Correspondence 0001398344-23-022830 from Mason Capital Fund Trust (CIK 0001953487)
Mason Capital Fund Trust (CIK 0001953487)
Date: Dec. 15, 2023 · CIK: 0001953487 · Accession: 0001398344-23-022830
AI Filing Summary & Sentiment
File numbers found in text: 333-270294, 811-23853
Letter
VIA EDGAR TRANSMISSION Securities and Exchange Commission Division of Investment Management 100 F. Street, N.E. Washington, D.C. 20549-0506
Re: Mason Capital Fund Trust, File Nos. 333-270294 and 811-23853 (the “Registrant”)
Dear Ms. Browning:
On July 25, 2023, the Registrant filed an amended registration statement on Form N-1A under the Securities Act of 1933 (the “Securities Act”) and the Investment Company Act of 1940 (the “1940 Act”) to offer shares of Fundamentals First ETF (the “Fund”). On November 17, 2023 and December 8, 2023, you provided comments via telephone to Zeynep Kart with respect to the registration statement as described below. Please find below the Registrant’s responses to your comments, which the Registrant has authorized Thompson Hine LLP to make on its behalf. Please note that added language is in italics and deleted language appears struck through.
Prospectus
Principal Investment Strategies
Comment 1. In your response to Comment 1 in the October 30 2023 Response Letter (“Response Letter”), you specified the type of issuers the Fund will invest in. Please also specify the types of notes the fund will use (e.g. promissory notes, unsecured notes, etc.) and disclose the intended risks of the specific commercial notes applicable to the Fund’s principal investment strategies.
Response. The sentence has been revised to the following:
With respect to fixed income securities, (1) the Fund may invest in (domestic and foreign corporate bonds and notes, (including commercial notes, unsecured promissory notes and variable rate notes) issued by domestic and foreign corporate issuers; (2) U.S. Treasury bills, notes and bonds securities, and; and (3) money market instruments including money market funds.
Kimberly A. Browning
December 13, 2023
Page 2
The following Item 4 risk disclosures have been added:
Commercial Notes Risk. Commercial notes are subject to interest rate and credit risks. Commercial notes are generally unsecured which subjects the Fund to potentially greater losses than the holder of a secured instrument in the event the issuer defaults.
Variable Rate Notes Risk. The market prices of notes with variable interest rates are generally less sensitive to interest rate changes than are the market prices of instruments with fixed interest rates. Variable rate notes may decline in value if market interest rates or interest rates paid by such instruments do not move as expected.
The following Item 9 strategy disclosures have been added:
Commercial notes are unsecured promissory notes issued by corporations primarily to finance short-term credit needs. Certain commercial notes may have floating or variable rates and may contain options, exercisable by either the buyer or the seller, that extend or shorten the maturity of the note.
The following Item 9 risk disclosures have been added:
Commercial Notes Risk. Commercial notes are subject to interest rate and credit risks. Commercial notes are generally unsecured. If the issuer of a commercial note defaults, the Fund will be a general creditor and will not have any rights to any specific assets of the issuer, potentially subjecting the Fund to greater losses than the holder of a secured instrument.
Variable Rate Notes Risk. The market prices of notes with variable interest rates are generally less sensitive to interest rate changes than are the market prices of instruments with fixed interest rates. Variable rate notes may decline in value if market interest rates or interest rates paid by such instruments do not move as expected. Conversely, variable rate notes will not generally rise in value if market interest rates decline. Thus, investing in variable notes generally allows less opportunity for capital appreciation and depreciation than investing in instruments with a fixed interest rate.
Kimberly A. Browning
December 13, 2023
Page 3
Comment 2. Please revise the third sentence in the second paragraph (“Such fixed income holdings may be of any maturity, duration or credit rating, including high-yield bonds (also known as “junk bonds””) to clarify that all fixed income holdings may be of any maturity, duration or credit rating, including high yield bonds.
Response. The sentence has been revised as follows:
Such Fixed income holdings may be of any maturity, duration or credit rating, including high-yield bonds (also known as “junk bonds”).
Comment 3. Please reconcile the Item 2 and Item 4 risk disclosures regarding equity securities. Please confirm whether the Fund will invest in only common stocks and ADRs or if the Fund will also invest in equity securities beyond the two listed. The Staff has no objections to specifying the equity securities in the Item 9 disclosures, but the Item 2 and Item 4 disclosures need to be reconciled. If the Fund will invest in other equity securities, but primarily invest in common stocks and ADRs, please revise Item 4 disclosure accordingly. Additionally, please confirm whether the Fund has an allocation policy with respect to the equity securities.
Response. The Fund confirms that it will only invest in common stocks and ADRs as principal investment strategies and no other equity securities.
The following risk disclosure has been revised as follows:
Item 4
Equity Risk. Equity securities, such as Common stocks and ADRs may decline in value because of changes in the price of a particular holding or a broad stock market decline. Common stock ranks below preferred stock and debt securities in claims for dividends and for assets of the company in a liquidation or bankruptcy. The value of an equity security a common stock or ADR may decline for a number of reasons that directly relate to the issuer of a security or broader economic or market events including changes in interest rates.
Item 9
Equity Risk. Equity securities, such as Common stocks and sponsored and unsponsored ADRs may decline in value because of changes in the price of a particular holding or a broad stock market decline. Common stock ranks below preferred stock and debt securities in claims for dividends and for assets of the company in a liquidation or bankruptcy. The value of a security common stock or ADR may decline for a number of reasons that directly relate to the issuer of a security or broader economic or market events including changes in interest rates. The common stocks and ADRS held by the Fund may experience sudden, unpredictable drops in value or long periods of decline in value, resulting in losses to the Fund.
Kimberly A. Browning
December 13, 2023
Page 4
Comment 4. In the Item 4 summary, please specify the types of U.S. Securities the Fund will invest in, such as Treasury bills, Treasury notes, Treasury bonds, etc. The Staff has no objection to adding the level of specificity in Item 9.
Response. The disclosure has been revised as follows:
With respect to fixed income securities, (1) the Fund may invest in (domestic and foreign corporate bonds and notes, (including commercial notes, unsecured promissory notes and variable rate notes) issued by domestic and foreign corporate issuers; (2) U.S. Treasury bills, notes and bonds securities, and; and (3) money market instruments including money market funds.
Comment 5. Please provide a brief definition and clarification of “fundamentals first” as used in the Fund’s name. The language provided (“The Fund is named “Fundamentals First” because the advisor emphasizes fundamental investment research and analysis in managing the Fund.”) is insufficient as a reasonable shareholder may not understand what “fundamental investment research and analysis” is. Please clarify.
Response. The Registrant added the following clarification to the definition of “fundamentals first”:
The Fund is named “Fundamentals First” because the advisor emphasizes fundamental investment research and analysis in managing the Fund. Fundamental analysis measures a security’s intrinsic value by examining related economic and financial factors, as well as market conditions. In conducting its own fundamental research on securities, the Advisor considers company filings and press releases, industry data and its own interviews with company management. The Advisor seeks to invest in companies which it believes have strong management that is focused on delivering shareholder value. The Advisor uses its fundamental analysis process to select investments for the long-term with relatively low turnover. As a long-term investor, the Advisor considers itself to be an “owner” of a company rather than a short-term trader.
Kimberly A. Browning
December 13, 2023
Page 5
Comment 6. The last sentence of the “Temporary Investments” risk disclosure under the “Principal Investments Risk” heading is not a part of the Fund’s principal investment strategies. Please considering deleting the sentence or providing additional clarification to the sentence and explain how it relates to the Fund’s investment strategies.
Response. The disclosure has been revised as follows:
Temporary Investments. To respond to adverse market, economic, political or other conditions, the Fund may invest 100% of its total assets, without limitation, in high-quality short-term debt securities and money market instruments. These short-term debt securities and money market instruments include: shares of money market mutual funds, commercial paper, certificates of deposit, bankers' acceptances, and U.S. Government securities. While the Fund is in a defensive position, the Fund may not achieve its investment objective. Furthermore, to the extent that the Fund invests in money market mutual funds for cash positions, there will be some duplication of expenses because the Fund pays its pro-rata portion of such money market funds' advisory fees and operational fees. The Fund may also invest a substantial portion of its assets in such instruments at any time to maintain liquidity or pending selection of investments in accordance with its policies.
Taxes on Distributions
Comment 7. In your response to Comment 4 in the Response Letter, you provided disclosure regarding return of capital in the SAI. If appropriate, please include the risk disclosure to Item 4 of the prospectus.
Response. The Registrant does not consider return of capital risk to be a principal risk of the Fund. Accordingly, no disclosure has been included in Items 4 and 9 of the Prospectus or in the SAI.
Advisor’s Prior Related Performance Information
Comment 8. Please revise the heading of the tables to “Composite Average Annual Total Returns.”
Kimberly A. Browning
December 13, 2023
Page 6
Response. The Registrant has revised the heading of the table to “Composite Average Annual Total Returns.
Shareholder Actions
Comment 9. Please revise the section to clarify that if a claim is not brought under federal law, it cannot be contemplated in federal court. Additionally, please revise the Amended Agreement and Declaration of Trust to reflect the same.
Response. The Registrant has revised the first paragraph under the “Shareholder Actions” section to the following:
With the exception of any claims under the federal laws, any legal suit, action, or proceeding arising out of or relating to the Fund’s Declaration of Trust and the transactions contemplated thereby, as well as the Fund’s By-Laws and the transactions contemplated thereby, shall be instituted in the federal courts of the United States of America or the courts of the State of Massachusetts in each case located in the City of Boston and County of Suffolk, and each party irrevocably submits to the exclusive jurisdiction of such courts in any such suit, action, or proceeding. Any claim under the federal laws, including federal securities laws, shall be instituted in the federal courts of the United States of America. As a result, shareholders may have to bring suit in an inconvenient and less favorable forum. There is question regarding the enforceability of this provision since the Securities Act of 1933 and the Investment Company Act of l940 permit shareholders to bring claims arising from these Acts in both state and federal courts.
The Registrant has revised the second paragraph under Section 6.1 of Article VI of the Amended Agreement and Declaration of Trust to the following:
With the exception of any claims under the federal laws, including federal securities laws, any legal suit, action, or proceeding arising out of or relating to this Declaration of Trust and the transactions contemplated hereby, as well as the By-Laws and the transactions contemplated thereby, shall be instituted in the federal courts of the United States of America or the courts of the State of Massachusetts in each case located in the City of Boston and County of Suffolk, and each party irrevocably submits to the exclusive jurisdiction of such courts in any such suit, action, or proceeding. Any claim under the federal laws, including federal securities laws, shall be instituted in the federal courts of the United States of America. As a result, shareholders may have to bring suit in an inconvenient and less favorable forum. There is question regarding the enforceability of this provision since the Securities Act of 1933 and the Investment Company Act of l940 permit shareholders to bring claims arising from these Acts in both state and federal courts. The parties irrevocably and unconditionally waive any objection to venue of any suit, action, or proceeding in such courts and irrevocably waive and agree not to plead or claim in any such court that any such suit, action, or proceeding brought in any such court has been brought in an inconvenient forum.
Kimberly A. Browning
December 13, 2023
Page 7
Statement of Additional Information
Code of Ethics
Comment 10. Item 17(e) of Form N-1A requires a brief statement disclosing whether the Fund, its investment adviser and principal underwriter have adopted codes of ethics under Rule 17j-1of the Investment Company Act of 1940 and whether the codes of ethics permit personnel subject to the codes to invest in securities, including securities that may be purchased or held by the Fund. The joint code of ethics provided by the Registrant does not address securities beyond those held by the investment adviser (Section 1.4(a) of the joint code of ethics filed on September 26, 2023). Please consider whether the code of ethics will address securities beyond those held by the investment adviser and revise accordingly. Please see Item 17(e) of Form N-1A. See also, Rule 17j-1 under the 1940 Act. Additionally, please revise the joint code of ethics to incorporate the Fund or Trust.
Response. The second paragraph of section 1.4A of the Code of Ethics has been revised as follows (italics added for emphasis):
The Firm does not restrict any employee, officer or director of the Firm from purchasing or selling the same securities as those that may be purchased or sold for Client’s accounts (including any Fund), except as noted herein, provided all purchases and sales are completed at least two days prior to or two days after those made on behalf of the Client’s account, unless such trades are completed simultaneous with those made on behalf of Client accounts and then are allocated pro-rata as to quantity and evenly as to price, provided the transactions for both the Clients and Firm personnel are executed by the same brokerage firm. If the same broker is not used for both the Client’s and Firm member’s account, then the trade for the Firm member must take place at least two days before or two days after the full execution of the Client’s transaction.
The
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filename1.htm
December 13, 2023
VIA EDGAR TRANSMISSION
Kimberly A. Browning
Securities and Exchange Commission
Division of Investment Management
100 F. Street, N.E.
Washington, D.C. 20549-0506
Re: Mason Capital Fund Trust, File Nos. 333-270294 and 811-23853
(the “Registrant”)
Dear Ms. Browning:
On July 25, 2023, the Registrant
filed an amended registration statement on Form N-1A under the Securities Act of 1933 (the “Securities Act”) and the Investment
Company Act of 1940 (the “1940 Act”) to offer shares of Fundamentals First ETF (the “Fund”). On November 17, 2023
and December 8, 2023, you provided comments via telephone to Zeynep Kart with respect to the registration statement as described below.
Please find below the Registrant’s responses to your comments, which the Registrant has authorized Thompson Hine LLP to make on
its behalf. Please note that added language is in italics and deleted language appears struck through.
Prospectus
Principal Investment Strategies
Comment 1.
In your response to Comment 1 in the October 30 2023 Response Letter (“Response Letter”), you specified the type of issuers the Fund will invest in. Please also specify the types of notes the fund will use (e.g. promissory notes, unsecured notes, etc.) and disclose the intended risks of the specific commercial notes applicable to the Fund’s principal investment strategies.
Response.
The sentence has been revised to the following:
With respect to fixed income securities, (1) the Fund may invest in (domestic and foreign corporate bonds and notes, (including commercial notes, unsecured promissory notes and variable rate notes) issued by domestic and foreign corporate issuers; (2) U.S. Treasury bills, notes and bonds securities, and; and (3) money market instruments including money market funds.
Kimberly A. Browning
December 13, 2023
Page 2
The following Item 4 risk disclosures have been added:
Commercial Notes Risk. Commercial notes are subject to interest rate and credit risks. Commercial notes are generally unsecured which subjects the Fund to potentially greater losses than the holder of a secured instrument in the event the issuer defaults.
Variable Rate Notes Risk. The market prices of notes with variable interest rates are generally less sensitive to interest rate changes than are the market prices of instruments with fixed interest rates. Variable rate notes may decline in value if market interest rates or interest rates paid by such instruments do not move as expected.
The following Item 9 strategy disclosures have been added:
Commercial notes are unsecured promissory notes issued by corporations primarily to finance short-term credit needs. Certain commercial notes may have floating or variable rates and may contain options, exercisable by either the buyer or the seller, that extend or shorten the maturity of the note.
The following Item 9 risk disclosures have been added:
Commercial Notes Risk. Commercial notes are subject to interest rate and credit risks. Commercial notes are generally unsecured. If the issuer of a commercial note defaults, the Fund will be a general creditor and will not have any rights to any specific assets of the issuer, potentially subjecting the Fund to greater losses than the holder of a secured instrument.
Variable Rate Notes Risk. The market prices of notes with variable interest rates are generally less sensitive to interest rate changes than are the market prices of instruments with fixed interest rates. Variable rate notes may decline in value if market interest rates or interest rates paid by such instruments do not move as expected. Conversely, variable rate notes will not generally rise in value if market interest rates decline. Thus, investing in variable notes generally allows less opportunity for capital appreciation and depreciation than investing in instruments with a fixed interest rate.
Kimberly A. Browning
December 13, 2023
Page 3
Comment 2.
Please revise the third sentence in the second paragraph (“Such fixed income holdings may be of any maturity, duration or credit rating, including high-yield bonds (also known as “junk bonds””) to clarify that all fixed income holdings may be of any maturity, duration or credit rating, including high yield bonds.
Response.
The sentence has been revised as follows:
Such Fixed income holdings may be of any maturity, duration or credit rating, including high-yield bonds (also known as “junk bonds”).
Comment 3.
Please reconcile the Item 2 and Item 4 risk disclosures regarding equity securities. Please confirm whether the Fund will invest in only common stocks and ADRs or if the Fund will also invest in equity securities beyond the two listed. The Staff has no objections to specifying the equity securities in the Item 9 disclosures, but the Item 2 and Item 4 disclosures need to be reconciled. If the Fund will invest in other equity securities, but primarily invest in common stocks and ADRs, please revise Item 4 disclosure accordingly. Additionally, please confirm whether the Fund has an allocation policy with respect to the equity securities.
Response. The Fund confirms that it will only invest in common stocks and ADRs as principal
investment strategies and no other equity securities.
The following risk disclosure has been revised as follows:
Item 4
Equity Risk. Equity securities, such as Common stocks and ADRs may decline in value because of changes in the price of a particular holding or a broad stock market decline. Common stock ranks below preferred stock and debt securities in claims for dividends and for assets of the company in a liquidation or bankruptcy. The value of an equity security a common stock or ADR may decline for a number of reasons that directly relate to the issuer of a security or broader economic or market events including changes in interest rates.
Item 9
Equity Risk. Equity securities, such as Common stocks and sponsored and unsponsored ADRs may decline in value because of changes in the price of a particular holding or a broad stock market decline. Common stock ranks below preferred stock and debt securities in claims for dividends and for assets of the company in a liquidation or bankruptcy. The value of a security common stock or ADR may decline for a number of reasons that directly relate to the issuer of a security or broader economic or market events including changes in interest rates. The common stocks and ADRS held by the Fund may experience sudden, unpredictable drops in value or long periods of decline in value, resulting in losses to the Fund.
Kimberly A. Browning
December 13, 2023
Page 4
Comment 4.
In the Item 4 summary, please specify the types of U.S. Securities the Fund will invest in, such as Treasury bills, Treasury notes, Treasury bonds, etc. The Staff has no objection to adding the level of specificity in Item 9.
Response. The disclosure has been revised as follows:
With respect to fixed income securities, (1) the Fund may invest in (domestic and foreign corporate bonds and notes, (including commercial notes, unsecured promissory notes and variable rate notes) issued by domestic and foreign corporate issuers; (2) U.S. Treasury bills, notes and bonds securities, and; and (3) money market instruments including money market funds.
Comment 5.
Please provide a brief definition and clarification of “fundamentals first” as used in the Fund’s name. The language provided (“The Fund is named “Fundamentals First” because the advisor emphasizes fundamental investment research and analysis in managing the Fund.”) is insufficient as a reasonable shareholder may not understand what “fundamental investment research and analysis” is. Please clarify.
Response. The Registrant added the following clarification to the definition of “fundamentals first”:
The Fund is named “Fundamentals First” because the advisor emphasizes fundamental investment research and analysis in managing the Fund. Fundamental analysis measures a security’s intrinsic value by examining related economic and financial factors, as well as market conditions. In conducting its own fundamental research on securities, the Advisor considers company filings and press releases, industry data and its own interviews with company management. The Advisor seeks to invest in companies which it believes have strong management that is focused on delivering shareholder value. The Advisor uses its fundamental analysis process to select investments for the long-term with relatively low turnover. As a long-term investor, the Advisor considers itself to be an “owner” of a company rather than a short-term trader.
Kimberly A. Browning
December 13, 2023
Page 5
Comment 6.
The last sentence of the “Temporary Investments” risk disclosure under the “Principal Investments Risk” heading is not a part of the Fund’s principal investment strategies. Please considering deleting the sentence or providing additional clarification to the sentence and explain how it relates to the Fund’s investment strategies.
Response.
The disclosure has been revised as follows:
Temporary Investments. To respond to adverse market, economic, political or other conditions, the Fund may invest 100% of its total assets, without limitation, in high-quality short-term debt securities and money market instruments. These short-term debt securities and money market instruments include: shares of money market mutual funds, commercial paper, certificates of deposit, bankers' acceptances, and U.S. Government securities. While the Fund is in a defensive position, the Fund may not achieve its investment objective. Furthermore, to the extent that the Fund invests in money market mutual funds for cash positions, there will be some duplication of expenses because the Fund pays its pro-rata portion of such money market funds' advisory fees and operational fees. The Fund may also invest a substantial portion of its assets in such instruments at any time to maintain liquidity or pending selection of investments in accordance with its policies.
Taxes on Distributions
Comment 7.
In your response to Comment 4 in the Response Letter, you provided disclosure regarding return of capital in the SAI. If appropriate, please include the risk disclosure to Item 4 of the prospectus.
Response.
The Registrant does not consider return of capital risk to be a principal risk of the Fund. Accordingly, no disclosure has been included in Items 4 and 9 of the Prospectus or in the SAI.
Advisor’s Prior Related Performance Information
Comment 8.
Please revise the heading of the tables to “Composite Average Annual Total Returns.”
Kimberly A. Browning
December 13, 2023
Page 6
Response.
The Registrant has revised the heading of the table to “Composite Average Annual Total Returns.
Shareholder Actions
Comment 9.
Please revise the section to clarify that if a claim is not brought under federal law, it cannot be contemplated in federal court. Additionally, please revise the Amended Agreement and Declaration of Trust to reflect the same.
Response.
The Registrant has revised the first paragraph under the “Shareholder Actions” section to the following:
With the exception of any claims under the federal laws, any legal suit, action, or proceeding arising out of or relating to the Fund’s Declaration of Trust and the transactions contemplated thereby, as well as the Fund’s By-Laws and the transactions contemplated thereby, shall be instituted in the federal courts of the United States of America or the courts of the State of Massachusetts in each case located in the City of Boston and County of Suffolk, and each party irrevocably submits to the exclusive jurisdiction of such courts in any such suit, action, or proceeding. Any claim under the federal laws, including federal securities laws, shall be instituted in the federal courts of the United States of America. As a result, shareholders may have to bring suit in an inconvenient and less favorable forum. There is question regarding the enforceability of this provision since the Securities Act of 1933 and the Investment Company Act of l940 permit shareholders to bring claims arising from these Acts in both state and federal courts.
The Registrant has revised the second paragraph under Section 6.1 of Article VI of the Amended Agreement and Declaration of Trust to the following:
With the exception of any claims under the federal laws, including federal securities laws, any legal suit, action, or proceeding arising out of or relating to this Declaration of Trust and the transactions contemplated hereby, as well as the By-Laws and the transactions contemplated thereby, shall be instituted in the federal courts of the United States of America or the courts of the State of Massachusetts in each case located in the City of Boston and County of Suffolk, and each party irrevocably submits to the exclusive jurisdiction of such courts in any such suit, action, or proceeding. Any claim under the federal laws, including federal securities laws, shall be instituted in the federal courts of the United States of America. As a result, shareholders may have to bring suit in an inconvenient and less favorable forum. There is question regarding the enforceability of this provision since the Securities Act of 1933 and the Investment Company Act of l940 permit shareholders to bring claims arising from these Acts in both state and federal courts. The parties irrevocably and unconditionally waive any objection to venue of any suit, action, or proceeding in such courts and irrevocably waive and agree not to plead or claim in any such court that any such suit, action, or proceeding brought in any such court has been brought in an inconvenient forum.
Kimberly A. Browning
December 13, 2023
Page 7
Statement of Additional Information
Code of Ethics
Comment 10.
Item 17(e) of Form N-1A requires a brief statement disclosing whether the Fund, its investment adviser and principal underwriter have adopted codes of ethics under Rule 17j-1of the Investment Company Act of 1940 and whether the codes of ethics permit personnel subject to the codes to invest in securities, including securities that may be purchased or held by the Fund. The joint code of ethics provided by the Registrant does not address securities beyond those held by the investment adviser (Section 1.4(a) of the joint code of ethics filed on September 26, 2023). Please consider whether the code of ethics will address securities beyond those held by the investment adviser and revise accordingly. Please see Item 17(e) of Form N-1A. See also, Rule 17j-1 under the 1940 Act. Additionally, please revise the joint code of ethics to incorporate the Fund or Trust.
Response.
The second paragraph of section 1.4A of the Code of Ethics has been revised as follows (italics added for emphasis):
The Firm does not restrict any employee, officer or director of the Firm from purchasing or selling the same securities as those that may be purchased or sold for Client’s accounts (including any Fund), except as noted herein, provided all purchases and sales are completed at least two days prior to or two days after those made on behalf of the Client’s account, unless such trades are completed simultaneous with those made on behalf of Client accounts and then are allocated pro-rata as to quantity and evenly as to price, provided the transactions for both the Clients and Firm personnel are executed by the same brokerage firm. If the same broker is not used for both the Client’s and Firm member’s account, then the trade for the Firm member must take place at least two days before or two days after the full execution of the Client’s transaction.
The