SecProbe.io

CORRESP
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filename1.htm

May
14, 2020

Mr.
Jeff Foor

U.S.
Securities and Exchange Commission

100
F Street, N.E.

Washington,
D.C. 20549

 Re: Comments
                                         on Preliminary Proxy Statement filed on behalf of Midwood Long/Short Equity Fund (the
                                         “Fund”), a series of 360 Funds (the “Trust”) (File Nos. 333-123290
                                         and 811-21726)

Dear
Mr. Foor:

This
letter provides the Trust’s responses to the comments you provided on Monday, May 11, 2020, on the preliminary proxy statement
filed on behalf of the Fund on Friday, May 1, 2020. For your convenience, I have summarized the comments in this letter and provided
the Trust’s response below each comment.

General

 1. Comment:
                                         	Please confirm that the Trust included all information required under Section
                                         22(c) of Schedule 14A in the proxy statement.

	Response:
	The Trust confirms that it included all information required under Section 22(c) of Schedule 14A in the proxy statement.

Shareholder
Letter

 2. The
                                         fifth paragraph suggests that the new expense limitation agreement may be up for approval.
                                         Please confirm is you are seeking shareholder approval of this agreement.

Response:
	The Trust is not seeking shareholder approval of the new expense limitation agreement, and it has deleted the reference
to that agreement.

Question
& Answer (“Q&A”)

 3. Comment:	Please
                                         confirm if the Fund’s gross expenses are expected to increase as a result of the
                                         change in investment adviser.

Response:	The
Trust confirms that it does not expect the Fund’s gross expenses to increase as a result of the change in the investment
adviser.

Proxy
Statement

 4. Comment:	For
                                         Proposal 1, we note that the Midwood Capital Management, LLC (the “New Adviser”)
                                         will retain Crow Point Partners, LLC (the “Current Adviser”) for marketing
                                         services. Please confirm if the Fund will bear any of the expenses related to this arrangement.

Response:	The
New Adviser will pay all fees and expenses related to the marketing agreement.

 5. Comment:	Relatedly,
                                         please confirm that all compensation will comply with Section (f) of the Investment Company
                                         Act of 1940 (the “1940 Act”).

Response:	The
Trust confirms that any compensation paid by the New Adviser to the Current Adviser will comply with Section 15(f) of the 1940
Act.

 6. Please
                                         provide a copy of the Board’s consideration for the staff’s review before
                                         filing the definitive proxy statement.

Response:	The
Trust has added the following disclosure to the proxy statement:

(1)       The
nature, extent, and quality of the services to be provided by the New Adviser.

The
Board considered the responsibilities the New Adviser has under the New Advisory Agreement for the Fund. The Board
reviewed the services to be provided by the New Adviser to the Fund including, without limitation: its processes for
formulating investment recommendations and assuring compliance with the Fund’s investment objectives and
limitations; its coordination of services for the  Fund among the  Fund’s service providers; and its
efforts to promote the  Fund, grow assets and assist in the distribution of the  Fund’s shares. The Board
considered the New Adviser’s staffing, personnel and methods of operating; the education and experience of the New
Adviser’s staff; and the New Adviser’s compliance program, policies, and procedures. The Board also noted that
while the New Adviser would retain the Current Adviser for operational and marketing services, the New Adviser, and not the
Fund, would bear all expenses related to that agreement. After reviewing the preceding and further information
from the New Adviser, the Board concluded that the nature, extent, and quality of the services to be provided by the New
Adviser was satisfactory and adequate for the  Fund.

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(2)       Investment
Performance of the  Fund and the New Adviser.

The
Board noted that the New Adviser is currently managing the Fund under a sub-advisory agreement with the Fund’s current
investment adviser. The Board considered that the New Adviser’s President and the portfolio manager of the Fund has
been the portfolio manager of the Fund since its inception in January 2020. The Trustees compared the short- and long-term
performance of the Fund with the performance of its benchmark index, or indices, as applicable, comparable funds with similar
objectives and size managed by other investment advisers, and peer group indices (e.g., Morningstar category
averages). The Trustees also considered the consistency of the New Adviser’s management of the  Fund with their
investment objective and policies.

For
the Fund, the Board recognized that the Fund was formed in January 2020 and did not yet have a meaningful performance record
to evaluate. The Board noted, however, the New Adviser’s longer-term performance in managing the strategy in a limited
partnership. Finally, the Board considered the Fund’s performance during the most recent market conditions as a result
of COVID-19. Based on the preceding, the Board concluded that the investment performance information presented for the
 Fund was satisfactory.

(3)       The
costs of the services provided and profits realized by the Adviser from the relationship with the Midwood Fund.

The
Trustees considered: the New Adviser’s staffing, personnel and methods of operating; the financial condition of the
New Adviser and its level of commitment to the Fund; the asset levels of the Fund; and the overall expenses of the
 Fund. The Trustees considered the financial statements of the New Adviser and the financial stability and productivity of
the firm. The Trustees considered the fees and expenses of the Fund (including the management fee) relative to its
peer group as of April 1, 2020. The Trustees noted that the management fee for the  Fund was above the peer group
median and average, but it was within a reasonable range for the category.

The
Trustees also noted that the Fund’s net expense ratio was above the peer group average and median; they recognized that
the Fund was substantially smaller than most of its peers, which affects the net expense ratio of the fund. The Trustees
noted that regarding the Fund, the New Adviser has agreed to enter into an expense limitation agreement according to which
the New Adviser will agreed to waive or reduce its fees and to assume other expenses of the Fund, if necessary, to limit the
Fund’s annual operating expenses (with industry-standard exceptions) through January 31, 2022. The Board also noted
that the New Adviser expects to realize a reasonable profit for its management of the Fund. Following this analysis and upon
further consideration and discussion of the preceding, the Board concluded that the fees to be paid to the New Adviser by the
Fund were fair and reasonable.

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(4)       The
extent to which economies of scale would be realized if the Fund grows and whether advisory fee levels reflect these economies
of scale for the benefit of the  Fund’s investors.

The
Board considered the Fund’s fee arrangements with the New Adviser. The Trustees determined that although the management
fee would stay the same as asset levels increased, the shareholders of the Fund would benefit from the expense limitation
arrangement for the Fund. The Trustees noted that while a breakpoint schedule in an advisory agreement would be beneficial,
such a feature only had benefits if the fund’s assets were enough to realize the effect of the breakpoint. The Trustees
noted that lower expenses for the Fund’s shareholders are realized immediately with the expense limitation arrangements
with the New Adviser. The Trustees noted that the Fund’s assets were at such levels that the expense limitation
arrangements were providing benefits to the Fund’s shareholders currently. The Trustees also noted that the Fund would
benefit from economies of scale under their agreements with some of their service providers other than the New Adviser as
fees that were in place with those other service providers were either fixed or essentially semi-fixed, and the Board
considered the New Adviser’s efforts to work with M3Sixty to secure such arrangements for the  Fund. Following
further discussion of the  Fund’s asset levels, expectations for growth and levels of fees, the Board determined
that the  Fund’s fee arrangements, in light of all the facts and circumstances, were fair and reasonable and
that the expense limitation arrangement provided savings and protection for the benefit of the  Fund’s
investors.

(5)       Possible
conflicts of interest and benefits derived by the Adviser.

	The
Trustees evaluated the potential for conflicts of interest and considered such matters as: the experience and ability of the
advisory and compliance personnel assigned to the Fund; the fact that the New Adviser does not utilize soft dollars; the
basis of decisions to buy or sell securities for the Fund; and the substance and administration of the New Adviser’s
code of ethics. The Board noted that members of the Current Adviser would be covered by the New Adviser’s Code of
Ethics during the operations and marketing engagement. Based on the preceding, the Board determined that the Adviser’s
standards and practices relating to the identification and mitigation of possible conflicts of interest were
satisfactory.

Please
contact me at (509) 279-8202 if you have any questions or comments on the responses contained in this letter.

    Sincerely,

    /s/ Bo
    James Howell

    Bo
J. Howell

    Partner

    Practus
LLP

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