SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the Registrant ☑
Filed by a Party other than the Registrant ☐
Check the appropriate box:
☑ | Preliminary Proxy Statement | |
☐ | Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) | |
☐ | Definitive Proxy Statement | |
☐ | Definitive Additional Materials | |
☐ | Soliciting Material Pursuant to Sec. 240.14a-12 |
360 Funds
(Name of Registrant as Specified in Its Charter) |
(Name of Person(s) Filing Proxy Statement, if other than Registrant) |
Payment of Filing Fee (Check the appropriate box):
☑ | No fee required. | ||
☐ | Fee computed on the table below per Exchange Act Rules 14a-6(i)(1) and 0-11. | ||
1) | Title of each class of securities to which transactions applies: | ||
2) | Aggregate number of securities to which transaction applies: | ||
3) | Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is calculated and state how it was determined): | ||
4) | Proposed maximum aggregate value of transaction: | ||
5) | Total fee paid: |
☐ | Fee paid previously with preliminary materials. |
☐ | Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identity the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. |
1) | Amount Previously Paid: |
2) | Form, Schedule, or Registration Statement No.: |
3) | Filing Party: |
4) | Date Filed: |
360 Funds
Midwood Long/Short Equity Fund
(the “Fund”)
4300 Shawnee Mission Parkway, Suite 100
Fairway, Kansas 66205
May __, 2020
Dear Shareholders:
The enclosed Proxy Statement contains information about the following proposals between 360 Funds (the “Trust”), on behalf of the Fund, and Midwood Capital Management LLC (the “New Adviser”).
1. | (“Proposal 1”) Approve a new investment advisory agreement between the Fund and the New Adviser (the “New Advisory Agreement”); |
Shareholders of the Fund will vote on the proposals at a Special Meeting of Shareholders to be held on June 10, 2020, at 11:00 a.m. at the offices of the Trust, 4300 Shawnee Mission Parkway, Suite 100, Fairway, Kansas 66205.
The New Adviser currently serves as the investment sub-adviser to the Fund under an investment sub-advisory agreement with the Crow Point Partners, LLC (the “Current Adviser”), on behalf of the Fund (the “Current Sub-Advisory Agreement”). The Sub-Advisory Agreement was approved by the Board of Trustees (the “Board”) at a meeting held on October 30, 2019. The Sub-Advisory Agreement took effect on December 23, 2019.
The Current Adviser plans to resign as the investment adviser to the Fund, effective on the date that shareholders of the Fund approve the New Advisory Agreement. The Current Adviser recommended that the Board appoint the New Adviser. Information on the Current Advisory Agreement and the New Advisory Agreement is outlined in this Proxy Statement, along with information on the New Adviser and the other service providers. The Board unanimously approved the New Advisory Agreement at a regular quarterly meeting held on April 30, 2020.
David Cohen, a portfolio manager to the Fund since its inception on January 2, 2020, is a principal and portfolio manager at the New Adviser. Mr. Cohen will continue to serve as the portfolio manager to the Fund, both under the Sub-Advisory Agreement and following shareholder approval of the New Advisory Agreement. In addition, no changes are being proposed to the advisory fees charged to the Fund. The New Adviser has committed to continue the current expense limitation arrangement with the Fund through at least January 31, 2022.
To allow the New Adviser to serve as the investment adviser to the Fund without any interruption, shareholders of the Fund are being asked to approve the Proposals.The Board, including a majority of the independent trustees, voted unanimously to approve the New Advisory Agreement and New ELA on behalf of the Fund and recommends that you approve the Proposal. The Board believes that the proposal is in the best interests of the Fund and its shareholders.
It is very important to receive your vote before June 10, 2020. Voting is quick and easy. Everything you need to vote is enclosed.Please mark, sign and date the enclosed proxy card and promptly return it in the enclosed, postage-paid envelope so that the maximum number of shares may be voted. Alternatively, you may call the toll-free number on your proxy card to vote by telephone. You should use the enclosed instructions to vote by phone.
YOUR VOTE IS IMPORTANT. If we do not hear from you after a reasonable period, you may receive a telephone call from a representative of the New Adviser, any of its affiliates, or our proxy solicitor, AST Fund Solutions, reminding you to vote your shares.
I appreciate your participation and prompt attention to this matter.
Sincerely,
Randall K. Linscott
President
360 Funds
IMPORTANT INFORMATION
YOUR VOTE IS IMPORTANT
We encourage you to read the full text of the enclosed Proxy Statement. However, we thought it would be helpful to provide brief answers to some questions.
Q. | What are shareholders being asked to vote on at the upcoming Special Meeting of Shareholders on June __, 2020 (the “Meeting”)? |
A. | At the Meeting, shareholders of the Midwood Long/Short Equity Fund (the “Fund”), a series of 360 Funds (the “Trust”), will be voting, separately, on (“Proposal 1”) Approve a new investment advisory agreement between the Fund and the New Adviser (the “New Advisory Agreement”); |
Q. | Why are shareholders being asked to approve the Proposal? |
A. | To avoid interruption to the management and operations of the Fund and to avoid additional costs to the Fund, the Board is recommending that shareholders of the Fund approve the Proposal. |
Q. | Has the Board of Trustees of the Trust (the “Board”) approved the Proposal? |
A. | At a meeting of the Board of Trustees of the Trust (the “Board”) held on April 30, 2020, the Board unanimously approved the New Advisory Agreement for the Fund, subject to approval by shareholders of the Fund. |
Q. | How does the Board recommend that I vote? |
A. | The Board recommends that you voteFORthe Proposal. |
Q. | Why is the Board recommending that shareholders approve the Proposal? |
A. | The Board believes the New Adviser will provide shareholders with the same level of service under the New Advisory Agreement that the Fund received under the Current Advisory Agreement. |
Q. | How will the approval of the Proposal affect the management and operations of the Fund? |
A. | The Fund’s investment objectives and investment strategies will not change as a result of the New Advisory Agreement. In addition, David Cohen, a portfolio manager of the Fund since its inception, will serve as portfolio manager to the Fund under the New Advisory Agreement. Further, the New Adviser has committed to continue the current expense limitation arrangement with the Fund through at least January 31, 2022. Accordingly, the approval of Proposal is not expected to affect the management or operations of the Fund. |
Q.
| How will the approval of the Proposal affect the expenses of the Fund?
|
A. | The approval of the New Advisory Agreement on behalf of the Fund will not result in a change to the advisory fee or expense limit. The New Adviser has agreed to maintain the current expense limitation agreements with the Fund through January 31, 2022.
Furthermore, the cost of preparing, printing and mailing the enclosed Proxy Statement and related proxy materials and all other costs incurred in connection with this solicitation of proxies, including any additional solicitation made by mail, telephone, e-mail or in person, will be paid by the New Adviser and the Current Adviser. The costs associated with the solicitation of proxies are expected to be $[ ].
|
Q. | What are the primary reasons for the retention of the New Adviser as the investment adviser to the Fund? |
A. | The Board weighed many factors in reaching its decision to approve the New Advisory Agreement, including, without limitation, the operations, reputation, and resources of the New Adviser, performance results achieved by the New Adviser for its clients, including the Fund, the quality of services provided by the New Adviser, and the fact that the Managing Member of the New Adviser has been a portfolio manager of the Fund its inception. The Board also considered that the advisory fee and expense limit will not change for the Fund and that the fee waivers and expense reimbursements provided by the Current Adviser for the Fund will remain in place as well.
Additional details regarding factors considered by the Board in approving the New Advisory Agreement can be found in the section “Evaluation by the Board of Trustees” in the enclosed Proxy Statement. |
Q. | Are there any material differences between the Current Advisory Agreement and the New Advisory Agreement? |
A. | No, there are no material changes to the advisory services under the Current Advisory Agreement and the New Advisory Agreements. The differences primarily relate to the form of the contract and some technical legal provisions. We have attached these as Exhibits to the proxy statement. Shareholders are encouraged to read them. |
Q. | How do I vote? |
A. | We urge you to vote your shares by submitting your proxy via the internet, phone, or mail as soon as possible. You may also vote in person at the shareholder meeting. Specific instructions for these voting options can be found on the enclosed Proxy Card. |
Q. | When should I vote? |
A. | Please vote as soon as possible. You may submit your vote at any time before the date of the shareholder meeting. Representatives of the New Adviser, any of its affiliates, and AST Fund Solutions, a firm authorized by the New Adviser to assist in the solicitation of proxies, may be contacting you to urge you to vote on these important matters. |
Midwood Long/Short Equity Fund
(the “Fund”)
4300 Shawnee Mission Parkway, Suite 100
Fairway, Kansas 66205
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
To Be Held on June 12, 2020
Dear Shareholders:
The Board of Trustees (the “Board”) of 360 Funds (the “Trust”) has called a special meeting of the Shareholders of the Midwood Long/Short Equity Fund (the “Fund”), a series of the Trust, to be held at the offices of the Trust, 4300 Shawnee Mission Parkway, Suite 100, Fairway, Kansas 66205, on June 10, 2020, at 11:00 a.m., Eastern Time, for the following purposes:
1. | To approve a new investment advisory agreement between the Trust, on behalf of the Fund, and Midwood Capital Management LLC.No increase in the investment advisory fee is proposed. | |
2. | To transact such other business as may properly come before the meeting or any adjournment(s) or postponement(s) thereof. |
The Board recommends that you voteFOR Proposal 1. Shareholders of record at the close of business on May 1, 2020, are entitled to notice of, and to vote at, the special meeting and any adjournment(s) or postponement(s) thereof.
Please read the enclosed Proxy Statement carefully for information concerning the Proposals to be placed before the Meeting or any adjournments or postponements thereof. Additional matters would include only matters that were not anticipated as of the date of the enclosed Proxy Statement.
On behalf of the Board of Trustees
Randall K. Linscott, President
May __, 2020
YOUR VOTE IS IMPORTANT
TO ASSURE YOUR REPRESENTATION AT THE MEETING, PLEASE COMPLETE THE ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE ACCOMPANYING ENVELOPE WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE MEETING. IF YOU ATTEND THE MEETING, YOU MAY REVOKE YOUR PROXY AND VOTE YOUR SHARES IN PERSON.
Midwood Long/Short Equity Fund
(the “Fund”)
4300 Shawnee Mission Parkway, Suite 100
Fairway, Kansas 66205
PROXY STATEMENT
SPECIAL MEETING OF SHAREHOLDERS
To Be Held on June 10, 2020
This Proxy Statement is furnished in connection with the solicitation of proxies by the Board of Trustees of 360 Funds (the “Trust”) on behalf of the Midwood Long/Short Equity Fund (the “Fund”) for use at the special meeting of shareholders, to be held at the offices of the Trust, 4300 Shawnee Mission Parkway, Suite 100, Fairway, Kansas 66205, on June 10, 2020, at 11:00 a.m., Eastern Time, and at any adjournments thereof. The Notice of the Meeting, Proxy Statement and accompanying form of proxy will first be mailed to shareholders on or about May 18, 2020. Only shareholders of record at the close of business on May 1, 2020 (the “Record Date”) will be entitled to vote at the Meeting.
The Shareholders of the Fund, as indicated below, are being asked to consider the following proposals:
1. | To approve a new investment advisory agreement between the Trust, on behalf of the Fund, and Midwood Capital Management LLC.No increase in the investment advisory fee is proposed. | |
2. | To transact such other business as may properly come before the meeting or any adjournment(s) or postponement(s) thereof. |
Shareholders in the Fund will vote separately on Proposal 1. Under the Investment Company Act of 1940, as amended (the “1940 Act”), an affirmative vote of the holders of a majority of the outstanding shares of the Fund is required for the approval of Proposal 1. As defined in the 1940 Act, a “vote of the holders of a majority of the outstanding voting” shares of a Fund means the vote of (1) 67% or more of the voting shares of a Fund present at the Meeting, if the holders of more than 50% of the outstanding shares of the Fund are present in person or represented by proxy, or (2) more than 50% of the outstanding voting shares of a Fund, whichever is less.
Important Notice Regarding Internet Availability of Proxy Materials
This Proxy Statement is available athttps://vote.proxyonline.com/___________or by calling [ ]. The Fund’s annual and semi-annual reports are available, at no charge, by calling 877-244-6235.
1
PROPOSAL 1: APPROVAL OF A NEW INVESTMENT ADVISORY AGREEMENT BETWEEN THE TRUST AND THE NEW ADVISER
Summary of the Proposal
You are receiving this proxy statement because the current investment adviser to the Fund, Crow Point Partners, LLC (the “Current Adviser”), plans to resign as the investment manager of the Fund, and recommended the Trust, on behalf of the Fund, enter into a new investment advisory agreement with Midwood Capital Management LLC, the current sub-adviser to the Fund (the “New Adviser”). As a result, the Board of Trustees (the “Board”), including a majority of the Trustees who are not “interested persons” (as that term is defined in the 1940 Act) of the Fund (the “Independent Trustees”), voted unanimously to approve a new investment advisory agreement between the Trust and the New Adviser (the “New Advisory Agreement”).Approval of the New Advisory Agreement will not increase advisory fees paid by the Fund or its shareholders.A description of the differences between the Current Advisory Agreement and the New Advisory Agreement are included below. The New Advisory Agreement is attached hereto as Exhibit A, and the Current Advisory Agreement is attached hereto as Exhibit B. The effective date of the New Advisory Agreement is expected to be the date it is approved by shareholders of the Fund.
The New Adviser has served as the investment sub-adviser to the Fund since its inception. David Cohen is a portfolio manager at the New Adviser, which was organized in 2003. The New Adviser is registered with the SEC as an investment adviser and has its principal office at 280 Summer Street, Suite M1, Boston, MA 02210.
At a meeting held on April 30, 2020, the Board, including all the Independent Trustees, approved the New Advisory Agreement between the Trust, on behalf of the Fund, and the New Adviser. The Independent Trustees’ considerations are set forth below. The New Adviser and the Current Adviser have entered into an agreement through which the New Adviser will retain the Current Adviser to provide marketing services. This transaction (the “Transaction”) will close following shareholder approval of the New Advisory Agreement.
There will be no increase in advisory fees as a result of the New Advisory Agreement for the Fund.
Legal Analysis
In advance of the Transaction, the Board was informed by the Current Adviser that compensation was going to be paid to affiliated persons of the Current Adviser as a part of the Transaction. Legal counsel informed the Board that since compensation was involved in the Transaction, Section 15(f) of the 1940 Act applied to the Board’s considerations. Section 15(f) provides that, when a change in the control of an investment adviser occurs, the investment adviser and any of its affiliated persons may receive any amount or benefit in connection therewith if the following two conditions are satisfied:
(1) An “unfair burden” must not be imposed on the investment company as a result of the transaction causing the change of control, or any express or implied terms, conditions, or understandings applicable thereto. The term “unfair burden” includes any arrangement during the two years after the change in control whereby the investment adviser (or predecessor or successor adviser), or an interested person of any such adviser, receives or is entitled to receive any compensation, directly or indirectly, from the investment company or its security holders (other than fees for bona fide investment advisory or other services) or any person in connection with the purchase or sale of securities or other property to, from, or on behalf of the investment company (other than fees for bona fide principal underwriting services). No such compensation arrangements are involved with this Transaction; and
(2) During the three years immediately following consummation of the transaction causing the change in control, at least 75% of the members of the investment company’s board must not be “interested persons” of the investment adviser or predecessor investment adviser within the meaning of the 1940 Act. Currently, 100% of the Trustees of the Trust are not interested persons, as defined by the 1940 Act, of the Current Adviser, and the Trust contemplates that it will maintain this composition for at least three years from the date of the Transaction.
2
Information Concerning the Current Adviser
The current investment adviser to the Fund is Crow Point Partners, LLC (the “Current Adviser”), located at 280 Summer Street, Suite M1, Boston, MA 02210. The Current Adviser is registered with the SEC as an investment adviser under the Investment Advisers Act of 1940, as amended. The Current Adviser is a Massachusetts limited liability company. The names, titles, and addresses of the principal executive officers and directors of the Current Adviser are set forth below:
Name and Address:* | Title and Principal Occupation: |
Timothy O’Brien | Managing Member & Managing Director |
Peter DeCaprio | Managing Member, Managing Director, and Assistant Compliance Officer |
Paul DeCaprio | Compliance Officer/ General Counsel |
James Craver | Chief Compliance Officer |
* The address for each officer and director is 280 Summer Street, Suite M1, Boston, MA 02210.
During the semi-annual period ended March 31, 2020, the Current Adviser was paid the following advisory fees from the Fund.
Fund Name | Gross Advisory Fee | Fee Waiver | Expense Reimbursement | Net Advisory Fee |
Midwood Long/Short Equity Fund |
The Current Adviser contractually agreed to reduce its advisory fees and reimburse expenses to the extent necessary to keep net operating expenses (excluding interest, fees payable under Rule 12b-1 Plans, taxes, brokerage commissions, acquired fund fees, and expenses and extraordinary expenses) from exceeding 2.25% until January 31, 2022. Each waiver or reimbursement of an expense by the Current Adviser is subject to repayment by the Fund within three years following the date such waiver or reimbursement was made, provided that the Fund can make the repayment without exceeding the expense limitation in place at the time of the waiver or reimbursement and at the time the waiver or reimbursement is recouped.
Information Concerning the New Adviser
Midwood Capital Management LLC (the “New Adviser”), located at 280 Summer Street, Suite M1, Boston, MA 02210, is the proposed investment adviser to the Fund. The New Adviser is a Delaware limited liability company founded in 2003 and is registered with the SEC as an investment adviser. The names, titles, addresses, and principal occupations of the principal executive officers and directors of the New Adviser are set forth below:
Name and Address:* | Title and Principal Occupation: |
David E. Cohen | Managing Member and CCO |
Mr. Cohen has been a portfolio manager to the Fund since its inception.
Comparison of the Current Advisory Agreement and the New Advisory Agreement
At a meeting on April 30, 2020, the Board, including all the Independent Trustees, unanimously approved the New Advisory Agreement, subject to shareholder approval. The New Advisory Agreement will become effective the day that it is approved by Fund shareholders. A general discussion of the differences between the New Advisory Agreement and the Current Advisory Agreement are described below. Additionally, set forth below is a summary of certain material terms of the New Advisory Agreement. The New Advisory Agreement is attached hereto as Exhibit A. The Current Advisory Agreement is attached hereto as Exhibit B. The Current Advisory Agreement was last approved by shareholders on October 20, 2019.
Differences Between the Agreements
Other than the dates of the Agreements and the parties to the Agreements, there are no other material differences between the Current Advisory Agreement and the New Advisory Agreement.
3
Material Terms of the New Advisory Agreement
Both the New Advisory Agreement and the Current Advisory Agreement provide that the investment adviser:
● | Has discretionary management authority over the Fund’s portfolio. |
● | Must comply with federal securities laws. |
● | Must maintain adequate books and records; and |
● | Must keep the Board informed of all materials events that impact the Fund. |
The compensation under the New Advisory Agreement and the Current Advisory Agreement is the same. Under the New Advisory Agreement, the New Adviser is entitled to receive an annual advisory fee from the Fund of 1.25% of the average daily net assets.
The New Advisory Agreement provides that it will continue for an initial term of two years, and from year to year thereafter, but only so long as its continuance is approved at least annually by the Board, including a majority of the Independent Trustees, at an in-person meeting called for that purpose or by the vote of a majority of the outstanding shares of the Fund. The New Advisory Agreement will automatically terminate on assignment, as defined by the 1940 Act, and is terminable upon notice by the Fund. In addition, the New Advisory Agreement can be terminated by the Adviser on 60 days’ notice to the Fund. The New Advisory Agreement may be amended by the parties (which include the New Adviser and the Trust) under the requirements of the 1940 Act.
The New Advisory Agreement, like the Current Advisory Agreement, provides that the New Adviser will not be subject to any liability in connection with the performance of its services thereunder in the absence of willful misfeasance, bad faith, gross negligence, or reckless disregard of its obligations and duties.
The effective date of the New Advisory Agreement is expected to be the date shareholders approve it. If shareholders do not approve the New Advisory Agreement, the Board and the New Adviser will consider other options, including a new or modified request for shareholder approval of a new advisory agreement with the New Adviser, retaining a new investment adviser for the Fund, which also would need to be approved by shareholders of the Fund, or the possible liquidation and closing of the Fund.
The New Advisory Agreement is attached as Exhibit A. You should read the New Advisory Agreement. The description in this Proxy Statement of the New Advisory Agreement is only a summary.
Evaluation by The Board of Trustees
At an in-person meeting held on April 30, 2020 (the “Meeting”), the Board approved the New Advisory Agreement for the Fund. The Board’s determination to approve the agreement followed its consideration of various factors and review of written materials provided by the Adviser.
The Board’s deliberations and the information on which its conclusions were based are summarized below. At the Meeting, the Board considered the following material factors when it evaluated the New Advisory Agreement: (i) the nature, extent, and quality of the services provided by the New Adviser; (ii) the investment performance of the Fund under the management of the current portfolio team, which is acquiring the Adviser’s operations; (iii) the costs of the services to be provided and profits to be realized by the New Adviser from the relationship with the Fund; (iv) the extent to which economies of scale would be realized if the Fund grows and whether advisory fee levels reflect those economies of scale for the benefit of the Fund’s investors; and (v) the New Adviser’s practices regarding possible conflicts of interest, including its contemplated brokerage practices, and other benefits derived by the New Adviser.
4
In assessing these factors and reaching its decisions, the Board took into consideration information furnished for the Board’s review and consideration throughout the year at regular Board meetings by the Current Adviser, which had part of the same portfolio management team as the New Adviser, as well as information specifically provided during the approval process, including at the Meeting. The Board requested and was provided with (or had access to) information and reports relevant to the approval of the New Advisory Agreement, including: (i) information regarding the services and support provided to the Fund and its shareholders by the Current Adviser, which would carry over to the New Adviser; (ii) quarterly assessments of the investment performance of the Fund from the portfolio management team; (iii) periodic commentary on the reasons for the performance; (iv) presentations by the Fund’s management addressing the New Adviser’s investment philosophy, investment strategy, personnel, and operations, including a comparison of the Current Adviser and the New Adviser; (v) compliance and audit reports concerning the Fund and the New Adviser; (vi) disclosure information contained in the registration statement for the Fund and the Form ADV of the New Adviser; and (vii) a memorandum from legal counsel that summarized the fiduciary duties and responsibilities of the Board in reviewing and approving the New Advisory Agreement, including the material factors set forth above and the types of information included in each factor that should be considered by the Board to make an informed decision.
The Board also reviewed various information provided by the New Adviser including, without limitation: (i) documents containing financial information about the New Adviser, a description of personnel and the services provided to the Fund by the New Adviser, information on investment advice, performance, summaries of Fund’s expenses, compliance program, current legal matters, and other general information; (ii) comparative expense and performance information for other mutual funds with strategies similar to the Fund; (iii) the anticipated effect of size on the Fund’s performance and expenses; and (iv) benefits to be realized by the New Adviser from its relationship with the Fund. The Board did not identify any information that was most relevant to its consideration to approve the New Advisory Agreement and each Trustee may have afforded different weights to the various factors.
[BOARD CONSIDERATIONS TO BE ADDED]
PROPOSAL 2: TO TRANSACT ANY OTHER BUSINESS THAT MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENT THEREOF IN THE DISCRETION OF THE PROXIES OR THEIR SUBSTITUTES
The proxy holders have no present intention of bringing any other matter before the Meeting other than the matters described herein or matters in connection with or to effect the same. Neither the proxy holders nor the Board is aware of any matters which may be presented by others. If any other business properly comes before the meeting, the proxy holders intend to vote thereon per their best judgment.
THE BOARD OF TRUSTEES OF THE TRUST, INCLUDING THE INDEPENDENT TRUSTEES, UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS OF THE FUND
VOTE “FOR” PROPOSAL 1.
OPERATION OF THE FUND
Each Fund is a diversified series of 360 Funds, an open-end management investment company organized as a Delaware statutory trust on February 25, 2005. The Board supervises the business activities of the Fund. Like other mutual funds, the Trust retains various organizations to perform specialized services. As described above, the Trust currently retains Midwood Capital Management LLC as the sub-adviser to the Fund. M3Sixty Administration, LLC (“M3Sixty”), located at 4300 Shawnee Mission Parkway, Suite 100, Fairway, Kansas 66205, serves as the Fund’s administrator, transfer agent and accounting agent. Fifth Third Bank, 38 Fountain Square Plaza, Cincinnati, OH 45263, serves as the custodian of the Fund’s assets. Matrix 360 Distributors, LLC, serves as the principal underwriter and national distributor for the shares of the Fund. No changes are being made to the service providers, other than the investment adviser, as a result of this Meeting.
THE PROXY
The Board solicits proxies so that each shareholder can vote on the proposals to be considered at the Meeting. A proxy for voting your shares at the Meeting is enclosed. The shares represented by each valid proxy received in time will be voted at the Meeting as specified. If no specification is made, the shares represented by a duly executed proxy for the Fund will be voted for approval of the proposals. If no specification is made, the shares represented by a duly executed proxy will be voted at the discretion of the holders of the proxy on any other matter that may come before the Meeting. You may revoke your proxy at any time before it is exercised by (1) submitting a duly executed proxy bearing a later date, (2) submitting a written notice to the President of the Trust revoking the proxy, or (3) attending and voting in person at the Meeting.
5
VOTING SECURITIES AND VOTING
As of the Record Date, _______ shares of beneficial interest of the Fund were issued and outstanding.
Shareholders of record of the Fund on the Record Date are entitled to vote at the Meeting. Each shareholder of the Fund is entitled to one vote per share held, and fractional votes for fractional shares held, on any matter concerning the Fund submitted to a vote at the Meeting.
One-third of the outstanding shares of the Fund entitled to vote, present in person, or represented by proxy, shall constitute a quorum for the transaction of business at the Meeting. An affirmative vote of the holders of a majority of the outstanding shares of the Fund is required for the approval of the proposed New Advisory Agreement and New Sub-Advisory Agreement as it relates to the Fund. The 1940 Act defines “the majority of the outstanding voting shares” to mean the vote (i) of 67% or more of the voting securities (i.e., shares) present at the Meeting if the holders of more than 50% of the outstanding voting securities of the Fund are present or represented by proxy; or (ii) of more than 50% of the outstanding voting securities of the Fund, whichever is less.
If the shareholders approve Proposal 1, the New Advisory Agreement is expected to be effective for the Fund as of the date of the Meeting. If shareholders of the Fund fail to approve Proposal 1, the Board will consider additional options as it relates to the Fund. These options include, among others, retaining a new investment adviser for the Fund, which also would need to be approved by shareholders of the Fund, or the possible liquidation and closing of the Fund.
“Broker non-votes” (i.e., shares held by brokers or nominees as to which (i) instructions have not been received from the beneficial owners or the persons entitled to vote and (ii) the broker or nominee does not have discretionary voting power on a particular matter) and abstentions will be counted for purposes of determining the presence of a quorum. The vote required to approve the Proposals is set forth above. Generally, abstentions and broker non-votes will be treated as votes present at the meeting but will not be treated as votes cast. Therefore, abstentions and broker non-votes may have the same effect as a vote “against” the Proposals.
SECURITY OWNERSHIP OF MANAGEMENT
As of the Record Date, the trustees and officers of the Trust beneficially owned, as a group, less than 1% of the outstanding shares of each Fund.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
As of the Record Date, the following shareholders were the record owners of 5% or more of the outstanding shares of the Fund:
Names and Addresses | Percent of Fund | Type of Ownership |
Institutional Class Shares | ||
As of the Record Date, the Trust knows of no other person (including any “group” as that term is used in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended) who beneficially owns more than 5% of the outstanding shares of a Fund.
SHAREHOLDER PROPOSALS
The Trust must receive any shareholder proposals to be included in the proxy statement for the next meeting of shareholders within a reasonable period before the Trust begins to print and send its proxy materials.
6
COST OF SOLICITATION
The New Adviser is bearing the costs of solicitation of proxies and expenses incurred in connection with the preparation of proxy materials. In addition to soliciting proxies by mail, the Board and employees of the Trust may solicit proxies in person or by telephone. The costs associated with the solicitation of proxies are expected to be $_____. By voting immediately, you can help avoid the additional expense and burden of a second proxy solicitation.
Only one copy of this Proxy Statement may be mailed to a shareholder holding shares in multiple accounts with the Fund. Unless the Trust has received contrary instructions, only one copy of this Proxy Statement will be mailed to a given address where two or more shareholders share that address. Additional copies of the Proxy Statement will be delivered promptly upon request. Requests may be sent to M3Sixty Administration, LLC, 4300 Shawnee Mission Parkway, Suite 100, Fairway, Kansas 66205, or made by telephone by calling 877-244-6235.
OTHER MATTERS
The Board is not aware of any other matters to be presented at the Meeting other than as set forth above. If any other matters properly come before the Meeting that the Trust did not have notice of a reasonable time before the mailing of this Proxy Statement, the persons named as proxies will vote the shares represented by the proxy on such matters per their best judgment, and discretionary authority to do so is included in the proxy.
Important Notice Regarding the Availability of Proxy Materials for the Shareholder
Meeting to Be Held on June 10, 2020: The notice of meeting, proxy statement and shareholder ballot is
available athttps://vote.proxyonline.com/_______________
PLEASE DATE AND SIGN THE ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED REPLY ENVELOPE. YOU MAY ALSO VOTE BY TELEPHONE OR ON THE INTERNET BY FOLLOWING THE INSTRUCTIONS ON THE ENCLOSED VOTING INSTRUCTION CARD. FOR MORE INFORMATION OR ASSISTANCE WITH VOTING, PLEASE CALL (800) 859-8509. REPRESENTATIVES ARE AVAILABLE TO ANSWER YOUR CALL 9:00 A.M. TO 10:00 P.M. EASTERN TIME.
7
EXHIBIT A
FORM OF THE NEW INVESTMENT ADVISORY AGREEMENT
A-1
EXHIBIT B
CURRENT INVESTMENT ADVISORY AGREEMENT
B-1