SCHEDULE 14A
PROXY STATEMENT
PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by Registrant [X]
Filed by 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)
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11c or Rule 14a-12
Flaherty & Crumrine/Claymore Total Return Fund Incorporated
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(Name of Registrant as Specified in Its Charter)
---------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11
(1) Title of each class of securities to which transaction
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 identify 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: ___________________________________________________________
FLAHERTY & CRUMRINE PREFERRED INCOME FUND INCORPORATED (NYSE: PFD)
FLAHERTY & CRUMRINE PREFERRED INCOME OPPORTUNITY FUND INCORPORATED (NYSE: PFO)
FLAHERTY & CRUMRINE/CLAYMORE PREFERRED SECURITIES INCOME FUND INCORPORATED
(NYSE: FFC)
FLAHERTY & CRUMRINE/CLAYMORE TOTAL RETURN FUND INCORPORATED (NYSE: FLC)
301 E. Colorado Boulevard, Suite 720
Pasadena, California 91101
NOTICE OF ANNUAL MEETINGS OF SHAREHOLDERS
To Be Held on April 18, 2008
To the Shareholders:
Notice is hereby given that the Annual Meetings of Shareholders of
Flaherty & Crumrine Preferred Income Fund Incorporated, Flaherty & Crumrine
Preferred Income Opportunity Fund Incorporated, Flaherty & Crumrine/Claymore
Preferred Securities Income Fund Incorporated and Flaherty & Crumrine/Claymore
Total Return Fund Incorporated (each a "Fund" and collectively, the "Funds"),
each a Maryland corporation, will be held at the offices of Willkie Farr &
Gallagher LLP, 787 Seventh Avenue, New York, New York 10019, Conference Room
38D-E at 8:30 a.m. ET, on April 18, 2008, for the following purposes:
1. To elect Directors of each Fund (PROPOSAL 1).
2. To transact such other business as may properly come before the
Annual Meetings or any adjournments thereof.
YOUR VOTE IS IMPORTANT!
The proposal set forth in this proxy statement is a routine item. A
routine item is one which occurs annually and makes no fundamental or material
changes to a Fund's investment objectives, policies or restrictions, or to the
investment management contracts.
The Board of Directors of each Fund has fixed the close of business on
January 25, 2008 as the record date for the determination of shareholders of
each Fund entitled to notice of and to vote at the Annual Meetings.
By Order of the Boards of Directors,
February 19, 2008 CHAD C. CONWELL
SECRETARY
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SEPARATE PROXY CARDS ARE ENCLOSED FOR EACH FUND IN WHICH YOU OWN SHARES.
SHAREHOLDERS WHO DO NOT EXPECT TO ATTEND THE ANNUAL MEETINGS ARE REQUESTED TO
COMPLETE, SIGN AND DATE THE ENCLOSED PROXY CARD(S). THE PROXY CARD(S) SHOULD BE
RETURNED IN THE ENCLOSED ENVELOPE, WHICH NEEDS NO POSTAGE IF MAILED IN THE
CONTINENTAL UNITED STATES. INSTRUCTIONS FOR THE PROPER EXECUTION OF PROXIES ARE
SET FORTH ON THE INSIDE COVER.
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INSTRUCTIONS FOR SIGNING PROXY CARDS
The following general rules for signing proxy cards may be of assistance
to you and may minimize the time and expense to the Fund(s) involved in
validating your vote if you fail to sign your proxy card(s) properly.
1. Individual Accounts: Sign your name exactly as it appears in the
registration on the proxy card(s).
2. Joint Accounts: Either party may sign, but the name of the party
signing should conform exactly to a name shown in the registration.
3. All Other Accounts: The capacity of the individual signing the proxy
card should be indicated unless it is reflected in the form of registration. For
example:
REGISTRATION VALID SIGNATURE
------------ ---------------
CORPORATE ACCOUNTS
(1) ABC Corp. ABC Corp.
(2) ABC Corp. John Doe, Treasurer
(3) ABC Corp. c/o John Doe, Treasurer John Doe
(4) ABC Corp. Profit Sharing Plan John Doe, Trustee
TRUST ACCOUNTS
(1) ABC Trust Jane B. Doe, Trustee
(2) Jane B. Doe, Trustee Jane B. Doe
u/t/d 12/28/78
CUSTODIAN OR ESTATE ACCOUNTS
(1) John B. Smith, Cust., John B. Smith
f/b/o John B. Smith, Jr. UGMA
(2) John B. Smith, Executor, John B. Smith, Jr., Executor
estate of Jane Smith
FLAHERTY & CRUMRINE PREFERRED INCOME FUND INCORPORATED (NYSE: PFD)
FLAHERTY & CRUMRINE PREFERRED INCOME OPPORTUNITY FUND INCORPORATED (NYSE: PFO)
FLAHERTY & CRUMRINE/CLAYMORE PREFERRED SECURITIES INCOME FUND INCORPORATED
(NYSE:FFC)
FLAHERTY & CRUMRINE/CLAYMORE TOTAL RETURN FUND INCORPORATED (NYSE: FLC)
301 E. Colorado Boulevard, Suite 720
Pasadena, California 91101
ANNUAL MEETINGS OF SHAREHOLDERS
April 18, 2008
JOINT PROXY STATEMENT
This document is a joint proxy statement ("Joint Proxy Statement") for
Flaherty & Crumrine Preferred Income Fund Incorporated ("PREFERRED INCOME
FUND" OR "PFD"), Flaherty & Crumrine Preferred Income Opportunity Fund
Incorporated ("PREFERRED INCOME OPPORTUNITY FUND" OR "PFO"), Flaherty &
Crumrine/Claymore Preferred Securities Income Fund Incorporated ("PREFERRED
SECURITIES INCOME FUND" OR "FFC") and Flaherty & Crumrine/Claymore Total Return
Fund Incorporated ("TOTAL RETURN FUND" OR "FLC") (EACH A "FUND" AND
COLLECTIVELY, THE "FUNDS"). This Joint Proxy Statement is furnished in
connection with the solicitation of proxies by each Fund's Board of Directors
(each a "Board" and collectively, the "Boards") for use at the Annual Meeting of
Shareholders of each Fund to be held on April 18, 2008, at 8:30 a.m. ET, at the
offices of Willkie Farr & Gallagher LLP, 787 Seventh Avenue, New York, New York
10019, Conference Room 38D-E and at any adjournments thereof (each a "Meeting"
and collectively, the "Meetings").
A Notice of Annual Meetings of Shareholders and proxy card for each Fund
of which you are a shareholder accompany this Joint Proxy Statement. Proxy
solicitations will be made, beginning on or about February 19, 2008, primarily
by mail, but proxy solicitations may also be made by telephone, telefax or
personal interviews conducted by officers of each Fund, Flaherty & Crumrine
Incorporated ("Flaherty & Crumrine" or the "Adviser"), the investment adviser of
each Fund, Claymore Securities, Inc. (the "Servicing Agent"), the servicing
agent of FFC and FLC, and PFPC Inc. ("PFPC"), the transfer agent and
administrator of each Fund and a member of The PNC Financial Services Group,
Inc. The costs of proxy solicitation and expenses incurred in connection with
the preparation of this Joint Proxy Statement and its enclosures will be shared
proportionally by the Funds. Each Fund also will reimburse brokerage firms and
others for their expenses in forwarding solicitation material to the beneficial
owners of its shares. This proxy statement and form of proxy are first being
sent to shareholders on or about February 19, 2008.
THE ANNUAL REPORT OF EACH FUND, INCLUDING AUDITED FINANCIAL STATEMENTS FOR
THE FISCAL YEAR ENDED NOVEMBER 30, 2007, IS AVAILABLE UPON REQUEST, WITHOUT
CHARGE, BY WRITING TO PFPC INC., P.O. BOX 43027, PROVIDENCE, RHODE ISLAND
02940-3027, OR CALLING 1-800-331-1710. EACH FUND'S ANNUAL REPORT IS ALSO
AVAILABLE ON THE FUNDS' WEB-SITES - WWW.PREFERREDINCOME.COM FOR PFD AND PFO AND
WWW.FCCLAYMORE.COM FOR FFC AND FLC - THE SECURITIES AND EXCHANGE COMMISSION'S
("SEC") WEBSITE (WWW.SEC.GOV) OR, FOR FFC AND FLC ONLY, BY CALLING CLAYMORE
SECURITIES, INC. AT 1-866-233-4001.
If the enclosed proxy card is properly executed and returned in time to be
voted at the relevant Meeting, the Shares (as defined below) represented thereby
will be voted in accordance with the instructions marked thereon. Unless
instructions to the contrary are marked thereon, a proxy will be voted "FOR" the
election of the nominees for Director. Any shareholder who has given a proxy has
the right to revoke it at any time prior to its exercise either by attending the
relevant Meeting and voting his or her Shares in person or by submitting a
letter of revocation or a later-dated proxy to the appropriate Fund delivered at
the above address prior to the date of the Meeting.
Under the Bylaws of each Fund, the presence in person or by proxy of the
holders of a majority of the outstanding shares of the Fund entitled to vote
shall be necessary and sufficient to constitute a quorum for the transaction of
business (a "Quorum") at that Fund's meeting. If a proposal is to be voted upon
by only one class of a Fund's shares, a Quorum of that class of shares must be
present at the Meeting in order for the proposal to be considered. In the event
that a Quorum is not present at a Meeting, or in the event that a Quorum is
present but sufficient votes to approve any of the proposals are not received,
the persons named as proxies may propose one or more adjournments of the Meeting
to permit further solicitation of proxies. Any such adjournment will require the
affirmative vote of a majority of those shares represented at the Meeting in
person or by proxy. If a Quorum is present, the persons named as proxies will
vote those proxies which they are entitled
1
to vote "FOR" a proposal in favor of such an adjournment with respect to that
proposal and will vote those proxies required to be voted "AGAINST" a proposal
against any such adjournment with respect to that proposal. A shareholder vote
may be taken on a proposal in the Joint Proxy Statement prior to any such
adjournment if sufficient votes have been received for approval of that
proposal.
Each Fund has two classes of capital stock including common stock, par
value $0.01 per share (the "Common Stock") and preferred stock (the "Preferred
Stock" and together with the Common Stock, the "Shares"). PFD and PPO each has
one series of Preferred Stock outstanding which is classified as Auction
Preferred Stock (formerly known as, "Money Market Cumulative Preferred(TM)
Stock" (MMP(R))). FFC and FLC each have multiple series of Preferred Stock
outstanding which are classified as Auction Market Preferred Stock. Each Share
is entitled to one vote at the Meeting with respect to matters to be voted on by
the class to which such Share belongs, with pro rata voting rights for any
fractional Shares. On the record date, January 25, 2008, the following number of
Shares of each Fund were issued and outstanding:
COMMON STOCK PREFERRED STOCK
NAME OF FUND OUTSTANDING OUTSTANDING
------------ ------------ ---------------
Preferred Income Fund (PFD) 10,550,676 800
Preferred Income Opportunity Fund (PFO) 11,764,165 700
Preferred Securities Income Fund (FFC) 42,601,719 Series M7 - 3,200
Series T7 - 3,200
Series W7 - 3,200
Series Th7 - 3,200
Series F7 - 3,200
Series T28 - 2,840
Series W28 - 2,840
Total Return Fund (FLC) 9,776,333 Series T7 - 2,570
Series W28 - 2,570
To the knowledge of each Fund and its Board, the following shareholder(s)
or "group," as that term is defined in Section 13(d) of the Securities Exchange
Act of 1934, as amended (the "1934 Act"), is the beneficial owner or owner of
record of more than 5% of the relevant Fund's outstanding shares as of January
25, 2008*:
NAME AND ADDRESS OF AMOUNT AND NATURE
BENEFICIAL/RECORD OWNER TITLE OF CLASS OF OWNERSHIP PERCENT OF CLASS
--------------------------- --------------- ----------------- ----------------
Cede & Co.** Common Stock PFD - 10,060,836 95.36%
Depository Trust Company (record)
55 Water Street, 25th Floor PFO - 11,300,994 96.06%
New York, NY 10041 (record)
FFC - 42,523,093 99.82%
(record)
FLC - 9,768,006 99.91%
(record)
Preferred Stock PFD - 800 (record) 100%
PFO - 700 (record) 100%
Preferred Stock FFC
Series M7 - 3,200 (record) 100%
Series T7 - 3,200 (record) 100%
Series W7 - 3,200 (record) 100%
Series Th7 - 3,200 (record) 100%
Series F7 - 3,200 (record) 100%
Series T28 - 2,840 (record) 100%
Series W28 - 2,840 (record) 100%
FLC
Series T7 - 2,570 (record) 100%
Series W28 - 2,570 (record) 100%
2
NAME AND ADDRESS OF AMOUNT AND NATURE
BENEFICIAL/RECORD OWNER TITLE OF CLASS OF OWNERSHIP PERCENT OF CLASS
--------------------------------------- -------------- ----------------- ----------------
Claymore Securities Defined Portfolios, Common Stock FLC - 802,611 8.21%
Series 305, 311, 320, 324, 335, 349, (beneficial)
355, 357, 358, 374, 375, 384, 390,
394, 398, 407, 423, 426, 434, 438
and 453+
2455 Corporate West Drive
Lisle, IL 60532
Spectrum Asset Management, Inc++ Common Stock FLC - 985,950 10.08%
2 High Ridge Park (beneficial)
Stamford, CT 06905
Principal Financial Group, Inc.++
711 High Street
Des Moines, IA 50392-0088
Morgan Stanley+++ Common Stock FLC - 725,204 7.4%
1585 Broadway (beneficial)
New York, NY 10036
Van Kampen Funds Inc.+++
Harborside Financial Center II
Floor 2
Jersey City, New Jersey 07311
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* As of January 25, 2008, the Directors and officers, as a group, owned less
than 1% of each class of Shares of each Fund.
** A nominee partnership of The Depository Trust Company.
+ Information obtained from a Schedule 13G filed by Claymore Securities,
Inc. with the SEC reporting share ownership as of December 31, 2007. Based
on that filing, each of the Claymore Securities Defined Portfolios has the
sole power to vote or direct the vote or dispose or direct the disposition
of the 802,611 shares of Common Stock.
++ Information obtained from a Schedule 13G filed by Spectrum Asset
Management, Inc. with the SEC reporting share ownership as of March 23,
2007. Based on that filing, Spectrum Asset Management, Inc and Principal
Financial Group, Inc. have the shared power to vote or direct the vote or
dispose or direct the disposition of the 985,950 shares of Common Stock.
+++ Information obtained from a Schedule 13G filed by Morgan Stanley with the
SEC reporting share ownership as of December 31, 2007. Based on that
filing, each of Morgan Stanley and Van Kampen Funds Inc. has the sole
power to vote or direct the vote or dispose or direct the disposition of
the 725,204 shares of Common Stock.
This Joint Proxy Statement is being used in order to reduce the
preparation, printing, handling and postage expenses that would result from the
use of a separate proxy statement for each Fund. Shareholders of each Fund will
vote as a single class except as described below under Proposal 1 for PFD and
PFO and will vote separately for each of PFD, PFO, FFC and FLC on each proposal
on which shareholders of that Fund are entitled to vote. Separate proxy cards
are enclosed for each Fund in which a shareholder is a record owner of Shares.
Thus, if a proposal is approved by shareholders of one or more Funds and not
approved by shareholders of one or more other Funds, the proposal will be
implemented for the Fund or Funds that approved the proposal and will not be
implemented for any Fund that did not approve the proposal. It is therefore
essential that shareholders complete, date and sign EACH enclosed proxy card.
SHAREHOLDERS OF EACH FUND ARE ENTITLED TO VOTE ON THE PROPOSALS PERTAINING TO
THAT FUND.
In order that your Shares may be represented at the Meetings, you are
requested to vote on the following matter:
SUMMARY OF VOTING RIGHTS ON PROXY PROPOSALS
PREFERRED INCOME FUND (PFD)
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PROPOSAL COMMON STOCK SHAREHOLDERS PREFERRED STOCK SHAREHOLDERS
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1. Election of Directors Common Stock Shareholders as a single class Preferred Stock Shareholders as a single
elect one Director: David Gale class elect one Director: Karen H. Hogan
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2. Other Business Common Stock and Preferred Stock Shareholders, voting together as a single class
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3
PREFERRED INCOME OPPORTUNITY FUND (PFO)
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PROPOSAL COMMON STOCK SHAREHOLDERS PREFERRED STOCK SHAREHOLDERS
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1. Election of Directors Common Stock Shareholders as a single class Preferred Stock Shareholders as a
elect one Director: Morgan Gust single class elect one Director:
Karen H. Hogan
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2. Other Business Common Stock and Preferred Stock Shareholders, voting together as a single class
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PREFERRED SECURITIES FUND (FFC)
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PROPOSAL COMMON STOCK SHAREHOLDERS AND PREFERRED STOCK SHAREHOLDERS
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1. Election of Director Common Stock and Preferred Stock Shareholders, voting together as a single class
elect one Director: David Gale
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2. Other Business Common Stock and Preferred Stock Shareholders, voting together as a single class
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TOTAL RETURN FUND (FLC)
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PROPOSAL COMMON STOCK SHAREHOLDERS AND PREFERRED STOCK SHAREHOLDERS
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1. Election of Director Common Stock and Preferred Stock Shareholders, voting together as a single class
elect one Director: David Gale
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2. Other Business Common Stock and Preferred Stock Shareholders, voting together as a single class
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PROPOSAL 1: ELECTION OF DIRECTORS
At the Meetings, shareholders are being asked to consider the election of
Directors of each Fund. The Board of each Fund is divided into three classes,
each class having a term of three years. Each year the term of office of one
class expires and the successor or successors elected to such class serve for a
three-year term and until their successors are duly elected and qualified.
NOMINEES FOR THE BOARDS OF DIRECTORS
Each nominee named below has consented to serve as a Director if elected
at the relevant Meeting. If a designated nominee declines or otherwise becomes
unavailable for election, however, the proxy confers discretionary power on the
persons named therein to vote in favor of a substitute nominee or nominees.
Mr. Gale and Ms. Hogan, each a Class I Director of PFD, have each been
nominated for a three-year term to expire at PFD's 2011 Annual Meeting of
Shareholders and until their successors are duly elected and qualified. Mr. Gust
and Ms. Hogan, each a Class III Director of PFO, have each been nominated for a
three-year term to expire at PFO's 2011 Annual Meeting of Shareholders and until
their successors are duly elected and qualified.
Mr. Gale, a Class I Director of FFC and FLC, has been nominated for a
three-year term to expire at each Fund's 2011 Annual Meeting of Shareholders and
until his successor is duly elected and qualified.
Under the Articles of Incorporation and Articles Supplementary, as amended
to date, of PFD and PFO, holders of each Fund's Preferred Stock, voting as a
single class, are entitled to elect two Directors, and holders of each Fund's
Common Stock. voting as a single class, are entitled to elect the remaining
Directors. Under the Articles of Incorporation and Articles Supplementary, as
amended to date, of FFC and FLC, holders of each Fund's Preferred Stock, voting
as a single class, are entitled to elect two Directors and holders of each
Fund's Common Stock and Preferred Stock, voting together as a single class, are
entitled to elect the remaining Directors. However, subject to the provisions of
the Investment Company Act of 1940, as amended (the "1940 Act"), and each Fund's
Articles of Incorporation and Articles Supplementary, the holders of Preferred
Stock, when dividends are in arrears for two full years, are able to elect the
minimum number of additional Directors that, when combined with the two
Directors elected by the holders of Preferred Stock, would give the holders of
Preferred Stock each a majority of the Directors. Donald F. Crumrine and Karen
H. Hogan, as Directors, currently represent holders of Preferred Stock for PFD
and PFO. Ms. Hogan, as a Director of PFD and PFO, has been nominated by the
Board of PFD and PFO, respectively, as a Director to represent its holders of
Preferred Stock. A Quorum of the Preferred Stock shareholders must be present at
the Meeting of each of PFD and PFO, respectively, in order for the proposal to
elect Ms. Hogan to be considered for that Fund. Donald F. Crumrine and Karen H.
Hogan, as Directors, currently represent holders of Preferred Stock for FFC and
FLC.
4
FUND (CLASS) NOMINEE FOR DIRECTOR
------------ --------------------
PFD (Common Stock) Gale
PFD (Preferred Stock) Hogan
PFO (Common Stock) Gust
PFO (Preferred Stock) Hogan
FFC (Common and Preferred Stock) Gale
FLC (Common Stock and Preferred Stock) Gale
INFORMATION ABOUT DIRECTORS AND OFFICERS
Set forth in the table below are the existing Directors and nominees for
election to the Boards of Directors of the Funds, including information relating
to their respective positions held with each Fund, a brief statement of their
principal occupations during the past five years and other directorships, if
any.
NUMBER OF
PRINCIPAL FUNDS IN OTHER
CURRENT TERM OF OFFICE OCCUPATION(S) FUND COMPLEX DIRECTORSHIPS
NAME, ADDRESS, POSITION(S) AND LENGTH OF DURING PAST OVERSEEN HELD BY
AND AGE HELD WITH FUNDS TIME SERVED* FIVE YEARS BY DIRECTOR** DIRECTOR
------------------------- --------------- --------------------- ------------------------ ------------- -------------------
NON-INTERESTED
DIRECTORS:
DAVID GALE Director CLASS I DIRECTOR President and CEO 4 Metromedia
Delta Dividend Group, Inc. PFD - since 1997 of Delta Dividend International
220 Montgomery Street, PFO - since 1997 Group, Inc. Group, Inc.
Suite 426 FFC - since inception (investments) (telecommunications)
San Francisco, CA 94104 FLC - since inception
Age: 58
MORGAN GUST Director CLASS III DIRECTOR Owner and operator 4 CoBiz, Inc.
301 E. Colorado Boulevard and PFD - since inception of various entities (financial services)
Suite 720 Nominating PFO - since inception engaged in
Pasadena, CA 91101 Committee CLASS II DIRECTOR agriculture and
Age: 60 Chairman FFC - since inception real estate;
FLC - since inception President of Giant
Industries, Inc.
(petroleum refining
and marketing)
from March 2002
through April 2007
KAREN H. HOGAN (1) Director CLASS I DIRECTOR Retired; 4 None
301 E. Colorado Boulevard PFD - since 2005 Community Volunteer;
Suite 720 CLASS III DIRECTOR From September 1985
Pasadena, CA 91101 PFO - since 2005 to January 1997,
Age: 46 CLASS II DIRECTOR Senior Vice President
FFC - since 2005 of Preferred Stock
FLC - since 2005 Origination at Lehman
Brothers and previously,
Vice President of New
Product Development
ROBERT F. WULF Director CLASS II DIRECTOR Financial Consultant; 4 None
P.O. Box 753 and Audit PFD - since inception Trustee, University of
Neskowin, OR 97149 Committee PFO - since inception Oregon Foundation;
Age: 70 Chairman CLASS III DIRECTOR Trustee, San Franc isco
FFC - since inception Theological Seminary
FLC - since inception
5
NUMBER OF
PRINCIPAL FUNDS IN OTHER
CURRENT TERM OF OFFICE OCCUPATION(S) FUND COMPLEX DIRECTORSHIPS
NAME, ADDRESS, POSITION(S) AND LENGTH OF DURING PAST OVERSEEN HELD BY
AND AGE HELD WITH FUNDS TIME SERVED* FIVE YEARS BY DIRECTOR** DIRECTOR
------------------------- --------------- --------------------- ------------------------ ------------- -------------------
INTERESTED
DIRECTOR:
DONALD F. CRUMRINE (1), (2) Director, CLASS II DIRECTOR Chairman of the Board 4 None
301 E. Colorado Boulevard Chairman of PFD - since inception and Director of
Suite 720 the Board and PFO - since inception Flaherty & Crumrine
Pasadena, CA 91101 Chief Executive CLASS III DIRECTOR
Age: 60 Officer FFC - since inception
FLC - since inception
OFFICERS:
ROBERT M. ETTINGER President PFD - since 2002 President and N/A N/A
301 E. Colorado Boulevard PFO - since 2002 Director of Flaherty &
Suite 720 FFC - since inception Crumrine
Pasadena, CA 91101 FLC - since inception
Age: 49
R. ERIC CHADWICK Chief Financial PFD - since 2002 Director of Flaherty & N/A N/A
301 E. Colorado Boulevard Officer, Vice PFO - since 2002 Crumrine since
Suite 720 President and FFC - since inception June 2006; Vice
Pasadena, CA 91101 Treasurer FLC - since inception President of
Age: 32 Flaherty & Crumrine
CHAD C. CONWELL Chief Compliance PFD - since 2005 Chief Compliance Officer N/A N/A
301 E. Colorado Boulevard Officer, PFO - since 2005 of Flaherty & Crumrine
Suite 720 Vice President FFC - since 2005 since September 2005;
Pasadena, CA 91101 and Secretary FLC - since 2005 Vice President of
Age: 35 Flaherty & Crumrine
since July 2005;
Attorney with
Paul, Hastings, Janofsky
& Walker LLP
from September 1998
to June 2005
BRADFORD S. STONE Vice President PFD - since 2003 Director of Flaherty & N/A N/A
392 Springfield Avenue and Assistant PFO - since 2003 Crumrine since
Mezzanine Suite Treasurer FFC - since 2003 June 2006; Vice
Summit, NJ 07901 FLC - since inception President of
Age: 48 Flaherty & Crumrine
since May 2003;
Director of U.S. Market
Strategy at Barclays
Capital from June
2001 to April 2003
6
NUMBER OF
PRINCIPAL FUNDS IN OTHER
CURRENT TERM OF OFFICE OCCUPATION(S) FUND COMPLEX DIRECTORSHIPS
NAME, ADDRESS, POSITION(S) AND LENGTH OF DURING PAST OVERSEEN HELD BY
AND AGE HELD WITH FUNDS TIME SERVED* FIVE YEARS BY DIRECTOR** DIRECTOR
------------------------- --------------- --------------------- ------------------------ ------------- -------------------
OFFICERS:
NICHOLAS DALMASO Vice President FFC - since inception Director of Claymore N/A N/A
2455 Corporate West Drive and Assistant FLC - since inception Group, LLC since
Lisle, IL 60532 Secretary January 2002;
Age: 42 (FFC and Senior Managing
FLC only) Director and
Chief Administrative
Officer of Claymore
Securities,
Inc. since November
2001 and Claymore
Advisors, LLC since
October 2003
LAURIE C. LODOLO Assistant PFD - since 2004 Assistant Compliance N/A N/A
301 E. Colorado Boulevard Compliance PFO - since 2004 Officer of Flaherty &
Suite 720 Officer, FFC - since 2004 Crumrine since
Pasadena, CA 91101 Assistant FLC - since 2004 August 2004; Secretary
Age: 44 Treasurer and of Flaherty & Crumrine
Assistant since February 2004;
Secretary Account Administrator
of Flaherty & Crumrine
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* The Class I Directors of PFD, FFC and FLC and the Class III Directors of
PFO have each been nominated for a three-year term to expire at each
Fund's 2011 Annual Meeting of Shareholders and until their successors are
duly elected and qualified. The Class II Directors of PFD, FFC and FLC and
the Class I Director of PFO will serve until each Fund's Annual Meeting of
Shareholders in 2009 and until their successors are duly elected and
qualified. The Class III Director of PFD, the Class III Directors of FFC
and FLC and the Class II Directors of PFO will serve until each Fund's
Annual Meeting of Shareholders in 2010 and until their successors are duly
elected and qualified.
** The funds in the fund complex are: Flaherty & Crumrine Preferred Income
Fund Incorporated, Flaherty & Crumrine Preferred Income Opportunity Fund
Incorporated, Flaherty & Crumrine/Claymore Preferred Securities Income
Fund Incorporated and Flaherty & Crumrine/Claymore Total Return Fund
Incorporated (together, the "Flaherty & Crumrine Fund Family").
(1) As a Director, currently represents holders of Preferred Stock.
(2) "Interested person" of the Funds as defined in the 1940 Act. M r.
Crumrine is considered an "interested person" because of his affiliation
with Flaherty & Crumrine, which acts as each Fund's investment adviser.
BENEFICIAL OWNERSHIP OF SHARES IN FUNDS AND FUND COMPLEX FOR EACH DIRECTOR AND
NOMINEE FOR ELECTION AS DIRECTOR
Set forth in the table below is the dollar range of equity securities in
each Fund and the aggregate dollar range of equity securities in the Flaherty &
Crumrine Fund Family beneficially owned by each Director.
AGGREGATE DOLLAR RANGE OF EQUITY
SECURITIES IN ALL REGISTERED INVESTMENT
DOLLAR RANGE OF EQUITY COMPANIES OVERSEEN BY DIRECTOR IN
NAME OF DIRECTOR OR NOMINEE SECURITIES HELD IN FUND* (1)(2)(3) FAMILY OF INVESTMENT COMPANIES* (4)
--------------------------- ---------------------------------- ---------------------------------------
PFD PFO FFC FLC TOTAL
------- ------- ------- ------- -----
NON-INTERESTED DIRECTORS:
David Gale C C C C E
Morgan Gust C C C C E
Karen H. Hogan A A A A A
7
AGGREGATE DOLLAR RANGE OF EQUITY
SECURITIES IN ALL REGISTERED INVESTMENT
DOLLAR RANGE OF EQUITY COMPANIES OVERSEEN BY DIRECTOR IN
NAME OF DIRECTOR OR NOMINEE SECURITIES HELD IN FUND* (1)(2)(3) FAMILY OF INVESTMENT COMPANIES* (4)
--------------------------- ---------------------------------- ---------------------------------------
PFD PFO FFC FLC TOTAL
------- ------- ------- ------- -----
NON-INTERESTED DIRECTORS:
Robert F. Wulf C C C C D
INTERESTED DIRECTOR:
Donald F. Crumrine E(5) E(5) E(5) E(5) E(5)
----------
* Key to Dollar Ranges
A. None
B. $1 - $10,000
C. $10,001 -$50,000
D. $50,001 - $100,000
E. over $100,000
All shares were valued as of January 25, 2008.
(1) No Director or officer of PFD or PFO owned any shares of Preferred Stock
on January 25, 2008.
(2) No Director or officer of FFC or FLC owned any shares of Preferred Stock
on January 25, 2008.
(3) This information has been furnished by each Director as of January 25,
2008. "Beneficial Ownership" is determined in accordance with Rule
16a-1(a)(2) of the 1934 Act.
(4) As a group, less than 1%.
(5) Includes shares of the Fund held by Flaherty & Crumrine of which the
reporting person is a shareholder and director.
Each Director of each Fund who is not a director, officer or employee of
Flaherty & Crumrine or any of its affiliates receives from each Fund a fee of
$9,000 per annum plus $500 for each in-person meeting attended, and $150 for
each telephone meeting attended. In addition, the Audit Committee Chairman
receives from each Fund an annual fee of $2,500. Each Director of each Fund is
reimbursed for travel and out-of-pocket expenses associated with attending Board
and committee meetings. The Board of Directors of each Fund held seven meetings
(three of which were held by telephone conference call) during the fiscal year
ended November 30, 2007, and each Director of each Fund then serving in such
capacity attended at least 75% of the meetings of Directors and of any Committee
of which he or she is a member. The aggregate remuneration paid to the Directors
of each Fund for the fiscal year ended November 30, 2007 is set forth below:
--------------------------------------------------------------------------------
BOARD MEETING TRAVEL AND
ANNUAL AND OUT-OF-POCKET
DIRECTORS FEES COMMITTEE MEETING FEES EXPENSES*
--------------------------------------------------------------------------------
PFD $36,000 $24,900 $7,444
--------------------------------------------------------------------------------
PFO $36,000 $24,900 $7,444
--------------------------------------------------------------------------------
FFC $36,000 $24,900 $7,851
--------------------------------------------------------------------------------
FLC $36,000 $24,900 $ 7,851
--------------------------------------------------------------------------------
----------
* Includes reimbursement for travel and out-of-pocket expenses for both
"interested" and "non-interested" Directors ("Independent Directors").
AUDIT COMMITTEE REPORT
The role of each Fund's Audit Committee is to assist the Board of
Directors in its oversight of: (i) the integrity of each Fund's financial
statements and the independent audit thereof; (ii) each Fund's accounting and
financial reporting policies and practices, its internal controls and, as
appropriate, the internal controls of certain service providers; (iii) each
Fund's compliance with legal and regulatory requirements; and (iv) the
independent auditor's qualifications, independence and performance. Each Fund's
Audit Committee is also required to prepare an audit committee report pursuant
to the rules of the SEC for inclusion in each Fund's annual proxy statement.
Each Audit Committee operates pursuant to a charter (the "Audit
8
Committee Charter" or "Charter") that was most recently reviewed and approved by
the Board of Directors of each Fund on January 29, 2008 and which is available
on PFD and PFO's website at www.preferredincome.com and FFC and FLC's website at
www.fcclaymore.com. As set forth in the Charter, management is responsible for
the (i) preparation, presentation and integrity of each Fund's financial
statements, (ii) maintenance of appropriate accounting and financial reporting
principles and policies and (iii) maintenance of internal controls and
procedures designed to assure compliance with accounting standards and
applicable laws and regulations. The Funds' independent registered public
accounting firm, KPMG LLP, (the "independent accountants") is responsible for
planning and carrying out proper audits and reviews of each Fund's financial
statements and expressing an opinion as to their conformity with accounting
principles generally accepted in the United States of America.
In performing its oversight function, at a meeting held on January 28,
2008, the Audit Committee reviewed and discussed with management of each Fund
and the independent accountants, the audited financial statements of each Fund
as of and for the fiscal year ended November 30, 2007, and discussed the audit
of such financial statements with the independent accountants.
In addition, the Audit Committee discussed with the independent
accountants the accounting principles applied by each Fund and such other
matters brought to the attention of the Audit Committee by the independent
accountants required by Statement of Auditing Standards No. 61, COMMUNICATIONS
WITH AUDIT COMMITTEES, as currently modified or supplemented. The Audit
Committee also received from the independent accountants the written disclosures
and statements required by the SEC's independence rules, delineating
relationships between the independent accountants and each Fund and discussed
the impact that any such relationships might have on the objectivity and
independence of the independent accountants.
As set forth above, and as more fully set forth in each Fund's Audit
Committee Charter, the Audit Committee has significant duties and powers in its
oversight role with respect to the Fund's financial reporting procedures,
internal control systems, and the independent audit process.
The members of the Audit Committee are not, and do not represent
themselves to be, professionally engaged in the practice of auditing or
accounting and are not employed by each Fund for accounting, financial
management or internal control. Moreover, the Audit Committee relies on and
makes no independent verification of the facts presented to it or
representations made by management or the independent accountants. Accordingly,
the Audit Committee's oversight does not provide an independent basis to
determine that management has maintained appropriate accounting and financial
reporting principles and policies, or internal controls and procedures, designed
to assure compliance with accounting standards and applicable laws and
regulations. Furthermore, the Audit Committee's considerations and discussions
referred to above do not provide assurance that the audit of each Fund's
financial statements has been carried out in accordance with generally accepted
accounting standards or that the financial statements are presented in
accordance with generally accepted accounting principles.
Based on its consideration of the audited financial statements and the
discussions referred to above with management and the independent accountants,
and subject to the limitations on the responsibilities and role of the Audit
Committee set forth in the Charter and those discussed above, the Audit
Committee of each Fund recommended to the Board of Directors of each Fund that
the audited financial statements be included in each Fund's Annual Report for
the fiscal year ended November 30, 2007.
THIS REPORT WAS SUBMITTED BY THE AUDIT COMMITTEE OF EACH FUND'S BOARD OF
DIRECTORS
David Gale
Morgan Gust
Karen H. Hogan
Robert F. Wulf (Chairman)
January 28, 2008
Each Audit Committee was established in accordance with Section
3(a)(58)(A) of the 1934 Act. Each Audit Committee met four times in connection
with its Board of Directors' regularly scheduled meetings during the fiscal year
ended November 30, 2007. Each Audit Committee is composed entirely of each
Fund's Independent (as such term is defined by the New York Stock Exchange
("NYSE") listing standards applicable to closed-end funds, as may be modified or
supplemented (the "NYSE Listing Standards")) Directors, namely Ms. Hogan and
Messrs. Gale, Gust and Wulf.
NOMINATING COMMITTEE
Each Board of Directors has a Nominating Committee composed entirely of
each Fund's Independent (as such term is defined by the NYSE Listing Standards)
Directors, namely Ms. Hogan and Messrs. Gale, Gust and Wulf. The Nominating
Committee of each Fund met twice during the fiscal year ended November 30, 2007.
The Nominating Committee is responsible for identifying individuals believed to
be qualified to become Board members and for recommending to the Board of
Directors such nominees to stand for election as directors at each Fund's annual
meeting of shareholders, and to fill any vacancies on the
9
Board. Each Fund's Nominating Committee has a charter which is available on its
website. PFD and PFO's website address is www.preferredincome.com and FFC and
FLC's website address is www.fcclaymore.com.
Each Fund's Nominating Committee believes that it is in the best interest
of the Fund and its shareholders to obtain highly qualified candidates to serve
as members of the Board of Directors. The Nominating Committees have not
established a formal process for identifying candidates where a vacancy exists
on the Board. In nominating candidates, the Nominating Committee shall take into
consideration such factors as it deems appropriate. These factors may include
judgment, skill, diversity, experience with investment companies and other
organizations of comparable purpose, complexity, size and subject to similar
legal restrictions and oversight, the interplay of the candidate's experience
with the experience of other Board members, and the extent to which the
candidate would be a desirable addition to the Board and any committees thereof.
Each Fund's Nominating Committee will consider director candidates
recommended by shareholders and submitted in accordance with applicable law and
procedures as described in this Joint Proxy Statement. (See "Submission of
Shareholder Proposals" below.)
OTHER BOARD-RELATED MATTERS
Shareholders who wish to send communications to the Board should send them
to the address of their Fund(s) and to the attention of the Board. All such
communications will be directed to the Board's attention.
The Funds do not have a formal policy regarding Board member attendance at
the Annual Meeting of Shareholders. However, all of the Directors of each Fund
attended the April 20, 2007 Annual Meetings of Shareholders.
COMPENSATION
The following table sets forth certain information regarding the
compensation of each Fund's Directors for the fiscal year ended November 30,
2007. No executive officer or person affiliated with a Fund received
compensation from a Fund during the fiscal year ended November 30, 2007 in
excess of $120,000. Directors and executive officers of the Funds do not receive
pension or retirement benefits from the Funds.
COMPENSATION TABLE
NAME OF AGGREGATE TOTAL COMPENSATION FROM
PERSON AND COMPENSATION THE FUNDS AND FUND
POSITION FROM EACH FUND COMPLEX PAID TO DIRECTORS*
---------- ------------------ --------------------------
DONALD F. CRUMRINE $0 $0 (4)
Director, Chairman of the Board and Chief Executive Officer
DAVID GALE $14,600 - PFD $58,400(4)
Director $14,600 - PFO
$14,600 - FFC
$14,600 - FLC
MORGAN GUST $14,600 - PFD $58,400(4)
Director; Nominating Committee Chairman $14,600 - PFO
$14,600 - FFC
$14,600 - FLC
KAREN H. HOGAN $14,450 - PFD $57,800(4)
Director $14,450 - PFO
$14,450 - FFC
$14,450 - FLC
ROBERT F. WULF $17,250 - PFD $69,000(4)
Director; Audit Committee Chairman $17,250 - PFO
$17,250 - FFC
$17,250 - FLC
----------
* Represents the total compensation paid for the fiscal year ended November
30, 2007, to such persons by the Funds and the other funds in the Flaherty
& Crumrine Fund Family, which are considered part of the same "fund
complex" because they have a common adviser. The parenthetical number
represents the total number of investment company directorships held by
the director or nominee in the fund complex as of November 30, 2007.
REQUIRED VOTE
The election of Mr. Gale as a Director of PFD, will require the
affirmative vote of a plurality of the votes cast by holders of the shares of
Common Stock of PFD at the meeting in person or by proxy. The election of Mr.
Gust as a Director of PFO will require the affirmative vote of a plurality of
the votes cast by holders of the shares of Common Stock of PFO at the Meeting in
person or by proxy. The election of Mr. Gale as a Director of each of FFC and
FLC will require the affirma-
10
tive vote of a plurality of the votes cast by holders of the Shares of Common
Stock and Preferred Stock, voting as a single class, of each such Fund at the
Meeting in person or by proxy. The election of Ms. Hogan as a Director of each
of PFD and PFO will require the affirmative vote of a plurality of the votes
cast by holders of the shares of Preferred Stock of each such Fund at the
Meeting in person or by proxy.
EACH BOARD OF DIRECTORS, INCLUDING ALL OF THE INDEPENDENT DIRECTORS, UNANIMOUSLY
RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR" EACH NOMINEE AS DIRECTOR.
SUBMISSION OF SHAREHOLDER PROPOSALS
All proposals by shareholders of each Fund that are intended to be
presented at each Fund's next Annual Meeting of Shareholders to be held in 2009
must be received by the relevant Fund for consideration for inclusion in the
relevant Fund's proxy statement relating to the meeting no later than October
22, 2008, and must satisfy the requirements of federal securities laws.
Each Fund's Bylaws require shareholders wishing to nominate Directors or
make proposals to be voted on at the Fund's annual meeting to provide timely
notice of the proposal in writing. To be considered timely, any such notice must
be delivered to or mailed and received at the principal executive offices of the
Fund at the address set forth on the first page of this proxy statement not
later than 60 days prior to the date of the meeting; provided, however, that if
less than 70 days, notice or prior public disclosure of the date of the meeting
is given or made to shareholders, any such notice by a shareholder to be timely
must be so received not later than the close of business on the 10th day
following the day on which notice of the date of the annual meeting was given or
such public disclosure was made.
Any such notice by a shareholder shall set forth the information required
by the Fund's Bylaws with respect to each matter the shareholder proposes to
bring before the annual meeting.
ADDITIONAL INFORMATION
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
KPMG, 99 High Street, Boston, Massachusetts 02110-2371, has been selected
to serve as each Fund's independent registered public accounting firm for each
Fund's fiscal year ending November 30, 2008. KPMG acted as the independent
registered public accounting firm for each Fund for the fiscal year ended
November 30, 2007. The Funds know of no direct financial or material indirect
financial interest of KPMG in the Funds. A representative of KPMG will not be
present at the Meeting, but will be available by telephone to respond to
appropriate questions and will have an opportunity to make a statement, if
asked.
Set forth in the table below are audit fees and non-audit related fees
billed to each Fund by KPMG for professional services for the fiscal years ended
November 30, 2006 and 2007, respectively.
FISCAL YEAR ENDED AUDIT-RELATED
FUND NOVEMBER 30 AUDIT FEES FEES TAX FEES* ALL OTHER FEES**
---- ----------- ---------- ---- --------- ----------------
PFD 2006 $38,700 $0 $6,800 $13,300
2007 $40,600 $0 $7,300 $15,100
PFO 2006 $38,700 $0 $6,800 $13,300
2007 $40,600 $0 $7,300 $15,100
FFC 2006 $40,800 $0 $7,700 $14,900
2007 $42,800 $0 $7,300 $15,500
FLC 2006 $40,800 $0 $7,700 $14,900
2007 $42,800 $0 $7,300 $15,500
----------
----------
* " Tax Fees" are those fees billed to each Fund by KPMG in connection with
tax consulting services, including primarily the review of each Fund's
income tax returns.
** "All Other Fees" are those fees billed to each Fund by KPMG in connection
with the preparation of a quarterly agreed-upon-procedures report. These
Agreed-Upon-Procedures ("AUP") are required pursuant to each Fund's
Articles Supplementary. Specifically, Moody's Investors Service and Fitch,
Inc. each require that such AUP be undertaken and a report be provided in
order to maintain their rating on the Preferred Stock.
Each Fund's Audit Committee Charter requires that the Audit Committee
pre-approve all audit and non-audit services to be provided by the independent
accountants to the Fund, and all non-audit services to be provided by the
independent accountants to the Fund's investment adviser and any entity
controlling, controlled by or under common control with the Funds' investment
adviser ("affiliates") that provide on-going services to each Fund, if the
engagement relates directly to the
11
operations and financial reporting of each Fund, or to establish detailed
pre-approval policies and procedures for such services in accordance with
applicable laws. All of the audit and non-audit services described above for
which KPMG billed each Fund fees for the fiscal years ended November 30, 2006
and November 30, 2007 were pre-approved by the Audit Committee.
For each Fund's fiscal year ended November 30, 2007, KPMG did not provide
any non-audit services (or bill any fees for such services) to the Funds'
investment adviser or any affiliates thereof that provide services to the Funds.
INVESTMENT ADVISER, ADMINISTRATOR AND SERVICING AGENT
Flaherty & Crumrine serves as the investment adviser to each Fund, and its
business address is 301 E. Colorado Boulevard, Suite 720, Pasadena, California
91101. PFPC acts as the administrator to each Fund and is located at 4400
Computer Drive, Westborough, Massachusetts 01581. Claymore Securities, Inc. acts
as the servicing agent to FFC and FLC and is located at 2455 Corporate West
Drive, Lisle, Illinois 60532.
COMPLIANCE WITH THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the 1934 Act and Section 30(h) of the 1940 Act require
each Fund's Directors and officers, certain persons affiliated with Flaherty &
Crumrine and persons who beneficially own more than 10% of a registered class of
each Fund's securities, to file reports of ownership and changes of ownership
with the SEC, the NYSE and each Fund. Directors, officers and greater-than-10%
shareholders are required by SEC regulations to furnish each Fund with copies of
such forms they file. Based solely upon its review of the copies of such forms
received by it and written representations from certain of such persons, each
Fund believes that during 2007, all such filing requirements applicable to such
persons were met.
BROKER NON-VOTE AND ABSTENTIONS
A proxy which is properly executed and returned accompanied by
instructions to withhold authority to vote represents a broker "non-vote" (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). Proxies that reflect abstentions or broker non-votes (collectively,
"abstentions") will be counted as shares that are present and entitled to vote
at the meeting for purposes of determining the presence of a Quorum. With
respect to Proposal 1, abstentions do not constitute a vote "for" or "against"
the proposal and will be disregarded in determining the "votes cast" on the
proposal.
OTHER MATTERS TO COME BEFORE THE MEETING
Each Fund does not intend to present any other business at the relevant
Meeting, nor is any Fund aware that any shareholder intends to do so. If,
however, any other matters are properly brought before the Meeting, the persons
named in the accompanying form of proxy will vote thereon in accordance with
their judgment.
EXPENSES OF PROXY SOLICITATION
The total expenses of the Annual Meetings, including the solicitation of
proxies and the expenses incurred in connection with the preparation of this
Joint Proxy Statement, are approximately $15,000.
VOTING RESULTS
Each Fund will advise its shareholders of the voting results of the
matters voted upon at its Meeting in its next Semi-Annual Report to
Shareholders.
NOTICE TO BANKS, BROKER/DEALERS AND VOTING TRUSTEES AND THEIR NOMINEES
Please advise the Funds whether other persons are the beneficial owners of
Fund shares for which proxies are being solicited from you, and, if so, the
number of copies of the joint proxy statement and other soliciting material you
wish to receive in order to supply copies to the beneficial owners of Fund
shares.
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. SHAREHOLDERS WHO DO NOT
EXPECT TO ATTEND THE MEETINGS ARE THEREFORE URGED TO COMPLETE, SIGN, DATE AND
RETURN ALL PROXY CARDS AS SOON AS POSSIBLE IN THE ENCLOSED POSTAGE-PAID
ENVELOPE.
12
This Page Left Blank Intentionally.
o PLEASE FOLD A LONG THE PERFORATION, DETACH AND
RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. o
--------------------------------------------------------------------------------
FLAHERTY & CRUMRINE/CLAYMORE TOTAL RETURN FUND INCORPORATED
--------------------------------------------------------------------------------
PROXY -- FLAHERTY & CRUMRINE/CLAYMORE TOTAL RETURN FUND INCORPORATED
--------------------------------------------------------------------------------
PROXY SOLICITED BY BOARD OF DIRECTORS
The undersigned holder of shares of Common Stock of Flaherty & Crumrine/Claymore
Total Return Fund Incorporated, a Maryland corporation (the "Fund"), hereby
appoints Donald F. Crumrine, Robert M. Ettinger, Teresa M.R. Hamlin and Emily H.
Harris, attorneys and proxies for the undersigned, each with full powers of
substitution and revocation to represent the undersigned and to vote on behalf
of the undersigned all shares of Common Stock which the undersigned is entitled
to vote at the Annual Meeting of Shareholders of the Fund to be held at the
offices of Willkie Farr & Gallagher LLP, 787 Seventh Avenue, New York, New York
10019, Conference Room 38D-E at 8:30 a.m. ET, on April 18, 2008, and any
adjournments or postponements thereof. The undersigned hereby acknowledges
receipt of the Notice of Annual Meeting and Proxy Statement and hereby instructs
said attorneys and proxies to vote said shares as indicated hereon. In their
discretion, the proxies are authorized to vote upon such other business as may
properly come before the Meeting. A majority of the proxies present and acting
at the Meeting in person or by substitute (or, if only one shall be so present,
then that one) shall have and may exercise all of the power and authority of
said proxies hereunder. The undersigned hereby revokes any proxy previously
given.
----------- -----------
SEE REVERSE SEE REVERSE
SIDE CONTINUED AND TO BE SIGNED ON REVERSE SIDE SIDE
----------- -----------
[BAR CODE]
FLAHERTY & CRUMRINE/CLAYMORE
TOTAL RETURN FUND INCORPORATED
[BAR CODE] C123456789
000004 000000000.000000 ext 000000000.000000 ext
000000000.000000 ext 000000000.000000 ext
[BAR CODE] MR A SAMPLE 000000000.000000 ext 000000000.000000 ext
DESIGNATION (IF ANY)
ADD 1
ADD 2
ADD 3
ADD 4
ADD 5
ADD 6
[IMAGE]
Using a BLACK INK pen, mark your votes with an X
as shown in this example. Please do not write outside
the designated areas. [X]
------------------------------------------------------------------------------------------------------------------------------------
ANNUAL MEETING PROXY CARD
------------------------------------------------------------------------------------------------------------------------------------
o PLEASE FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. o
------------------------------------------------------------------------------------------------------------------------------------
A ELECTION OF DIRECTOR -- THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE NOMINEE LISTED.
1. Nominee: FOR WITHHOLD +
01 - David Gale [ ] [ ]
THIS PROXY, IF PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED BY THE
UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR THE ELECTION OF THE NOMINEE AS DIRECTOR.
PLEASE REFER TO THE PROXY STATEMENT FOR A DISCUSSION OF THE PROPOSAL.
B NON-VOTING ITEMS
CHANGE OF ADDRESS -- Please print new address below.
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
C AUTHORIZED SIGNATURES -- THIS SECTION MUST BE COMPLETED FOR YOUR VOTE TO BE COUNTED. -- DATE AND SIGN BELOW
Please sign exactly as name(s) appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator,
corporate officer, trustee, guardian, or custodian, please give full title.
Date (mm/dd/yyyy) -- Please print Signature 1 -- Please keep signature Signature 2 -- Please keep signature
date below. within the box. within the box.
----------------------------------- -------------------------------------- -----------------------------------------------------
/ /
----------------------------------- -------------------------------------- -----------------------------------------------------
C 1234567890 J N T MR A SAMPLE (THIS AREA IS SET UP TO ACCOMMODATE
140 CHARACTERS) MR A SAMPLE AND MR A SAMPLE AND
MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND
[IMAGE] [BAR CODE] 1 0 A V 0 1 6 3 8 3 1 MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND +
(STOCK#) 00U5OC
o PLEASE FOLD ALONG THE PERFORATION, DETACH AND
RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. o
--------------------------------------------------------------------------------
FLAHERTY & CRUMRINE/CLAYMORE TOTAL RETURN FUND INCORPORATED
--------------------------------------------------------------------------------
PROXY -- FLAHERTY & CRUMRINE/CLAYMORE TOTAL RETURN FUND INCORPORATED
--------------------------------------------------------------------------------
PROXY SOLICITED BY BOARD OF DIRECTORS
The undersigned holder of shares of Preferred Stock of Flaherty &
Crumrine/Claymore Total Return Fund Incorporated, a Maryland corporation (the
"Fund"), hereby appoints Donald F. Crumrine, Robert M. Ettinger, Teresa M.R.
Hamlin and Emily H. Harris, attorneys and proxies for the undersigned, each with
full powers of substitution and revocation to represent the undersigned and to
vote on behalf of the undersigned all shares of Preferred Stock which the
undersigned is entitled to vote at the Annual Meeting of Shareholders of the
Fund to be held at the offices of Willkie Farr & Gallagher LLP, 787 Seventh
Avenue, New York, New York 10019, Conference Room 38D-E at 8:30 a.m. ET, on
April 18, 2008, and any adjournments or postponements thereof. The undersigned
hereby acknowledges receipt of the Notice of Annual Meeting and Proxy Statement
and hereby instructs said attorneys and proxies to vote said shares as indicated
hereon. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the Meeting. A majority of the proxies
present and acting at the Meeting in person or by substitute (or, if only one
shall be so present, then that one) shall have and may exercise all of the power
and authority of said proxies hereunder. The undersigned hereby revokes any
proxy previously given.
----------- -----------
SEE REVERSE SEE REVERSE
SIDE CONTINUED AND TO BE SIGNED ON REVERSE SIDE SIDE
----------- -----------
[BAR CODE]
FLAHERTY & CRUMRINE/CLAYMORE
TOTAL RETURN FUND INCORPORATED
[BAR CODE] C123456789
000004 000000000.000000 ext 000000000.000000 ext
000000000.000000 ext 000000000.000000 ext
[BAR CODE] MR A SAMPLE 000000000.000000 ext 000000000.000000 ext
DESIGNATION (IF ANY)
ADD 1
ADD 2
ADD 3
ADD 4
ADD 5
ADD 6
[IMAGE]
Using a BLACK INK pen, mark your votes with an X
as shown in this example. Please do not write outside
the designated areas. [X]
------------------------------------------------------------------------------------------------------------------------------------
ANNUAL MEETING PROXY CARD
------------------------------------------------------------------------------------------------------------------------------------
o PLEASE FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. o
------------------------------------------------------------------------------------------------------------------------------------
A ELECTION OF DIRECTOR -- THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE NOMINEE LISTED.
1. Nominee: FOR WITHHOLD +
01 - David Gale [ ] [ ]
THIS PROXY, IF PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED BY THE
UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR THE ELECTION OF THE NOMINEE AS DIRECTOR.
PLEASE REFER TO THE PROXY STATEMENT FOR A DISCUSSION OF THE PROPOSAL.
B NON-VOTING ITEMS
CHANGE OF ADDRESS -- Please print new address below.
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
C AUTHORIZED SIGNATURES -- THIS SECTION MUST BE COMPLETED FOR YOUR VOTE TO BE COUNTED. -- DATE AND SIGN BELOW
Please sign exactly as name(s) appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator,
corporate officer, trustee, guardian, or custodian, please give full title.
Date (mm/dd/yyyy) -- Please print Signature 1 -- Please keep signature Signature 2 -- Please keep signature
date below. within the box. within the box.
----------------------------------- -------------------------------------- -----------------------------------------------------
/ /
----------------------------------- -------------------------------------- -----------------------------------------------------
C 1234567890 J N T MR A SAMPLE (THIS AREA IS SET UP TO ACCOMMODATE
140 CHARACTERS) MR A SAMPLE AND MR A SAMPLE AND
MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND
[IMAGE] [BAR CODE] 1 U P X 0 1 6 3 8 3 2 MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND +
(STOCK#) 00U5PD