Form N-CSRS FORUM FUNDS II For: Mar 31
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E-mailAs filed with the
Securities and Exchange Commission on May 25, 2022
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, 2021 – March 31, 2022
ITEM 1. REPORT TO STOCKHOLDERS.
Semi-Annual
Report
March
31,
2022
(Unaudited)
Advised
by:
SKBA
Capital
Management,
LLC
www.baywoodfunds.com
BAYWOOD
VALUE
PLUS
FUND
A
MESSAGE
TO
OUR
SHAREHOLDERS
March
31,
2022
1
Dear
Shareholders,
We
are
pleased
to
report
our
economic
and
financial
market
perspectives
and
the
investment
activities
for
the
Baywood
Value
Plus
Fund
(the
“Fund”)
for
the
six
months
ended
March
31,
2022.
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.
Over
the
last
six
months,
the
broad
stock
market
(represented
by
the
S&P
500)
experience
two
diametrically
opposed
quarters,
with
a
strong
11.0%
gain
in
the
4th
quarter
of
2021
followed
by
a
reversal
of
trend
to
post
a
-4.6%
return
in
the
1st
quarter
of
2022.
Over
the
six
months
as
a
whole,
The
S&P
gained
5.92%.
The
stock
market’s
first
quarter
of
2022
decline
could
be
attributed
to
a
number
of
factors—Omicron,
the
war
in
Ukraine,
the
highest
year
over
year
consumer
price
inflation
in
40
years,
labor
shortages,
and/or
continued
supply
chain
disruption.
Yet
its
root
cause
might
be
best
attributed
to
“Poor
Peter
Powell
finally
had
to
Pay
the
Piper!”
Naturally,
“Peter”
is
Fed
Chairman
Jerome
Powell
who
indulged
in
the
fantasy
that
MMT
(Modern
Monetary
Theory)
offered
a
free
lunch—meaning
no
amount
of
Federal
Reserve
Board
money
supply
growth
to
fund
the
federal
government’s
massive
deficit
spending
spree,
while
suppressing
of
yields
via
its
Zero
Interest
Rate
Policy
(ZIRP),
would
put
upward
pressure
on
consumer
and
industrial
prices.
After
wishing
and
forecasting
for
months
that
price
inflation
would
prove
to
be
transitory,
Powell
finally
acknowledged
the
Fed
was
behind
the
curve.
The
Piper
now
has
to
be
paid
with
many
more
Fed
Fund
rate
hikes
than
would
likely
have
been
necessary
had
he
ended
the
Fed’s
extraordinary
monetary
ease
and
ZIRP
in
June
of
2021.
We
identified
the
coming
awakening
of
price
inflation
before
it
actually
appeared
in
2021.
In
light
of
these
pressures,
it
is
a
pleasure
to
report
that
Baywood
Value
Plus
Fund
produced
positive
returns
in
the
1st
quarter,
with
a
total
return
of
5.61%,
and
an
11.51%
return
over
the
last
six
months.
This
compared
to
the
return
on
our
primary
benchmark,
Morningstar
US
Large
Cap
Value
Index,
of
1.63%
and
9.37%
over
the
first
quarter
and
six-month
periods,
respectively.
For
years
now
through
the
end
of
2021,
growth-stock
indexes
feasted
on
low
interest
rates
that
justified
high
price/earnings
ratios.
Not
surprisingly,
the
rise
in
discount
rates
so
far
in
2022
year
punished
these
stocks
the
most.
Even
with
price
recovery
in
March,
the
NASDAQ
plunged
-8.9%
for
the
first
quarter
as
a
whole,
the
S&P
500
dropped
-4.6%,
and
even
the
S&P
500
Value
produced
a
modest
decline
of
-0.16%.
Given
the
shellacking
the
30-year
T-bond
took,
with
a
return
of
-11%,
T-bonds
looked
a
lot
like
growth
stocks
and
offered
no
protection
against
the
weak
equity
market
returns.
It
is
important
to
note
that
the
booming
economic
recovery
was
well
underway
at
the
beginning
of
the
new
year,
producing
real
growth
from
pent
up
demand
at
the
same
time
price
inflation
was
gaining
upside
momentum.
All
of
the
factors
necessary
to
create
today’s
problems
were
in
place
before
the
Fed
realized
its
error
and
changed
policy
in
2022,
before
the
wave
of
Omicron
infections
peaked
and
then
dropped
sharply
in
January,
and
before
Russia
launched
its
war
against
Ukraine.
With
the
Omicron
wave
receding
rapidly
(except
in
China),
the
economic
reopening
story
was
revived
once
again.
Was
the
first
quarter
of
2022
then
the
beginning
of
the
“perfect
storm”
for
stocks
and
bonds
or
just
a
short-lived
squall
in
financial
markets?
Certainly,
if
the
Federal
Reserve
Board
actually
follows
through
and
raises
the
Fed
Fund
Rate
six
more
times
(at
least
175
basis
points
in
total
this
year),
rising
interest
rates
should
push
up
cash
flow
discount
rates.
As
a
result,
growth
stock
valuations
(as
measure
by
a
stock’s
price/earnings
ratio)
should
remain
under
downside
pressure
as
they
were
in
the
first
quarter.
The
highest
growth
sectors
in
the
value
benchmark,
information
technology
and
consumer
discretionary
sectors
of
the
Morningstar
US
Large
Cap
Value
fell
approximately
-8%
and
-18%
in
the
1st
quarter,
respectively,
with
six-month
returns
of
+2%
and
-3%,
respectively,
which
highlights
that
rising
interest
rates
the
1st
quarter
have
already
begun
to
hit
the
valuations
of
stocks
in
these
two
sectors
Nor
is
it
difficult
to
understand
that
rising
prices
benefit
the
purveyors
of
commodities.
Energy
stocks
topped
Morningstar’s
sector
list
rising
nearly
51%,
followed
by
materials
up
nearly
35%.
Having
anticipated
that
the
problem
with
price
inflation
would
not
be
transitory,
SKBA
positioned
Value
Plus
to
have
more
of
the
latter
holdings
(energy
and
materials)
compared
to
the
former.
While
Russia’s
invasion
of
Ukraine
pushed
the
price
of
West
Texas
Intermediate
(WTI)
and
Brent
Crude
temporarily
above
$120
per
barrel,
even
a
quick
resolution
of
the
war
would
not
likely
cause
crude
oil
prices
to
collapse.
Worldwide
consumption
is
back
to
pre-pandemic
BAYWOOD
VALUE
PLUS
FUND
A
MESSAGE
TO
OUR
SHAREHOLDERS
March
31,
2022
2
levels
of
100
million
barrels
per
day
even
without
a
full
recovery
in
jet
fuel
consumption.
Equinor,
Chevron
and
ConocoPhillips
led
the
charge
higher
among
energy
stocks
in
the
portfolio.
Yet
it
wasn’t
simply
the
over-weighted
positions
in
energy
and
materials
that
made
the
difference
over
the
last
two
quarters.
Drug
manufacturer
AbbVie
gained
almost
53%
as
its
Botox
franchise
regained
momentum
along
with
its
new
treatments
for
autoimmune
diseases,
Skyrizi
and
Rinvoq.
Raytheon
Technologies,
known
for
its
highly
successful
Patriot
missile
system
as
well
as
commercial
jet
engine
manufacturing
and
maintenance,
rose
16%.
Union
Pacific
(railroad)
rose
almost
41%.
Even
though
Morningstar’s
financial
sector
reported
a
negative
-3%
return
over
the
period,
SKBA’s
holdings
produced
positive
9%
return.
While
underweighting
bank
stocks,
SKBA
overweight
insurance
stocks.
Among
financials,
insurance
stocks
posted
the
largest
returns
with
American
International
Group,
Chubb,
and
MetLife
each
producing
low
double-digit
returns.
The
rise
in
the
yield
curve
result
in
the
decision
to
start
a
position
in
Wells
Fargo
during
the
1st
quarter
as
we
believe
it
has
the
potential
for
upside
surprise
in
its
net
interest
margins
and
cost
cutting.
Next
to
energy,
our
overweight
among
diversified
holdings
in
materials
stocks
generate
nearly
a
34%
total
return
with
holdings
in
gold
miner
Newmont,
fertilizer
company
Nutrien,
metals
miner
Rio
Tinto,
and
Packaging
Corp
all
contributing
to
this
sizeable
outperformance.
At
the
other
end
of
the
spectrum,
the
strategy
underperformed
the
benchmark
in
two
sectors,
consumer
discretionary
and
utilities.
Three
stocks
saw
significant
losses.
Generic
drug
maker
Viatris
plunged
-24%
in
part
due
to
a
dramatic
shift
in
business
strategy
that
we
do
not
support,
and
so
we
chose
to
exit
the
position
during
the
first
quarter.
Following
its
decline
in
the
4th
quarter,
we
also
exited
healthcare
equipment
company,
Royal
Philips,
as
product
quality
and
demand
issues
arose.
Auto
parts
maker
Lear
and
clothing
manufacturer
Kontoor
declined
-8%
and
-16%,
respectively,
but
because
we
continue
to
have
confidence
in
their
long-term
prospects,
we
used
this
opportunity
to
buy
low.
The
question
arises,
can
Value
Plus
sustain
positive
performance
in
the
face
of
a
weak
market
or
a
resurgence
of
return
from
growth-stock
indexes?
Certainly
no
one
knows
the
answer
to
this
but
it
is
important
to
note
that
there
are
some
parallels
between
to
market
and
the
peak
of
the
growth-stock
mania
of
1999.
First,
using
various
valuation
metrics,
“growth”
substantially
outperformed
“value”
in
the
late
1990s,
setting
up
an
extreme
differential
in
valuation
that
left
growth
stocks
vulnerable
to
any
deterioration
in
the
“new
paradigm”
set
of
growth
stock
beliefs
from
the
tech
and
internet
boom.
We
have
believed
a
similar
valuation
spread
exists
today,
particularly
heightened
by
the
boom
in
stay-at-home/work-at-
home
products
and
services
during
the
pandemic
shutdown.
With
Omicron
fading
and
economic
reopening
more
secure,
this
valuation
difference
is
no
longer
justified.
In
our
view,
the
first
quarter
market
decline
barely
put
a
dent
in
the
continued
overvaluation.
Second,
we
also
believe
both
periods
(late
1990s
and
2020-21)
saw
a
pull
forward
revenues
from
future
periods
due
to
the
surge
in
pandemic
services
like
Netflix
and
Zoom
subscriptions
of
late
and
info
tech
spending
to
resolve
the
Y2K
problem
of
the
late
1990’s
(the
need
to
shift
from
2-digit
years
to
4-digit
years
in
all
computer
systems
and
software).
Investors
who
believed
the
new
paradigm
of
accelerated
growth
were
massively
disappointed
in
the
new
century,
and
it
is
our
view
that
we
have
just
begun
a
significant
slowdown
in
the
relative
growth
rates
of
growth
stocks
compared
to
value
stocks.
Only
time
will
tell
if
these
perspectives
are
accurate.
In
the
meantime,
we’ll
keep
an
eye
on
these
trends
and
how
to
best
adjust
client
portfolios
to
changes
we
see
coming.
Current
and
future
portfolio
holdings
are
subject
to
change
and
risk.
Fund
holdings
and
sector
allocations
are
subject
to
change
at
any
time
and
are
not
recommendations
to
buy
or
sell
any
security.
Please
see
the
Schedule
of
Investments
in
this
report
for
a
complete
list
of
Fund
holdings.
The
S&P
500®
Index,
is
a market-capitalization-weighted
index of
500
leading publicly
traded
companies
in
the
U.S.
An
investment
cannot
be
made
directly
in
an
index.
The
S&P
500®
Value
Index
is
an
unmanaged
group
of
securities
and
is
considered
to
be
representative
of
those
stocks
in
the
S&P
500®
Index
exhibiting
the
strongest
value
characteristics.
The
gains
and
losses
reflect
the
monthly
price
of
the
Index
only,
and
therefore,
do
not
include
dividends.
The
Morningstar
US
Large
Value
TR
Index
measures
the
performance
of
measures
the
performance
of
US
large-cap
stocks
with
relatively
low
prices
given
anticipated
per-share
earnings,
book
value,
cash
flow,
sales
and
dividends.
This
Index
does
not
incorporate
Environmental,
Social,
or
Governance
(ESG)
criteria.
Basis
points
refers
to a
common
unit
of
measure
for
interest
rates
and
other
percentages
in
finance.
One
basis
point
is
equal
to
1/100th
of
1%,
or
0.01%,
or
0.0001,
and
is
used
to
denote
the
percentage
change
in
a
financial
instrument.
BAYWOOD
VALUE
PLUS
FUND
A
MESSAGE
TO
OUR
SHAREHOLDERS
March
31,
2022
3
Past
performance
is
no
guarantee
of
future
results.
Risk
Considerations:
Mutual
fund
investing
involves
risk,
including
the
possible
loss
of
principal.
The
Fund
primarily
invests
in
undervalued
securities,
which
may
not
appreciate
in
value
as
anticipated
by
the
Advisor
or
remain
undervalued
for
longer
than
anticipated.
The
Fund
may
invest
in
American
Depositary
Receipts
(ADRs),
which
involves
risks
relating
to
political,
economic
or
regulatory
conditions
in
foreign
countries
and
may
cause
greater
volatility
and
less
liquidity.
The
Fund
may
also
invest
in
convertible
securities
and
preferred
stock,
which
may
be
adversely
affected
as
interest
rates
rise.
BAYWOOD
VALUE
PLUS
FUND
PERFORMANCE
CHART
AND
ANALYSIS
March
31,
2022
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
5.66%.
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,
2023
(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
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.
Average
Annual
Total
Returns
Periods
Ended
March
31,
2022
One
Year
Five
Year
Ten
Year
Since
Inception
06/27/08
Baywood
Value
Plus
Fund
15.95%
10.37%
10.67%
9.84%
Morningstar
US
Large
Value
TR
Index
12.12%
10.26%
11.14%
8.64%
*
The
Fund’s
Institutional
Shares
performance
for
periods
prior
to
the
commencement
of
operations
(12/2/13)
is
that
of
a
collective
investment
trust
managed
by
the
Fund’s
Advisor
and
portfolio
management
team.
The
Institutional
Shares
of
the
collective
investment
trust
commenced
operations
on
June
27,
2008.
BAYWOOD
VALUE
PLUS
FUND
SCHEDULE
OF
INVESTMENTS
March
31,
2022
5
See
Notes
to
Financial
Statements.
The
following
is
a
summary
of
the
inputs
used
to
value
the
Fund's instruments
as
of
March
31,
2022.
The
inputs
or
methodology
used
for
valuing
securities
are
not
necessarily
an
indication
of
the
risks
associated
with
investing
in
those
securities.
For
more
information
on
valuation
inputs,
and
their
aggregation
into
the
levels
used
in
the
table
below,
please
refer
to
the
Security
Valuation
section
in
Note
2
of
the
accompanying
Notes
to
Financial
Statements.
The
Level
1
value
displayed
in
this
table
is
Common
Stock.
The
Level
2
value
displayed
in
this
table
is
a
Money
Market
Fund.
Refer
to
this
Schedule
of
Investments
for
a
further
breakout
of
each
security
by
industry.
Shares
Security
Description
Value
Common
Stock
-
97.2%
Basic
Materials
-
10.8%
400
International
Flavors
&
Fragrances,
Inc.
$
52,532
1,300
Newmont
Corp.
103,285
860
Nutrien,
Ltd.
89,431
300
Packaging
Corp.
of
America
46,833
1,400
Rio
Tinto
PLC,
ADR
112,560
404,641
Capital
Goods
/
Industrials
-
5.9%
800
ManpowerGroup,
Inc.
75,136
100
Parker-Hannifin
Corp.
28,376
1,200
Raytheon
Technologies
Corp.
118,884
222,396
Communication
Services
-
6.2%
2,900
AT&T,
Inc.
68,527
1,900
Comcast
Corp.,
Class A
88,958
1,500
Verizon
Communications,
Inc.
76,410
233,895
Consumer
Discretionary
-
6.9%
500
Darden
Restaurants,
Inc.
66,475
400
Genuine
Parts
Co.
50,408
2,000
Kontoor
Brands,
Inc.
82,700
400
Lear
Corp.
57,036
256,619
Consumer
Staples
-
6.9%
800
Ingredion,
Inc.
69,720
700
Molson
Coors
Beverage
Co.,
Class B
37,366
200
PepsiCo.,
Inc.
33,476
1,900
The
Kraft
Heinz
Co.
74,841
300
Walmart,
Inc.
44,676
260,079
Energy
-
10.4%
300
Chevron
Corp.
48,849
1,400
ConocoPhillips
140,000
2,100
Equinor
ASA,
ADR
78,771
3,200
Kinder
Morgan,
Inc.
60,512
700
Phillips
66
60,473
388,605
Financials
-
18.5%
2,200
American
International
Group,
Inc.
138,094
500
Chubb,
Ltd.
106,950
1,600
Citigroup,
Inc.
85,440
200
CME
Group,
Inc.
47,572
400
First
American
Financial
Corp.
25,928
1,600
MetLife,
Inc.
112,448
500
Northern
Trust
Corp.
58,225
900
Prosperity
Bancshares,
Inc.
62,442
1,100
Wells
Fargo
&
Co.
53,306
690,405
Health
Care
-
13.4%
700
AbbVie,
Inc.
113,477
300
Amgen,
Inc.
72,546
1,000
AstraZeneca
PLC,
ADR
66,340
1,500
Cardinal
Health,
Inc.
85,050
16
Koninklijke
Philips
NV,
ADR
489
600
Medtronic
PLC
66,570
1,200
Merck
&
Co.,
Inc.
98,460
502,932
Real
Estate
-
3.9%
1,104
Realty
Income
Corp.
REIT
76,507
2,400
VICI
Properties,
Inc.
REIT
68,304
144,811
Shares
Security
Description
Value
Technology
-
9.3%
1,200
Cisco
Systems,
Inc.
$
66,912
1,300
Corning,
Inc.
47,983
600
International
Business
Machines
Corp.
78,012
1,100
NetApp,
Inc.
91,300
200
TE
Connectivity,
Ltd.
26,196
200
Texas
Instruments,
Inc.
36,696
347,099
Transportation
-
3.9%
6,100
Atlas
Corp.
89,548
200
Union
Pacific
Corp.
54,642
144,190
Utilities
-
1.1%
1,000
OGE
Energy
Corp.
40,780
Total
Common
Stock
(Cost
$2,826,430)
3,636,452
Shares
Security
Description
Value
Money
Market
Fund
-
3.1%
115,103
First
American
Government
Obligations
Fund,
Class X,
0.19%
(a)
(Cost
$115,103)
115,103
Investments,
at
value
-
100.3%
(Cost
$2,941,533)
$
3,751,555
Other
Assets
&
Liabilities,
Net
-
(0.3)%
(11,716)
Net
Assets
-
100.0%
$
3,739,839
ADR
American
Depositary
Receipt
PLC
Public
Limited
Company
REIT
Real
Estate
Investment
Trust
(a)
Dividend
yield
changes
daily
to
reflect
current
market
conditions.
Rate
was
the
quoted
yield
as
of
March
31,
2022.
Valuation
Inputs
Investments
in
Securities
Level
1
-
Quoted
Prices
$
3,636,452
Level
2
-
Other
Significant
Observable
Inputs
115,103
Level
3
-
Significant
Unobservable
Inputs
–
Total
$
3,751,555
BAYWOOD
VALUE
PLUS
FUND
SCHEDULE
OF
INVESTMENTS
March
31,
2022
6
See
Notes
to
Financial
Statements.
PORTFOLIO
HOLDINGS
%
of
Total
Investments
Basic
Materials
10.8%
Capital
Goods
/
Industrials
5.9%
Communication
Services
6.2%
Consumer
Discretionary
6.8%
Consumer
Staples
6.9%
Energy
10.4%
Financials
18.4%
Health
Care
13.4%
Real
Estate
3.9%
Technology
9.3%
Transportation
3.8%
Utilities
1.1%
Money
Market
Fund
3.1%
100.0%
BAYWOOD
VALUE
PLUS
FUND
STATEMENT
OF
ASSETS
AND
LIABILITIES
March
31,
2022
7
See
Notes
to
Financial
Statements.
ASSETS
Investments,
at
value
(Cost
$2,941,533)
$
3,751,555
Receivables:
Dividends
13,509
From
investment
advisor
10,546
Prepaid
expenses
13,542
Total
Assets
3,789,152
LIABILITIES
Payables:
Fund
shares
redeemed
25,401
Accrued
Liabilities:
Trustees’
fees
and
expenses
22
Fund
services
fees
5,117
Other
expenses
18,773
Total
Liabilities
49,313
NET
ASSETS
$
3,739,839
COMPONENTS
OF
NET
ASSETS
Paid-in
capital
$
2,719,420
Distributable
earnings
1,020,419
NET
ASSETS
$
3,739,839
SHARES
OF
BENEFICIAL
INTEREST
AT
NO
PAR
VALUE
(UNLIMITED
SHARES
AUTHORIZED)
183,203
NET
ASSET
VALUE,
OFFERING
AND
REDEMPTION
PRICE
PER
SHARE
$
20.41
BAYWOOD
VALUE
PLUS
FUND
STATEMENT
OF
OPERATIONS
SIX
MONTHS
ENDED
MARCH
31,
2022
8
See
Notes
to
Financial
Statements.
INVESTMENT
INCOME
Dividend
income
(Net
of
foreign
withholding
taxes
of
$383)
$
63,860
Total
Investment
Income
63,860
EXPENSES
Investment
advisor
fees
8,889
Fund
services
fees
29,623
Transfer
agent
fees
9,262
Custodian
fees
2,547
Registration
fees
12,469
Professional
fees
16,636
Trustees'
fees
and
expenses
2,322
Other
expenses
15,065
Total
Expenses
96,813
Fees
waived
and
expenses
reimbursed
(84,368)
Net
Expenses
12,445
NET
INVESTMENT
INCOME
51,415
NET
REALIZED
AND
UNREALIZED
GAIN
(LOSS)
Net
realized
gain
on
investments
197,408
Net
change
in
unrealized
appreciation
(depreciation)
on
investments
139,493
NET
REALIZED
AND
UNREALIZED
GAIN
336,901
INCREASE
IN
NET
ASSETS
RESULTING
FROM
OPERATIONS
$
388,316
BAYWOOD
VALUE
PLUS
FUND
STATEMENTS
OF
CHANGES
IN
NET
ASSETS
9
See
Notes
to
Financial
Statements.
For
the
Six
Months
Ended
March
31,
2022
For
the
Year
Ended
September
30,
2021
OPERATIONS
Net
investment
income
$
51,415
$
78,386
Net
realized
gain
197,408
281,849
Net
change
in
unrealized
appreciation
(depreciation)
139,493
592,957
Increase
in
Net
Assets
Resulting
from
Operations
388,316
953,192
DISTRIBUTIONS
TO
SHAREHOLDERS
Total
Distributions
Paid
(303,361)
(71,909)
CAPITAL
SHARE
TRANSACTIONS
Sale
of
shares
40,792
97,772
Reinvestment
of
distributions
300,824
71,883
Redemption
of
shares
(75,300)
(250,617)
Increase
(Decrease)
in
Net
Assets
from
Capital
Share
Transactions
266,316
(80,962)
Increase
in
Net
Assets
351,271
800,321
NET
ASSETS
Beginning
of
Period
3,388,568
2,588,247
End
of
Period
$
3,739,839
$
3,388,568
SHARE
TRANSACTIONS
Sale
of
shares
2,022
5,147
Reinvestment
of
distributions
15,780
3,675
Redemption
of
shares
(3,747)
(12,688)
Increase
(Decrease)
in
Shares
14,055
(3,866)
BAYWOOD
VALUE
PLUS
FUND
FINANCIAL
HIGHLIGHTS
10
See
Notes
to
Financial
Statements.
These
financial
highlights
reflect
selected
data
for
a
share
outstanding
throughout
each
period.
For
the
Six
Months
Ended
March
31,
2022
For
the
Years
Ended
September
30,
2021
2020
2019
2018
2017
INSTITUTIONAL
SHARES
NET
ASSET
VALUE,
Beginning
of
Period
$
20.03
$
14.96
$
17.03
$
18.63
$
17.36
$
15.59
INVESTMENT
OPERATIONS
Net
investment
income
(a)
0.29
0.45
0.39
0.44
0.38
0.38
Net
realized
and
unrealized
gain
(loss)
1.86
5.04
(1.86)
(0.84)
1.76
2.02
Total
from
Investment
Operations
2.15
5.49
(1.47)
(0.40)
2.14
2.40
DISTRIBUTIONS
TO
SHAREHOLDERS
FROM
Net
investment
income
(0.25)
(0.42)
(0.38)
(0.39)
(0.35)
(0.36)
Net
realized
gain
(1.52)
–
(0.22)
(0.81)
(0.52)
(0.27)
Total
Distributions
to
Shareholders
(1.77)
(0.42)
(0.60)
(1.20)
(0.87)
(0.63)
NET
ASSET
VALUE,
End
of
Period
$
20.41
$
20.03
$
14.96
$
17.03
$
18.63
$
17.36
TOTAL
RETURN
11.51%(b)
36.80%
(8.77)%
(1.55)%
12.57%
15.60%
RATIOS/SUPPLEMENTARY
DATA
Net
Assets
at
End
of
Year
(000s
omitted)
$
3,740
$
3,389
$
2,588
$
2,802
$
936
$
711
Ratios
to
Average
Net
Assets:
Net
investment
income
2.89%(c)
2.39%
2.51%
2.66%
2.10%
2.28%
Net
expenses
0.70%(c)
0.70%
0.70%
0.70%
0.70%
0.70%
Gross
expenses
(d)
5.45%(c)
5.66%
6.68%
8.13%
8.83%
11.16%
PORTFOLIO
TURNOVER
RATE
19%(b)
35%
40%
49%
34%
48%
(a)
Calculated
based
on
average
shares
outstanding
during
each
period.
(b)
Not
annualized.
(c)
Annualized.
(d)
Reflects
the
expense
ratio
excluding
any
waivers
and/or
reimbursements.
BAYWOOD
SOCIALLY
RESPONSIBLE
FUND
A
MESSAGE
TO
OUR
SHAREHOLDERS
March
31,
2022
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
six
months
ended
March
31,
2022.
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.
Reflecting
back
on
the
past
two
years
can
be
daunting
considering
how
much
the
world
has
changed
in
that
time
period.
The
way
in
which
we
even
speak
about
the
past
has
changed;
we
now
collectively
refer
to
the
period
before
March
2020
as
pre-pandemic,
marking
a
new
era
of
sorts
for
the
period
after.
Defining
when
the
“post-pandemic”
period
began
(or
will
begin)
is
a
bit
trickier,
which
could
be
different
depending
on
location
and
other
factors,
like
politics
and
individual
perspective;
however,
we
can
all
agree
that
the
world
we
live
in
now
is
vastly
different
than
the
one
we
did
prior
to
2020.
It’s
vastly
different
from
a
portfolio
positioning
perspective
as
well.
Given
the
overvaluation
of
much
of
the
stock
and
bond
market,
our
steps
to
protect
the
Socially
Responsible
Value
strategy
produced
positive
returns
during
the
1st
quarter
of
2022
market
selloff.
How
did
we
get
here?
First,
the
pandemic
was
an
attack
on
our
consciousness,
as
we
all
had
to
figure
out
how
to
adapt
to
the
strange
new
world
of
mask-
wearing,
curfews,
limited
store
hours
and
store
items.
Most
of
us
took
the
time
to
reconsider
our
health,
knowing
this
was
a
disease
that
killed
the
less
fortunate
and
less
healthy.
Many
of
us
lost
loved
ones
to
this
new
and
seemingly
strange
disease.
Then
came
the
economic
consequences
of
government
responses
to
bend
the
curve
and
ease
the
strain
on
hospitals.
The
total
shut-down
of
the
global
economy
carried
some
strange
repercussions
that
we
still
see
in
our
daily
lives.
The
government
response
to
print
and
deliver
money
to
every
citizen
was
also
not
without
consequence
either.
Even
our
recreational
choices
had
changed;
RVs
and
camping
gear
were
the
two
leading
consumer
discretionary
industries
in
2020
and
2021.
Supply
chains
were
hammered
as
companies
realized
you
couldn’t
just
start
and
stop
production
on
a
dime
in
a
world
that
had
become
highly
dependent
on
global
trade.
Not
to
mention
all
of
the
supply
shortages
brought
out
by
the
shortage
of
labor
due
to
lockdowns
and
sickness.
Auto
production,
for
example,
which
was
shut
down
for
more
than
three
months
in
2020
and
severely
constrained
by
the
semiconductor
shortage
afterwards
has
yet
to
fully
recover,
thus
contributing
to
the
massive
spike
in
prices
of
new
and
used
vehicles.
In
fact,
if
you
purchased
a
new
car
in
the
last
2-3
years,
there’s
a
good
chance
that
vehicle
is
worth
more
than
what
you
paid
for
it.
The
labor
shortages,
partly
due
to
a
wave
of
retirements,
has
led
to
significant
wage
increases,
the
likes
of
which
hasn’t
been
seen
in
decades.
Furthermore,
a
large
number
of
firms
have
realized
that
they
no
longer
need
to
take
an
“all-hands-on-deck”
approach
to
a
work
environment
and,
in
conjunction
with
the
leverage
laborers
can
now
exert,
is
reshaping
how
many
days
workers
are
needed
in
an
office
setting.
One
more
factor
that
has
changed
since
the
pandemic
began
is
consolidation.
Just
think
of
the
many
restaurants
and
retail
locations
that
have
closed
or
shutdown
since
March
of
2020.
In
energy,
consolidation
accelerated
as
did
the
bankruptcies.
With
consolidation
often
comes
price
discipline
as
there
are
fewer
companies
competing
on
price,
which
also
leads
to,
if
not
outright
price
increases,
then
at
least
the
cessation
of
irrational
competitive
pricing
tactics
(price
declines).
Most
of
these
are
also
contributing
factors
to
one
of
the
biggest
issues
the
U.S.
has
had
to
face
in
almost
40
years:
Price
Inflation.
After
nearly
40
years
of
declining
to
very
low
inflation,
many
Americans
find
themselves
dealing
with
unprecedented
price
increases
for
the
first
time
in
their
lives.
Anyone
approximately
40
or
younger
have
yet
to
deal
with
inflation
of
this
magnitude
over
their
lifespan.
Higher
inflation
has
also
ended
the
40-year
bull-market
in
bonds
as
the
Fed
now
has
a
serious
problem
to
contend
with
and
will
likely
not
have
the
ability
to
kowtow
to
political
pressure
to
keep
rates
(and
thus
government
borrowing
cost)
low.
Furthermore,
inflation
eats
away
at
the
value
of
fixed
payments
(like
bonds)
and
investors
tend
to
prefer
investments
that
can
appreciate
in
an
inflationary
environment,
which
will
lead
to
further
pressure
for
increasing
bond
yields.
And
thus,
for
investors,
we
find
ourselves
in
a
landscape
that
is
very
different
from
the
one
in
which
we
were
in
just
two
short
years
ago.
While
the
fourth
quarter
of
2021
was
dominated
by
the
fear
of
Delta
and
Omicron
and
thus
the
market
favored
growth
stocks,
what
we’ve
seen
so
far
in
2022
is
that
the
markets
have
completely
reversed.
Now,
the
markets
are
finally
reacting
to
the
new
reality
of
higher
interest
rates
and
higher
inflation
and
has
shown
a
preference
for
shorter-dated
assets
(cyclicals
as
opposed
to
growth)
with
upfront
dividend
payments
(with
the
ability
to
grow
with
inflation),
reversing
the
trends
we’ve
witnessed
in
the
markets
throughout
most
of
the
2010s
and
early
2020s.
Growth
stocks
are
now
at
the
beginning
of
what
we
believe
will
be
a
prolonged
correction
in
valuations.
BAYWOOD
SOCIALLY
RESPONSIBLE
FUND
A
MESSAGE
TO
OUR
SHAREHOLDERS
March
31,
2022
12
Having
previously
pointed
out
the
excess
valuations
and
concentration
within
the
indices
to
these
mega-cap
growth
stocks,
we
won’t
belabor
the
details
in
this
write-up.
Suffice
to
say,
we
have
seen
this
coming
for
years,
though
at
times,
interrupted
by
the
pandemic.
Furthermore,
as
it
relates
to
ESG
and
Socially
Responsible
investments,
there
is
also
a
concentration
in
the
number
of
funds
available
to
the
community
towards
growth
stocks.
Or,
in
other
words,
there
are
very
limited
options
to
diversify
away
from
concentration
in
the
highly
valued
growth
sector
for
ESG
related
strategies.
Which
is
one
reason
we
are
more
than
pleased
to
report
positive
absolute
(yes,
absolute,
not
just
relative)
returns
for
the
Socially
Responsible
Value
strategy
in
the
first
quarter
of
2022.
To
put
this
in
context,
we
would
like
to
revisit
what
has
happened
in
the
markets
since
the
pandemic
began.
In
early
2020,
when
the
global
economy
was
in
the
process
of
shutting
down
the
markets
sold
off.
But
not
all
sell-offs
are
created
equal.
This
one
was
slightly
unusual
in
that
the
stocks
with
the
lowest
P/E’s
sold
off
the
worst,
while
the
best
performing
stocks
were
the
ones
with
the
highest
P/E’s
and
highest
market
capitalizations
held
up
the
best.
We
said
this
at
the
time,
and
will
reiterate
it
now,
we
believed
the
panic
sell-off
that
occurred
was
one
of
the
best
buying
opportunities
for
Value
stocks
in
decades.
Our
relative
returns
against
our
benchmarks
since
the
first
quarter
of
2020
has
reinforced
our
thoughts
and
vindicated
our
actions
to
buy
when
the
rest
of
the
market
was
selling.
We
didn’t
just
buy
indiscriminately,
however.
We
purchased
stocks
that
we
had
long
wanted
to
buy
but
couldn’t
due
to
elevated
valuations
and
throughout
the
two-year
period
since
then
we
have
been
selling
those
companies
whose
valuations
had
increased
beyond
our
expectations
and
buying
more
of
the
companies
whose
valuations
have
continued
to
deteriorate.
For
the
six
months
ending
March
31st
of
2022,
our
holdings
in
basic
materials
and
financials
contributed
the
most
to
returns.
In
basic
materials,
Nutrien,
Newmont
and
Steel
Dynamics
contributed
the
most
to
performance
as
both
inflation
beneficiaries,
and
as
undervalued
investments
for
years
with
solid
underlying
fundamental
thesis’
returned
62%
and
37%
and
44%
respectively.
We
have
owned
Nutrien
for
years
and
are
now
being
rewarded
for
our
patience.
Steel
Dynamics
was
a
relatively
new
company
added
to
the
portfolio
during
the
pandemic
when
the
global
economy
was
at
a
stand-still.
While
most
would
agree—with
the
benefit
of
hindsight
of
course—it
wasn’t
likely
that
we
were
going
to
stay
“locked
up”
forever,
the
market
behaved
as
if
it
was.
Our
investments
in
both
of
these
companies
have
more
than
doubled
in
a
very
short
period
of
time,
aiding
returns
for
our
holding
periods.
In
the
financial
sector,
the
benchmark’s
returns
were
dragged
down
by
the
negative
returns
of
the
largest
banks.
The
benchmark
returns
in
the
financial
sector
was
negative
during
the
period,
yet
the
holdings
in
the
Socially
Responsible
Value
portfolio
returned
greater
than
positive
12%!
Banks
rallied
over
the
last
year
as
the
prospect
for
increased
interest
rates,
and
thus
increased
net
investment
margins
(NIM’s),
but
turned
mostly
negative
in
the
first
quarter
of
2022
as
perhaps
a
sign
that
the
market
awarded
these
companies
higher
valuation
perhaps
a
bit
too
fast.
We
have
also
not
been
very
attracted
to
most
of
the
large
banks,
as
it
seems
that
an
improvement
in
net
investment
margins
were
only
one
of
the
few
ways
in
which
a
bank
can
improve
profitability.
Especially
considering
that
larger
money
centers
like
JP
Morgan
and
Goldman
Sachs
had
made
so
much
money
from
SPAC
boom
over
the
last
few
years,
which
we
felt
was
not
likely
to
continue
and
would
offset
some
of
the
benefit
of
an
increase
in
NIM’s.
Instead
we
have
preferred
property
and
casualty
insurance
(AIG
and
Chubb)
and
industrial
conglomerates
(Brookfield
Asset
Management
and
Berkshire
Hathaway)
which
helped
aid
returns
over
the
benchmark.
Offsetting
some
of
the
positive
relative
performance
from
these
sectors
were
our
holdings
in
health
care,
energy
and
consumer
discretionary.
In
energy,
our
holdings
in
Texas
Pacific
Land
Corporation
simply
underperformed
the
benchmark,
while
Kontoor
and
Aptiv
underperformed
the
benchmark’s
consumer
discretionary
holdings.
Aptiv’s
valuation
has
ranged
widely
over
the
past
two
years
as
our
purchase
price
is
nearly
one
third
of
where
it
is
priced
now,
yet
as
supply
constraints
continue
to
pressure
auto
industry
production,
the
auto
suppliers,
like
Aptiv,
are
often
some
of
the
first
companies
to
decline
in
valuation.
With
the
supply
of
vehicles
available
for
sale
having
been
dramatically
reduced
over
the
last
two
years,
the
auto
industry
should
have
multiple
years
of
above
market
growth
once
normal
production
resumes.
With
gas
prices
near
all-time
highs
for
most
Americans,
the
switch
to
hybrids
and
EVs
should
be
even
better
for
Aptiv
as
it
is
the
only
supplier
with
end-to-end
solutions
for
both
EVs,
hybrids
and
autonomous
functions.
In
health
care,
Royal
Philips
announced
a
series
of
unfortunate
manufacturing
quality
issues
and
was
one
of
the
worst
performers
in
the
fourth
quarter
of
2021.
After
re-evaluating
our
options,
we
believe
there
are
better
opportunities
in
and
out
of
the
sector
and
we
decided
to
exit
our
position
in
the
company.
Laboratory
Corporation
of
America
also
declined
in
the
period
after
a
very
strong
year-and-a-half
as
a
primary
beneficiary
of
Covid
testing.
Even
without
the
extra
profitability
from
Covid
testing,
Lab
Corp’s
fundamentals
remain
attractive
and
we
are
holding
our
position.
During
the
period
we
added
two
new
companies
to
the
strategy,
Citigroup
and
Merck,
and
sold
our
remaining
shares
in
Arista
Networks
and
Royal
Philips
(as
previously
mentioned).
Citigroup
is
at
the
beginning
of
a
turnaround
where
relatively
new
CEO,
Jane
Fraser,
is
shrinking
the
organization
and
improving
profitability
across
the
company.
It’s
a
daunting
task
for
this
global
bank,
however
its
BAYWOOD
SOCIALLY
RESPONSIBLE
FUND
A
MESSAGE
TO
OUR
SHAREHOLDERS
March
31,
2022
13
valuation,
by
far
amongst
the
lowest
in
its
peer
group,
more
than
compensates
for
the
time
required
for
such
a
turnaround
(as
does
its
dividend
yield
at
~4%).
Arista,
meanwhile,
outperformed
our
expectations,
both
fundamentally
and
from
a
valuation
perspective
and
reached
a
point
where
its
valuation
was
not
discounting
any
slowing
growth
from
the
large
cloud
providers.
We
believe
that
there
has
been
a
pull-forward
in
technology
spending
since
the
pandemic
began
whereby
companies
had
to
increase
spending
to
improve
bandwidth
so
we
can
all
work
from
home,
pulling
in
revenues
from
the
future.
Growth
rates
are
likely
to
decline
from
this
accelerated
revenue
growth
and
is
a
major
contributor
to
this
preference
shift
from
growth
to
value
stocks
as
the
market
is
beginning
to
realize
the
growth
rates
are
unsustainable.
With,
so
many
changes
having
taken
place
in
the
economy,
the
market
and
our
individual
lives
over
the
last
two
years
it
would
be
prudent
to
exercise
a
great
deal
of
caution
going
forward.
The
market
has
priced
in
a
lot
of
these
changes,
but
in
many
cases,
as
the
market
is
wont
to
do,
they
have
been
pushed
to
an
extreme.
The
first
quarter
of
2022,
in
our
opinion,
is
a
reflection
of
the
very
beginning
reversal
of
this
extreme
and
with
very
few
options
for
Value
stocks
in
the
ESG
market,
we
believe
now
is
the
time
for
the
Socially
Responsible
Value
strategy.
____________________________________________________________________________
Current
and
future
portfolio
holdings
are
subject
to
change
and
risk.
Fund
holdings
and
sector
allocations
are
subject
to
change
at
any
time
and
are
not
recommendations
to
buy
or
sell
any
security.
Please
see
the
Schedule
of
Investments
in
this
report
for
a
complete
list
of
Fund
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
March
31,
2022
14
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
3.76%.
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,
2023
(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
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.
Average
Annual
Total
Returns
Periods
Ended
March
31,
2022
One
Year
Five
Year
Ten
Year
Since
Inception
01/03/05
Baywood
Socially
Responsible
Fund
13.70%
11.02%
9.79%
6.63%
Morningstar
US
Large
Value
TR
Index
12.12%
10.26%
11.14%
7.57%
*
Performance
for
Institutional
Shares
for
periods
prior
to
January
8,
2016,
reflects
the
performance
and
expenses
of
City
National
Rochdale
Socially
Responsible
Equity
Fund,
a
series
of
City
National
Rochdale
Funds
(the
“Predecessor
Fund”).
BAYWOOD
SOCIALLY
RESPONSIBLE
FUND
SCHEDULE
OF
INVESTMENTS
March
31,
2022
15
See
Notes
to
Financial
Statements.
The
following
is
a
summary
of
the
inputs
used
to
value
the
Fund's instruments
as
of
March
31,
2022.
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
-
96.7%
Basic
Materials
-
7.8%
1,000
International
Flavors
&
Fragrances,
Inc.
$
131,330
1,200
Newmont
Corp.
95,340
1,900
Nutrien,
Ltd.
197,581
500
Packaging
Corp.
of
America
78,055
700
Steel
Dynamics,
Inc.
58,401
560,707
Capital
Goods
/
Industrials
-
5.1%
450
Cummins,
Inc.
92,300
1,100
ManpowerGroup,
Inc.
103,312
5,000
nVent
Electric
PLC
173,900
369,512
Communication
Services
-
7.0%
3,800
Comcast
Corp.,
Class A
177,916
1,000
The
Walt
Disney
Co.
(a)
137,160
3,800
Verizon
Communications,
Inc.
193,572
508,648
Consumer
Discretionary
-
5.8%
700
Aptiv
PLC
(a)
83,797
1,100
Genuine
Parts
Co.
138,622
4,800
Kontoor
Brands,
Inc.
198,480
420,899
Consumer
Staples
-
4.7%
1,600
Mondelez
International,
Inc.,
Class A
100,448
500
PepsiCo.,
Inc.
83,690
3,900
The
Kraft
Heinz
Co.
153,621
337,759
Energy
-
7.4%
2,600
Devon
Energy
Corp.
153,738
5,500
Kinder
Morgan,
Inc.
104,005
2,100
Schlumberger
NV
86,751
140
Texas
Pacific
Land
Corp.
189,295
533,789
Financials
-
23.7%
3,300
Air
Lease
Corp.
147,345
1,300
American
Express
Co.
243,100
4,300
American
International
Group,
Inc.
269,911
2,300
Bank
of
America
Corp.
94,806
500
Berkshire
Hathaway,
Inc.,
Class B
(a)
176,455
1,600
BOK
Financial
Corp.
150,320
4,683
Brookfield
Asset
Management,
Inc.,
Class A
264,918
500
Chubb,
Ltd.
106,950
1,700
Citigroup,
Inc.
90,780
700
CME
Group,
Inc.
166,502
1,711,087
Health
Care
-
15.4%
400
Amgen,
Inc.
96,728
1,200
AstraZeneca
PLC,
ADR
79,608
850
Becton
Dickinson
and
Co.
226,100
2,600
Cardinal
Health,
Inc.
147,420
450
Laboratory
Corp.
of
America
Holdings
(a)
118,647
900
Medtronic
PLC
99,855
1,600
Merck
&
Co.,
Inc.
131,280
300
Regeneron
Pharmaceuticals,
Inc.
(a)
209,526
1,109,164
Real
Estate
-
2.8%
2,934
Realty
Income
Corp.
REIT
203,326
Technology
-
11.0%
2,600
Cisco
Systems,
Inc.
144,976
4,500
Corning,
Inc.
166,095
1,100
International
Business
Machines
Corp.
143,022
1,300
NetApp,
Inc.
107,900
700
NXP
Semiconductors
NV
129,556
Shares
Security
Description
Value
Technology
-
11.0%
(continued)
800
TE
Connectivity,
Ltd.
$
104,784
796,333
Transportation
-
6.0%
20,300
Atlas
Corp.
298,004
500
Union
Pacific
Corp.
136,605
434,609
Total
Common
Stock
(Cost
$4,939,695)
6,985,833
Shares
Security
Description
Value
Money
Market
Fund
-
3.2%
230,800
First
American
Government
Obligations
Fund,
Class X,
0.19%
(b)
(Cost
$230,800)
230,800
Investments,
at
value
-
99.9%
(Cost
$5,170,495)
$
7,216,633
Other
Assets
&
Liabilities,
Net
-
0.1%
9,335
Net
Assets
-
100.0%
$
7,225,968
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
March
31,
2022.
Valuation
Inputs
Investments
in
Securities
Level
1
-
Quoted
Prices
$
6,985,833
Level
2
-
Other
Significant
Observable
Inputs
230,800
Level
3
-
Significant
Unobservable
Inputs
–
Total
$
7,216,633
PORTFOLIO
HOLDINGS
%
of
Total
Investments
Basic
Materials
7.8%
Capital
Goods
/
Industrials
5.1%
Communication
Services
7.1%
Consumer
Discretionary
5.8%
Consumer
Staples
4.7%
Energy
7.4%
Financials
23.7%
Health
Care
15.4%
Real
Estate
2.8%
Technology
11.0%
Transportation
6.0%
Money
Market
Fund
3.2%
100.0%
BAYWOOD
SOCIALLY
RESPONSIBLE
FUND
STATEMENT
OF
ASSETS
AND
LIABILITIES
March
31,
2022
16
See
Notes
to
Financial
Statements.
ASSETS
Investments,
at
value
(Cost
$5,170,495)
$
7,216,633
Receivables:
Fund
shares
sold
1,958
Dividends
9,778
From
investment
advisor
7,951
Trustees'
fees
and
expenses
7
Prepaid
expenses
13,437
Total
Assets
7,249,764
LIABILITIES
Payables:
Fund
shares
redeemed
108
Accrued
Liabilities:
Fund
services
fees
5,324
Other
expenses
18,364
Total
Liabilities
23,796
NET
ASSETS
$
7,225,968
COMPONENTS
OF
NET
ASSETS
Paid-in
capital
$
4,942,261
Distributable
earnings
2,283,707
NET
ASSETS
$
7,225,968
SHARES
OF
BENEFICIAL
INTEREST
AT
NO
PAR
VALUE
(UNLIMITED
SHARES
AUTHORIZED)
480,794
NET
ASSET
VALUE,
OFFERING
AND
REDEMPTION
PRICE
PER
SHARE
$
15.03
BAYWOOD
SOCIALLY
RESPONSIBLE
FUND
STATEMENT
OF
OPERATIONS
SIX
MONTHS
ENDED
MARCH
31,
2022
17
See
Notes
to
Financial
Statements.
INVESTMENT
INCOME
Dividend
income
(Net
of
foreign
withholding
taxes
of
$1,021)
$
89,506
Total
Investment
Income
89,506
EXPENSES
Investment
advisor
fees
24,675
Fund
services
fees
32,573
Transfer
agent
fees
9,130
Custodian
fees
2,511
Registration
fees
10,639
Professional
fees
16,532
Trustees'
fees
and
expenses
2,347
Other
expenses
15,499
Total
Expenses
113,906
Fees
waived
and
expenses
reimbursed
(82,533)
Net
Expenses
31,373
NET
INVESTMENT
INCOME
58,133
NET
REALIZED
AND
UNREALIZED
GAIN
(LOSS)
Net
realized
gain
on
investments
292,371
Net
change
in
unrealized
appreciation
(depreciation)
on
investments
238,369
NET
REALIZED
AND
UNREALIZED
GAIN
530,740
INCREASE
IN
NET
ASSETS
RESULTING
FROM
OPERATIONS
$
588,873
BAYWOOD
SOCIALLY
RESPONSIBLE
FUND
STATEMENTS
OF
CHANGES
IN
NET
ASSETS
18
See
Notes
to
Financial
Statements.
For
the
Six
Months
Ended
March
31,
2022
For
the
Year
Ended
September
30,
2021
OPERATIONS
Net
investment
income
$
58,133
$
75,418
Net
realized
gain
292,371
202,985
Net
change
in
unrealized
appreciation
(depreciation)
238,369
1,427,701
Increase
in
Net
Assets
Resulting
from
Operations
588,873
1,706,104
DISTRIBUTIONS
TO
SHAREHOLDERS
Total
Distributions
Paid
(248,294)
(94,786)
CAPITAL
SHARE
TRANSACTIONS
Sale
of
shares
117,701
2,056,628
Reinvestment
of
distributions
246,544
94,123
Redemption
of
shares
(245,175)
(621,975)
Increase
in
Net
Assets
from
Capital
Share
Transactions
119,070
1,528,776
Increase
in
Net
Assets
459,649
3,140,094
NET
ASSETS
Beginning
of
Period
6,766,319
3,626,225
End
of
Period
$
7,225,968
$
6,766,319
SHARE
TRANSACTIONS
Sale
of
shares
7,920
157,203
Reinvestment
of
distributions
17,030
7,174
Redemption
of
shares
(16,731)
(47,959)
Increase
in
Shares
8,219
116,418
BAYWOOD
SOCIALLY
RESPONSIBLE
FUND
FINANCIAL
HIGHLIGHTS
19
See
Notes
to
Financial
Statements.
These
financial
highlights
reflect
selected
data
for
a
share
outstanding
throughout
each
period.
For
the
Six
Months
Ended
March
31,
2022
For
the
Years
Ended
September
30,
2021
2020
2019
2018
2017
INSTITUTIONAL
SHARES
NET
ASSET
VALUE,
Beginning
of
Period
$
14.32
$
10.18
$
11.21
$
12.60
$
11.43
$
10.15
INVESTMENT
OPERATIONS
Net
investment
income
(a)
0.12
0.18
0.15
0.18
0.12
0.10
Net
realized
and
unrealized
gain
(loss)
1.11
4.19
(0.90)
(0.53)
1.31
1.33
Total
from
Investment
Operations
1.23
4.37
(0.75)
(0.35)
1.43
1.43
DISTRIBUTIONS
TO
SHAREHOLDERS
FROM
Net
investment
income
(0.10)
(0.14)
(0.15)
(0.16)
(0.10)
(0.15)
Net
realized
gain
(0.42)
(0.09)
(0.13)
(0.88)
(0.16)
–
Total
Distributions
to
Shareholders
(0.52)
(0.23)
(0.28)
(1.04)
(0.26)
(0.15)
NET
ASSET
VALUE,
End
of
Period
$
15.03
$
14.32
$
10.18
$
11.21
$
12.60
$
11.43
TOTAL
RETURN
8.77%(b)
43.10%
(6.67)%
(1.79)%
12.66%
14.18%
RATIOS/SUPPLEMENTARY
DATA
Net
Assets
at
End
of
Year
(000s
omitted)
$
7,226
$
6,766
$
3,626
$
3,824
$
1,699
$
5,404
Ratios
to
Average
Net
Assets:
Net
investment
income
1.65%(c)
1.31%
1.45%
1.60%
1.01%
0.92%
Net
expenses
0.89%(c)
0.89%
0.89%
0.89%
0.89%
0.89%
Gross
expenses
(d)
3.23%(c)
3.76%
5.10%
5.78%
3.03%
2.64%
PORTFOLIO
TURNOVER
RATE
10%(b)
15%
30%
33%
31%
42%
(a)
Calculated
based
on
average
shares
outstanding
during
each
period.
(b)
Not
annualized.
(c)
Annualized.
(d)
Reflects
the
expense
ratio
excluding
any
waivers
and/or
reimbursements.
BAYWOOD
FUNDS
NOTES
TO
FINANCIAL
STATEMENTS
March
31,
2022
20
Note
1.
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.
Note
2.
Summary
of
Significant
Accounting
Policies
The
Funds
are
investment
companies
and
follow
accounting
and
reporting
guidance
under
Financial
Accounting
Standards
Board
Accounting
Standards
Codification
Topic
946,
“Financial
Services
–
Investment
Companies.”
These
financial
statements
are
prepared
in
accordance
with
accounting
principles
generally
accepted
in
the
United
States
of
America
(“GAAP”),
which
require
management
to
make
estimates
and
assumptions
that
affect
the
reported
amounts
of
assets
and
liabilities,
the
disclosure
of
contingent
liabilities
at
the
date
of
the
financial
statements,
and
the
reported
amounts
of
increases
and
decreases
in
net
assets
from
operations
during
the
fiscal
period.
Actual
amounts
could
differ
from
those
estimates.
The
following
summarizes
the
significant
accounting
policies
of
each
Fund:
Security
Valuation
–
Securities
are
valued
at
market
prices
using
the
last
quoted
trade
or
official
closing
price
from
the
principal
exchange
where
the
security
is
traded,
as
provided
by
independent
pricing
services
on
each
Fund
business
day.
In
the
absence
of
a
last
trade,
securities
are
valued
at
the
mean
of
the
last
bid
and
ask
price
provided
by
the
pricing
service.
Shares
of
non-exchange
traded
open-end
mutual
funds
are
valued
at
net
asset
value
(“NAV”).
Short-term
investments
that
mature
in
sixty
days
or
less
may
be
valued
at
amortized
cost.
Each
Fund
values
its
investments
at
fair
value
pursuant
to
procedures
adopted
by
the
Trust’s
Board
of
Trustees
(the
“Board”)
if
(1)
market
quotations
are
not
readily
available
or
(2)
the
Advisor,
as
defined
in
Note
3,
believes
that
the
values
available
are
unreliable.
The
Trust’s
Valuation
Committee,
as
defined
in
each
Fund’s
registration
statement,
performs
certain
functions
as
they
relate
to
the
administration
and
oversight
of
each
Fund’s
valuation
procedures.
Under
these
procedures,
the
Valuation
Committee
convenes
on
a
regular
and
ad
hoc
basis
to
review
such
investments
and
considers
a
number
of
factors,
including
valuation
methodologies
and
significant
unobservable
inputs,
when
arriving
at
fair
value.
BAYWOOD
FUNDS
NOTES
TO
FINANCIAL
STATEMENTS
March
31,
2022
21
The
Valuation
Committee
may
work
with
the
Advisor
to
provide
valuation
inputs.
In
determining
fair
valuations,
inputs
may
include
market-based
analytics
that
may
consider
related
or
comparable
assets
or
liabilities,
recent
transactions,
market
multiples,
book
values
and
other
relevant
investment
information.
Advisor
inputs
may
include
an
income-based
approach
in
which
the
anticipated
future
cash
flows
of
the
investment
are
discounted
in
determining
fair
value.
Discounts
may
also
be
applied
based
on
the
nature
or
duration
of
any
restrictions
on
the
disposition
of
the
investments.
The
Valuation
Committee
performs
regular
reviews
of
valuation
methodologies,
key
inputs
and
assumptions,
disposition
analysis
and
market
activity.
Fair
valuation
is
based
on
subjective
factors
and,
as
a
result,
the
fair
value
price
of
an
investment
may
differ
from
the
security’s
market
price
and
may
not
be
the
price
at
which
the
asset
may
be
sold.
Fair
valuation
could
result
in
a
different
NAV
than
a
NAV
determined
by
using
market
quotes.
GAAP
has
a
three-tier
fair
value
hierarchy.
The
basis
of
the
tiers
is
dependent
upon
the
various
“inputs”
used
to
determine
the
value
of
each
Fund’s
investments.
These
inputs
are
summarized
in
the
three
broad
levels
listed
below:
Level
1
-
Quoted
prices
in
active
markets
for
identical
assets
and
liabilities.
Level
2
-
Prices
determined
using
significant
other
observable
inputs
(including
quoted
prices
for
similar
securities,
interest
rates,
prepayment
speeds,
credit
risk,
etc.).
Short-term
securities
with
maturities
of
sixty
days
or
less
are
valued
at
amortized
cost,
which
approximates
market
value,
and
are
categorized
as
Level
2
in
the
hierarchy.
Municipal
securities,
long-term
U.S.
government
obligations
and
corporate
debt
securities
are
valued
in
accordance
with
the
evaluated
price
supplied
by
a
pricing
service
and
generally
categorized
as
Level
2
in
the
hierarchy.
Other
securities
that
are
categorized
as
Level
2
in
the
hierarchy
include,
but
are
not
limited
to,
warrants
that
do
not
trade
on
an
exchange,
securities
valued
at
the
mean
between
the
last
reported
bid
and
ask
quotation
and
international
equity
securities
valued
by
an
independent
third
party
with
adjustments
for
changes
in
value
between
the
time
of
the
securities’
respective
local
market
closes
and
the
close
of
the
U.S.
market.
Level
3
-
Significant
unobservable
inputs
(including
each
Fund’s
own
assumptions
in
determining
the
fair
value
of
investments).
The
aggregate
value
by
input
level,
as
of
March
31,
2022,
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
March
31,
2022,
there
are
no
uncertain
tax
positions
that
would
require
financial
statement
recognition,
de-recognition
or
disclosure.
Income
and
Expense
Allocation
–
The
Trust
accounts
separately
for
the
assets,
liabilities
and
operations
of
each
of
its
investment
portfolios.
Expenses
that
are
directly
attributable
to
more
than
one
investment
portfolio
are
allocated
among
the
respective
investment
portfolios
in
an
equitable
manner.
BAYWOOD
FUNDS
NOTES
TO
FINANCIAL
STATEMENTS
March
31,
2022
22
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.
Note
3.
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.
Note
4.
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)
to
0.70%
through
January
31,
2023,
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)
to
0.89%
through
January
31,
2023,
for
Baywood
Socially
Responsible
Fund.
Other
Fund
service
providers
have
voluntarily
agreed
to
waive
and
reimburse
a
portion
of
their
fees.
These
voluntary
fee
waivers
and
reimbursements
may
be
reduced
or
eliminated
at
any
time.
For
the
period
ended
March
31,
2022,
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
made
within
three
years
of
the
fee
waiver
or
expense
reimbursement,
and
does
not
cause
the
Total
Annual
Fund
Operating
Expenses
After
Fee
Waiver
and/or
Expense
Reimbursement
to
exceed
the
lesser
of
(i)
the
then-current
expense
cap,
or
(ii)
the
expense
cap
in
place
at
the
time
the
fees/expenses
were
waived/reimbursed.
As
of
March
31,
2022,
$412,897
and
$420,175
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
$
8,889
$
64,780
$
10,699
$
84,368
Baywood
Socially
Responsible
Fund
24,675
47,311
10,547
82,533
BAYWOOD
FUNDS
NOTES
TO
FINANCIAL
STATEMENTS
March
31,
2022
23
Note
5.
Security
Transactions
The
cost
of
purchases
and
proceeds
from
sales
of
investment
securities
(including
maturities),
other
than
short-term
investments
during
the
period
ended
March
31,
2022
were
as
follows:
Note
6.
Federal
Income
Tax
As
of
March
31,
2022
,
the
cost
for
federal
income
tax
purposes
is
substantially
the
same
as
for
financial
statement
purposes
and
the
components
of
net
unrealized
appreciation
were
as
follows:
As
of
September
30,
2021,
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.
Note
7.
Subsequent
Events
Subsequent
events
occurring
after
the
date
of
this
report
through
the
date
these
financial
statements
were
issued
have
been
evaluated
for
potential
impact,
and
each
Fund
has
had
no
such
events.
Management
has
evaluated
the
need
for
additional
disclosures
and/or
adjustments
resulting
from
subsequent
events.
Based
on
this
evaluation,
no
additional
disclosures
or
adjustments
were
required
to
the
financial
statements
as
of
the
date
the
financial
statements
were
issued.
Purchases
Sales
Baywood
Value
Plus
Fund
$646,424
$
648,290
Baywood
Socially
Responsible
Fund
662,830
706,409
Gross
Unrealized
Appreciation
Gross
Unrealized
Depreciation
Net
Unrealized
Appreciation
Baywood
Value
Plus
Fund
$
860,423
$
(50,401)
$
810,022
Baywood
Socially
Responsible
Fund
2,087,757
(41,619)
2,046,138
Undistributed
Ordinary
Income
Undistributed
Long-Term
Gain
Unrealized
Appreciation
Total
Baywood
Value
Plus
Fund
$
2,591
$
257,155
$
675,718
$
935,464
Baywood
Socially
Responsible
Fund
86,049
101,547
1,755,532
1,943,128
Baywood
Funds
ADDITIONAL
INFORMATION
March
31,
2022
24
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
October
1,
2021
through
March
31,
2022.
Actual
Expenses
–
The
first
line
of
the
table
below
provides
information
about
actual
account
values
and
actual
expenses.
You
may
use
the
information
in
this
line,
together
with
the
amount
you
invested,
to
estimate
the
expenses
that
you
paid
over
the
period.
Simply
divide
your
account
value
by
$1,000
(for
example,
an
$8,600
account
value
divided
by
$1,000
=
8.6),
then
multiply
the
result
by
the
number
in
the
first
line
under
the
heading
entitled
“Expenses
Paid
During
Period”
to
estimate
the
expenses
you
paid
on
your
account
during
the
period.
Hypothetical
Example
for
Comparison
Purposes
–
The
second
line
of
the
table
below
provides
information
about
hypothetical
account
values
and
hypothetical
expenses
based
on
each
Fund’s
actual
expense
ratio
and
an
assumed
rate
of
return
of
5%
per
year
before
expenses,
which
is
not
each
Fund’s
actual
return.
The
hypothetical
account
values
and
expenses
may
not
be
used
to
estimate
the
actual
ending
account
balance
or
expenses
you
paid
for
the
period.
You
may
use
this
information
to
compare
the
ongoing
costs
of
investing
in
each
Fund
and
other
funds.
To
do
so,
compare
this
5%
hypothetical
example
with
the
5%
hypothetical
examples
that
appear
in
the
shareholder
reports
of
other
funds.
Please
note
that
the
expenses
shown
in
the
table
are
meant
to
highlight
your
ongoing
costs
only.
Therefore,
the
second
line
of
the
table
is
useful
in
comparing
ongoing
costs
only
and
will
not
help
you
determine
the
relative
total
costs
of
owning
different
funds.
Beginning
Account
Value
October
1,
2021
Ending
Account
Value
March
31,
2022
Expenses
Paid
During
Period*
Annualized
Expense
Ratio*
Baywood
Value
Plus
Fund
Actual
$
1,000.00
$
1,115.12
$
3.69
0.70%
Hypothetical
(5%
return
before
expenses)
$
1,000.00
$
1,021.44
$
3.53
0.70%
Baywood
Socially
Responsible
Fund
Actual
$
1,000.00
$
1,087.74
$
4.63
0.89%
Hypothetical
(5%
return
before
expenses)
$
1,000.00
$
1,020.49
$
4.48
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
(182)
divided
by
365
to
reflect
the
half-year
period.
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.apexgroup.com
DISTRIBUTOR
Foreside
Fund
Services,
LLC
Three
Canal
Plaza,
Suite
100
Portland,
ME
04101
www.foreside.com
This
report
is
submitted
for
the
general
information
of
the
shareholders
of
the
Funds.
It
is
not
authorized
for
distribution
to
prospective
investors
unless
preceded
or
accompanied
by
an
effective
prospectus,
which
includes
information
regarding
the
Funds’
risks,
objectives,
fees
and
expenses,
experience
of
its
management,
and
other
information.
217-SAR-0322
ITEM 2. CODE OF ETHICS.
Not applicable.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not applicable.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not applicable.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable
ITEM 6. INVESTMENTS.
(a) Included
as part of report to shareholders under Item 1.
(b) Not applicable.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES
FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT
INVESTMENT COMPANIES.
Not applicable.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END
MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS.
Not applicable.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Registrant does not accept nominees to the board of
trustees from shareholders.
ITEM 11. CONTROLS AND PROCEDURES
(a) The Registrant’s Principal
Executive Officer and Principal Financial Officer have concluded that the
Registrant’s disclosure controls and procedures (as defined in Rule 30a-3(c)
under the Investment Company Act of 1940 (the “Act”)) are effective, based on
their evaluation of the controls and procedures required by Rule 30a-3(b) under
the Act and Rules 13a-15(b) or 15d-15(b) under the Securities Exchange Act of
1934, as of a date within 90 days of the filing date of this report.
(b) There were no changes in
the Registrant’s internal control over financial reporting (as defined in
Rule 30a-3(d) under the Act)
that occurred during the second fiscal quarter of the period covered by this
report that have materially affected, or are reasonably likely to materially
affect, the Registrant’s internal control over financial reporting.
ITEM 12. DISCLOSURE OF SECURITIES LENDING ACTIVITIES FOR
CLOSED-END MANAGEMENT INVESTMENT COMPANIES
Not applicable.
ITEM 13. EXHIBITS.
(a)(1) Not applicable.
(a)(3) Not applicable.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and
the Investment Company Act of 1940, the Registrant has duly caused this report
to be signed on its behalf by the undersigned, thereunto duly authorized.
Registrant Forum Funds II
|
By:
|
/s/ Jessica Chase
|
|
|
|
Jessica Chase, Principal
Executive Officer
|
|
|
|
|
|
|
Date:
|
May 24, 2022
|
|
Pursuant to the requirements of the Securities Exchange Act
of 1934 and the Investment Company Act of 1940, this report has been signed
below by the following persons on behalf of the Registrant and in the
capacities and on the dates indicated.
|
By:
|
/s/ Jessica Chase
|
|
|
|
Jessica Chase, Principal
Executive Officer
|
|
|
|
|
|
|
Date:
|
May 24, 2022
|
|
|
By:
|
/s/ Karen Shaw
|
|
|
|
Karen Shaw, Principal
Financial Officer
|
|
|
|
|
|
|
Date:
|
May 24, 2022
|
|
Exhibit 1A
Forum Funds II
I, Jessica Chase, certify that:
1. I have reviewed this
report on Form N-CSR of Forum Funds II (Baywood ValuePlus Fund and Baywood
SociallyResponsible Fund);
2. Based on my
knowledge, this report does not contain any untrue statement of a material fact
or omit to state a material fact necessary to make the statements made, in
light of the circumstances under which such statements were made, not
misleading with respect to the period covered by this report;
3. Based on my
knowledge, the financial statements, and other financial information included
in this report, fairly present in all material respects the financial
condition, results of operations, and changes in net assets of the Registrant as of, and for, the periods
presented in this report;
4. The Registrant’s
other certifying officer and I are responsible for establishing and maintaining
disclosure controls and procedures (as defined in Rule 30a-3(c) under the
Investment Company Act of 1940 (the “Act”)) and internal control over financial
reporting (as defined in Rule 30a-3(d) under the Act ) for the Registrant and
have:
(a) Designed
such disclosure controls and procedures, or caused such disclosure controls and
procedures to be designed under our supervision, to ensure that material
information relating to the Registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this report is being prepared;
(b) Designed
such internal control over financial reporting, or caused such internal control
over financial reporting to be designed under our supervision, to provide
reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with
generally accepted accounting principles;
(c) Evaluated
the effectiveness of the Registrant’s disclosure controls and procedures and
presented in this report our conclusions about the effectiveness of the
disclosure controls and procedures, as of a date within 90 days prior to the
filing date of this report, based on such evaluation; and
(d) Disclosed
in this report any change in the Registrant’s internal control over financial
reporting that occurred during the second fiscal quarter of the period covered
by this report that has materially affected, or is reasonably likely to
materially affect, the Registrant’s internal control over financial reporting;
and
5. The Registrant’s
other certifying officer and I have disclosed to the Registrant’s auditors and
the audit committee of the Registrant’s board of directors (or persons
performing the equivalent functions):
(a) All
significant deficiencies and material weaknesses in the design or operation of
internal control over financial reporting which are reasonably likely to
adversely affect the Registrant’s ability to record, process, summarize, and
report financial information; and
(b) Any
fraud, whether or not material, that involves management or other employees who
have a significant role in the Registrant’s internal control over financial
reporting.
|
Date:
|
May 24, 2022
|
|
/s/ Jessica Chase
|
|
|
|
|
|
Jessica Chase
|
|
|
|
|
|
Principal Executive Officer
|
|
Exhibit 1B
Forum Funds II
I, Karen Shaw, certify that:
1. I have reviewed this
report on Form N-CSR of Forum Funds II (Baywood ValuePlus Fund and Baywood
SociallyResponsible Fund);
2. Based on my
knowledge, this report does not contain any untrue statement of a material fact
or omit to state a material fact necessary to make the statements made, in
light of the circumstances under which such statements were made, not
misleading with respect to the period covered by this report;
3. Based on my
knowledge, the financial statements, and other financial information included
in this report, fairly present in all material respects the financial
condition, results of operations, and changes in net assets of the Registrant as of, and for, the periods
presented in this report;
4. The Registrant’s
other certifying officer and I are responsible for establishing and maintaining
disclosure controls and procedures (as defined in Rule 30a-3(c) under the
Investment Company Act of 1940 (the “Act”)) and internal control over financial
reporting (as defined in Rule 30a-3(d) under the Act ) for the Registrant and
have:
(a) Designed
such disclosure controls and procedures, or caused such disclosure controls and
procedures to be designed under our supervision, to ensure that material
information relating to the Registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this report is being prepared;
(b) Designed
such internal control over financial reporting, or caused such internal control
over financial reporting to be designed under our supervision, to provide
reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with
generally accepted accounting principles;
(c) Evaluated
the effectiveness of the Registrant’s disclosure controls and procedures and
presented in this report our conclusions about the effectiveness of the
disclosure controls and procedures, as of a date within 90 days prior to the
filing date of this report, based on such evaluation; and
(d) Disclosed
in this report any change in the Registrant’s internal control over financial
reporting that occurred during the second fiscal quarter of the period covered
by this report that has materially affected, or is reasonably likely to
materially affect, the Registrant’s internal control over financial reporting;
and
5. The Registrant’s
other certifying officer and I have disclosed to the Registrant’s auditors and
the audit committee of the Registrant’s board of directors (or persons
performing the equivalent functions):
(a) All
significant deficiencies and material weaknesses in the design or operation of
internal control over financial reporting which are reasonably likely to
adversely affect the Registrant’s ability to record, process, summarize, and
report financial information; and
(b) Any
fraud, whether or not material, that involves management or other employees who
have a significant role in the Registrant’s internal control over financial
reporting.
|
Date:
|
May 24, 2022
|
|
/s/ Karen Shaw
|
|
|
|
|
|
Karen Shaw
|
|
|
|
|
|
Principal Financial Officer
|
|
Exhibit 2
Certification Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350, chapter 63
of title 18, United States Code)
In connection with the
attached Report of Forum Funds II (the “Trust”) on Form N-CSR to be filed with
the Securities and Exchange Commission (the “Report”), each of the undersigned
officers of the Trust does hereby certify that, to the best of such officer’s
knowledge:
1.
The Report containing the
financial statements fully complies with the requirements of section 13(a) or
15(d) of the Securities Exchange Act of 1934; and
- The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Trust as of, and for, the periods presented in the Report.
|
Dated: |
May 24, 2022
|
|
|
|
|
|
|
|
/s/ Jessica Chase |
|
|
|
Jessica Chase |
|
|
|
Principal Executive Officer |
|
|
|
|
|
|
Dated: |
May 24, 2022
|
|
|
|
|
|
|
|
/s/ Karen Shaw |
|
|
|
Karen Shaw |
|
|
|
Principal Financial Officer |
|
A signed original of this
written statement required by Section 906 has been provided to the Trust and
will be retained by the Trust and furnished to the Securities and Exchange
Commission or its staff upon request.
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