advisor
fees
14,804
Fund
services
fees
31,338
Transfer
agent
fees
8,974
Custodian
fees
2,470
Registration
fees
9,653
Professional
fees
13,730
Trustees'
fees
and
expenses
1,988
Other
expenses
11,057
Total
Expenses
94,014
Fees
waived
and
expenses
reimbursed
(75,192)
Net
Expenses
18,822
NET
INVESTMENT
INCOME
30,623
NET
REALIZED
AND
UNREALIZED
GAIN
(LOSS)
Net
realized
gain
on
investments
21,764
Net
change
in
unrealized
appreciation
(depreciation)
on
investments
(1,102,938)
NET
REALIZED
AND
UNREALIZED
LOSS
(1,081,174)
DECREASE
IN
NET
ASSETS
RESULTING
FROM
OPERATIONS
$
(1,050,551)
BAYWOOD
SOCIALLY
RESPONSIBLE
FUND
STATEMENTS
OF
CHANGES
IN
NET
ASSETS
20
See
Notes
to
Financial
Statements.
For
the
Six
Months
Ended
March
31,
2020
For
the
Year
Ended
September
30,
2019
OPERATIONS
Net
investment
income
$
30,623
$
52,605
Net
realized
gain
21,764
102,477
Net
change
in
unrealized
appreciation
(depreciation)
(1,102,938)
(260,772)
Decrease
in
Net
Assets
Resulting
from
Operations
(1,050,551)
(105,690)
DISTRIBUTIONS
TO
SHAREHOLDERS
Investor
Shares
-
(204,892)
Institutional
Shares
(82,239)
(149,124)
Total
Distributions
Paid
(82,239)
(354,016)
CAPITAL
SHARE
TRANSACTIONS
Sale
of
shares
Investor
Shares
-
167,328
Institutional
Shares
641,265
2,373,806
Reinvestment
of
distributions
Investor
Shares
-
193,403
Institutional
Shares
79,664
146,187
Redemption
of
shares
Investor
Shares
-
(2,701,698)
Institutional
Shares
(325,164)
(295,860)
Increase
(Decrease)
in
Net
Assets
from
Capital
Share
Transactions
395,765
(116,834)
Decrease
in
Net
Assets
(737,025)
(576,540)
NET
ASSETS
Beginning
of
Period
3,824,383
4,400,923
End
of
Period
$
3,087,358
$
3,824,383
SHARE
TRANSACTIONS
Sale
of
shares
Investor
Shares
-
14,949
Institutional
Shares
57,840
218,445
Reinvestment
of
distributions
Investor
Shares
-
19,029
Institutional
Shares
7,383
14,302
Redemption
of
shares
Investor
Shares
-
(248,092)
Institutional
Shares
(31,409)
(26,646)
Increase
(Decrease)
in
Shares
33,814
(8,013)
BAYWOOD
SOCIALLY
RESPONSIBLE
FUND
FINANCIAL
HIGHLIGHTS
21
See
Notes
to
Financial
Statements.
These
financial
highlights
reflect
selected
data
for
a
share
outstanding
throughout
each
period.
For
the
Six
Months
Ended
March
31,
2020
For
the
Years
Ended
September
30,
2019
2018
2017
2016
2015
INSTITUTIONAL
SHARES
NET
ASSET
VALUE,
Beginning
of
Year
$
11.21
$
12.60
$
11.43
$
10.15
$
10.18
$
11.45
INVESTMENT
OPERATIONS
Net
investment
income
(a)
0.08
0.18
0.12
0.10
0.14
0.14
Net
realized
and
unrealized
gain
(loss)
(2.84)
(0.53)
1.31
1.33
0.66
(0.99)
Total
from
Investment
Operations
(2.76)
(0.35)
1.43
1.43
0.80
(0.85)
DISTRIBUTIONS
TO
SHAREHOLDERS
FROM
Net
investment
income
(0.08)
(0.16)
(0.10)
(0.15)
(0.30)
(0.13)
Net
realized
gain
(0.13)
(0.88)
(0.16)
–
(0.53)
(0.29)
Total
Distributions
to
Shareholders
(0.21)
(1.04)
(0.26)
(0.15)
(0.83)
(0.42)
NET
ASSET
VALUE,
End
of
Year
$
8.24
$
11.21
$
12.60
$
11.43
$
10.15
$
10.18
TOTAL
RETURN
(25.02)%(b)
(1.79)%
12.66%
14.18%
8.40%
(7.70)%
RATIOS/SUPPLEMENTARY
DATA
Net
Assets
at
End
of
Year
(000s
omitted)
$
3,087
$
3,824
$
1,699
$
5,404
$
5,555
$
238,379
Ratios
to
Average
Net
Assets:
Net
investment
income
1.45%(c)
1.60%
1.01%
0.92%
1.35%
1.22%
Net
expenses
0.89%(c)
0.89%
0.89%
0.89%
0.89%
0.89%(d)
Gross
expenses(e)
4.44%(c)
5.78%
3.03%
2.64%
1.00%
0.87%
PORTFOLIO
TURNOVER
RATE
14%(b)
33%
31%
42%
57%
29%
(a)
Calculated
based
on
average
shares
outstanding
during
each
period.
(b)
Not
annualized.
(c)
Annualized.
(d)
Ratio
includes
waivers
and
previously
waived
investment
advisory
fees
recovered. The
impact
of
the
recovered
fees
may
cause
a
higher
net
expense
ratio.
(e)
Reflects
the
expense
ratio
excluding
any
waivers
and/or
reimbursements.
BAYWOOD
FUNDS
NOTES
TO
FINANCIAL
STATEMENTS
March
31,
2020
22
Organization
Baywood
Value
Plus
Fund
and
Baywood
Socially
Responsible
Fund
(individually,
a
“Fund”
and
collectively,
the
“Funds”)
are
diversified
portfolios
of
Forum
Funds
II
(the
“Trust”).
The
Trust
is
a
Delaware
statutory
trust
that
is
registered
as
an
open-end,
management
investment
company
under
the
Investment
Company
Act
of
1940,
as
amended
(the
“Act”).
Under
its
Trust
Instrument,
the
Trust
is
authorized
to
issue
an
unlimited
number
of
each
Fund’s
shares
of
beneficial
interest
without
par
value.
The
Baywood
Value
Plus
Fund
commenced
operations
on
December
2,
2013,
through
a
reorganization
of
a
collective
investment
trust
into
the
Baywood
Value
Plus
Fund.
The
collective
investment
trust
was
previously
managed
by
the
Baywood
Value
Plus
Fund’s
Advisor
and
portfolio
management
team.
This
collective
investment
trust
was
organized
and
commenced
operations
on
June
27,
2008.
The
Baywood
Value
Plus
Fund
currently
offers
Institutional
Shares.
The
Baywood
Value
Plus
Fund
seeks
to
achieve
long-term
capital
appreciation
by
investing
in
undervalued
equity
securities.
The
Baywood
Socially
Responsible
Fund
commenced
operations
on
January
3,
2005.
The
Baywood
Socially
Responsible
Fund
currently
offers
Institutional
Shares.
The
Baywood
Socially
Responsible
Fund
seeks
to
provide
long-term
capital
growth.
On
December
7,
2015,
at
a
special
meeting
of
shareholders
of
Baywood
Socially
Responsible
Fund,
formerly
City
National
Rochdale
Socially
Responsible
Equity
Fund,
a
series
of
City
National
Rochdale
Funds
(the
"Predecessor
Fund"),
the
shareholders
approved
a
proposal
to
reorganize
the
Predecessor
Fund
into
the
Baywood
Socially
Responsible
Fund,
a
newly
created
series
of
the
Forum
Funds
II.
The
Predecessor
Fund
was
sub-advised
by
the
Fund's
Advisor,
SKBA
Capital
Management,
LLC,
with
the
same
portfolio
managers
as
the
Baywood
Socially
Responsible
Fund.
The
Baywood
Socially
Responsible
Fund
is
managed
in
a
manner
that
is
in
all
material
respects
equivalent
to
the
management
of
the
Predecessor
Fund,
including
the
investment
objective,
strategies,
guidelines
and
restrictions.
The
primary
purpose
of
the
reorganization
was
to
move
the
Predecessor
Fund
to
a
newly
created
series
of
Forum
Funds
II.
As
a
result
of
the
reorganization,
the
Baywood
Socially
Responsible
Fund
is
now
operating
under
the
supervision
of
the
Trust’s
board
of
trustees.
On
January
8,
2016,
the
Baywood
Socially
Responsible
Fund
acquired
all
of
the
assets,
subject
to
liabilities,
of
the
Predecessor
Fund.
The
shares
of
the
Predecessor
Fund
were,
in
effect,
exchanged
on
a
tax-free
basis
for
Shares
of
the
Baywood
Socially
Responsible
Fund
with
the
same
aggregate
value.
No
commission
or
other
transactional
fees
were
imposed
on
shareholders
in
connection
with
the
tax-free
exchange
of
their
shares.
On
June
14,
2019,
the
Trust’s
Board
of
Trustees
approved
the
conversion
of
the
outstanding
shares
of
the
Funds’
Investor
Shares,
in
a
tax-free
exchange
into
shares
of
the
Funds’
Institutional
Shares
and
the
closure
of
the
Investor
Shares
to
new
investments.
On
August
19,
2019,
each
shareholder
of
the
Funds’
Investor
Shares
received
Institutional
Shares
in
a
dollar
amount
equal
to
their
investment
in
the
Investor
Shares
as
of
that
date.
Summary
of
Significant
Accounting
Policies
The
Funds
are
investment
companies
and
follow
accounting
and
reporting
guidance
under
Financial
Accounting
Standards
Board
(“FASB”)
Accounting
Standards
Codification
(“ASC”)
Topic
946,
“Financial
Services
–
Investment
Companies.”
These
financial
statements
are
prepared
in
accordance
with
accounting
principles
generally
accepted
in
the
United
States
of
America
(“GAAP”),
which
require
management
to
make
estimates
and
assumptions
that
affect
the
reported
amounts
of
assets
and
liabilities,
the
disclosure
of
contingent
liabilities
at
the
date
of
the
financial
statements,
and
the
reported
amounts
of
increases
and
decreases
in
net
assets
from
operations
during
the
fiscal
period.
Actual
amounts
could
differ
from
those
estimates.
The
following
summarizes
the
significant
accounting
policies
of
each
Fund:
Security
Valuation
–
Securities
are
valued
at
market
prices
using
the
last
quoted
trade
or
official
closing
price
from
the
principal
exchange
where
the
security
is
traded,
as
provided
by
independent
pricing
services
on
each
Fund
business
day.
In
the
absence
of
a
last
trade,
securities
are
valued
at
the
mean
of
the
last
bid
and
ask
price
provided
by
the
pricing
service.
Shares
of
non-exchange
traded
open-end
mutual
funds
are
valued
at
net
asset
value
(“NAV”).
Short-term
investments
that
mature
in
sixty
days
or
less
may
be
valued
at
amortized
cost.
Each
Fund
values
its
investments
at
fair
value
pursuant
to
procedures
adopted
by
the
Trust’s
Board
of
Trustees
(the
“Board”)
if
(1)
market
quotations
are
not
readily
available
or
(2)
the
Advisor,
as
defined
in
Note
3,
believes
that
the
values
available
are
unreliable.
The
Trust’s
Valuation
Committee,
as
defined
in
each
Fund’s
registration
statement,
performs
certain
functions
as
they
relate
to
the
administration
and
oversight
of
each
Fund’s
valuation
procedures.
Under
these
procedures,
the
Valuation
Committee
convenes
on
a
regular
and
ad
hoc
basis
to
review
such
investments
and
considers
a
number
of
factors,
including
valuation
methodologies
and
significant
unobservable
inputs,
when
arriving
at
fair
value.
BAYWOOD
FUNDS
NOTES
TO
FINANCIAL
STATEMENTS
March
31,
2020
23
The
Valuation
Committee
may
work
with
the
Advisor
to
provide
valuation
inputs.
In
determining
fair
valuations,
inputs
may
include
market-based
analytics
that
may
consider
related
or
comparable
assets
or
liabilities,
recent
transactions,
market
multiples,
book
values
and
other
relevant
investment
information.
Advisor
inputs
may
include
an
income-based
approach
in
which
the
anticipated
future
cash
flows
of
the
investment
are
discounted
in
determining
fair
value.
Discounts
may
also
be
applied
based
on
the
nature
or
duration
of
any
restrictions
on
the
disposition
of
the
investments.
The
Valuation
Committee
performs
regular
reviews
of
valuation
methodologies,
key
inputs
and
assumptions,
disposition
analysis
and
market
activity.
Fair
valuation
is
based
on
subjective
factors
and,
as
a
result,
the
fair
value
price
of
an
investment
may
differ
from
the
security’s
market
price
and
may
not
be
the
price
at
which
the
asset
may
be
sold.
Fair
valuation
could
result
in
a
different
NAV
than
a
NAV
determined
by
using
market
quotes.
GAAP
has
a
three-tier
fair
value
hierarchy.
The
basis
of
the
tiers
is
dependent
upon
the
various
“inputs”
used
to
determine
the
value
of
each
Fund’s
investments.
These
inputs
are
summarized
in
the
three
broad
levels
listed
below:
Level
1
-
Quoted
prices
in
active
markets
for
identical
assets
and
liabilities.
Level
2
-
Prices
determined
using
significant
other
observable
inputs
(including
quoted
prices
for
similar
securities,
interest
rates,
prepayment
speeds,
credit
risk,
etc.).
Short-term
securities
with
maturities
of
sixty
days
or
less
are
valued
at
amortized
cost,
which
approximates
market
value,
and
are
categorized
as
Level
2
in
the
hierarchy.
Municipal
securities,
long-term
U.S.
government
obligations
and
corporate
debt
securities
are
valued
in
accordance
with
the
evaluated
price
supplied
by
a
pricing
service
and
generally
categorized
as
Level
2
in
the
hierarchy.
Other
securities
that
are
categorized
as
Level
2
in
the
hierarchy
include,
but
are
not
limited
to,
warrants
that
do
not
trade
on
an
exchange,
securities
valued
at
the
mean
between
the
last
reported
bid
and
ask
quotation
and
international
equity
securities
valued
by
an
independent
third
party
with
adjustments
for
changes
in
value
between
the
time
of
the
securities’
respective
local
market
closes
and
the
close
of
the
U.S.
market.
Level
3
-
Significant
unobservable
inputs
(including
each
Fund’s
own
assumptions
in
determining
the
fair
value
of
investments).
The
aggregate
value
by
input
level,
as
of
March
31,
2020,
for
each
Fund’s
investments
is
included
at
the
end
of
each
Fund’s
Schedule
of
Investments.
Security
Transactions,
Investment
Income
and
Realized
Gain
and
Loss
–
Investment
transactions
are
accounted
for
on
the
trade
date.
Dividend
income
is
recorded
on
the
ex-dividend
date.
Foreign
dividend
income
is
recorded
on
the
ex-dividend
date
or
as
soon
as
possible
after
determining
the
existence
of
a
dividend
declaration
after
exercising
reasonable
due
diligence.
Interest
income
is
recorded
on
an
accrual
basis.
Premium
is
amortized
and
discount
is
accreted
using
the
effective
interest
method.
Identified
cost
of
investments
sold
is
used
to
determine
the
gain
and
loss
for
both
financial
statement
and
federal
income
tax
purposes.
Distributions
to
Shareholders
–
Distributions
to
shareholders
of
net
investment
income,
if
any,
are
declared
and
paid
at
least
annually.
Distributions
to
shareholders
of
net
capital
gains,
if
any,
are
declared
and
paid
at
least
at
least
annually.
Distributions
to
shareholders
are
recorded
on
the
ex-dividend
date.
Distributions
are
based
on
amounts
calculated
in
accordance
with
applicable
federal
income
tax
regulations,
which
may
differ
from
GAAP.
These
differences
are
due
primarily
to
differing
treatments
of
income
and
gain
on
various
investment
securities
held
by
each
Fund,
timing
differences
and
differing
characterizations
of
distributions
made
by
each
Fund.
Federal
Taxes
–
Each
Fund
intends
to
continue
to
qualify
each
year
as
a
regulated
investment
company
under
Subchapter
M
of
Chapter
1,
Subtitle
A,
of
the
Internal
Revenue
Code
of
1986,
as
amended
(“Code”),
and
to
distribute
all
of
its
taxable
income
to
shareholders.
In
addition,
by
distributing
in
each
calendar
year
substantially
all
of
its
net
investment
income
and
capital
gains,
if
any,
the
Funds
will
not
be
subject
to
a
federal
excise
tax.
Therefore,
no
federal
income
or
excise
tax
provision
is
required.
Each
Fund
files
a
U.S.
federal
income
and
excise
tax
return
as
required.
Each
Fund’s
federal
income
tax
returns
are
subject
to
examination
by
the
Internal
Revenue
Service
for
a
period
of
three
fiscal
years
after
they
are
filed.
As
of
March
31,
2020,
there
are
no
uncertain
tax
positions
that
would
require
financial
statement
recognition,
de-recognition
or
disclosure.
Income
and
Expense
Allocation
–
The
Trust
accounts
separately
for
the
assets,
liabilities
and
operations
of
each
of
its
investment
portfolios.
Expenses
that
are
directly
attributable
to
more
than
one
investment
portfolio
are
allocated
among
the
respective
investment
portfolios
in
an
equitable
manner.
BAYWOOD
FUNDS
NOTES
TO
FINANCIAL
STATEMENTS
March
31,
2020
24
Commitments
and
Contingencies
–
In
the
normal
course
of
business,
each
Fund
enters
into
contracts
that
provide
general
indemnifications
by
each
Fund
to
the
counterparty
to
the
contract.
Each
Fund’s
maximum
exposure
under
these
arrangements
is
dependent
on
future
claims
that
may
be
made
against
each
Fund
and,
therefore,
cannot
be
estimated;
however,
based
on
experience,
the
risk
of
loss
from
such
claims
is
considered
remote.
Each
Fund
has
determined
that
none
of
these
arrangements
requires
disclosure
on
each
Fund’s
balance
sheet.
Fees
and
Expenses
Investment
Advisor
–
SKBA
Capital
Management,
LLC
(the
“Advisor”)
is
the
investment
adviser
to
the
Funds.
Pursuant
to
an
investment
advisory
agreement,
the
Advisor
receives
an
advisory
fee,
payable
monthly,
at
an
annual
rate
of
0.50%
and
0.70%
of
the
average
daily
net
assets
of
Baywood
Value
Plus
Fund
and
Baywood
Socially
Responsible
Fund,
respectively.
Distribution
–
Foreside
Fund
Services,
LLC
serves
as
each
Fund’s
distributor
(the
“Distributor”).
The
Funds
do
not
have
a
distribution
(12b-1)
plan;
accordingly,
the
Distributor
does
not
receive
compensation
from
the
Funds
for
its
distribution
services.
The
Advisor
compensates
the
Distributor
directly
for
its
services.
The
Distributor
is
not
affiliated
with
the
Advisor
or
Atlantic
Fund
Administration,
LLC,
a
wholly
owned
subsidiary
of
Apex
US
Holdings,
LLC
(d/b/a
Apex
Fund
Services)
(“Apex”)
or
their
affiliates.
Other
Service
Providers
–
Apex
provides
fund
accounting,
fund
administration,
compliance
and
transfer
agency
services
to
each
Fund.
The
fees
related
to
these
services
are
included
in
Fund
services
fees
within
the
Statements
of
Operations.
Apex
also
provides
certain
shareholder
report
production
and
EDGAR
conversion
and
filing
services.
Pursuant
to
an
Apex
services
agreement,
each
Fund
pays
Apex
customary
fees
for
its
services.
Apex
provides
a
Principal
Executive
Officer,
a
Principal
Financial
Officer,
a
Chief
Compliance
Officer
and
an
Anti-Money
Laundering
Officer
to
each
Fund,
as
well
as
certain
additional
compliance
support
functions.
Trustees
and
Officers
–
The
Trust
pays
each
Independent
Trustee
an
annual
fee
of
$16,000
($21,000
for
the
Chairman)
for
service
to
the
Trust.
The
Independent
Trustees
and
Chairman
may
receive
additional
fees
for
special
Board
meetings.
The
Independent
Trustees
are
also
reimbursed
for
all
reasonable
out-of-pocket
expenses
incurred
in
connection
with
their
duties
as
Trustees,
including
travel
and
related
expenses
incurred
in
attending
Board
meetings.
The
amount
of
Independent
Trustees’
fees
attributable
to
each
Fund
is
disclosed
in
the
Statements
of
Operations.
Certain
officers
of
the
Trust
are
also
officers
or
employees
of
the
above
named
service
providers,
and
during
their
terms
of
office
received
no
compensation
from
each
Fund.
Expense
Reimbursement
and
Fees
Waived
The
Advisor
has
contractually
agreed
to
waive
its
fee
and/or
reimburse
certain
expenses
to
limit
total
operating
expenses
(excluding
all
taxes,
interest,
portfolio
transaction
expenses,
acquired
fund
fees
and
expenses,
proxy
expenses
and
extraordinary
expenses)
for
Institutional
Shares
to
0.70%
through
January
31,
2021,
for
Baywood
Value
Plus
Fund.
The
Advisor
also
has
contractually
agreed
to
waive
its
fees
and/or
reimburse
certain
expenses
to
limit
total
operating
expenses
(excluding
all
taxes,
interest,
portfolio
transaction
expenses,
acquired
fund
fees
and
expenses,
proxy
expenses
and
extraordinary
expenses)
for
Institutional
Shares
to
0.89%
through
January
31,
2021,
for
Baywood
Socially
Responsible
Fund.
Other
Fund
service
providers
have
voluntarily
agreed
to
waive
and
reimburse
a
portion
of
their
fees.
These
voluntary
fee
waivers
and
reimbursements
may
be
reduced
or
eliminated
at
any
time.
For
the
period
ended
March
31,
2020,
fees
waived
and
expenses
reimbursed
were
as
follows:
The
Advisor
may
be
reimbursed
by
each
Fund
for
fees
waived
and
expenses
reimbursed
by
the
Advisor
pursuant
to
the
Expense
Cap
if
such
payment
is
approved
by
the
Board,
made
within
three
years
of
the
fee
waiver
or
expense
reimbursement,
and
does
not
cause
the
Total
Annual
Fund
Operating
Expenses
After
Fee
Waiver
and/or
Expense
Reimbursement
to
exceed
the
lesser
of
(i)
the
then-current
expense
cap,
or
(ii)
the
expense
cap
in
place
at
the
time
the
fees/expenses
were
waived/reimbursed.
As
of
March
31,
2020,
$330,272
and
$336,517
in
the
Baywood
Value
Plus
Fund
and
Baywood
Socially
Responsible
Fund,
respectively,
is
subject
to
recapture
by
the
Advisor.
Other
Waivers
are
not
eligible
for
recoupment.
Investment
Adviser
Fees
Waived
Investment
Adviser
Expenses
Reimbursed
Other
Waivers
Total
Fees
Waived
and
Expenses
Reimbursed
Baywood
Value
Plus
Fund
$
6,984
$
54,663
$
10,188
$
71,835
Baywood
Socially
Responsible
Fund
14,804
50,017
10,371
75,192
BAYWOOD
FUNDS
NOTES
TO
FINANCIAL
STATEMENTS
March
31,
2020
25
Security
Transactions
The
cost
of
purchases
and
proceeds
from
sales
of
investment
securities
(including
maturities),
other
than
short-term
investments
during
the
period
ended
March
31,
2020
were
as
follows:
Federal
Income
Tax
As
of
March
31,
2020
,
the
cost
for
federal
income
tax
purposes
is
substantially
the
same
as
for
financial
statement
purposes
and
the
components
of
net
unrealized
depreciation
were
as
follows:
As
of
September
30,
2019,
distributable
earnings
(accumulated
loss)
on
a
tax
basis
were
as
follows:
The
difference
between
components
of
distributable
earnings
on
a
tax
basis
and
the
amounts
reflected
in
the
Statements
of
Assets
and
Liabilities
are
primarily
due
to
wash
sales,
partnerships
and
equity
return
of
capital.
Subsequent
Events
Management
is
currently
evaluating
the
recent
introduction
of
the
COVID-19
virus
and
its
impact
on
the
financial
services
industry
and
has
concluded
that
while
it
is
reasonably
possible
that
the
virus
could
have
a
negative
effect
on
the
fair
value
of
each
Funds'
investments
and
results
of
operations,
the
specific
impact
is
not
readily
determinable
as
of
the
date
of
these
financial
statements.
The
financial
statements
do
not
include
any
adjustments
that
might
result
from
the
outcome
of
this
uncertainty.
Purchases
Sales
Baywood
Value
Plus
Fund
$
650,829
$
965,736
Baywood
Socially
Responsible
Fund
611,686
550,564
Gross
Unrealized
Appreciation
Gross
Unrealized
Depreciation
Net
Unrealized
Depreciation
Baywood
Value
Plus
Fund
$
150,506
$
(515,926)
$
(365,420)
Baywood
Socially
Responsible
Fund
331,165
(671,442)
(340,277)
Undistributed
Ordinary
Income
Undistributed
Long-Term
Gain
Unrealized
Appreciation
Total
Baywood
Value
Plus
Fund
$
1,141
$
25,916
$
363,704
$
390,761
Baywood
Socially
Responsible
Fund
1,807
51,361
701,168
754,336
Baywood
Funds
ADDITIONAL
INFORMATION
March
31,
2020
26
Proxy
Voting
Information
A
description
of
the
policies
and
procedures
that
each
Fund
uses
to
determine
how
to
vote
proxies
relating
to
securities
held
in
each
Fund’s
portfolio
is
available,
without
charge
and
upon
request,
by
calling
(855)
409-2297
and
on
the
SEC’s
website
at
www.sec.gov.
Each
Fund’s
proxy
voting
record
for
the
most
recent
twelve-month
period
ended
June
30
is
available,
without
charge
and
upon
request,
by
calling
(855)
409-2297
and
on
the
SEC’s
website
at
www.sec.gov.
Availability
of
Quarterly
Portfolio
Schedules
Each
Fund
files
its
complete
schedule
of
portfolio
holdings
with
the
SEC
for
the
first
and
third
quarters
of
each
fiscal
year
on
Form
N-PORT.
Forms
N-PORT
are
available
free
of
charge
on
the
SEC’s
website
at
www.sec.gov
or
may
be
reviewed
and
copied
at
the
SEC’s
Public
Reference
Room
in
Washington,
D.C.
Information
on
the
operation
of
the
Public
Reference
Room
may
be
obtained
by
calling
(800)
SEC-0330.
Shareholder
Expense
Example
As
a
shareholder
of
the
funds
,
you
incur
ongoing
costs,
including
management
fees,
and
other
Fund
expenses.
This
example
is
intended
to
help
you
understand
your
ongoing
costs
(in
dollars)
of
investing
in
the
funds
and
to
compare
these
costs
with
the
ongoing
costs
of
investing
in
other
mutual
funds.
The
example
is
based
on
an
investment
of
$1,000
invested
at
the
beginning
of
the
period
and
held
for
the
entire
period
from
October
1,
2019
through
March
31,
2020.
Actual
Expenses
–
The
first
line
of
the
table
below
provides
information
about
actual
account
values
and
actual
expenses.
You
may
use
the
information
in
this
line,
together
with
the
amount
you
invested,
to
estimate
the
expenses
that
you
paid
over
the
period.
Simply
divide
your
account
value
by
$1,000
(for
example,
an
$8,600
account
value
divided
by
$1,000
=
8.6),
then
multiply
the
result
by
the
number
in
the
first
line
under
the
heading
entitled
“Expenses
Paid
During
Period”
to
estimate
the
expenses
you
paid
on
your
account
during
the
period.
Hypothetical
Example
for
Comparison
Purposes
–
The
second
line
of
the
table
below
provides
information
about
hypothetical
account
values
and
hypothetical
expenses
based
on
each
Fund’s
actual
expense
ratio
and
an
assumed
rate
of
return
of
5%
per
year
before
expenses,
which
is
not
each
Fund’s
actual
return.
The
hypothetical
account
values
and
expenses
may
not
be
used
to
estimate
the
actual
ending
account
balance
or
expenses
you
paid
for
the
period.
You
may
use
this
information
to
compare
the
ongoing
costs
of
investing
in
each
Fund
and
other
funds.
To
do
so,
compare
this
5%
hypothetical
example
with
the
5%
hypothetical
examples
that
appear
in
the
shareholder
reports
of
other
funds.
Please
note
that
the
expenses
shown
in
the
table
are
meant
to
highlight
your
ongoing
costs
only.
Therefore,
the
second
line
of
the
table
is
useful
in
comparing
ongoing
costs
only
and
will
not
help
you
determine
the
relative
total
costs
of
owning
different
funds.
Beginning
Account
Value
October
1,
2019
Ending
Account
Value
March
31,
2020
Expenses
Paid
During
Period*
Annualized
Expense
Ratio*
Baywood
Value
Plus
Fund
Actual
$
1,000.00
$
749.96
$
3.06
0.70%
Hypothetical
(5%
return
before
expenses)
$
1,000.00
$
1,021.50
$
3.54
0.70%
Baywood
Socially
Responsible
Fund
Actual
$
1,000.00
$
749.82
$
3.89
0.89%
Hypothetical
(5%
return
before
expenses)
$
1,000.00
$
1,020.55
$
4.50
0.89%
*
Expenses
are
equal
to
the
Fund’s
annualized
expense
ratio
multiplied
by
the
average
account
value
over
the
period,
multiplied
by
the
number
of
days
in
the
most
recent
fiscal
half-year
(183)
divided
by
366
to
reflect
the
half-year
period.
![](https://capedge.com/proxy/N-CSRS/0001435109-20-000167/epub93823560581120.jpg)
FOR
MORE
INFORMATION:
P.O.
Box
588
Portland,
ME
04112
(855)
409-2297
(toll
free)
INVESTMENT
ADVISOR
SKBA
Capital
Management,
LLC
44
Montgomery
Street,
Suite
3500
San
Francisco,
CA
94104
TRANSFER
AGENT
Apex
Fund
Services
P.O.
Box
588
Portland,
ME
04112
www.theapexgroup.com
DISTRIBUTOR
Foreside
Fund
Services,
LLC
Three
Canal
Plaza,
Suite
100
Portland,
ME
04101
www.foreside.com
This
report
is
submitted
for
the
general
information
of
the
shareholders
of
the
Funds.
It
is
not
authorized
for
distribution
to
prospective
investors
unless
preceded
or
accompanied
by
an
effective
prospectus,
which
includes
information
regarding
the
Funds’
risks,
objectives,
fees
and
expenses,
experience
of
its
management,
and
other
information.
217-SAR-0320
CARAVAN
FRONTIER
MARKETS
OPPORTUNITIES
FUND
SUPRA
INSTITUTIONAL
SHARES
(
CSFOX)
SEMI-ANNUAL
REPORT
MARCH
31,
2020
(Unaudited)
Beginning
on
January
1,
2021,
as
permitted
by
regulations
adopted
by
the
Securities
and
Exchange
Commission,
paper
copies
of
the
Fund’s
shareholder
reports
will
no
longer
be
sent
by
mail,
unless
you
specifically
request
paper
copies
of
the
reports
from
the
Fund
or
from
your
financial
intermediary,
such
as
a
broker-dealer
or
bank.
Instead,
the
reports
will
be
made
available
on
a
website,
and
you
will
be
notified
by
mail
each
time
a
report
is
posted
and
provided
with
a
website
link
to
access
the
report.
If
you
already
elected
to
receive
shareholder
reports
electronically,
you
will
not
be
affected
by
this
change
and
you
need
not
take
any
action.
You
may
elect
to
receive
shareholder
reports
and
other
communications
from
the
Fund
or
your
financial
intermediary
electronically
by
contacting
the
Fund
at
(844)
856-1516,
caravan.ta@apexfs.com,
or
by
contacting
your
financial
intermediary
directly.
You
may
elect
to
receive
all
future
reports
in
paper
free
of
charge.
You
can
inform
the
Fund
or
your
financial
intermediary
that
you
wish
to
continue
receiving
paper
copies
of
your
shareholder
reports
by
contacting
the
Fund
at
(844)
856-1516,
caravan.ta@apexfs.com,
or
by
contacting
your
financial
intermediary
directly.
Your
election
to
receive
reports
in
paper
will
apply
to
the
Caravan
Frontier
Markets
Opportunities
Fund.
Caravan
Frontier
Markets
Opportunities
Fund
SCHEDULE
OF
INVESTMENTS
March
31,
2020
1
See
Notes
to
Financial
Statements.
Shares
Security
Description
Value
Common
Stock
-
89.7%
Argentina
-
4.0%
10,900
Adecoagro
SA
(a)
$
42,401
7,800
Banco
BBVA
Argentina
SA,
ADR
20,436
2,500
Banco
Macro
SA,
ADR
42,450
85,685
Bolsas
y
Mercados
Argentinos
SA
(b)
247,399
15,217
Grupo
Clarin
SA,
GDR
(a)(b)(c)
11,200
363,886
Bangladesh
-
6.3%
673,939
Beximco
Pharmaceuticals,
Ltd.,
GDR
272,057
600,304
Golden
Harvest
Agro
Industries,
Ltd.
(b)
119,943
21,571
GrameenPhone,
Ltd.
(b)
61,630
6,604
Youngone
Corp.
121,247
574,877
Colombia
-
1.5%
4,300
Bancolombia
SA,
ADR
107,328
84,907
CEMEX
Latam
Holdings
SA
(a)
31,145
138,473
Cyprus
-
1.1%
129,872
Bank
of
Cyprus
Holdings
PLC
(a)
96,111
Egypt
-
4.8%
12,035
Commercial
International
Bank
Egypt
SAE
44,936
125,694
Egyptian
Financial
Group-Hermes
Holding
Co.
66,201
27,098
Egyptian
International
Pharmaceuticals
EIPICO
97,305
171,940
ElSewedy
Electric
Co.
85,642
13,147
Integrated
Diagnostics
Holdings
PLC
(d)
44,042
299,726
Oriental
Weavers
102,448
440,574
Estonia
-
1.1%
142,300
Tallink
Grupp
AS
99,815
Georgia
-
3.6%
10,603
Bank
of
Georgia
Group
PLC
120,505
18,358
Georgia
Capital
PLC
(a)
96,911
12,478
TBC
Bank
Group
PLC
112,367
329,783
Iceland
-
2.7%
2,518,210
Kvika
banki
hf
(a)
150,131
564,359
Origo
HF
92,577
242,708
Kazakhstan
-
4.2%
26,261
Halyk
Savings
Bank
of
Kazakhstan
JSC,
GDR
241,601
23,797
KCell
JSC,
GDR
142,306
383,907
Kenya
-
4.8%
401,700
Equity
Group
Holdings
PLC
129,821
407,300
KCB
Group,
Ltd.
135,702
695,100
Safaricom
PLC
175,016
440,539
Kuwait
-
10.1%
16,341
Humansoft
Holding
Co.
KSC
122,688
159,950
Mabanee
Co.
SAK
323,988
104,625
Mobile
Telecommunications
Co.
KSC
172,481
130,065
National
Bank
of
Kuwait
SAKP
299,190
918,347
Lithuania
-
1.4%
333,853
Siauliu
Bankas
AB
127,768
Mauritius
-
0.7%
11,300
MCB
Group,
Ltd.
(b)
65,082
Shares
Security
Description
Value
Nigeria
-
3.0%
3,819,329
Guaranty
Trust
Bank
PLC
$
177,201
3,063,570
Zenith
Bank
PLC
93,955
271,156
Pakistan
-
3.7%
50,600
Lucky
Cement,
Ltd.
112,929
133,600
MCB
Bank,
Ltd.
120,071
21,752
NetSol
Technologies,
Inc.
(a)
54,380
111,000
Oil
&
Gas
Development
Co.,
Ltd.
51,450
338,830
Peru
-
6.2%
111,489
Alicorp
SAA,
Class C
238,762
1,600
Credicorp,
Ltd.
228,912
266,307
Ferreycorp
SAA
97,769
565,443
Philippines
-
8.8%
3,731,900
Cosco
Capital,
Inc.
(c)
348,535
3,051,600
Megaworld
Corp.
150,000
198,157
Metropolitan
Bank
&
Trust
Co.
155,845
19,141,000
STI
Education
Systems
Holdings,
Inc.
(c)
150,539
804,919
Romania
-
4.0%
413,607
Banca
Transilvania
SA
171,371
70,638
BRD-Groupe
Societe
Generale
SA
189,208
360,579
Senegal
-
1.7%
7,137
Sonatel
SA
155,938
Slovenia
-
1.1%
1,400
Krka
dd
Novo
mesto
100,055
Sri
Lanka
-
3.3%
463,819
John
Keells
Holdings
PLC
(b)
303,318
Ukraine
-
2.0%
31,184
MHP
SE,
GDR
(a)
187,104
United
Arab
Emirates
-
0.4%
948,036
Gulf
Marine
Services
PLC
(a)(c)
37,682
Vietnam
-
9.2%
1,172,000
CP
Pokphand
Co.,
Ltd.
92,215
116,600
FPT
Corp.
202,916
32,003
LS
Cable
&
System
Asia,
Ltd.
179,554
128,520
Military
Commercial
Joint
Stock
Bank
73,737
185,628
PetroVietnam
Technical
Services
Corp.
70,740
30,490
Taseco
Air
Services
JSC
52,932
139,500
Vietnam
Engine
&
Agricultural
Machinery
Corp.
165,389
837,483
Total
Common
Stock
(Cost
$14,079,318)
8,184,377
Investment
Company
-
2.9%
1,030,897
Fondul
Proprietatea
SA
(Cost
$230,764)
261,079
Exchange
Traded
Funds
-
3.4%
98,000
iShares
COLCAP
ETF
281,672
1,169
iShares
MSCI
Frontier
100
ETF
24,958
Total
Exchange
Traded
Funds
(Cost
$490,809)
306,630
Money
Market
Fund
-
2.0%
185,594
First
American
Government
Obligations
Fund,
Class X,
0.40%
(e)
(Cost
$185,594)
185,594
Investments,
at
value
-
98.0%
(Cost
$14,986,485)
$
8,937,680
Other
Assets
&
Liabilities,
Net
-
2.0%
184,692
Net
Assets
-
100.0%
$
9,122,372
Caravan
Frontier
Markets
Opportunities
Fund
SCHEDULE
OF
INVESTMENTS
March
31,
2020
2
See
Notes
to
Financial
Statements.
The
following
is
a
summary
of
the
inputs
used
to
value
the
Fund's investments
as
of
March
31,
2020.
The
inputs
or
methodology
used
for
valuing
securities
are
not
necessarily
an
indication
of
the
risks
associated
with
investing
in
those
securities.
For
more
information
on
valuation
inputs,
and
their
aggregation
into
the
levels
used
in
the
table
below,
please
refer
to
the
Security
Valuation
section
in
Note
2
of
the
accompanying
Notes
to
Financial
Statements.
The
following
is
a
reconciliation
of
Level
3
investments
for
which
significant
unobservable
inputs
were
used
to
determine
fair
value.
*The
change
in
unrealized
appreciation/(depreciation)
is
included
in
net
change
in
unrealized
appreciation
(depreciation)
of
investments
in
the
accompanying
Statement
of
Operations.
ADR
American
Depositary
Receipt
ETF
Exchange
Traded
Fund
GDR
Global
Depositary
Receipt
JSC
Joint
Stock
Company
PLC
Public
Limited
Company
(a)
Non-income
producing
security.
(b)
Security
fair
valued
in
accordance
with
procedures
adopted
by
the
Board
of
Trustees.
At
the
period
end,
the
value
of
these
securities
amounted
to
$808,572
or
8.9%
of
net
assets.
(c)
All
or
a
portion
of
this
security
is
illiquid.
(d)
Security
exempt
from
registration
under
Rule
144A
under
the
Securities
Act
of
1933.
At
the
period
end,
the
value
of
these
securities
amounted
to
$44,042
or
0.5%
of
net
assets.
(e)
Dividend
yield
changes
daily
to
reflect
current
market
conditions.
Rate
was
the
quoted
yield
as
of
March
31,
2020.
Level
1
Level
2
Level
3
Total
Investments
at
Value
Common
Stock
Argentina
$
105,287
$
258,599
$
–
$
363,886
Bangladesh
393,304
–
181,573
574,877
Colombia
138,473
–
–
138,473
Cyprus
96,111
–
–
96,111
Egypt
440,574
–
–
440,574
Estonia
99,815
–
–
99,815
Georgia
329,783
–
–
329,783
Iceland
242,708
–
–
242,708
Kazakhstan
383,907
–
–
383,907
Kenya
440,539
–
–
440,539
Kuwait
918,347
–
–
918,347
Lithuania
127,768
–
–
127,768
Mauritius
–
–
65,082
65,082
Nigeria
271,156
–
–
271,156
Pakistan
338,830
–
–
338,830
Peru
565,443
–
–
565,443
Philippines
804,919
–
–
804,919
Romania
360,579
–
–
360,579
Senegal
155,938
–
–
155,938
Slovenia
100,055
–
–
100,055
Sri
Lanka
–
–
303,318
303,318
Ukraine
187,104
–
–
187,104
United
Arab
Emirates
37,682
–
–
37,682
Vietnam
837,483
–
–
837,483
Investment
Company
261,079
–
–
261,079
Exchange
Traded
Funds
306,630
–
–
306,630
Money
Market
Fund
–
185,594
–
185,594
Investments
at
Value
$
7,943,514
$
444,193
$
549,973
$
8,937,680
Common
Stock
Balance
as
of
September
30,
2019
$
-
Purchases
61,630
Transfer
In
488,343
Change
in
Unrealized
Appreciation/
(Depreciation)
-
Balance
as
of
March
31,
2020
$
549,973
Net
change
in
unrealized
appreciation
(depreciation)
from
investments
held
as
of
March
31,
2020*
$
-
PORTFOLIO
HOLDINGS
%
of
Total
Investments
Argentina
4.1%
Bangladesh
6.4%
Colombia
1.6%
Cyprus
1.1%
Egypt
4.9%
Estonia
1.1%
Georgia
3.7%
Iceland
2.7%
Kazakhstan
4.3%
Kenya
4.9%
Kuwait
10.3%
Lithuania
1.4%
Mauritius
0.7%
Nigeria
3.0%
Pakistan
3.8%
Peru
6.3%
Philippines
9.0%
Romania
4.1%
Senegal
1.8%
Slovenia
1.1%
Sri
Lanka
3.4%
Ukraine
2.1%
United
Arab
Emirates
0.4%
Vietnam
9.4%
Investment
Company
2.9%
Exchange
Traded
Funds
3.4%
Money
Market
Fund
2.1%
100.0%
Caravan
Frontier
Markets
Opportunities
Fund
STATEMENT
OF
ASSETS
AND
LIABILITIES
March
31,
2020
3
See
Notes
to
Financial
Statements.
*
Shares
redeemed
or
exchanged
within
90
days
of
purchase
are
charged
a
2.00%
redemption
fee.
ASSETS
Investments,
at
value
(Cost
$14,986,485)
$
8,937,680
Foreign
currency
(Cost
$198,944)
197,852
Receivables:
Dividends
16,649
Prepaid
expenses
3,957
Total
Assets
9,156,138
LIABILITIES
Payables:
Foreign
capital
gains
tax
payable
24,420
Accrued
Liabilities:
Investment
adviser
fees
124
Trustees’
fees
and
expenses
24
Fund
services
fees
3,350
Other
expenses
5,848
Total
Liabilities
33,766
NET
ASSETS
$
9,122,372
COMPONENTS
OF
NET
ASSETS
Paid-in
capital
$
17,095,314
Distributable
earnings
(7,972,942)
NET
ASSETS
$
9,122,372
SHARES
OF
BENEFICIAL
INTEREST
AT
NO
PAR
VALUE
(UNLIMITED
SHARES
AUTHORIZED)
1,660,457
NET
ASSET
VALUE,
OFFERING
AND
REDEMPTION
PRICE
PER
SHARE
$
5.49
Caravan
Frontier
Markets
Opportunities
Fund
STATEMENT
OF
OPERATIONS
SIX
MONTHS
ENDED
MARCH
31,
2020
4
See
Notes
to
Financial
Statements.
INVESTMENT
INCOME
Dividend
income
(Net
of
foreign
withholding
taxes
of
$19,950)
$
177,828
Total
Investment
Income
177,828
EXPENSES
Investment
adviser
fees
81,828
Fund
services
fees
37,815
Transfer
agent
fees
8,507
Custodian
fees
17,898
Registration
fees
1,522
Professional
fees
15,618
Trustees'
fees
and
expenses
2,999
Other
expenses
16,581
Total
Expenses
182,768
Fees
waived
(85,994)
Net
Expenses
96,774
NET
INVESTMENT
INCOME
81,054
NET
REALIZED
AND
UNREALIZED
GAIN
(LOSS)
Net
realized
loss
on:
Investments
(Net
of
foreign
withholding
taxes
of
$11,316)
(1,036,870)
Foreign
currency
transactions
(18,653)
Net
realized
loss
(1,055,523)
Net
change
in
unrealized
appreciation
(depreciation)
on:
Investments
(2,234,739)
Deferred
foreign
capital
gains
taxes
5,571
Foreign
currency
translations
(2,022)
Net
change
in
unrealized
appreciation
(depreciation)
(2,231,190)
NET
REALIZED
AND
UNREALIZED
LOSS
(3,286,713)
DECREASE
IN
NET
ASSETS
RESULTING
FROM
OPERATIONS
$
(3,205,659)
Caravan
Frontier
Markets
Opportunities
Fund
STATEMENTS
OF
CHANGES
IN
NET
ASSETS
5
See
Notes
to
Financial
Statements.
For
the
Six
Months
Ended
March
31,
2020
For
the
Year
Ended
September
30,
2019
OPERATIONS
Net
investment
income
$
81,054
$
442,767
Net
realized
loss
(1,055,523)
(820,643)
Net
change
in
unrealized
appreciation
(depreciation)
(2,231,190)
(1,475,654)
Decrease
in
Net
Assets
Resulting
from
Operations
(3,205,659)
(1,853,530)
DISTRIBUTIONS
TO
SHAREHOLDERS
Institutional
Shares
–
(13,207)
Supra
Institutional
Shares
(482,301)
(201,950)
Total
Distributions
Paid
(482,301)
(215,157)
CAPITAL
SHARE
TRANSACTIONS
Sale
of
shares:
Institutional
Shares
–
51,975
Supra
Institutional
Shares
629,801
5,937,954*
Reinvestment
of
distributions:
Institutional
Shares
–
13,207
Supra
Institutional
Shares
482,301
201,950
Redemption
of
shares:
Institutional
Shares
–
(1,243,346)*
Supra
Institutional
Shares
(5,020,487)
(1,831,369)
Redemption
fees:
Institutional
Shares
–
–
Supra
Institutional
Shares
128
913
Increase
(Decrease)
in
Net
Assets
from
Capital
Share
Transactions
(3,908,257)
3,131,284
Increase
(Decrease)
in
Net
Assets
(7,596,217)
1,062,597
NET
ASSETS
Beginning
of
Period
16,718,589
15,655,992
End
of
Period
$
9,122,372
$
16,718,589
SHARE
TRANSACTIONS
Sale
of
shares:
Institutional
Shares
–
6,434
Supra
Institutional
Shares
79,818
724,996*
Reinvestment
of
distributions:
Institutional
Shares
–
1,691
Supra
Institutional
Shares
59,617
25,891
Redemption
of
shares:
Institutional
Shares
–
(159,422)*
Supra
Institutional
Shares
(628,653)
(224,763)
Increase
(Decrease)
in
Shares
(489,218)
374,827
*
The
above
figure
includes
transfers
of
$1,127,928
and
145,164
and
144,978
shares
from
the
Institutional
Shares
to
the
Supra
Institutional
Shares,
respectively,
as
a
result
of
the
liquidation
of
the
Institutional
Shares
on
September
30,
2019.
Caravan
Frontier
Markets
Opportunities
Fund
FINANCIAL
HIGHLIGHTS
6
See
Notes
to
Financial
Statements.
These
financial
highlights
reflect
selected
data
for
a
share
outstanding
throughout
each
period.
For
the
Six
Months
Ended
March
31,
2020
For
the
Year
Ended
September
30,
2019
November
15,
2017
(a)
Through
September
30,
2018
SUPRA
INSTITUTIONAL
SHARES
NET
ASSET
VALUE,
Beginning
of
Period
$
7.78
$
8.82
$
10.00
OPERATIONS
Net
investment
income
(b)
0.04
0.22
0.19
Net
realized
and
unrealized
loss
(2.06)
(1.14)
(1.37)
Total
from
Investment
Operations
(2.02)
(0.92)
(1.18)
DISTRIBUTIONS
TO
SHAREHOLDERS
FROM
Net
investment
income
(0.27)
(0.12)
(0.00)(c)
Total
Distributions
to
Shareholders
(0.27)
(0.12)
(0.00)
REDEMPTION
FEES(b)
0.00(c)
0.00(c)
0.00(c)
NET
ASSET
VALUE,
End
of
Period
$
5.49
$
7.78
$
8.82
TOTAL
RETURN
(27.06)%(d)
(10.48)%
(11.77)%(d)
RATIOS/SUPPLEMENTARY
DATA
Net
Assets
at
End
of
Period
(000s
omitted)
$
9,122
$
16,719
$
14,324
Ratios
to
Average
Net
Assets:
Net
investment
income
1.09%(e)
2.71%
2.15%(e)
Net
expenses
1.30%(e)
1.30%
1.30%(e)
Gross
expenses
(f)
2.46%(e)
2.51%
3.04%(e)
PORTFOLIO
TURNOVER
RATE
18%(d)
24%
12%(d)
(a)
Commencement
of
operations.
(b)
Calculated
based
on
average
shares
outstanding
during
each
period.
(c)
Less
than
$0.01
per
share.
(d)
Not
annualized.
(e)
Annualized.
(f)
Reflects
the
expense
ratio
excluding
any
waivers
and/or
reimbursements.
Caravan
Frontier
Markets
Opportunities
Fund
NOTES
TO
FINANCIAL
STATEMENTS
March
31,
2020
7
Organization
The
Caravan
Frontier
Markets
Opportunities
Fund
(the
“Fund”)
is
a
diversified
portfolio
of
Forum
Funds
II
(the
“Trust”).
The
Trust
is
a
Delaware
statutory
trust
that
is
registered
as
an
open-end,
management
investment
company
under
the
Investment
Company
Act
of
1940,
as
amended
(the
“Act”).
Under
its
Trust
Instrument,
the
Trust
is
authorized
to
issue
an
unlimited
number
of
the
Fund’s
shares
of
beneficial
interest
without
par
value.
The
Fund
commenced
operations
on
November
14,
2017
and
currently
offers
Supra
Institutional
Shares.
Supra
Institutional
Shares
commenced
operations
on
November
15,
2017.
The
Fund’s
investment
objective
is
long-
term
capital
appreciation.
On
August
6,
2019,
the
Trust’s
Board
of
Trustees
approved
the
conversion
of
the
outstanding
shares
of
the
Fund’s
Institutional
Shares,
in
a
tax-free
exchange
into
shares
of
the
Fund’s
Supra
Institutional
Shares
and
the
closure
of
the
Institutional
Shares
to
new
investments.
On
September
30,
2019,
each
shareholder
of
the
Institutional
Shares
received
Supra
Institutional
Shares
in
a
dollar
amount
equal
to
their
investment
in
the
Institutional
Shares
as
of
that
date.
Summary
of
Significant
Accounting
Policies
The
Fund
is
an
investment
company
and
follows
accounting
and
reporting
guidance
under
Financial
Accounting
Standards
Board
(“FASB”)
Accounting
Standards
Codification
(“ASC”)
Topic
946,
“Financial
Services
–
Investment
Companies.”
These
financial
statements
are
prepared
in
accordance
with
accounting
principles
generally
accepted
in
the
United
States
of
America
(“GAAP”),
which
require
management
to
make
estimates
and
assumptions
that
affect
the
reported
amounts
of
assets
and
liabilities,
the
disclosure
of
contingent
liabilities
at
the
date
of
the
financial
statements,
and
the
reported
amounts
of
increases
and
decreases
in
net
assets
from
operations
during
the
fiscal
period.
Actual
amounts
could
differ
from
those
estimates.
The
following
summarizes
the
significant
accounting
policies
of
the
Fund:
Security
Valuation
–
Securities
are
valued
at
market
prices
using
the
last
quoted
trade
or
official
closing
price
from
the
principal
exchange
where
the
security
is
traded,
as
provided
by
independent
pricing
services
on
each
Fund
business
day.
In
the
absence
of
a
last
trade,
securities
are
valued
at
the
mean
of
the
last
bid
and
ask
price
provided
by
the
pricing
service.
Shares
of
non-exchange
traded
open-end
mutual
funds
are
valued
at
net
asset
value
(“NAV”).
Short-term
investments
that
mature
in
sixty
days
or
less
may
be
valued
at
amortized
cost.
The
Fund
values
its
investments
at
fair
value
pursuant
to
procedures
adopted
by
the
Trust’s
Board
of
Trustees
(the
“Board”)
if
(1)
market
quotations
are
not
readily
available
or
(2)
the
Adviser,
as
defined
in
Note
3,
believes
that
the
values
available
are
unreliable.
The
Trust’s
Valuation
Committee,
as
defined
in
the
Fund’s
registration
statement,
performs
certain
functions
as
they
relate
to
the
administration
and
oversight
of
the
Fund’s
valuation
procedures.
Under
these
procedures,
the
Valuation
Committee
convenes
on
a
regular
and
ad
hoc
basis
to
review
such
investments
and
considers
a
number
of
factors,
including
valuation
methodologies
and
significant
unobservable
inputs,
when
arriving
at
fair
value.
The
Valuation
Committee
may
work
with
the
Adviser
to
provide
valuation
inputs.
In
determining
fair
valuations,
inputs
may
include
market-based
analytics
that
may
consider
related
or
comparable
assets
or
liabilities,
recent
transactions,
market
multiples,
book
values
and
other
relevant
investment
information.
Adviser
inputs
may
include
an
income-based
approach
in
which
the
anticipated
future
cash
flows
of
the
investment
are
discounted
in
determining
fair
value.
Discounts
may
also
be
applied
based
on
the
nature
or
duration
of
any
restrictions
on
the
disposition
of
the
investments.
The
Valuation
Committee
performs
regular
reviews
of
valuation
methodologies,
key
inputs
and
assumptions,
disposition
analysis
and
market
activity.
Fair
valuation
is
based
on
subjective
factors
and,
as
a
result,
the
fair
value
price
of
an
investment
may
differ
from
the
security’s
market
price
and
may
not
be
the
price
at
which
the
asset
may
be
sold.
Fair
valuation
could
result
in
a
different
NAV
than
a
NAV
determined
by
using
market
quotes.
GAAP
has
a
three-tier
fair
value
hierarchy.
The
basis
of
the
tiers
is
dependent
upon
the
various
“inputs”
used
to
determine
the
value
of
the
Fund’s
investments.
These
inputs
are
summarized
in
the
three
broad
levels
listed
below:
Level
1
-
Quoted
prices
in
active
markets
for
identical
assets
and
liabilities.
Level
2
-
Prices
determined
using
significant
other
observable
inputs
(including
quoted
prices
for
similar
securities,
interest
rates,
prepayment
speeds,
credit
risk,
etc.).
Short-term
securities
with
maturities
of
sixty
days
or
less
are
valued
at
amortized
cost,
which
approximates
market
value,
and
are
categorized
as
Level
2
in
the
hierarchy.
Municipal
securities,
long-term
U.S.
government
obligations
and
corporate
debt
securities
are
valued
in
accordance
with
the
evaluated
price
supplied
by
a
pricing
service
and
generally
categorized
as
Caravan
Frontier
Markets
Opportunities
Fund
NOTES
TO
FINANCIAL
STATEMENTS
March
31,
2020
8
Level
2
in
the
hierarchy.
Other
securities
that
are
categorized
as
Level
2
in
the
hierarchy
include,
but
are
not
limited
to,
warrants
that
do
not
trade
on
an
exchange,
securities
valued
at
the
mean
between
the
last
reported
bid
and
ask
quotation
and
international
equity
securities
valued
by
an
independent
third
party
with
adjustments
for
changes
in
value
between
the
time
of
the
securities’
respective
local
market
closes
and
the
close
of
the
U.S.
market.
Level
3
-
Significant
unobservable
inputs
(including
the
Fund’s
own
assumptions
in
determining
the
fair
value
of
investments).
The
aggregate
value
by
input
level,
as
of
March
31,
2020,
for
the
Fund’s
investments
is
included
in
the
Fund’s
Schedule
of
Investments.
Security
Transactions,
Investment
Income
and
Realized
Gain
and
Loss
–
Investment
transactions
are
accounted
for
on
the
trade
date.
Dividend
income
is
recorded
on
the
ex-dividend
date.
Foreign
dividend
income
is
recorded
on
the
ex-dividend
date
or
as
soon
as
possible
after
determining
the
existence
of
a
dividend
declaration
after
exercising
reasonable
due
diligence.
Income
and
capital
gains
on
some
foreign
securities
may
be
subject
to
foreign
withholding
taxes,
which
are
accrued
as
applicable.
Interest
income
is
recorded
on
an
accrual
basis.
Premium
is
amortized
and
discount
is
accreted
using
the
effective
interest
method.
Identified
cost
of
investments
sold
is
used
to
determine
the
gain
and
loss
for
both
financial
statement
and
federal
income
tax
purposes.
Foreign
Currency
Translations
–
Foreign
currency
amounts
are
translated
into
U.S.
dollars
as
follows:
(1)
assets
and
liabilities
at
the
rate
of
exchange
at
the
end
of
the
respective
period;
and
(2)
purchases
and
sales
of
securities
and
income
and
expenses
at
the
rate
of
exchange
prevailing
on
the
dates
of
such
transactions.
The
portion
of
the
results
of
operations
arising
from
changes
in
the
exchange
rates
and
the
portion
due
to
fluctuations
arising
from
changes
in
the
market
prices
of
securities
are
not
isolated.
Such
fluctuations
are
included
with
the
net
realized
and
unrealized
gain
or
loss
on
investments.
Foreign
Currency
Transactions
–
The
Fund
may
enter
into
transactions
to
purchase
or
sell
foreign
currency
contracts
and
options
on
foreign
currency.
Forward
currency
contracts
are
agreements
to
exchange
one
currency
for
another
at
a
future
date
and
at
a
specified
price.
A
fund
may
use
forward
currency
contracts
to
facilitate
transactions
in
foreign
securities,
to
manage
a
fund’s
foreign
currency
exposure
and
to
protect
the
U.S.
dollar
value
of
its
underlying
portfolio
securities
against
the
effect
of
possible
adverse
movements
in
foreign
exchange
rates.
These
contracts
are
intrinsically
valued
daily
based
on
forward
rates,
and
a
fund’s
net
equity
therein,
representing
unrealized
gain
or
loss
on
the
contracts
as
measured
by
the
difference
between
the
forward
foreign
exchange
rates
at
the
dates
of
entry
into
the
contracts
and
the
forward
rates
at
the
reporting
date,
is
recorded
as
a
component
of
NAV.
These
instruments
involve
market
risk,
credit
risk,
or
both
kinds
of
risks,
in
excess
of
the
amount
recognized
in
the
Statement
of
Assets
and
Liabilities.
Risks
arise
from
the
possible
inability
of
counterparties
to
meet
the
terms
of
their
contracts
and
from
movement
in
currency
and
securities
values
and
interest
rates.
Due
to
the
risks
associated
with
these
transactions,
a
fund
could
incur
losses
up
to
the
entire
contract
amount,
which
may
exceed
the
net
unrealized
value
included
in
its
NAV.
Distributions
to
Shareholders
–
The
Fund
declares
any
dividends
from
net
investment
income
and
pays
them
annually.
Any
net
capital
gains
and
net
foreign
currency
gains
realized
by
the
Fund
are
distributed
at
least
annually.
Distributions
to
shareholders
are
recorded
on
the
ex-dividend
date.
Distributions
are
based
on
amounts
calculated
in
accordance
with
applicable
federal
income
tax
regulations,
which
may
differ
from
GAAP.
These
differences
are
due
primarily
to
differing
treatments
of
income
and
gain
on
various
investment
securities
held
by
the
Fund,
timing
differences
and
differing
characterizations
of
distributions
made
by
the
Fund.
Federal
Taxes
–
The
Fund
intends
to
continue
to
qualify
each
year
as
a
regulated
investment
company
under
Subchapter
M
of
Chapter
1,
Subtitle
A,
of
the
Internal
Revenue
Code
of
1986,
as
amended
(“Code”),
and
to
distribute
all
of
its
taxable
income
to
shareholders.
In
addition,
by
distributing
in
each
calendar
year
substantially
all
of
its
net
investment
income
and
capital
gains,
if
any,
the
Fund
will
not
be
subject
to
a
federal
excise
tax.
Therefore,
no
federal
income
or
excise
tax
provision
is
required.
The
Fund
will
file
a
U.S.
federal
income
and
excise
tax
return
as
required.
The
Fund’s
federal
income
tax
returns
are
subject
to
examination
by
the
Internal
Revenue
Service
for
a
period
of
three
fiscal
years
after
they
are
filed.
As
of
March
31,
2020,
there
are
no
uncertain
tax
positions
that
would
require
financial
statement
recognition,
de-recognition
or
disclosure.
Income
and
Expense
Allocation
–
The
Trust
accounts
separately
for
the
assets,
liabilities
and
operations
of
each
of
its
investment
portfolios.
Expenses
that
are
directly
attributable
to
more
than
one
investment
portfolio
are
allocated
among
the
respective
investment
portfolios
in
an
equitable
manner.
Redemption
Fees
–
A
shareholder
who
redeems
or
exchanges
shares
within
90
days
of
purchase
will
incur
a
redemption
fee
of
2.00%
of
the
current
NAV
of
shares
redeemed
or
exchanged,
subject
to
certain
limitations.
The
fee
is
charged
for
the
benefit
of
the
remaining
shareholders
and
will
be
paid
to
the
Fund
to
help
offset
transaction
costs.
The
fee
is
accounted
for
as
an
addition
to
paid-in
capital.
The
Caravan
Frontier
Markets
Opportunities
Fund
NOTES
TO
FINANCIAL
STATEMENTS
March
31,
2020
9
Fund
reserves
the
right
to
modify
the
terms
of
or
terminate
the
fee
at
any
time.
There
are
limited
exceptions
to
the
imposition
of
the
redemption
fee.
Redemption
fees
incurred
for
the
Fund,
if
any,
are
reflected
on
the
Statement
of
Changes
in
Net
Assets.
Commitments
and
Contingencies
–
In
the
normal
course
of
business,
the
Fund
enters
into
contracts
that
provide
general
indemnifications
by
the
Fund
to
the
counterparty
to
the
contract.
The
Fund’s
maximum
exposure
under
these
arrangements
is
dependent
on
future
claims
that
may
be
made
against
the
Fund
and,
therefore,
cannot
be
estimated;
however,
based
on
experience,
the
risk
of
loss
from
such
claims
is
considered
remote.
The
Fund
has
determined
that
none
of
these
arrangements
requires
disclosure
on
the
Fund’s
balance
sheet.
Fees
and
Expenses
Investment
Adviser
–
Caravan
Capital
Management,
LLC
(the
“Adviser”)
is
the
investment
adviser
to
the
Fund.
Pursuant
to
an
investment
advisory
agreement,
the
Adviser
receives
an
advisory
fee,
payable
monthly,
from
the
Fund
at
an
annual
rate
of
1.10%
of
the
Fund’s
average
daily
net
assets.
Distribution
–
Foreside
Fund
Services,
LLC
serves
as
the
Fund’s
distributor
(the
“Distributor”).
The
Fund
does
not
have
a
distribution
(12b-1)
plan;
accordingly,
the
Distributor
does
not
receive
compensation
from
the
Fund
for
its
distribution
services.
The
Adviser
compensates
the
Distributor
directly
for
its
services.
The
Distributor
is
not
affiliated
with
the
Adviser
or
Atlantic
Fund
Administration,
LLC,
a
wholly
owned
subsidiary
of
Apex
US
Holdings,
LLC
(d/b/a
Apex
Fund
Services)
(“Apex”)
or
their
affiliates.
Other
Service
Providers
–
Apex
provides
fund
accounting,
fund
administration,
compliance
and
transfer
agency
services
to
the
Fund.
The
fees
related
to
these
services
are
included
in
Fund
services
fees
within
the
Statement
of
Operations.
Apex
also
provides
certain
shareholder
report
production
and
EDGAR
conversion
and
filing
services.
Pursuant
to
an
Apex
services
agreement,
the
Fund
pays
Apex
customary
fees
for
its
services.
Apex
provides
a
Principal
Executive
Officer,
a
Principal
Financial
Officer,
a
Chief
Compliance
Officer
and
an
Anti-Money
Laundering
Officer
to
the
Fund,
as
well
as
certain
additional
compliance
support
functions.
Trustees
and
Officers
–
The
Trust
pays
each
Independent
Trustee
an
annual
fee
of
$16,000
($21,000
for
the
Chairman)
for
service
to
the
Trust.
The
Independent
Trustees
and
Chairman
may
receive
additional
fees
for
special
Board
meetings.
The
Independent
Trustees
are
also
reimbursed
for
all
reasonable
out-of-pocket
expenses
incurred
in
connection
with
their
duties
as
Trustees,
including
travel
and
related
expenses
incurred
in
attending
Board
meetings.
The
amount
of
Independent
Trustees’
fees
attributable
to
the
Fund
is
disclosed
in
the
Statement
of
Operations.
Certain
officers
of
the
Trust
are
also
officers
or
employees
of
the
above
named
service
providers,
and
during
their
terms
of
office
received
no
compensation
from
the
Fund.
Expense
Reimbursement
and
Fees
Waived
The
Adviser
has
contractually
agreed
to
waive
its
fee
and/or
reimburse
Fund
expenses
to
limit
total
annual
fund
operating
expenses
(excluding
all
taxes,
interest,
portfolio
transaction
expenses,
acquired
fund
fees
and
expenses,
proxy
expenses
and
extraordinary
expenses)
to
1.30%
through
February
1,
2021.
Other
fund
service
providers
have
voluntarily
agreed
to
waive
and
reimburse
a
portion
of
their
fees.
These
voluntary
fee
waivers
and
reimbursements
may
be
reduced
or
eliminated
at
any
time.
For
the
period
ended
March
31,
2020,
fees
waived
and/or
reimbursed
expenses
were
as
follows:
The
Adviser
may
be
reimbursed
by
the
Fund
for
fees
waived
and
expenses
reimbursed
by
the
Adviser
pursuant
to
the
Expense
Cap
if
such
payment
is
approved
by
the
Board,
made
within
three
years
of
the
fee
waiver
or
expense
reimbursement,
and
does
not
cause
the
Total
Annual
Fund
Operating
Expenses
After
Fee
Waiver
and/or
Expense
Reimbursement
to
exceed
the
lesser
of
(i)
the
then-current
expense
cap,
or
(ii)
the
expense
cap
in
place
at
the
time
the
fees/expenses
were
waived/reimbursed.
As
of
March
31,
2020,
$444,776
is
subject
to
recapture
by
the
Adviser.
Security
Transactions
The
cost
of
purchases
and
proceeds
from
sales
of
investment
securities
(including
maturities),
other
than
short-term
investments
during
the
period
ended
March
31,
2020
,
were
$2,633,567
and
$6,926,546
,
respectively.
Investment
Adviser
Fees
Waived
Other
Waivers
Total
Fees
Waived
and
Expenses
Reimbursed
$
74,763
$
11,231
$
85,994
Caravan
Frontier
Markets
Opportunities
Fund
NOTES
TO
FINANCIAL
STATEMENTS
March
31,
2020
10
Federal
Income
Tax
As
of
March
31,
2020,
the
cost
of
investments
for
federal
income
tax
purposes
is
substantially
the
same
as
for
financial
statement
purposes and
the
components
of
net
unrealized
depreciation
were
as
follows:
As
of
September
30,
2019,
distributable
earnings
(accumulated
loss)
on
a
tax
basis
were
as
follows:
The
difference
between
components
of
distributable
earnings
on
a
tax
basis
and
the
amounts
reflected
in
the
Statement
of
Assets
and
Liabilities
are
primarily
due
to
investments
in
passive
foreign
investment
companies
(“PFIC”)
and
wash
sales.
As
of
September
30,
2019,
the
Fund
had
$90,207
of
available
short-term
capital
loss
carryforwards
and
$717,247
of
available
long-term
capital
loss
carryforwards
that
have
no
expiration
date.
Subsequent
Events
Management
is
currently
evaluating
the
recent
introduction
of
the
COVID-19
virus
and
its
impact
on
the
financial
services
industry
and
has
concluded
that
while
it
is
reasonably
possible
that
the
virus
could
have
a
negative
effect
on
the
fair
value
of
the
Fund's
investments
and
results
of
operations,
the
specific
impact
is
not
readily
determinable
as
of
the
date
of
these
financial
statements.
The
financial
statements
do
not
include
any
adjustments
that
might
result
from
the
outcome
of
this
uncertainty.
Gross
Unrealized
Appreciation
$
69,752
Gross
Unrealized
Depreciation
(6,118,557)
Net
Unrealized
Depreciation
$
(6,048,805)
Undistributed
Ordinary
Income
$
448,269
Capital
and
Other
Losses
(807,454)
Unrealized
Depreciation
(3,925,797)
Total
$
(4,284,982)
Caravan
Frontier
Markets
Opportunities
Fund
ADDITIONAL
INFORMATION
March
31,
2020
11
Investment
Advisory
Agreement
Approval
At
the
March
27,
2020
Board
meeting
(the
“March
meeting”),
the
Board,
including
the
Independent
Trustees,
considered
the
approval
of
the
continuance
of
the
investment
advisory
agreement
between
the
Adviser
and
the
Trust
pertaining
to
the
Fund
(the
“Advisory
Agreement”).
In
preparation
for
the
March
meeting,
the
Board
was
presented
with
a
range
of
information
to
assist
in
its
deliberations.
The
Board
requested
and
reviewed
written
responses
from
the
Adviser
to
a
letter
circulated
on
the
Board's
behalf
concerning
the
personnel,
operations,
financial
condition,
performance,
compensation,
and
services
provided
to
the
Fund
by
the
Adviser.
During
its
deliberations,
the
Board
received
an
oral
presentation
from
the
Adviser
and
discussed
the
materials
with
the
Adviser,
independent
legal
counsel
to
the
Independent
Trustees
(“Independent
Legal
Counsel”),
and,
as
necessary,
with
the
Trust's
administrator.
The
Independent
Trustees
also
met
in
executive
session
with
Independent
Legal
Counsel
while
deliberating.
At
the
March
meeting,
the
Board
reviewed,
among
other
matters,
the
topics
discussed
below.
Nature,
Extent
and
Quality
of
Services
Based
on
written
materials
received,
a
presentation
from
senior
representatives
of
the
Adviser
and
a
discussion
with
the
Adviser
about
the
Adviser’s
personnel,
operations
and
financial
condition,
the
Board
considered
the
quality
of
services
to
be
provided
by
the
Adviser
under
the
Advisory
Agreement.
In
this
regard,
the
Board
considered
information
regarding
the
experience,
qualifications
and
professional
background
of
the
portfolio
manager
and
other
personnel
at
the
Adviser
with
principal
responsibility
for
the
Fund,
as
well
as
the
investment
philosophy
and
decision-making
process
of
those
professionals
and
the
capability
and
integrity
of
the
Adviser’s
senior
management
and
staff.
The
Board
considered
also
the
adequacy
of
the
Adviser’s
resources.
The
Board
noted
the
Adviser’s
representation
that
the
firm
is
financially
stable
and
has
the
operational
capability
and
necessary
staffing
and
experience
to
provide
quality
investment
advisory
services
to
the
Fund.
Based
on
the
presentation
and
the
materials
provided
by
the
Adviser
in
connection
with
the
Board’s
consideration
of
the
renewal
of
the
Advisory
Agreement,
the
Board
concluded
that,
overall,
it
was
satisfied
with
the
nature,
extent
and
quality
of
services
to
be
provided
to
the
Fund
under
the
Advisory
Agreement.
Performance
In
connection
with
a
presentation
by
the
Adviser
regarding
its
approach
to
managing
the
Fund,
including
the
investment
objective
and
strategy
of
the
Fund
and
discussion
of
the
performance
achieved
by
the
Adviser,
the
Board
reviewed
the
performance
of
the
Fund
compared
to
its
primary
benchmark.
The
Board
observed
that
the
Fund
underperformed
its
primary
benchmark
index,
the
MSCI
Frontier
Emerging
Markets
Index,
for
the
one-year
period
ended
December
31,
2019,
and
for
the
period
since
the
Fund’s
inception
on
November
15,
2017.
The
Board
also
considered
the
Fund’s
performance
relative
to
an
independent
peer
group
of
funds
identified
by
Broadridge
Financial
Solutions,
Inc.
(“Broadridge”)
believed
to
have
characteristics
similar
to
those
of
the
Fund.
The
Board
observed
that
the
Fund
underperformed
the
median
of
its
Broadridge
peers
for
the
one-year
period
ended
December
31,
2019.
The
Board
noted
the
Adviser’s
representation
that
the
Fund’s
underperformance
relative
to
the
benchmark
and
Broadridge
peers
could
be
attributed,
in
part,
to
the
Fund’s
underweight
exposure
to
investments
in
Kuwait,
which
investments
had
rallied
during
the
period
as
a
result
of
the
upcoming
country
graduation
from
a
“frontier”
to
an
“emerging”
market,
as
well
as
stock
selection
within
Kuwait.
Based
on
the
foregoing
and
other
relevant
factors,
the
Board
concluded
that
the
Adviser’s
management
of
the
Fund
could
benefit
the
Fund
and
its
shareholders.
Compensation
The
Board
evaluated
the
Adviser’s
compensation
for
providing
advisory
services
to
the
Fund
and
analyzed
comparative
information
on
actual
advisory
fee
rates
and
actual
total
expenses
of
the
Fund’s
Broadridge
peers.
The
Board
observed
that
the
Fund’s
actual
advisory
fee
rate
and
actual
total
expense
ratio
were
each
less
than
the
median
of
its
Broadridge
peers.
The
Board
also
recognized
that
the
Adviser
had
contractually
agreed
to
waive
fees
or
reimburse
expenses
to
the
extent
necessary
to
keep
the
total
expense
ratio
of
the
Fund
at
a
competitive
level
and
that,
as
a
result
of
the
contractual
expense
cap
arrangements,
the
Fund’s
total
expense
ratio
was
the
lowest
in
the
Broadridge
peer
group.
Based
on
the
foregoing
and
other
applicable
considerations,
the
Board
concluded
that
the
advisory
fees
paid
to
the
Adviser
by
the
Fund
appeared
to
be
reasonable
in
light
of
the
nature,
extent
and
quality
of
services
provided
by
the
Adviser.
Caravan
Frontier
Markets
Opportunities
Fund
ADDITIONAL
INFORMATION
March
31,
2020
12
Cost
of
Services
and
Profitability
The
Board
considered
information
provided
by
the
Adviser
regarding
the
costs
of
services
and
its
profitability
with
respect
to
the
Fund.
In
this
regard,
the
Board
considered
the
Adviser’s
resources
devoted
to
the
Fund,
as
well
as
the
Adviser’s
discussion
of
the
aggregate
costs
and
profitability
of
its
mutual
fund
activity.
The
Board
noted
the
Adviser’s
representation
that
it
had
subsidized
the
Fund’s
operations
since
the
inception
of
the
Fund
and
had
continued
to
waive
the
entirety
of
its
advisory
fee
to
do
so.
Based
on
these
and
other
applicable
considerations,
the
Board
concluded
that
the
Adviser’s
costs
of
services
and
profits
attributable
to
management
of
the
Fund
were
reasonable
in
the
context
of
all
factors
considered.
Economies
of
Scale
The
Board
considered
whether
the
Fund
would
benefit
from
any
economies
of
scale.
In
this
respect,
the
Board
noted
the
Adviser’s
representation
that
the
Fund
could
benefit
from
economies
of
scale
at
higher
asset
levels,
but
that
the
Adviser
believed
that
economies
of
scale
had
not
been
achieved
at
current
asset
levels.
Based
on
the
foregoing
information
and
other
applicable
factors,
and
in
light
of
the
size
of
the
Fund
and
the
existence
of
the
Adviser’s
contractual
expense
cap
arrangements
with
respect
to
the
Fund,
the
Board
concluded
that
the
asset
level
of
the
Fund
was
not
consistent
with
the
existence
of
economies
of
scale
and
that
economies
of
scale
were
not
a
material
factor
to
consider
in
renewing
the
Advisory
Agreement.
Other
Benefits
The
Board
noted
the
Adviser’s
representation
that,
aside
from
its
contractual
advisory
fees,
it
does
not
benefit
in
a
material
way
from
its
relationship
with
the
Fund.
Based
on
the
foregoing
representation,
the
Board
concluded
that
other
benefits
received
by
the
Adviser
from
its
relationship
with
the
Fund
were
not
a
material
factor
in
approving
the
continuation
of
the
Advisory
Agreement.
Conclusion
The
Board
did
not
identify
any
single
factor
as
being
of
paramount
importance,
and
different
Trustees
may
have
given
different
weight
to
different
factors.
In
addition,
various
materials
provided
to
and
discussed
with
the
Board
throughout
the
year,
including
with
respect
to
performance
and
compliance,
also
informed
the
Board’s
decision.
The
Board
reviewed
a
memorandum
from
Independent
Legal
Counsel
discussing
the
legal
standards
applicable
to
its
consideration
of
the
Advisory
Agreement.
Based
on
its
review,
including
consideration
of
each
of
the
factors
referenced
above,
the
Board,
in
the
exercise
of
its
reasonable
business
judgment,
approved
the
continuation
of
the
Advisory
Agreement.
Proxy
Voting
Information
A
description
of
the
policies
and
procedures
that
the
Fund
uses
to
determine
how
to
vote
proxies
relating
to
securities
held
in
the
Fund’s
portfolio
is
available,
without
charge
and
upon
request,
by
calling
(844)
856-1516
and
on
the
U.S.
Securities
and
Exchange
Commission's
(the
"SEC")
website
at
www.sec.gov.
The
Fund’s
proxy
voting
record
for
the
most
recent
twelve-month
period
ended
June
30
is
available,
without
charge
and
upon
request,
by
calling
(844)
856-1516
and
on
the
SEC’s
website
at
www.sec.gov.
Availability
of
Quarterly
Portfolio
Schedules
The
Fund
files
its
complete
schedule
of
portfolio
holdings
with
the
SEC
for
the
first
and
third
quarters
of
each
fiscal
year
on
Form
N-PORT.
Forms
N-PORT
are
available
free
of
charge
on
the
SEC’s
website
at
www.sec.gov
or
may
be
reviewed
and
copied
at
the
SEC’s
Public
Reference
Room
in
Washington,
D.C.
Information
on
the
operation
of
the
Public
Reference
Room
may
be
obtained
by
calling
(800)
SEC-0330.
Shareholder
Expense
Example
As
a
shareholder
of
the
Fund,
you
incur
two
types
of
costs:
(1)
transaction
costs,
including
redemption
fees,
and
(2)
ongoing
costs,
including
management
fees
and
other
Fund
expenses.
This
example
is
intended
to
help
you
understand
your
ongoing
costs
(in
dollars)
of
investing
in
the
Fund,
and
to
compare
these
costs
with
the
ongoing
costs
of
investing
in
other
mutual
funds.
The
example
is
based
on
an
investment
of
$1,000
invested
at
the
beginning
of
the
period
and
held
for
the
entire
period
from
October
1,
2019
through
March
31,
2020.
Caravan
Frontier
Markets
Opportunities
Fund
ADDITIONAL
INFORMATION
March
31,
2020
13
Actual
Expenses
–
The
first
line
of
the
table
below
provides
information
about
actual
account
values
and
actual
expenses.
You
may
use
the
information
in
this
line,
together
with
the
amount
you
invested,
to
estimate
the
expenses
that
you
paid
over
the
period.
Simply
divide
your
account
value
by
$1,000
(for
example,
an
$8,600
account
value
divided
by
$1,000
=
8.6),
then
multiply
the
result
by
the
number
in
the
first
line
under
the
heading
entitled
“Expenses
Paid
During
Period”
to
estimate
the
expenses
you
paid
on
your
account
during
the
period.
Hypothetical
Example
for
Comparison
Purposes
–
The
second
line
of
the
table
below
provides
information
about
hypothetical
account
values
and
hypothetical
expenses
based
on
the
Fund’s
actual
expense
ratio
and
an
assumed
rate
of
return
of
5%
per
year
before
expenses,
which
is
not
the
Fund’s
actual
return.
The
hypothetical
account
values
and
expenses
may
not
be
used
to
estimate
the
actual
ending
account
balance
or
expenses
you
paid
for
the
period.
You
may
use
this
information
to
compare
the
ongoing
costs
of
investing
in
the
Fund
and
other
funds.
To
do
so,
compare
this
5%
hypothetical
example
with
the
5%
hypothetical
examples
that
appear
in
the
shareholder
reports
of
other
funds.
Please
note
that
the
expenses
shown
in
the
table
are
meant
to
highlight
your
ongoing
costs
only
and
do
not
reflect
any
transactional
costs,
such
as
redemption
fees.
Therefore,
the
second
line
of
the
table
is
useful
in
comparing
ongoing
costs
only
and
will
not
help
you
determine
the
relative
total
costs
of
owning
different
funds.
In
addition,
if
these
transactional
costs
were
included,
your
costs
would
have
been
higher.
Beginning
Account
Value
October
1,
2019
Ending
Account
Value
March
31,
2020
Expenses
Paid
During
Period*
Annualized
Expense
Ratio*
Supra
Institutional
Shares
Actual
$
1,000.00
$
729.40
$
5.62
1.30%
Hypothetical
(5%
return
before
expenses)
$
1,000.00
$
1,018.50
$
6.56
1.30%
*
Expenses
are
equal
to
the
Fund’s
annualized
expense
ratio
multiplied
by
the
average
account
value
over
the
period,
multiplied
by
the
number
of
days
in
the
most
recent
fiscal
half-year
(183)
divided
by
366
to
reflect
the
half-year
period.
CARAVAN
FRONTIER
MARKETS
OPPORTUNITIES
FUND
SUPRA
INSTITUTIONAL
SHARES
(CSFOX)
FOR
MORE
INFORMATION:
P.O.
Box
588
Portland,
ME
04112
(844)
856-1516
(toll
free)
INVESTMENT
ADVISER
Caravan
Capital
Management,
LLC
950
Pacific
Avenue,
Suite
500
Tacoma,
WA
98402
TRANSFER
AGENT
Apex
Fund
Services
P.O.
Box
588
Portland,
ME
04112
www.theapexgroup.com
DISTRIBUTOR
Foreside
Fund
Services,
LLC
Three
Canal
Plaza,
Suite
100
Portland,
Maine
04101
www.foreside.com
This
report
is
submitted
for
the
general
information
of
the
shareholders
of
the
Fund.
It
is
not
authorized
for
distribution
to
prospective
investors
unless
preceded
or
accompanied
by
an
effective
prospectus,
which
includes
information
regarding
the
Fund’s
risks,
objectives,
fees
and
expenses,
experience
of
its
management,
and
other
information.
206-SAR-0320
ITEM 2. CODE OF ETHICS.
Not applicable.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not applicable.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not applicable.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable
ITEM 6. INVESTMENTS.
(a) Included as part of report to shareholders under Item 1.
(b) Not applicable.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS.
Not applicable.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Registrant does not accept nominees to the board of trustees from shareholders.
ITEM 11. CONTROLS AND PROCEDURES
(a) The Registrant’s Principal Executive Officer and Principal Financial Officer have concluded that the Registrant’s disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940 (the “Act”)) are effective, based on their evaluation of the controls and procedures required by Rule 30a-3(b) under the Act and Rules 13a-15(b) or 15d-15(b) under the Securities Exchange Act of 1934, as of a date within 90 days of the filing date of this report.
(b) There were no changes in the Registrant’s internal control over financial reporting (as defined in
Rule 30a-3(d) under the Act) that occurred during the second fiscal quarter of the period covered by this report that have materially affected, or are reasonably likely to materially affect, the Registrant’s internal control over financial reporting.
ITEM 12. DISCLOSURE OF SECURITIES LENDING ACTIVITIES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES
Not applicable.
ITEM 13. EXHIBITS.
(a)(1) Not applicable.
(a)(3) Not applicable.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Registrant Forum Funds II
By: | /s/ Jessica Chase | |
Jessica Chase, Principal Executive Officer | ||
Date: | May 28, 2020 |
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
By: | /s/ Jessica Chase | |
Jessica Chase, Principal Executive Officer | ||
Date: | May 28, 2020 |
By: | /s/ Karen Shaw | |
Karen Shaw, Principal Financial Officer | ||
Date: | May 28, 2020 |