Proxy Voting Policy and Procedures

Proxy Voting Policy and Procedures

Background

The Board of Trustees has adopted policies and procedures with respect to voting proxies relating to portfolio securities of the Funds, pursuant to which the Board has delegated responsibility for voting such proxies to the Advisor subject to the Board's continuing oversight.

Policies and Procedures

The Advisor's proxy voting policies and procedures (the “Guidelines”) are designed to maximize shareholder value and protect shareowner interests when voting proxies. The Advisor's Proxy Oversight Committee (the “Proxy Committee”) exercises and documents the Advisor's responsibility with regard to voting of client proxies. The Proxy Committee is composed of representatives of the Advisor's Compliance, Legal and Portfolio Management Departments, and chaired by the Advisor's Chief Compliance Officer. The Proxy Committee reviews and monitors the effectiveness of the Guidelines.

To assist the Advisor in its responsibility for voting proxies and the overall proxy voting process, the Advisor has retained Institutional Shareholder Services (“ISS”) as an expert in the proxy voting and corporate governance area. ISS is an independent company that specializes in providing a variety of proxy-related services to institutional investment managers, plan sponsors, custodians, consultants, and other institutional investors. The services provided by ISS include in-depth research, global issuer analysis, and voting recommendations as well as vote execution, reporting and record keeping. ISS issues quarterly reports for the Advisor to review to assure proxies are being voted properly. The Advisor and ISS also perform spot checks intra-quarter to match the voting activity with available shareholder meeting information. ISS's management meets on a regular basis to discuss its approach to new developments and amendments to existing policies. Information on such developments or amendments in turn is provided to the Proxy Committee. The Proxy Committee reviews and, as necessary, may amend periodically the Guidelines to address new or revised proxy voting policies or procedures.

The Guidelines are maintained and implemented by ISS and are an extensive list of common proxy voting issues with recommended voting actions based on the overall goal of achieving maximum shareholder value and protection of shareholder interests. Generally, proxies are voted in accordance with the voting recommendations contained in the Guidelines. If necessary, the Advisor will be consulted by ISS on non-routine issues. Proxy issues identified in the Guidelines include but are not limited to:

  • Election of Directors - considering factors such as director qualifications, term of office, age limits.
  • Proxy Contests - considering factors such as voting for nominees in contested elections and reimbursement of expenses.
  • Election of Auditors - considering factors such as independence and reputation of the auditing firm.
  • Proxy Contest Defenses - considering factors such as board structure and cumulative voting.
  • Tender Offer Defenses - considering factors such as poison pills (stock purchase rights plans) and fair price provisions.
  • Miscellaneous Governance Issues - considering factors such as confidential voting and equal access.
  • Capital Structure - considering factors such as common stock authorization and stock distributions.
  • Executive and Director Compensation - considering factors such as performance goals and employee stock purchase plans.
  • State of Incorporation - considering factors such as state takeover statutes and voting on reincorporation proposals.
  • Mergers and Corporate Restructuring - considering factors such as spin-offs and asset sales.
  • Mutual Fund Proxy Voting - considering factors such as election of directors and proxy contests.
  • Consumer and Public Safety Issues - considering factors such as social and environmental issues as well as labor issues.

A full description of each guideline and voting policy is maintained by the Advisor, and a complete copy of the Guidelines is available upon request.

Conflicts of Interest

From time to time, proxy issues may pose a material conflict of interest between Fund shareholders and the Advisor, the underwriter or any affiliates thereof. Due to the limited nature of the Advisor's activities (e.g., no underwriting business, no publicly traded affiliates, no investment banking activities, and no research recommendations), conflicts of interest are likely to be infrequent. Nevertheless, it shall be the duty of the Proxy Committee to monitor for potential conflicts of interest. In the event a conflict of interest arises, the Advisor will direct ISS to use its independent judgment to vote affected proxies in accordance with approved guidelines. The Proxy Committee will disclose to the Board the voting issues that created the conflict of interest and the manner in which ISS voted such proxies.

Record of Proxy Voting

The Advisor, with the assistance of ISS, shall maintain for a period of at least five years a record of each proxy statement received and materials that were considered when the proxy was voted during the calendar year. Information on how the Funds voted proxies relating to portfolio securities for the 12-month (or shorter) period ended June 30 will be available

  1. without charge, upon request, by calling the Advisor at 1-866-PRO-5125,
  2. on the ProShares web site, and
  3. on the Securities and Exchange Commission's website at http://www.sec.gov.