As filed with the Securities and Exchange Commission on November 30, 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 – September 30, 2020
ITEM 1. REPORT TO STOCKHOLDERS.
Annual
Report
September
30,
2020
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
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
Funds
or
your
financial
intermediary
electroni-
cally
by
contacting
the
Funds
at
(855)
409-2297
or
baywoodfunds.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
Funds
or
your
financial
intermediary
that
you
wish
to
continue
receiving
paper
copies
of
your
shareholder
reports
by
contacting
the
Funds
at
(855)
409-2297
or
baywoodfunds.ta@
apexfs.com
or
by
contacting
your
financial
intermediary
directly.
Your
election
to
receive
reports
in
paper
will
apply
to
all
funds
held
with
Baywood
Funds.
BAYWOOD
VALUE
PLUS
FUND
A
MESSAGE
TO
OUR
SHAREHOLDERS
(Unaudited)
September
30,
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
year
ended
September
30,
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.
From
a
goldilocks
economy
with
unemployment
below
4%
to
the
worst
economic
contraction
in
a
century
three
months
later,
to
the
largest
global
coordinated
monetary
and
fiscal
stimuli
ever
produced,
it
is
no
surprise
that
stock
market
volatility
reached
historical
proportions
in
the
most
recent
fiscal
year.
That
volatility
results
in
lower
overall
valuations
is
an
investment
tenet
that
has
historically
proven
true
over
time
and
has
been
widely
taught
in
most
business
education.
That
is,
after
all,
why
companies
attempt
to
“manage”
their
earnings.
Volatility
is
simply
not
typically
associated
with
higher
valuations.
And
yet
here
we
are,
the
greatest
economic
downturn
in
generations
created
by
a
pandemic
the
likes
of
which
hasn’t
been
experienced
in
a
century.
Companies
around
the
world
have
removed
earnings
guidance,
many
industries
would
have
succumbed
to
bankruptcy
were
it
not
for
government
largesse,
and
most
countries
are
not
likely
to
return
to
prior
economic
peaks
for
years
to
come.
How
is
it
then,
given
the
general
disdain
for
volatility,
that
stock
markets,
the
U.S.
stock
market
in
particular,
are
at
such
elevated
levels
of
valuations.
How
is
it
that
we
find
ourselves
in
another
market
folly
rivaling
those
of
recent
and
distant
past,
all
of
which
were
followed
by
major
stock
downturns?
While
not
all
stocks
are
priced
higher
today
than
they
were
a
year
ago,
those
that
are
driving
the
S&P
500
Index,
a
stock
market
index
that
tracks
the
stocks
of
500
large-cap
U.S.
companies,
have
significantly
increased
in
value.
As
a
result,
the
S&P
500,
is
higher
today
than
it
ended
calendar
2019.
Quite
a
feat
but
one
we
view
with
suspicion.
The
prolific
Norwegian
explorer
Roald
Amundsen
famously
said
adventure
is
just
bad
planning.
To
us,
bad
planning
can
take
many
forms
but
strikingly
it
means
the
same
thing
for
explorers
and
investors.
Bad
planning
is
not
reading
the
terrain,
it’s
ignoring
the
warning
signs
that
are
in
front
of
you,
and
not
learning
from
past
mistakes.
Adventure
occurs
when
people
fail
to
take
necessary
precautions
against
possible
dangers
and
risks.
At
SKBA,
our
goal
always
has
been
and
still
remains
to
approach
investing
as
a
disciplined
and
professional
activity,
not
an
adventurous
one.
We
believe
it
is
our
job
to
avoid
the
thrill
of
adventure
investing
and
to
take
warnings
and
risks
seriously.
The
market
is
offering
an
abundance
of
warning
signs,
signs
that
in
our
many
decades
of
experience
are
quite
familiar.
Comparable
to
past
occurrences
of
market
folly
is
today’s
widespread
acceptance
that
market
leadership
will
not
change.
We
are
now
precisely
at
such
a
point
wherein
the
prevailing
investor
consensus
assumes
that
market
leadership
will
remain
so
into
perpetuity.
We
are
at
a
time
during
which
even
self-proclaimed
value
investors
are
extolling
the
virtues
of
those
few
leading
securities.
This
behavior
exactly
mirrors
that
towards
the
large
financials
in
2006,
Citigroup,
AIG,
Bank
of
America,
which
were
poised
to
continue
to
dominate
the
market.
It
also
perfectly
mirrors
behavior
and
statements
made
in
the
late
90s,
and
not
simply
with
dot-coms.
WorldCom
within
communications,
Enron
within
energy,
AOL-Time
Warner
within
consumer
discretionary
and
GE
within
industrials
were
among
the
largest
market
capitalizations.
The
majority
of
the
broad
market’s
advance
was
led
by
one
sector
with
select
representation
from
a
few
other
companies.
This
perfectly
describes
the
investing
environment
we
find
ourselves
in
today.
At
the
time
of
this
writing,
technology’s
weight
in
the
S&P
500
is
slightly
above
28%.
Until
recently,
however,
Alphabet,
Facebook,
and
Amazon
were
classified
within
technology.
They
have
since
been
reclassified
into
communications
and
consumer
discretionary.
As
the
largest
market
capitalization
stocks,
they
benefit
from
a
preponderance
of
flows
in
the
largest
market-cap
weighted
index.
As
such,
they
need
to
be
included
within
technology
to
appreciate
the
influence
they
hold.
They
are,
after
all,
among
the
top
five
holdings
in
the
S&P
500
index.
Amazon,
Alphabet,
and
Facebook
add
another
10%
to
the
overall
concentration
of
the
index
to
total
nearly
40%!
That
concentration
rivals
if
not
exceeds
levels
of
concentration
experienced
in
prior
market
follies.
The
rationale
for
this
concentration
of
dominance
is
also
eerily
similar
to
prior
episodes
of
excess:
“This
time
is
different
because
these
are
good
companies
that
have
significant
and
lasting
advantages
that
accrue
to
their
bottom
lines”.
This
rationale
was
applied
equally,
though
few
would
now
accept
or
admit
it,
to
WorldCom
and
Enron;
even
GE.
Unless
an
investment
manager
had
even
greater
exposure
to
those
mentioned
securities,
he
or
she
would’ve
been
hard-pressed
to
outperform
the
S&P
500.
Lasting
competitive
advantages
that
accrue
to
companies’
future
earnings
stream
were
also
touted
as
the
primary
rationale
for
excessive
concentration
in
the
largest
financials
a
decade
ago.
At
the
peak
of
the
credit
bubble,
financials
totaled
approximately
37%
of
the
BAYWOOD
VALUE
PLUS
FUND
A
MESSAGE
TO
OUR
SHAREHOLDERS
(Unaudited)
September
30,
2020
2
Russell
1000
Value
index,
an
index
composed
of
large-
and
mid-capitalization
U.S.
equities
that
exhibit
value
characteristics.
It
became
impossible
to
beat
that
index
unless,
once
again,
a
manager
had
even
greater
concentration
in
those
few
stocks.
We
struggle
to
defend
today’s
behavior
as
being
any
different
from
those
prior
instances.
Value
Plus
chose
not
to
participate
in
either
of
the
two
prior
frenzies
and
underperformed
in
the
short-term
as
a
result.
Maintaining
a
strict
investment
discipline
nevertheless
showed
itself
soon
thereafter
as
market
excesses
were
laid
bare
and
many
of
those
formerly
leading
securities
declined
significantly,
more
often
than
not
never
to
recover.
A
few
statistics,
which
we
cite
courtesy
of
Jeffries,
may
resonate
with
a
shrinking
cohort
of
actively
minded
investors.
At
the
end
of
August,
Apple’s
market
cap
was
larger
than
the
entire
Russell
2000
index,
an
index
measuring
the
performance
of
approximately
2,000
smallest-cap
American
companies
in
the
Russell
3000
Index,
which
is
made
up
of
3,000
of
the
largest
U.S.
stocks..
One
company
larger
than
an
entire
index!
Another
data
point:
through
August
of
this
year,
Russell
growth
had
outperformed
Russell
value
each
and
every
month
over
the
last
year.
Yet
another:
for
those
few
that
might
be
interested
in
valuation,
the
top
five
positions
in
the
S&P,
all
of
which
we’ve
mentioned
with
the
addition
of
Microsoft,
recently
traded
at
8.6
times
revenues
as
compared
with
1.7
times
revenues
for
the
Russell
2000.
That’s
an
over
5
times
greater
valuation
than
the
remaining
benchmark.
Are
these
five
companies
truly
five
times
greater
than
a
truly
broad
representation
of
the
market?
The
parallels
to
prior
bubbles
which
we
were
until
recently
cautious
to
reference,
are
becoming
too
strong
to
ignore.
Once
again,
we
find
ourselves
in
an
eerily
similar
place
as
we
have
in
each
of
the
last
two
decades.
We
continue
to
purchase
securities
that
are
ignored
by
what
is
now
best
described
as
bots.
Because
it
is
not
simply
index
investing
that
has
garnered
a
great
majority
of
assets.
It
is
that
all
of
those
assets,
by
their
implementation,
do
not
need
to
be
managed
by
humans.
The
only
aspect
tied
to
human
investing
is
in
attempting
to
keep
up
with
the
largest
market
cap
weighted
index
in
the
world
at
a
time
when
caution
should
be
heeded.
Instead,
caution
is
being
thrown
to
the
wind
on
a
massive
scale
and
there
is
no
longer
any
distinction
in
the
majority
of
widely
available
investing
options.
We
must
also
ask
ourselves
whether
the
companies
at
the
top
of
the
market
capitalization
derby
will
remain
there
for
another
five
years,
let
alone
ten.
Starting
with
the
obvious
ones
from
the
dustbin
of
stock
market
history.
Where
are
AOL-TimeWarner,
WorldCom
and
Enron?
The
first
was
a
failed
merger
based
on
a
house
of
cards
business
model
while
the
others
were
accused
of
fraud
and
other
accounting
misdeeds.
But
how
about
GE?
In
2000
and
again
in
2004,
GE
was
the
largest
market
capitalization
in
the
S&P
500,
not
Microsoft,
not
Amazon,
not
Apple,
not
Google.
In
fact,
Apple
had
just
recently
flirted
with
bankruptcy,
only
to
accept
a
financial
lifeline
from
its
longtime
nemesis,
Microsoft.
What
we
can
declare
with
high
conviction
is
that
GE
is
incredibly
unlikely
to
find
itself
at
the
top
of
the
derby
anytime
soon.
And
lastly,
what
bots
(automated
algorithmic
traders)
fail
to
recognize
and
can’t
be
programmed
for
is
that
even
great
companies
can
decline
meaningfully.
They
always
have
in
the
past
and
as
with
all
immutable
laws,
they
will
again
in
the
future.
The
nifty-fifty
environment
provides
yet
another
vivid
example
of
strong
companies
losing
most
of
their
market
values
over
a
few
years.
Xerox,
Polaroid,
IBM,
but
also
companies
like
Proctor
&
Gamble
declined
to
levels
prior
to
believed
unimaginable.
So
we
are
reminded
of
Santayana
who
wisely
stated
that
“those
who
cannot
remember
the
past
are
condemned
to
repeat
it.”
In
the
recently
ended
fiscal
year,
a
year
that
included
a
historically
swift
decline
followed
by
just
as
swift
of
a
rally,
Value
Plus
modestly
underperformed
its
large
cap
value
benchmark
primarily
due
to
its
exposure
to
consumer
staples
and
healthcare.
Within
consumer
staples,
being
underweight
the
sector
during
a
period
of
heightened
hoarding
of
everything
from
canned
soup
to
paper
towels
is
explainable.
This
was
the
largest
source
of
relative
underperformance.
Within
consumer
staples,
we
can
point
directly
to
our
holding
in
Molson
Coors,
a
company
whose
business
has
fundamentally
changed
for
the
time
being.
Imagine
most
restaurants
and
bars
in
the
world
as
well
as
social
events—concerts,
sports
arenas
and
holiday
gatherings—being
closed
or
prohibited
for
extended
periods
of
time.
That
is
what
Molson
Coors
has
had
to
contend
with.
Not
surprisingly,
its
shares
have
suffered
along
with
its
fundamentals.
Within
healthcare,
companies
not
directly
tied
to
Covid-19,
those
providing
services
and
equipment
to
elective
surgery
and
procedure
markets
simply
performed
less
well.
None
are
at
risk;
in
fact,
the
delay
in
procedures
will
soon
result
in
pent-up
demand.
In
the
short
term,
however,
little
importance
has
been
paid
to
their
intact
fundamentals.
The
fund’s
exposure
to
communications,
consumer
discretionary
and
industrial
sectors
contributed
meaningfully
and
mostly
offset
areas
of
underperformance.
Within
communications,
it
is
clear
that
shelter-in-place
policies
benefit
companies
like
Comcast
and
Verizon.
These
two
companies
were
top
positions
in
the
fund
prior
to
the
pandemic
and
remain
so
due
to
their
strong
fundamentals
and
reasonable
valuations.
Within
consumer
discretionary,
our
overweight
played
a
significant
part
in
outperforming
our
benchmark’s
sector
exposure.
Kontoor
Brands
and
Lear
declined
while
Genuine
Parts
and
Target
increased
smartly.
Our
industrial
exposure
meaningfully
contributed
BAYWOOD
VALUE
PLUS
FUND
A
MESSAGE
TO
OUR
SHAREHOLDERS
(Unaudited)
September
30,
2020
3
to
relative
returns,
driven
by
Cummins,
Eaton,
Parker
Hannifin
and
Union
Pacific.
We
purchased
UPS
earlier
this
year
and
those
shares
have
since
contributed
as
well.
Following
a
significant
rebound
in
energy
in
Summer,
we
reduced
our
sector
allocation
by
modestly
trimming
our
positions,
eliminating
Valero
and
letting
the
sector
drift
lower.
We
wrote
at
length
about
the
absurdities
surrounding
energy
markets
in
our
semi-annual
letter
six
months
ago.
Many
of
those
have
since
reversed
themselves.
As
a
result,
our
overweight
in
energy
contributed
marginally
during
the
year
as
did
IT.
Cisco
and
NetApp
detracted
from
relative
returns
while
TE
Connectivity
and
Texas
Instruments
contributed.
None
of
the
lagging
aforementioned
companies
give
us
pause
as
their
valuations
are
all
the
more
attractive
today
than
they
were
a
few
months
ago.
In
addition,
many
were
among
the
largest
contributors
in
prior
periods
and
stock
prices
rarely
move
unidirectionally.
Within
financials,
a
modest
detractor
for
the
year,
we
continued
to
lower
our
overall
bank
exposure
as
a
result
of
the
flattening
and
declining
yield
curve.
Unless
monetary
policy
were
to
change
meaningfully,
an
event
we
see
as
unlikely,
we
will
maintain
this
posture.
We
eliminated
BOK
Financial
and
initiated
positions
in
Chubb,
a
premium
insurance
underwriter
at
a
time
when
pricing
is
as
strong
as
it
has
been
in
years.
We
also
purchased
shares
in
First
American
Financial,
a
leading
real
estate
title
insurance
company.
Consistent
with
our
strategy,
both
Chubb
and
First
American
dominate
their
industries,
both
are
priced
at
attractive
if
not
cycle
low
valuations
and
both
are
generally
ignored
due
to
the
previously
discussed
reasons.
Even
though
we
worry
about
the
state
of
overall
markets,
in
contrast,
we
are
not
worried
about
either
Chubb
or
First
American.
Some
of
the
additional
recent
purchases
include
Ingredion,
a
leader
in
nutrition
ingredients
and
UPS,
a
global
leader
in
transportation,
commerce
and
package
delivery.
Value
Plus
being
a
value
focused
strategy
supports
the
primary
justification
for
recent
underperformance
compared
with
the
broad
market.
Value
Plus
being
an
actively-managed
strategy
supports
the
primary
justification
towards
headwinds
relative
to
value
indexes.
But
as
with
our
long-term
track
record
of
outperforming
in
declining
markets,
in
both
recent
downdrafts
of
June
and
September,
the
strategy
held
up
well
compared
to
our
value
benchmarks
as
well
as
the
broad
market.
We
will
continue
to
avoid
adventures
in
investing
and
instead
opt
for
prudent
thru-cycle
planning.
Current
and
future
portfolio
holdings
are
subject
to
change
and
risk.
Please
see
the
schedule
of
investments
section
in
this
report
for
a
full
listing
of
the
Fund’s
holdings
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.
Diversification
does
not
assure
a
profit,
nor
does
it
protect
against
a
loss
in
a
declining
market
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
(Unuadited)
September
30,
2020
4
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
September
30,
2020
One
Year
Five
Year
Ten
Year
Since
Inception
06/27/08
Baywood
Value
Plus
Fund
-8.77%
6.38%
8.42%
7.34%
Morningstar
US
Large
Value
TR
Index
-7.14%
8.44%
9.43%
6.68%
*
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
September
30,
2020
5
See
Notes
to
Financial
Statements.
The
following
is
a
summary
of
the
inputs
used
to
value
the
Fund's instruments
as
of
September
30,
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
-
96.8%
Basic
Materials
-
7.4%
1,766
Corteva,
Inc.
$
50,878
1,460
Nutrien,
Ltd.
57,276
800
Rio
Tinto
PLC,
ADR
48,312
1,000
Westrock
Co.
34,740
191,206
Capital
Goods
/
Industrials
-
8.6%
200
3M
Co.
32,036
400
Cummins,
Inc.
84,464
300
Eaton
Corp.
PLC
30,609
200
Parker-Hannifin
Corp.
40,468
600
Raytheon
Technologies
Corp.
34,524
222,101
Communication
Services
-
6.7%
1,800
Comcast
Corp.,
Class A
83,268
1,500
Verizon
Communications,
Inc.
89,235
172,503
Consumer
Discretionary
-
7.0%
500
Genuine
Parts
Co.
47,585
1,600
Kontoor
Brands,
Inc.
38,720
300
Lear
Corp.
32,715
400
Target
Corp.
62,968
181,988
Consumer
Staples
-
9.4%
300
Ingredion,
Inc.
22,704
200
Kimberly-Clark
Corp.
29,532
1,100
Molson
Coors
Beverage
Co.,
Class B
36,916
500
Mondelez
International,
Inc.,
Class A
28,725
300
PepsiCo.,
Inc.
41,580
600
Walmart,
Inc.
83,946
243,403
Energy
-
7.3%
400
Chevron
Corp.
28,800
1,500
ConocoPhillips
49,260
3,200
Equinor
ASA,
ADR
44,992
2,000
Kinder
Morgan,
Inc.
24,660
800
Phillips
66
41,472
189,184
Financials
-
16.0%
2,200
American
International
Group,
Inc.
60,566
400
Ameriprise
Financial,
Inc.
61,644
200
Chubb,
Ltd.
23,224
1,000
Citigroup,
Inc.
43,110
700
First
American
Financial
Corp.
35,637
1,500
MetLife,
Inc.
55,755
400
Morgan
Stanley
19,340
300
Northern
Trust
Corp.
23,391
1,000
Prosperity
Bancshares,
Inc.
51,830
2,600
Radian
Group,
Inc.
37,986
412,483
Health
Care
-
14.6%
800
AbbVie,
Inc.
70,072
300
Amgen,
Inc.
76,248
700
AstraZeneca
PLC,
ADR
38,360
500
Cardinal
Health,
Inc.
23,475
400
CVS
Health
Corp.
23,360
500
Gilead
Sciences,
Inc.
31,595
816
Koninklijke
Philips
NV,
ADR
38,475
500
Medtronic
PLC
51,960
300
Merck
&
Co.,
Inc.
24,885
378,430
Shares
Security
Description
Value
Real
Estate
-
4.6%
6,830
VEREIT,
Inc.
REIT
$
44,395
1,600
VICI
Properties,
Inc.
REIT
37,392
1,300
Weyerhaeuser
Co.
REIT
37,076
118,863
Technology
-
9.2%
1,600
Cisco
Systems,
Inc.
63,024
500
Intel
Corp.
25,890
1,400
NetApp,
Inc.
61,376
600
TE
Connectivity,
Ltd.
58,644
200
Texas
Instruments,
Inc.
28,558
237,492
Transportation
-
5.1%
4,800
Atlas
Corp.
42,912
200
Union
Pacific
Corp.
39,374
300
United
Parcel
Service,
Inc.,
Class B
49,989
132,275
Utilities
-
0.9%
800
OGE
Energy
Corp.
23,992
Total
Common
Stock
(Cost
$2,426,348)
2,503,920
Shares
Security
Description
Value
Money
Market
Fund
-
3.4%
89,038
Federated
Government
Obligations
Fund,
Institutional
Class,
0.01%
(b)
(Cost
$89,038)
89,038
Investments,
at
value
-
100.2%
(Cost
$2,515,386)
$
2,592,958
Other
Assets
&
Liabilities,
Net
-
(0.2)%
(4,711)
Net
Assets
-
100.0%
$
2,588,247
ADR
American
Depositary
Receipt
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
September
30,
2020.
Valuation
Inputs
Investments
in
Securities
Level
1
-
Quoted
Prices
$
2,503,920
Level
2
-
Other
Significant
Observable
Inputs
89,038
Level
3
-
Significant
Unobservable
Inputs
–
Total
$
2,592,958
BAYWOOD
VALUE
PLUS
FUND
SCHEDULE
OF
INVESTMENTS
September
30,
2020
6
See
Notes
to
Financial
Statements.
PORTFOLIO
HOLDINGS
(Unaudited)
%
of
Total
Investments
Basic
Materials
7.4%
Capital
Goods
/
Industrials
8.6%
Communication
Services
6.6%
Consumer
Discretionary
7.0%
Consumer
Staples
9.4%
Energy
7.3%
Financials
15.9%
Health
Care
14.6%
Real
Estate
4.6%
Technology
9.2%
Transportation
5.1%
Utilities
0.9%
Money
Market
Fund
3.4%
100.0%
BAYWOOD
VALUE
PLUS
FUND
STATEMENT
OF
ASSETS
AND
LIABILITIES
September
30,
2020
7
See
Notes
to
Financial
Statements.
ASSETS
Investments,
at
value
(Cost
$2,515,386)
$
2,592,958
Receivables:
Fund
shares
sold
1,885
Investment
securities
sold
51,174
Dividends
4,068
From
investment
advisor
8,071
Prepaid
expenses
7,339
Total
Assets
2,665,495
LIABILITIES
Payables:
Investment
securities
purchased
49,451
Accrued
Liabilities:
Fund
services
fees
4,753
Other
expenses
23,044
Total
Liabilities
77,248
NET
ASSETS
$
2,588,247
COMPONENTS
OF
NET
ASSETS
Paid-in
capital
$
2,536,017
Distributable
earnings
52,230
NET
ASSETS
$
2,588,247
SHARES
OF
BENEFICIAL
INTEREST
AT
NO
PAR
VALUE
(UNLIMITED
SHARES
AUTHORIZED)
173,014
NET
ASSET
VALUE,
OFFERING
AND
REDEMPTION
PRICE
PER
SHARE
$
14.96
BAYWOOD
VALUE
PLUS
FUND
STATEMENT
OF
OPERATIONS
YEAR
ENDED
SEPTEMBER
30,
2020
8
See
Notes
to
Financial
Statements.
INVESTMENT
INCOME
Dividend
income
(Net
of
foreign
withholding
taxes
of
$1,350)
$
84,913
Total
Investment
Income
84,913
EXPENSES
Investment
advisor
fees
13,210
Fund
services
fees
59,661
Transfer
agent
fees
18,165
Custodian
fees
5,000
Registration
fees
19,368
Professional
fees
30,600
Trustees'
fees
and
expenses
3,832
Other
expenses
26,935
Total
Expenses
176,771
Fees
waived
and
expenses
reimbursed
(158,277)
Net
Expenses
18,494
NET
INVESTMENT
INCOME
66,419
NET
REALIZED
AND
UNREALIZED
GAIN
(LOSS)
Net
realized
loss
on
investments
(19,145)
Net
change
in
unrealized
appreciation
(depreciation)
on
investments
(289,212)
NET
REALIZED
AND
UNREALIZED
LOSS
(308,357)
DECREASE
IN
NET
ASSETS
RESULTING
FROM
OPERATIONS
$
(241,938)
BAYWOOD
VALUE
PLUS
FUND
STATEMENTS
OF
CHANGES
IN
NET
ASSETS
9
See
Notes
to
Financial
Statements.
For
the
Year
Ended
September
30,
2020
For
the
Year
Ended
September
30,
2019
OPERATIONS
Net
investment
income
$
66,419
$
64,034
Net
realized
gain
(loss)
(19,145)
30,295
Net
change
in
unrealized
appreciation
(depreciation)
(289,212)
(139,596)
Decrease
in
Net
Assets
Resulting
from
Operations
(241,938)
(45,267)
DISTRIBUTIONS
TO
SHAREHOLDERS
Investor
Shares
-
(113,003)
Institutional
Shares
(100,190)
(72,133)
Total
Distributions
Paid
(100,190)
(185,136)
CAPITAL
SHARE
TRANSACTIONS
Sale
of
shares
Investor
Shares
-
7,750
Institutional
Shares
63,897
2,204,983
Reinvestment
of
distributions
Investor
Shares
-
112,658
Institutional
Shares
99,997
72,102
Redemption
of
shares
Investor
Shares
-
(1,805,831)
Institutional
Shares
(35,799)
(435,150)
Increase
in
Net
Assets
from
Capital
Share
Transactions
128,095
156,512
Decrease
in
Net
Assets
(214,033)
(73,891)
NET
ASSETS
Beginning
of
Year
2,802,280
2,876,171
End
of
Year
$
2,588,247
$
2,802,280
SHARE
TRANSACTIONS
Sale
of
shares
Investor
Shares
-
477
Institutional
Shares
4,328
137,725
Reinvestment
of
distributions
Investor
Shares
-
7,217
Institutional
Shares
6,354
4,519
Redemption
of
shares
Investor
Shares
-
(112,284)
Institutional
Shares
(2,174)
(27,993)
Increase
in
Shares
8,508
9,661
BAYWOOD
VALUE
PLUS
FUND
FINANCIAL
HIGHLIGHTS
10
See
Notes
to
Financial
Statements.
These
financial
highlights
reflect
selected
data
for
a
share
outstanding
throughout
each
year
or
period
presented.
For
the
Year
Ended
September
30,
2020
For
the
Year
Ended
September
30,
2019
For
the
Year
Ended
September
30,
2018
For
the
Year
Ended
September
30,
2017
For
the
Period
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)
0.39
0.44
0.38
0.38
0.29
0.39
Net
realized
and
unrealized
gain
(loss)
(1.86)
(0.84)
1.76
2.02
0.94
(1.06)
Total
from
Investment
Operations
(1.47)
(0.40)
2.14
2.40
1.23
(0.67)
DISTRIBUTIONS
TO
SHAREHOLDERS
FROM
Net
investment
income
(0.38)
(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
(0.60)
(1.20)
(0.87)
(0.63)
(2.64)
(1.75)
NET
ASSET
VALUE,
End
of
Period
$
14.96
$
17.03
$
18.63
$
17.36
$
15.59
$
17.00
TOTAL
RETURN
(8.77)%
(1.55)%
12.57%
15.60%
8.65%(c)
(3.58)%
RATIOS/SUPPLEMENTARY
DATA
Net
Assets
at
End
of
Period
(000s
omitted)
$
2,588
$
2,802
$
936
$
711
$
536
$
426
Ratios
to
Average
Net
Assets:
Net
investment
income
2.51%
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)
6.68%
8.13%
8.83%
11.16%
14.43%(d)
2.09%
PORTFOLIO
TURNOVER
RATE
40%
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
(Unaudited)
September
30,
2020
11
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
twelve
months
ended
September
30,
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
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.
Of
all
the
thoughts,
phrases
and
adjectives
we
have
seen
ascribed
to
the
changes
taking
place
in
2020,
very
few
point
out
that
we
are
the
true
agents
of
change;
the
world
does
not
simply
change
around
us.
The
term
“new
normal”
implies
as
much.
And
this
is
exactly
what
is
taking
place
in
the
world
we
live
in.
We
have
all
had
to
adapt
the
way
we
think
about
shopping,
traveling,
social
interacting,
to
name
a
few.
Government
officials
have
altered
the
way
they
think
about
governing.
The
Federal
Reserve
has
changed
the
way
it
thinks
about
monetary
policy,
dangerously
so.
Investors
have
also
had
to
consider
what’s
permanent
which
may
change
the
way
they
think
about
investing.
Both
good
and
bad
changes
are
all
around
us,
and
it
has
rarely
felt
so
overwhelming
and
rapid
at
the
same
time.
Yet
lasting
change,
the
type
that
holds
for
long
periods
of
time,
doesn’t
occur
overnight.
The
world
is
still
changing
as
we
are
all
constantly
changing
the
way
we
think
about
it,
and
this
will
very
likely
define
a
new
era
for
humanity
in
the
years
to
come.
In
terms
of
investing,
we
have
to
distinguish
between
what
is
temporary
and
what
is
lasting.
As
value
investors
we
deal
with
changes
and
perceptions
of
change
on
a
daily
basis.
The
concept
of
mean
reversion
is
timeless,
whereas
one
might
argue
that
momentum
investing
relies
on
the
absence
of
change,
the
continuation
of
today’s
trend.
As
we
wrote
earlier
this
year,
the
dislocations
in
the
market
have
created
one
of
the
widest
opportunity
sets
of
investing
in
over
a
decade.
This
opportunity
to
affect
changes
in
the
portfolio
has
resulted
in
another
quarter
of
better
than
benchmark
returns,
yet,
the
type
of
changes
we
made
are
likely
to
affect
more
than
just
one
or
two
quarters
of
returns.
Another
change—a
much
larger
change
in
terms
of
its
effects
on
not
just
relative
but
also
absolute
returns
that
we
believe
is
on
the
way—is
the
one
in
which
the
laws
of
mean
reversion
return
to
the
market
and
value
outperforms
growth
once
again.
It
has
been
years
since
a
sustained
outperformance
has
taken
place,
yet
what
we
have
seen
recently
is
not
only
encouraging,
but
the
driving
forces
behind
it
are
much
more
concrete
than
they
have
been
in
a
long
time.
One
driving
force
is
inflation.
With
reported
inflation
near
record
lows
for
more
than
ten
years
now
investors
have
had
a
preference
for
longer-dated
returns.
They
could
essentially
afford
to
wait
for
growth
stocks’
returns
as
opposed
to
demanding
more
upfront
payments
like
dividends
or
from
cyclical
stocks
as
inflation
did
not
eat
much
into
returns.
With
the
massive
declines
in
inventory
across
the
supply
chain
including
oil,
food,
household
products,
semiconductors,
etc.,
any
sustained
pick-up
in
demand
is
likely
to
cause
upside
pressure
to
prices.
Furthermore,
as
the
Fed
has
changed
its
policy,
essentially
ignoring
short-term
inflationary
pressure,
there
is
room
for
increases
without
the
fear
of
higher
rates
to
suppress
it.
In
August
there
were
a
few
main
categories
of
deflationary
pressure
that
one
might
have
expected
given
the
environment:
oil,
airline
fares,
apparel,
and
auto
insurance
all
declined.
These
will
be
some
of
the
first
to
increase
with
renewed
demand.
The
rate
of
inflation
in
nearly
every
other
category
increased,
the
most
notable
being
food,
medical
care,
and
autos
at
4.1%,
5.3%,
and
4.0%.
Another
is
interest
rates.
With
the
Fed
being
fully
committed
to
keeping
interest
rates
low
in
the
long-term,
it
is
highly
likely
that
the
short-end
of
the
yield
curve,
a
line
that
plots
yields
of
bonds
having
equal
credit
quality
but
differing
maturity
dates,
will
remain
near
zero
in
the
medium-term.
The
Fed
has
also
committed
to
suppressing
the
long-end,
in
which
it
has
had
limited
success
in
controlling
due
to
the
large
number
of
issues
and
global
base
of
market
participants.
Should
inflation
begin
to
eat
away
at
the
value
of
longer-dated
bonds
and
a
cyclical
rebound
takes
place,
we
would
imagine
investors
might
shorten
up
their
time
horizons
and
prefer
cyclical
stocks
to
longer-dated
bonds.
The
third
catalyst
could
very
well
be
a
return
to
a
more
normal
work
environment
(more
being
the
key
word
here).
As
the
economy
opens
up
demand
for
work-at-home
products
and
services
will
likely
begin
to
fade
and
those
work
at
home
stocks
which
dominate
the
indices
and
are
responsible
for
over
a
fourth
of
the
S&P
500
Index,
a
stock
market
index
that
tracks
the
stocks
of
500
large-cap
U.S.
companies,
could
very
well
go
out-of-favor.
Since
those
stocks
represent
an
ever-increasing
proportion
of
growth
indices,
the
rotation
from
growth
to
value
could
come
very
swift.
Since
we
cannot
begin
our
discussion
of
the
portfolio
actions
without
first
acknowledging
that
there
are
two
distinct
environments
in
the
last
year:
pre-pandemic
and
pandemic,
we
will
start
from
the
fourth
quarter
of
calendar
2019
the
only
pre-pandemic
quarter
in
the
year.
BAYWOOD
SOCIALLY
RESPONSIBLE
FUND
A
MESSAGE
TO
OUR
SHAREHOLDERS
(Unaudited)
September
30,
2020
12
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
Index,
an
index
composed
of
large-
and
mid-capitalization
U.S.
equities
that
exhibit
value
characteristics,
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;
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
economic
growth
was
accelerating,
the
market
showed
its
preference
for
more
cyclical
stocks
and,
as
a
result,
last
year’s
“safe
sectors”
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
and
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.
Few
of
these
changes
had
any
immediate
effects
as
the
world
would
quickly
change
in
the
first
quarter
of
2020.
The
global
pandemic
and
ensuing
shutdown
of
economic
activity
caused
markets
around
the
world
to
panic
and
return
to
the
knee-jerk,
technical
reactions
favoring
staples,
utilities,
and
mega
capitalization
stocks
while
eschewing
nearly
everything
else.
We
used
the
market
volatility
to
add
high
quality
companies
selling
at
valuations
not
witnessed
in
years,
if
not
decades,
while
also
selling
companies
that
we
believed
would
be
impaired
over
our
investment
horizon
due
to
changes
in
the
economy
from
the
pandemic.
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
rare.
Given
the
declines
in
the
overall
market
in
the
first
quarter,
we
were
active
in
our
effort
to
“high-grade”
the
holdings
in
the
portfolio,
positioning
us
for
long-term
success.
We
added
to
our
position
in
Aptiv,
Nutrien,
Comcast
and
Royal
Philips.
Aptiv
is
the
only
technology
focused
auto
supplier
in
our
investable
universe
with
the
ability
to
grow
well
above
market
rates.
This
growth
is
driven
by
the
increase
in
content
per
vehicle
as
the
desire
for
safety,
autonomous
and
entertainment
features
rise.
Similar
to
TE
Connectivity,
while
its
end-markets
will
be
affected
by
the
diminution
in
economic
activity,
the
effect
should
prove
to
be
temporary
and
this
company
has
the
financial
capacity
to
withstand
a
reduction
in
demand
for
its
products.
Nutrien
supplies
the
world
with
fertilizers.
Last
year’s
crop
in
the
U.S.
was
devastated
by
floods
and
the
need
for
fertilizers
going
forward
is
even
greater
as
climate
change
will
negatively
affect
the
volume
of
arable
land.
Regardless
of
how
much
economic
impact
social
distancing
may
cause,
farmers
will
attempt
to
recover
some
of
last
year’s
losses
with
more
plantings.
In
favor
of
the
companies
we
added
to
the
portfolio,
we
eliminated
CenturyLink
and
Sensata.
Although
it
owns
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
the
Socially
Responsible
fund
underperformed
its
benchmark
in
the
first
calendar
quarter
of
2020
(-30.4%
vs
-25.1%
respectively),
it
would
more
than
make
up
the
difference
in
the
following
two
quarters
(24.5%
vs
15.8%
respectively),
a
major
source
of
which
is
due
to
companies
added
during
the
major
dislocation
early
in
the
year.
Stocks
in
the
information
technology
sector
contributed
the
most
in
the
rebound
quarters
(second
and
third
quarter
of
2020).
NXP
Semiconductors,
Corning
and
TE
Connectivity
were
the
standouts
in
the
sector
returning
52%,
60%,
and
57%
respectively.
Holdings
in
the
consumer
discretionary
sector
were
the
second
largest
contributors
to
returns,
led
by
Aptiv
and
Genuine
Parts;
both
returned
86%
and
44%
respectively.
In
the
Industrial
sector
Cummins,
United
Parcel
BAYWOOD
SOCIALLY
RESPONSIBLE
FUND
A
MESSAGE
TO
OUR
SHAREHOLDERS
(Unaudited)
September
30,
2020
13
Service,
Union
Pacific
and
Maersk
all
returned
58%,
47%,
41%,
and
77%
respectively,
contributing
more
to
the
outperformance
in
the
rebound
quarters.
These
are
all
cyclical
value
stocks
whose
attributes
are
slowly
starting
to
be
recognized
after
being
left
for
dead
earlier
in
the
year.
Should
investors
continue
to
change
their
preference
for
which
stocks
they
prefer,
we
would
expect
even
more
stocks
and
sectors
to
participate.
There
was
only
one
minor
source
of
negative
relative
return
in
the
rebound
quarters
outside
of
the
fund’s
cash
holdings
and
that
was
the
relative
underweight
in
staples.
Given
staples
benefitted
greatly
from
stay-at-home
orders,
it
was
one
of
the
better
sectors
to
have
had
exposure
so
far
in
2020;
however,
the
majority
of
these
benefits
are
a
pull
forward
in
demand
and
we
would
not
expect
the
effects
to
be
permanent.
Our
thoughts
around
how
the
pandemic
is
changing
society
is
evident
in
the
changes
we
have
made
in
our
investment
portfolio.
During
the
rebound
quarters
we
added
six
new
companies:
First
American
Financial,
United
Postal
Service,
Arista
Networks,
Texas
Pacific
Land
Trust,
Kinder
Morgan,
and
Albemarle.
First
American
Financial
is
a
company
that
sells
title
insurance,
a
requirement
for
a
30-
year
mortgage.
The
industry
is
consolidated
and
due-diligence
is
done
in
advance
of
insurance
being
sold,
so
losses
tend
to
be
very
low
and
operating
margins
are
respectable.
We
believe
that
housing
and
autos
are
going
to
be
among
the
few
sectors
in
the
economy
that
can
perform
well
due
to
the
promise
of
low
interest
rates
for
longer.
Furthermore,
with
housing,
there
is
still
a
shortage
of
housing
and
starts
are
likely
to
pick
up
where
they
left
off
to
address
the
situation.
As
purchase
activity
picks
up,
so
will
title
insurance.
UPS
is
ubiquitous
in
most
neighborhoods
due
to
its
longevity
and
that
most
recognize
that
brown
truck
as
it
offloads
their
Amazon
products.
However,
it
has
not,
since
e-commerce
began
taking
share
from
brick
and
mortar
retail,
been
able
to
profit
from
the
boom
due
to
the
surge
in
capacity
required
during
the
holidays
and
the
associated
costs.
Each
year
however,
it
has
made
progress
in
reducing
fourth
quarter
losses,
finally
breaking
even
last
year.
We
added
it
to
the
portfolio
in
a
recognition
that
UPS
has
finally
turned
a
corner
on
its
costs.
We
were
rewarded
when
both
UPS
and
FedEx
announced
price
increases,
which
go
a
long
way
in
helping
keep
up
with
the
costs
associated
with
the
extraordinary
amount
of
e-commerce
being
done
in
the
pandemic.
Arista
Networks,
a
recent
addition
within
technology,
sells
networking
gear;
mainly
high-speed
switching
and
routing
that
competes
directly
with
Cisco.
Its
CEO,
Jayshree
Ullal,
was
in
fact
a
former
business
leader
at
Cisco
that
believed
the
company
was
leaving
money
on
the
table
due
to
its
size
and
bureaucratic
nature
and
not
attacking
markets
she
believed
they
needed
to.
She
left
the
company
in
2009
and
joined
Arista
where
they
have
taken
significant
share
in
high
speed
routers.
Due
to
its
high
growth
it
had
always
been
out-
of-reach
for
value
investors
like
us,
however,
several
years
of
“growing
into
its
earnings”
and
a
pandemic-related
sell-off
we
were
able
to
purchase
this
high-growth
company
for
a
song.
We
reduced
our
weight
in
Cisco
to
make
room
for
Arista,
and
while
we
acknowledge
that
Cisco
has
been
losing
share
to
Arista,
it
still
competes
in
many
more
end-markets
and
geographies
and
is
therefore
more
diversified.
Both
companies
can
do
well
at
the
same
time
and
are
poised
to
benefit
from
a
roll-out
of
5G
networks.
In
an
acknowledgement
that
there
will
likely
be
a
higher
level
of
defaults
on
debt
across
the
economy
due
to
the
lower
level
of
economic
activity,
we
have
been
reducing
our
exposure
to
banks.
Both
Bank
of
America
and
Bank
of
Oklahoma
were
reduced
in
favor
of
First
American
Financial.
Furthermore,
lower
interest
rates
are
likely
to
continue
to
pressure
banks’
investment
spreads
which
is
a
significant
driver
of
overall
profitability.
We
exited
Brookfield
Property
and
Mosaic
in
favor
of
the
companies
we
added.
Brookfield
Property,
while
run
by
an
astute
management
team
and
backed
by
the
savvy
investors
at
Brookfield
Asset
Management,
is
one
of
the
companies
that
will
have
a
more
permanent
impairment
due
to
the
accelerated
shift
to
e-commerce.
It
owns
malls
and
other
retail
centers
and
is
burdened
with
a
high
level
of
debt,
which
will
likely
cause
it
to
struggle
in
the
medium-term
as
occupancy
and
rates
decline.
Mosaic
we
simply
swapped
out
of
for
Albemarle
as
the
relative
valuation
became
more
attractive.
We
continued
to
modestly
add
to
our
basic
materials
exposure.
Should
inflation
creep
above
the
2%
mark,
as
we
think
it
is
likely
to
do,
basic
materials
would
likely
benefit
greatly.
In
sort
of
an
acknowledgement
of
this,
it
was
one
of
the
best
performing
sectors
in
the
benchmark
in
the
rebound
quarters.
Unlike
many
basic
materials
companies
represented
by
indices,
these
companies
have
attributes
very
different
from
an
ESG
perspective.
Albemarle
is
a
producer
of
bromine
and
lithium,
the
latter
of
which
will
help
the
world
eventually
meet
renewable
energy
storage
needs
and
reduce
the
level
of
carbon
emissions
by
creating
batteries
for
the
transportation
sector
and
eventually
utilities.
Nutrien
produces
potash
and
phosphate,
nutrients
that
help
improve
agricultural
yields
and
especially
important
in
a
world
of
shrinking
arable
farm
land.
Packing
Corporation
produces
the
basic
materials
required
to
pack
and
ship
goods.
Extremely
important
during
the
pandemic,
but
also
in
a
world
where
e-commerce
becomes
the
dominant
marketplace
for
shopping.
E-commerce
is
also
a
more
centralized
form
of
shopping,
reducing
the
overall
number
of
cars
on
the
road
required
to
sustain
household
needs.
Given
the
extreme
pessimism
that
has
existed
in
the
basic
materials
sector
for
years,
we
believe
it
can
sustain
this
performance,
albeit
not
linearly,
for
years
to
come
and
will
continue
to
look
for
more
companies
to
add
given
the
opportunity.
BAYWOOD
SOCIALLY
RESPONSIBLE
FUND
A
MESSAGE
TO
OUR
SHAREHOLDERS
(Unaudited)
September
30,
2020
14
As
we
approach
the
end
of
this
tumultuous
year,
the
beginnings
of
a
changing
tide
may
be
taking
hold.
The
last
time
value
began
to
outperform
growth
in
the
early
2000s,
value
investing
produced
superior
returns
for
nearly
a
decade.
We
cannot
make
the
call
on
when
this
is
likely
to
happen.
Until
then
we
will
continue
to
monitor
the
investing
landscape,
taking
advantage
of
opportunities
while
also
being
mindful
of
additional
risks
in
these
unprecedented
times.
____________________________________________________________________________
Current
and
future
portfolio
holdings
are
subject
to
change
and
risk.
Please
see
the
schedule
of
investments
section
in
this
report
for
a
full
listing
of
the
Fund’s
holdings
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
(Unaudited)
September
30,
2020
15
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
September
30,
2020
One
Year
Five
Year
Ten
Year
Since
Inception
01/03/05
Baywood
Socially
Responsible
Fund
-6.67%
5.03%
6.73%
4.31%
Morningstar
US
Large
Value
TR
Index
-7.14%
8.44%
9.43%
5.95%
*
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
September
30,
2020
16
See
Notes
to
Financial
Statements.
The
following
is
a
summary
of
the
inputs
used
to
value
the
Fund's instruments
as
of
September
30,
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
-
98.1%
Basic
Materials
-
6.6%
700
Albemarle
Corp.
$
62,496
3,100
Nutrien,
Ltd.
121,613
500
Packaging
Corp.
of
America
54,525
238,634
Capital
Goods
/
Industrials
-
2.3%
400
Cummins,
Inc.
84,464
Communication
Services
-
11.5%
2,400
Comcast
Corp.,
Class A
111,024
2,600
Discovery,
Inc.,
Class C
(a)
50,960
900
The
Walt
Disney
Co.
111,672
2,400
Verizon
Communications,
Inc.
142,776
416,432
Consumer
Discretionary
-
7.8%
1,200
Aptiv
PLC
110,016
800
Genuine
Parts
Co.
76,136
4,000
Kontoor
Brands,
Inc.
96,800
282,952
Consumer
Staples
-
4.8%
1,800
Mondelez
International,
Inc.,
Class A
103,410
500
PepsiCo.,
Inc.
69,300
172,710
Energy
-
3.9%
4,000
Devon
Energy
Corp.
37,840
4,100
Kinder
Morgan,
Inc.
50,553
2,100
Schlumberger
NV
32,676
50
Texas
Pacific
Land
Trust
22,578
143,647
Financials
-
20.0%
3,100
Air
Lease
Corp.
91,202
1,300
American
Express
Co.
130,325
3,500
American
International
Group,
Inc.
96,355
2,200
Bank
of
America
Corp.
52,998
400
Berkshire
Hathaway,
Inc.,
Class B
(a)
85,176
1,100
BOK
Financial
Corp.
56,661
3,883
Brookfield
Asset
Management,
Inc.,
Class A
128,372
1,000
First
American
Financial
Corp.
50,910
2,200
Radian
Group,
Inc.
32,142
724,141
Health
Care
-
17.2%
300
Amgen,
Inc.
76,248
900
AstraZeneca
PLC,
ADR
49,320
600
Becton
Dickinson
and
Co.
139,608
700
Gilead
Sciences,
Inc.
44,233
1,428
Koninklijke
Philips
NV,
ADR
67,330
360
Laboratory
Corp.
of
America
Holdings
(a)
67,778
700
Medtronic
PLC
72,744
190
Regeneron
Pharmaceuticals,
Inc.
(a)
106,358
623,619
Real
Estate
-
1.7%
9,300
VEREIT,
Inc.
REIT
60,450
Technology
-
13.2%
300
Arista
Networks,
Inc.
(a)
62,079
2,300
Cisco
Systems,
Inc.
90,597
2,900
Corning,
Inc.
93,989
700
Intel
Corp.
36,246
1,100
NetApp,
Inc.
48,224
800
NXP
Semiconductors
NV
99,848
500
TE
Connectivity,
Ltd.
48,870
479,853
Shares
Security
Description
Value
Transportation
-
9.1%
4,700
AP
Moller
-
Maersk
A/S,
ADR
$
37,036
14,400
Atlas
Corp.
128,736
500
Union
Pacific
Corp.
98,435
400
United
Parcel
Service,
Inc.,
Class B
66,652
330,859
Total
Common
Stock
(Cost
$3,177,693)
3,557,761
Shares
Security
Description
Value
Money
Market
Fund
-
2.1%
74,333
Morgan
Stanley
Institutional
Liquidity
Funds
Government
Portfolio,
Institutional
Class,
0.02%
(b)
(Cost
$74,333)
74,333
Investments,
at
value
-
100.2%
(Cost
$3,252,026)
$
3,632,094
Other
Assets
&
Liabilities,
Net
-
(0.2)%
(5,869)
Net
Assets
-
100.0%
$
3,626,225
ADR
American
Depositary
Receipt
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
September
30,
2020.
Valuation
Inputs
Investments
in
Securities
Level
1
-
Quoted
Prices
$
3,557,761
Level
2
-
Other
Significant
Observable
Inputs
74,333
Level
3
-
Significant
Unobservable
Inputs
–
Total
$
3,632,094
PORTFOLIO
HOLDINGS
(Unaudited)
%
of
Total
Investments
Basic
Materials
6.6%
Capital
Goods
/
Industrials
2.3%
Communication
Services
11.5%
Consumer
Discretionary
7.8%
Consumer
Staples
4.8%
Energy
3.9%
Financials
19.9%
Health
Care
17.2%
Real
Estate
1.7%
Technology
13.2%
Transportation
9.1%
Money
Market
Fund
2.0%
100.0%
BAYWOOD
SOCIALLY
RESPONSIBLE
FUND
STATEMENT
OF
ASSETS
AND
LIABILITIES
September
30,
2020
17
See
Notes
to
Financial
Statements.
ASSETS
Investments,
at
value
(Cost
$3,252,026)
$
3,632,094
Cash
395
Receivables:
Fund
shares
sold
1,343
Dividends
7,031
From
investment
advisor
7,463
Prepaid
expenses
7,958
Total
Assets
3,656,284
LIABILITIES
Payables:
Fund
shares
redeemed
963
Accrued
Liabilities:
Fund
services
fees
5,028
Other
expenses
24,068
Total
Liabilities
30,059
NET
ASSETS
$
3,626,225
COMPONENTS
OF
NET
ASSETS
Paid-in
capital
$
3,294,689
Distributable
earnings
331,536
NET
ASSETS
$
3,626,225
SHARES
OF
BENEFICIAL
INTEREST
AT
NO
PAR
VALUE
(UNLIMITED
SHARES
AUTHORIZED)
356,157
NET
ASSET
VALUE,
OFFERING
AND
REDEMPTION
PRICE
PER
SHARE
$
10.18
BAYWOOD
SOCIALLY
RESPONSIBLE
FUND
STATEMENT
OF
OPERATIONS
YEAR
ENDED
SEPTEMBER
30,
2020
18
See
Notes
to
Financial
Statements.
INVESTMENT
INCOME
Dividend
income
(Net
of
foreign
withholding
taxes
of
$2,856)
$
90,207
Total
Investment
Income
90,207
EXPENSES
Investment
advisor
fees
26,923
Fund
services
fees
63,339
Transfer
agent
fees
18,165
Custodian
fees
5,000
Registration
fees
19,842
Professional
fees
31,324
Trustees'
fees
and
expenses
4,012
Other
expenses
27,781
Total
Expenses
196,386
Fees
waived
and
expenses
reimbursed
(162,155)
Net
Expenses
34,231
NET
INVESTMENT
INCOME
55,976
NET
REALIZED
AND
UNREALIZED
GAIN
(LOSS)
Net
realized
gain
on
investments
11,456
Net
change
in
unrealized
appreciation
(depreciation)
on
investments
(382,593)
NET
REALIZED
AND
UNREALIZED
LOSS
(371,137)
DECREASE
IN
NET
ASSETS
RESULTING
FROM
OPERATIONS
$
(315,161)
BAYWOOD
SOCIALLY
RESPONSIBLE
FUND
STATEMENTS
OF
CHANGES
IN
NET
ASSETS
19
See
Notes
to
Financial
Statements.
For
the
Year
Ended
September
30,
2020
For
the
Year
Ended
September
30,
2019
OPERATIONS
Net
investment
income
$
55,976
$
52,605
Net
realized
gain
11,456
102,477
Net
change
in
unrealized
appreciation
(depreciation)
(382,593)
(260,772)
Decrease
in
Net
Assets
Resulting
from
Operations
(315,161)
(105,690)
DISTRIBUTIONS
TO
SHAREHOLDERS
Investor
Shares
-
(204,892)
Institutional
Shares
(108,179)
(149,124)
Total
Distributions
Paid
(108,179)
(354,016)
CAPITAL
SHARE
TRANSACTIONS
Sale
of
shares
Investor
Shares
-
167,328
Institutional
Shares
741,913
2,373,806
Reinvestment
of
distributions
Investor
Shares
-
193,403
Institutional
Shares
105,418
146,187
Redemption
of
shares
Investor
Shares
-
(2,701,698)
Institutional
Shares
(622,149)
(295,860)
Increase
(Decrease)
in
Net
Assets
from
Capital
Share
Transactions
225,182
(116,834)
Decrease
in
Net
Assets
(198,158)
(576,540)
NET
ASSETS
Beginning
of
Year
3,824,383
4,400,923
End
of
Year
$
3,626,225
$
3,824,383
SHARE
TRANSACTIONS
Sale
of
shares
Investor
Shares
-
14,949
Institutional
Shares
68,512
218,445
Reinvestment
of
distributions
Investor
Shares
-
19,029
Institutional
Shares
10,013
14,302
Redemption
of
shares
Investor
Shares
-
(248,092)
Institutional
Shares
(63,381)
(26,646)
Increase
(Decrease)
in
Shares
15,144
(8,013)
BAYWOOD
SOCIALLY
RESPONSIBLE
FUND
FINANCIAL
HIGHLIGHTS
20
See
Notes
to
Financial
Statements.
These
financial
highlights
reflect
selected
data
for
a
share
outstanding
throughout
each
year.
For
the
Years
Ended
September
30,
2020
2019
2018
2017
2016
INSTITUTIONAL
SHARES
NET
ASSET
VALUE,
Beginning
of
Year
$
11.21
$
12.60
$
11.43
$
10.15
$
10.18
INVESTMENT
OPERATIONS
Net
investment
income
(a)
0.15
0.18
0.12
0.10
0.14
Net
realized
and
unrealized
gain
(loss)
(0.90)
(0.53)
1.31
1.33
0.66
Total
from
Investment
Operations
(0.75)
(0.35)
1.43
1.43
0.80
DISTRIBUTIONS
TO
SHAREHOLDERS
FROM
Net
investment
income
(0.15)
(0.16)
(0.10)
(0.15)
(0.30)
Net
realized
gain
(0.13)
(0.88)
(0.16)
–
(0.53)
Total
Distributions
to
Shareholders
(0.28)
(1.04)
(0.26)
(0.15)
(0.83)
NET
ASSET
VALUE,
End
of
Year
$
10.18
$
11.21
$
12.60
$
11.43
$
10.15
TOTAL
RETURN
(6.67)%
(1.79)%
12.66%
14.18%
8.40%
RATIOS/SUPPLEMENTARY
DATA
Net
Assets
at
End
of
Year
(000s
omitted)
$
3,626
$
3,824
$
1,699
$
5,404
$
5,555
Ratios
to
Average
Net
Assets:
Net
investment
income
1.45%
1.60%
1.01%
0.92%
1.35%
Net
expenses
0.89%
0.89%
0.89%
0.89%
0.89%
Gross
expenses
(b)
5.10%
5.78%
3.03%
2.64%
1.00%
PORTFOLIO
TURNOVER
RATE
30%
33%
31%
42%
57%
(a)
Calculated
based
on
average
shares
outstanding
during
each
year.
(b)
Reflects
the
expense
ratio
excluding
any
waivers
and/or
reimbursements.
BAYWOOD
FUNDS
NOTES
TO
FINANCIAL
STATEMENTS
September
30,
2020
21
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
year.
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
September
30,
2020
22
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
September
30,
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
to
the
next
call
date
above
par
and
discount
is
accreted
to
maturity
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
September
30,
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
September
30,
2020
23
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
year
ended
September
30,
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
September
30
2020,
$402,527
and
$409,477
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
$
13,210
$
120,692
$
24,375
$
158,277
Baywood
Socially
Responsible
Fund
26,923
110,857
24,375
162,155
BAYWOOD
FUNDS
NOTES
TO
FINANCIAL
STATEMENTS
September
30,
2020
24
Security
Transactions
The
cost
of
purchases
and
proceeds
from
sales
of
investment
securities
(including
maturities),
other
than
short-term
investments
during
the
year
ended
September
30,
2020
were
as
follows:
Federal
Income
Tax
As
of
September
30,
2020
,
the
cost
for
federal
income
tax
purposes
and
the
components
of
net
unrealized
appreciation
were
as
follows:
Distributions
paid
during
the
fiscal
years
ended
as
noted
were
characterized
for
tax
purposes
as
follows:
As
of
September
30,
2020,
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,
REITS
and
equity
return
of
capital.
On
the
Statements
of
Assets
and
Liabilities,
as
a
result
of
permanent
book
to
tax
differences,
certain
amounts
have
been
reclassified
for
the
year
ended
September
30,
2020.
The
following
reclassifications
were
the
result
of
partnerships
and
distributions
in
excess
of
earnings
and
have
no
impact
on
the
net
assets
of
each
Fund.
For
tax
purposes,
the
current
year
post-October
loss
for
the
Baywood
Value
Plus
Fund
was
$26,712.
This
loss
will
be
recognized
for
tax
purposes
on
the
first
business
day
of
the
Fund’s
next
fiscal
year,
October
1,
2020
.
Subsequent
Events
The
global
outbreak
of
the
COVID-19
virus
has
caused
negative
effects
on
many
companies,
sectors,
countries,
regions,
and
financial
markets
in
general,
and
uncertainty
exists
as
to
its
long-term
implications.
The
effects
of
the
pandemic
may
adversely
impact
each
Funds'
assets
and
performance.
The
financial
statements
do
not
include
any
adjustments
that
might
result
from
the
outcome
of
this
uncertainty.
Purchases
Sales
Baywood
Value
Plus
Fund
$
1,106,144
$
1,016,250
Baywood
Socially
Responsible
Fund
1,380,689
1,118,770
Tax
Cost
of
Investments
Gross
Unrealized
Appreciation
Gross
Unrealized
Depreciation
Net
Unrealized
Appreciation
Baywood
Value
Plus
Fund
$
2,514,016
$
387,507
$
(308,565)
$
78,942
Baywood
Socially
Responsible
Fund
3,318,087
641,500
(327,493)
314,007
Ordinary
Income
Long-Term
Capital
Gain
Total
Baywood
Value
Plus
Fund
2020
$
63,833
$
36,357
$
100,190
2019
58,006
127,130
185,136
Baywood
Socially
Responsible
Fund
2020
54,676
53,503
108,179
2019
50,594
303,422
354,016
Undistributed
Long-Term
Gain
Capital
and
Other
Losses
Unrealized
Appreciation
Total
Baywood
Value
Plus
Fund
$
–
$
(26,712)
$
78,942
$
52,230
Baywood
Socially
Responsible
Fund
17,529
–
314,007
331,536
Distributable
Earnings
Paid-in-Capital
Baywood
Value
Plus
Fund
$
3,597
$
(3,597)
Baywood
Socially
Responsible
Fund
540
(540)
REPORT
OF
INDEPENDENT
REGISTERED
PUBLIC
ACCOUNTING
FIRM
25
To
the
Shareholders
of
Baywood
Value
Plus
Fund
and
Baywood
Socially
Responsible
Fund
and
the
Board
of
Trustees
of
Forum
Funds
II
Opinion
on
the
Financial
Statements
We
have
audited
the
accompanying
statements
of
assets
and
liabilities
of
Baywood
Value
Plus
Fund
and
Baywood
Socially
Responsible
Fund,
each
a
series
of
shares
of
beneficial
interest
in
Forum
Funds
II
(the
“Funds”),
including
the
schedules
of
investments,
as
of
September
30,
2020,
and
the
related
statements
of
operations
for
the
year
then
ended,
the
statements
of
changes
in
net
assets
for
each
of
the
years
in
the
two-year
period
then
ended,
the
financial
highlights
as
noted
in
the
table
below,
and
the
related
notes
(collectively
referred
to
as
the
“financial
statements”).
In
our
opinion,
the
financial
statements
present
fairly,
in
all
material
respects,
the
financial
position
of
the
Funds
as
of
September
30,
2020,
and
the
results
of
their
operations
for
the
year
then
ended,
the
changes
in
their
net
assets
for
each
of
the
years
in
the
two-year
period
then
ended
and
their
financial
highlights
for
each
of
the
periods
noted
in
the
table
below,
in
conformity
with
accounting
principles
generally
accepted
in
the
United
States
of
America.
Basis
for
Opinion
These
financial
statements
are
the
responsibility
of
the
Funds'
management.
Our
responsibility
is
to
express
an
opinion
on
the
Funds’
financial
statements
based
on
our
audits.
We
are
a
public
accounting
firm
registered
with
the
Public
Company
Accounting
Oversight
Board
(United
States)
(“PCAOB”)
and
are
required
to
be
independent
with
respect
to
the
Funds
in
accordance
with
the
U.S.
federal
securities
law
and
the
applicable
rules
and
regulations
of
the
Securities
and
Exchange
Commission
and
the
PCAOB.
We
conducted
our
audits
in
accordance
with
the
standards
of
the
PCAOB.
Those
standards
require
that
we
plan
and
perform
the
audits
to
obtain
reasonable
assurance
about
whether
the
financial
statements
are
free
of
material
misstatement,
whether
due
to
error
or
fraud.
The
Funds
are
not
required
to
have,
nor
were
we
engaged
to
perform,
an
audit
of
their
internal
control
over
financial
reporting.
As
part
of
our
audits
we
are
required
to
obtain
an
understanding
of
internal
control
over
financial
reporting
but
not
for
the
purpose
of
expressing
an
opinion
on
the
effectiveness
of
the
Funds’
internal
control
over
financial
reporting.
Accordingly,
we
express
no
such
opinion.
Our
audits
included
performing
procedures
to
assess
the
risk
of
material
misstatement
of
the
financial
statements,
whether
due
to
error
or
fraud,
and
performing
procedures
that
respond
to
those
risks.
Such
procedures
included
examining,
on
a
test
basis,
evidence
regarding
the
amounts
and
disclosures
in
the
financial
statements.
Our
procedures
included
confirmation
of
securities
owned
as
of
September
30,
2020
by
correspondence
with
the
custodian
and
brokers.
Our
audits
also
included
evaluating
the
accounting
principles
used
and
significant
estimates
made
by
management,
as
well
as
evaluating
the
overall
presentation
of
the
financial
statements.
We
believe
that
our
audits
provide
a
reasonable
basis
for
our
opinion.
BBD,
LLP
We
have
served
as
the
auditor
of
one
or
more
of
the
Funds
in
the
Forum
Funds
II
since
2013.
Philadelphia,
Pennsylvania
November
24,
2020
Baywood
Funds
ADDITIONAL
INFORMATION
(Unaudited)
September
30,
2020
26
Investment
Advisory
Agreement
Approval
At
the
September
10,
2020
Board
meeting
(“September
meeting”),
the
Board,
including
the
Independent
Trustees,
met
in
person
and
considered
the
approval
of
the
continuance
of
the
investment
advisory
agreement
between
the
Advisor
and
the
Trust
pertaining
to
the
Funds
(the
“Advisory
Agreement”).
In
preparation
for
the
September
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
Adviser’s
personnel,
operations,
financial
condition,
performance,
and
services
provided
to
the
Funds
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
September
meeting,
the
Board
reviewed,
among
other
matters,
the
topics
discussed
below:
Nature,
Extent
and
Quality
of
Services
Based
on
written
materials
received
and
the
presentation
from
senior
representatives
of
the
Adviser
regarding
the
Adviser’s
personnel,
operations,
and
financial
condition,
the
Board
considered
the
quality
of
services
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
managers
and
other
personnel
at
the
Adviser
with
principal
responsibility
for
the
Funds,
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
continue
providing
quality
investment
advisory
services
to
the
Funds.
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,
and
other
relevant
considerations,
the
Board
concluded
that,
overall,
it
was
satisfied
with
the
nature,
extent
and
quality
of
services
to
be
provided
to
the
Funds
under
the
Advisory
Agreement.
Performance
The
Board
observed
that
the
Value
Plus
Fund
underperformed
its
primary
benchmark
index,
the
Morningstar
US
Large
Value
Total
Return
Index,
for
the
one-,
three-,
five-,
and
10-year
periods
ended
June
30,
2020,
and
outperformed
the
primary
benchmark
index
for
the
period
since
the
Value
Plus
Fund’s
inception
on
June
27,
2008.
The
Board
also
observed
that,
based
on
the
information
provided
by
Broadridge,
the
Value
Plus
Fund
underperformed
the
median
of
its
Broadridge
peers
for
the
one-,
three-,
and
five-year
periods
ended
June
30,
2020.
The
Board
noted
the
Adviser’s
representation
that
the
Value
Plus
Fund’s
relative
underperformance
could
be
attributed,
at
least
in
part,
to
the
Fund’s
sector
allocation
and
market
capitalization
allocations
and
that
the
value
investment
style
remained
out
of
favor
in
the
market.
The
Board
also
noted
that
it
was
the
Adviser’s
belief
that
market
sentiment
was
beginning
to
shift
back
in
favor
of
value-style
investing.
The
Board
observed
that
the
Socially
Responsible
Fund
underperformed
its
primary
benchmark
index,
the
Morningstar
US
Large
Value
Total
Return
Index,
for
the
one-,
three-,
five-,
and
10-year
periods
ended
June
30,
2020,
as
well
as
for
the
period
since
the
Socially
Responsible
Fund’s
inception
on
January
3,
2005.
The
Board
observed
that
the
Socially
Responsible
Fund
underperformed
the
median
of
its
Broadridge
peers
for
the
one-,
three-,
and
five-year
periods
ended
June
30,
2020.
The
Board
noted
the
Adviser’s
representation
that
the
Socially
Responsible
Fund’s
relative
underperformance
could
be
attributed,
at
least
in
part,
to
smaller
capitalization
stocks
and
stocks
with
lower
price/equity
ratio,
such
as
those
held
in
the
Fund’s
portfolio,
having
underperformed
larger
capitalization
stocks
and
stocks
with
higher
price-equity
ratios
during
the
period.
The
Board
also
noted
the
Adviser’s
representation
that
the
Socially
Responsible
Fund’s
underperformance
over
the
longer
term
could
be
attributed,
at
least
in
part,
to
a
significant
shareholder
redemption
that
occurred
prior
to
the
Socially
Responsible
Fund’s
reorganization
into
the
Trust
at
the
beginning
of
2016,
which
disproportionately
impacted
the
Socially
Responsible
Fund’s
long-term
performance.
The
Board
further
noted
the
Adviser’s
representation
that
the
Morningstar
US
Large
Value
Total
Return
Index
did
not
have
the
same
socially
responsible
investment
constraints
as
those
of
the
Fund.
Based
on
the
foregoing
and
other
applicable
considerations,
the
Board
determined
that
the
Funds
and
their
shareholders
could
benefit
from
the
Adviser’s
continued
management.
Baywood
Funds
ADDITIONAL
INFORMATION
(Unaudited)
September
30,
2020
27
Compensation
The
Board
evaluated
the
Adviser’s
compensation
for
providing
advisory
services
to
the
Funds
and
analyzed
comparative
information
on
actual
advisory
fee
rates
and
actual
total
expense
ratios
of
the
Funds
as
compared
to
those
of
their
respective
Broadridge
peer
groups.
The
Board
observed
that
the
Adviser’s
actual
advisory
fee
rate
and
actual
total
expense
ratio
for
each
of
the
Funds
were
less
than
the
median
of
their
respective
Broadridge
peer
groups.
Based
on
the
foregoing,
and
other
relevant
considerations,
the
Board
concluded
that
the
Adviser’s
advisory
fee
rates
charged
to
the
Funds
were
reasonable.
Cost
of
Services
and
Profitability
The
Board
evaluated
information
provided
by
the
Adviser
regarding
the
costs
of
services
and
its
profitability
with
respect
to
the
Funds.
In
this
regard,
the
Board
considered
the
Adviser’s
resources
devoted
to
the
Funds,
as
well
as
the
information
provided
by
the
Adviser
regarding
the
costs
and
profitability
of
its
Fund
activities.
The
Board
noted
the
Adviser’s
representation
that,
as
a
result
of
the
contractual
expense
limitation
arrangement
in
place
for
each
of
the
Funds,
the
Adviser
was
not
earning
any
profit
from
its
mutual
fund
operations
but
that
the
Adviser
was
willing
to
continue
subsidizing
the
Funds
in
an
effort
to
support
growth
initiatives.
Based
on
these
and
other
applicable
considerations,
including
financial
statements
from
the
Adviser
indicating
its
profitability
and
expenses
from
overall
operations,
the
Board
concluded
that
the
Adviser’s
costs
of
services
and
profits
attributable
to
management
of
the
Funds
were
not
a
material
factor
in
approving
the
continuation
of
the
Advisory
Agreement.
Economies
of
Scale
The
Board
evaluated
whether
the
Funds
were
benefitting,
or
may
benefit
in
the
future,
from
any
economies
of
scale.
In
this
respect,
the
Board
considered
the
Funds’
fee
structures,
asset
sizes,
and
net
expense
ratios.
The
Board
noted
the
Adviser’s
representation
that
economies
of
scale
could
be
experienced
if
the
Funds
were
to
reach
significantly
higher
asset
levels
but
that,
in
light
of
the
Funds’
current
asset
levels
and
the
Adviser’s
ongoing
subsidization
of
the
Funds,
breakpoints
in
the
advisory
fee
were
not
believed
by
the
Adviser
to
be
appropriate
at
this
time.
Based
on
the
foregoing
information
and
other
applicable
considerations,
the
Board
concluded
that
the
asset
levels
of
the
Funds
were
not
consistent
with
the
existence
of
economies
of
scale
and
that
economies
of
scale
were
not
a
material
factor
in
approving
the
continuation
of
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
Funds.
Based
on
the
foregoing
representation
and
the
materials
presented,
the
Board
concluded
that
other
benefits
received
by
the
Adviser
from
its
relationship
with
the
Funds
were
not
a
material
factor
to
consider
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.
The
Board
reviewed
a
memorandum
from
Fund
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
determined,
in
the
exercise
of
its
reasonable
business
judgment,
that
the
advisory
arrangement,
as
outlined
in
the
Advisory
Agreement,
was
fair
and
reasonable
in
light
of
the
services
performed
or
to
be
performed,
expenses
incurred
or
to
be
incurred
and
such
other
matters
as
the
Board
considered
relevant.
Liquidity
Risk
Management
Program
The
Funds
have
adopted
and
implemented
a
written
liquidity
risk
management
program,
as
required
by
Rule
22e-4
(the
“Liquidity
Rule”)
under
the
Investment
Company
Act
of
1940,
as
amended.
The
liquidity
risk
management
program
is
reasonably
designed
to
assess
and
manage
the
Fund’s
liquidity
risk,
taking
into
consideration,
among
other
factors,
the
Funds'
investment
strategy
and
the
liquidity
of
the
portfolio
investments
during
normal
and
reasonably
foreseeable
stressed
conditions;
its
short
and
long-term
cash
flow
projections;
and
its
cash
holdings
and
access
to
other
funding
sources.
The
Board
approved
the
designation
of
the
Trust’s
Valuation
Committee
as
the
administrator
of
the
liquidity
risk
management
program
(the
“Program
Administrator”).
The
Program
Administrator
is
responsible
for
the
administration
and
oversight
of
the
program
and
for
Baywood
Funds
ADDITIONAL
INFORMATION
(Unaudited)
September
30,
2020
28
reporting
to
the
Board
on
at
least
an
annual
basis
regarding,
among
other
things,
the
program’s
operation,
adequacy,
and
effectiveness.
The
Program
Administrator
assessed
the
Fund’s
liquidity
risk
profile
based
on
information
gathered
for
the
period
June
1,
2019
through
June
30,
2020
in
order
to
prepare
a
written
report
to
the
Board
for
review
at
its
meeting
held
on
September
10,
2020.
The
Program
Administrator’s
written
report
stated
that:
(i)
the
Funds
are
able
to
meet
redemptions
in
normal
and
reasonably
foreseeable
stressed
conditions
and
without
significant
dilution
of
remaining
shareholders’
interests
in
the
Funds;
(ii)
the
Funds'
strategy
is
appropriate
for
an
open-end
mutual
fund;
(iii)
the
liquidity
classification
determinations
regarding
the
Funds'
portfolio
investments,
which
take
into
account
a
variety
of
factors
and
may
incorporate
analysis
from
one
or
more
third-party
data
vendors,
remained
appropriate;
(iv)
the
Funds
did
not
approach
the
internal
triggers
set
forth
in
the
liquidity
risk
management
program
or
the
regulatory
percentage
limitation
(15%)
on
holdings
in
illiquid
investments;
(v)
it
continues
to
be
appropriate
to
not
set
a
“highly
liquid
investment
minimum”
for
the
Funds
because
the
Funds
primarily
hold
“highly
liquid
investments”;
and
(vi)
the
liquidity
risk
management
program
remains
reasonably
designed
and
adequately
implemented
to
prevent
violations
of
the
Liquidity
Rule.
The
report
also
reviewed
the
changes
to
the
Program
since
its
inception.
No
significant
liquidity
events
impacting
the
Funds
or
proposed
changes
to
the
Program
were
noted
in
the
report.
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.
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
April
1,
2020
through
September
30,
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.
Baywood
Funds
ADDITIONAL
INFORMATION
(Unaudited)
September
30,
2020
29
Federal
Tax
Status
of
Dividends
Declared
during
the
Fiscal
Year
For
federal
income
tax
purposes,
dividends
from
short-term
capital
gains
are
classified
as
ordinary
income.
Each
Fund
designates
100.00
%
of
its
income
dividend
distributed
as
qualifying
for
the
corporate
dividends-received
deduction
(DRD)
and
100.00
%
for
the
qualified
dividend
rate
(QDI)
as
defined
in
Section
1(h)(11)
of
the
Internal
Revenue
Code.
Pursuant
to
Section
852(b)(3)
of
the
Internal
Revenue
Code,
Baywood
Valu
ePlus
Fund,
and
Baywood
Sociall
yResponsible
Fund
designated
$36,357
and
$53,503,
as
long-term
capital
gain
dividends,
respectively.
Trustees
and
Officers
of
the
Trust
The
Board
is
responsible
for
oversight
of
the
management
of
the
Trust’s
business
affairs
and
of
the
exercise
of
all
the
Trust’s
powers
except
those
reserved
for
the
shareholders.
The
following
table
provides
information
about
each
Trustee
and
certain
officers
of
the
Trust.
Each
Trustee
and
officer
holds
office
until
the
person
resigns,
is
removed,
or
is
replaced.
Unless
otherwise
noted,
the
persons
have
held
their
principal
occupations
for
more
than
five
years.
The
address
for
all
Trustees
and
officers
is
Three
Canal
Plaza,
Suite
600,
Portland,
Maine
04101.
Each
Fund’s
Statement
of
Additional
Information
includes
additional
information
about
the
Trustees
and
is
available,
without
charge
and
upon
request,
by
calling
(855)
409-2297.
Beginning
Account
Value
April
1,
2020
Ending
Account
Value
September
30,
2020
Expenses
Paid
During
Period*
Annualized
Expense
Ratio*
Baywood
Value
Plus
Fund
Actual
$
1,000.00
$
1,215.44
$
3.88
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
$
1,244.64
$
4.99
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.
Name
and
Year
of
Birth
Position
with
the
Trust
Length
of
Time
Served
Principal
Occupation(s)
During
Past
Five
Years
Number
of
Series
in
Fund
Complex
Overseen
By
Trustee
Other
Directorships
By
Trustee
During
Past
Five
Years
Independent
Trustees
David
Tucker
Born:
1958
Chairman
of
the
Board;
Trustee;
Chairman,
Nominating
Committee
and
Qualified
Legal
Compliance
Committee
Since
2013
Director,
Blue
Sky
Experience
(a
charitable
endeavor),
since
2008;
Senior
Vice
President
&
General
Counsel,
American
Century
Companies
(an
investment
management
firm),
1998-
2008.
2
Trustee,
Forum
Funds;
Trustee,
U.S.
Global
Investors
Funds.
Mark
D.
Moyer
Born:
1959
Trustee;
Chairman
Audit
Committee
Since
2013
Chief
Financial
Officer,
Freedom
House
(a
NGO
advocating
political
freedom
and
democracy),
since
2017;
independent
consultant
providing
interim
CFO
services,
principally
to
non-profit
organizations,
2011-2017.
2
Trustee,
Forum
Funds;
Trustee,
U.S.
Global
Investors
Funds.
Jennifer
Brown-Strabley
Born:
1964
Trustee
Since
2013
Principal,
Portland
Global
Advisors
(a
registered
investment
adviser),
1996-
2010.
2
Trustee,
Forum
Funds;
Trustee,
U.S.
Global
Investors
Funds.
Interested
Trustees
(1)
Baywood
Funds
ADDITIONAL
INFORMATION
(Unaudited)
September
30,
2020
30
(1)
Jessica
Chase
is
currently
an
interested
person
of
the
Trust,
as
defined
in
the
1940
Act,
due
to
her
affiliation
with
Apex
Fund
Services
and
her
role
as
President
of
the
Trust.
Apex
Fund
Services
is
a
wholly
owned
subsidiary
of
Apex
US
Holdings
LLC.
Name
and
Year
of
Birth
Position
with
the
Trust
Length
of
Time
Served
Principal
Occupation(s)
During
Past
Five
Years
Number
of
Series
in
Fund
Complex
Overseen
By
Trustee
Other
Directorships
Held
By
Trustee
During
Past
Five
Years
Jessica
Chase
Born:
1970
Trustee
Since
2019
Director,
Apex
Fund
Services
since
2019;
Senior
Vice
President,
Atlantic
Fund
Services
2008-2019.
2
Trustee,
Forum
Funds,
Trustee,
U.S.
Global
Investors
Funds.
Name
and
Year
of
Birth
Position
with
the
Trust
Length
of
Time
Served
Principal
Occupation(s)
During
Past
5
Years
Officers
Jessica
Chase
Born:
1970
President;
Principal
Executive
Officer
Since
2015
Director,
Apex
Fund
Services
since
2019;
Senior
Vice
President,
Atlantic
Fund
Services
2008-2019.
Karen
Shaw
Born:
1972
Treasurer;
Principal
Financial
Officer
Since
2013
Senior
Vice
President,
Apex
Fund
Services
since
2019;
Senior
Vice
President,
Atlantic
Fund
Services
2008-2019.
Zachary
Tackett
Born:
1988
Vice
President;
Secretary
and
Anti-
Money
Laundering
Compliance
Officer
Since
2014
Senior
Counsel,
Apex
Fund
Services
since
2019;
Counsel,
Atlantic
Fund
Services
2014-
2019.
Timothy
Bowden
Born:
1969
Vice
President
Since
2013
Manager,
Apex
Fund
Services
since
2019;
Manager,
Atlantic
Fund
Services
2008-2019.
Michael
J.
McKeen
Born:
1971
Vice
President
Since
2013
Senior
Vice
President,
Apex
Fund
Services
since
2019;
Senior
Vice
President,
Atlantic
Fund
Services
2008-2019.
Geoffrey
Ney
Born:
1975
Vice
President
Since
2013
Manager,
Apex
Fund
Services
since
2019;
Manager,
Atlantic
Fund
Services
2013-2019.
Todd
Proulx
Born:
1978
Vice
President
Since
2013
Manager,
Apex
Fund
Services
since
2019;
Manager,
Atlantic
Fund
Services
2013-2019.
Carlyn
Edgar
Born:
1963
Chief
Compliance
Officer
Since
2013
Senior
Vice
President,
Apex
Fund
Services
since
2019;
Senior
Vice
President,
Atlantic
Fund
Services
2008-2019.
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-ANR-0920
ITEM 2. CODE OF ETHICS.
(a) As of the end of the period covered by this report, Forum Funds II (the “Registrant”) has adopted a code of ethics, which applies to its Principal Executive Officer and Principal Financial Officer (the “Code of Ethics”).
(c) There have been no amendments to the Registrant’s Code of Ethics during the period covered by this report.
(d) There have been no waivers to the Registrant’s Code of Ethics during the period covered by this report.
(e) Not applicable.
(f) (1) A copy of the Code of Ethics is being filed under Item 13(a) hereto.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
The Board of Trustees has determined that Mr. Mark Moyer is an "audit committee financial expert" as that term is defined under applicable regulatory guidelines. Mr. Moyer is a non- “interested” Trustee (as defined in Section 2(a)(19) under the Investment Company Act of 1940, as amended (the “Act”)), and serves as Chairman of the Audit Committee.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
(a) Audit Fees - The aggregate fees billed for each of the last two fiscal years (the “Reporting Periods”) for professional services rendered by the Registrant’s principal accountant for the audit of the Registrant’s annual financial statements, or services that are normally provided by the principal accountant in connection with the statutory and regulatory filings or engagements for the Reporting Periods, were $26,800 in 2019 and $26,800 in 2020.
(b) Audit-Related Fees – The aggregate fees billed in the Reporting Periods for assurance and related services rendered by the principal accountant that were reasonably related to the performance of the audit of the Registrant’s financial statements and are not reported under paragraph (a) of this Item 4 were $0 in 2019 and $0 in 2020.
(c) Tax Fees - The aggregate fees billed in the Reporting Periods for professional services rendered by the principal accountant to the Registrant for tax compliance, tax advice and tax planning were $6,000 in 2019 and $6,000 in 2020. These services consisted of review or preparation of U.S. federal, state, local and excise tax returns.
(d) All Other Fees - The aggregate fees billed in the Reporting Periods for products and services provided by the principal accountant to the Registrant, other than the services reported in paragraphs (a) through (c) of this Item, were $0 in 2019 and $0 in 2020.
(e) (1) The Audit Committee reviews and approves in advance all audit and “permissible non-audit services” (as that term is defined by the rules and regulations of the Securities and Exchange Commission) to be rendered to a series of the Registrant (each, a “Series”). In addition, the Audit Committee reviews and approves in advance all “permissible non-audit services” to be provided to an investment adviser (not including any sub-adviser) of a Series, or an affiliate of such investment adviser, that is controlling, controlled by or under common control with the investment adviser and provides on-going services to the Registrant (“Affiliate”), by the Series’ principal accountant if the engagement relates directly to the operations and financial reporting of the Series. The Audit Committee considers whether fees paid by a Series’ investment adviser or an Affiliate to the Series’ principal accountant for audit and permissible non-audit services are consistent with the principal accountant’s independence.
(e) (2) No services included in (b) - (d) above were approved pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X.
(f) Not applicable
(g) The aggregate non-audit fees billed by the principal accountant for services rendered to the Registrant for the Reporting Periods were $0 in 2019 and $0 in 2020. There were no fees billed in either of the Reporting Periods for non-audit services rendered by the principal accountant to the Registrant’s investment adviser or any Affiliate.
(h) During the Reporting Period, the Registrant's principal accountant provided no non-audit services to the investment advisers or any entity controlling, controlled by or under common control with the investment advisers to the series of the Registrant to which this report relates.
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 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)(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: | November 18, 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: | November 18, 2020 |
By: | /s/ Karen Shaw | |
Karen Shaw, Principal Financial Officer | ||
Date: | November 18, 2020 |