APPROVAL OF ADVISORY AGREEMENT AND
BOARD CONSIDERATIONS
The Board, including the Independent Trustees,
reviewed: (i) the nature and quality of the advisory services to be provided by
the Tema Global Limited (the “Adviser”), including the experience and
qualifications of the personnel providing such services; (ii) the performance
history of Tema Luxury ETF, Tema Monopolies and Oligopolies ETF, and Tema
American Reshoring ETF (each a “Fund” and collectively the “Funds),
noting that none of the Funds had not yet launched; (iii) the proposed fees and
expenses of the Funds, including the proposed advisory fee to be paid by the
Funds to the Adviser; (iv) the anticipated profitability of the Funds to the
Adviser; (v) potential economies of scale; (vi) possible fall-out benefits to
the Adviser and its affiliates (i.e., the ancillary benefits realized by the
Adviser and its affiliates from the Adviser’s relationship with the Trust); and
(vii) possible conflicts of interest. In considering the approval of the
Investment Advisory Agreement, the Board reviewed and analyzed various factors
that they determined were relevant, including the factors enumerated
below.
The Board exercised its own business judgment in
determining its conclusions and its conclusions were based on an evaluation of
all of the information provided and were not the result of any one factor.
Moreover, each Trustee may have afforded different weight to the various factors
in reaching his or her conclusions with respect to the Advisory
Agreement.
Nature, Extent and Quality of
Services
The Board reviewed materials provided by the
Adviser related to the proposed approval of the Investment Advisory Agreement,
including a description of its oversight of NEOS Investment Management, LLC (the
“Sub-Adviser”), a review of the professional personnel who will be performing
services for the Trust, the Adviser’s compliance and risk management
infrastructure, its financial strength and resources, and how it will monitor
the Sub-Adviser’s performance of trading, portfolio management and operational
services to the Funds. The Board also noted the extensive responsibilities that
the Adviser will have as investment adviser to the Funds, including: adherence
to the Fund’s investment strategy and restrictions, monitoring of the
Sub-Adviser’s buying and selling of securities and other transactions, reviewing
the Funds’ performance, reviewing the proxies voted by the Adviser and oversight
of the creation of custom creation or redemption baskets for authorized
participants; oversight of the daily valuation of the Funds’ portfolio holdings;
oversight of general Fund compliance with federal and state laws; and
implementation of Board directives as they relate to the Funds. The Board also
considered research support available to, and management capabilities of, the
Funds’ management personnel and that the Adviser will provide oversight of
day-to-day Fund operations, including fund accounting, tax matters,
administration, compliance and legal assistance in meeting disclosure and
regulatory requirements. The Board discussed the extent of the Adviser’s
research capabilities, the quality of its compliance infrastructure and the
experience of its fund management personnel.
Additionally, the Board received satisfactory
responses from the representatives of the Adviser with respect to a series of
questions, including: whether the Adviser was involved in any lawsuits or
pending regulatory actions; whether the management of other accounts would
conflict with its management of the Trust; and whether there are procedures in
place to adequately allocate trades among its respective clients.
The Board reviewed the description provided on the
practices for monitoring compliance with the Trust’s investment limitations,
noting that the Adviser’s CCO would periodically review the portfolio managers’
performance of their duties to ensure compliance under the Adviser’s compliance
program. The Board concluded that the Adviser had sufficient quality and depth
of personnel, resources, investment methods and compliance policies and
procedures essential to performing its duties under the Advisory Agreement and
that the nature, overall quality and extent of the management services to be
provided by the Adviser to the Trust would be satisfactory.
Performance
Because the Funds had not yet commenced operations,
the Trustees could not consider past performance.
Fees and Expenses
As to the costs of the services to be provided by
the Adviser, the Board discussed the comparison of advisory fees and total
operating expense data and reviewed the Fund’s advisory fee, which is a unitary
fee, and overall expenses compared to a peer group comprised of funds in the
category constructed by the Adviser and the Sub-Adviser for each Fund, each of
which had similar investment objectives and strategies to the relevant Fund. The
Board was aware that under the unitary fee arrangement, the Adviser is
contractually obligated to pay the fees of each of the Funds’ service providers,
with the exception of the Adviser’s advisory fee, and certain other expenses.
The Board considered the fact that the
Adviser would charge the Fund an investment advisory fee of 99 basis points,
subject to the Expense
