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<SEC-DOCUMENT>0000950123-11-017801.txt : 20110224
<SEC-HEADER>0000950123-11-017801.hdr.sgml : 20110224
<ACCEPTANCE-DATETIME>20110224152400
ACCESSION NUMBER:		0000950123-11-017801
CONFORMED SUBMISSION TYPE:	DEF 14A
PUBLIC DOCUMENT COUNT:		2
CONFORMED PERIOD OF REPORT:	20110415
FILED AS OF DATE:		20110224
DATE AS OF CHANGE:		20110224
EFFECTIVENESS DATE:		20110224

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			FLAHERTY & CRUMRINE/CLAYMORE TOTAL RETURN FUND INC
		CENTRAL INDEX KEY:			0001245648
		IRS NUMBER:				000000000
		STATE OF INCORPORATION:			MD
		FISCAL YEAR END:			1130

	FILING VALUES:
		FORM TYPE:		DEF 14A
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	811-21380
		FILM NUMBER:		11636006

	BUSINESS ADDRESS:	
		STREET 1:		301 E COLORADO BLVD STE 720
		STREET 2:		C/O FLAHERTY & CRUMRINE INC
		CITY:			PASADENA
		STATE:			CA
		ZIP:			91101
		BUSINESS PHONE:		(626) 795-7300

	MAIL ADDRESS:	
		STREET 1:		301 E COLORADO BLVD STE 720
		STREET 2:		C/O FLAHERTY & CRUMRINE INC
		CITY:			PASADENA
		STATE:			CA
		ZIP:			91101
</SEC-HEADER>
<DOCUMENT>
<TYPE>DEF 14A
<SEQUENCE>1
<FILENAME>w81619ddef14a.htm
<DESCRIPTION>FORM DEF 14A
<TEXT>
<HTML>
<HEAD>
<TITLE>def14a</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
<!-- PAGEBREAK -->
<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV style="width: 100%; border-bottom: 2pt solid black; font-size: 1pt">&nbsp;</DIV>
<DIV style="width: 100%; border-bottom: 1pt solid black; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="font-size: 18pt; margin-top: 18pt"><B>SCHEDULE 14A</B>
</DIV>

<DIV align="center" style="font-size: 12pt; margin-top: 10pt"><B>PROXY STATEMENT<BR>
PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Filed by
Registrant <FONT style="font-family: Wingdings">&#254;</FONT><BR>
Filed by Party other than the Registrant

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Check the appropriate box:

</DIV>

<DIV style="margin-top: 0pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">

<TD width="1%" nowrap align="left"><FONT style="font-family: Wingdings">&#111;</FONT></TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="60%">Preliminary Proxy Statement</TD>
</TR>

<TR>
    <TD style="font-size: 0pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><FONT style="font-family: Wingdings">&#111;</FONT></TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="60%">Confidential for Use of the Commission Only as permitted by Rule&nbsp;14a-6(e)(2)</TD>
</TR>

<TR>
    <TD style="font-size: 0pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><FONT style="font-family: Wingdings">&#254;</FONT></TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="60%">Definitive Proxy Statement</TD>
</TR>

<TR>
    <TD style="font-size: 0pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><FONT style="font-family: Wingdings">&#111;</FONT></TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="60%">Definitive Additional Materials</TD>
</TR>

<TR>
    <TD style="font-size: 0pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><FONT style="font-family: Wingdings">&#111;</FONT></TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="60%">Soliciting Material Pursuant to Rule&nbsp;14a-11c or Rule&nbsp;14a-12</TD>
</TR>

</TABLE>
</DIV>
<DIV align="center" style="font-size: 14pt; margin-top: 12pt"><B><FONT style="border-bottom: 1px solid #000000">Flaherty &#038; Crumrine/Claymore Total Return Fund Incorporated</FONT></B>
</DIV>

<DIV align="center" style="font-size: 10pt">(Name of Registrant as Specified in Its Charter)</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 12pt"><DIV style="margin-top: 1px"><FONT style="border-top: 1px solid #000000">(Name of Person(s) Filing Proxy Statement)</FONT></DIV></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Payment of Filing Fee (Check the appropriate box):
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><FONT style="font-family: Wingdings">&#254;</FONT> No fee required
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 0pt"><FONT style="font-family: Wingdings">&#111;</FONT> Fee computed on table below per Exchange Act Rules&nbsp;14a-6(i)(1) and 0-11
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(1)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="35%" nowrap>Title of each class of securities to which transaction applies:&nbsp;</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
</TR>
<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(2)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="35%" nowrap>Aggregate number of securities to which transaction applies:&nbsp;</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
</TR>
</table>
</div>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(3)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD colspan="2">Per unit price or other underlying value of transaction computed pursuant to Exchange Act
Rule&nbsp;0-11. (Set forth the amount on which the</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="38%" nowrap>filing fee is calculated and state how it was
determined):&nbsp;</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
</TR>
</table>
</div>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(4)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD  NOWRAP width="35%">Proposed maximum aggregate value of transaction:</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
</TR>
</table>
</div>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(5)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="10%" nowrap>Total fee paid:&nbsp;</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
</TR>
</TABLE>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><FONT style="font-family: Wingdings">&#111;</FONT> Fee paid previously with preliminary materials.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><FONT style="font-family: Wingdings">&#111;</FONT> Check box if any part of the fee is offset as provided by Exchange Act Rule&nbsp;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.
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(1)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="15%" nowrap>Amount previously paid:&nbsp;</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
</TR>
</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(2)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="30%" nowrap>Form, Schedule or Registration Statement No.:&nbsp;</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
</TR>
</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(3)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%" nowrap>Filing Party:&nbsp;</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
</TR>
</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(4)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%" nowrap>Date Filed:&nbsp;</TD>
    <TD style="border-bottom: 1px solid #000000">&nbsp;</TD>
</TR>


</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>
<DIV style="width: 100%; border-bottom: 1pt solid black; margin-top: 10pt; font-size: 1pt">&nbsp;</DIV>
<DIV style="width: 100%; border-bottom: 2pt solid black; font-size: 1pt">&nbsp;</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 9pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-size: 7pt; font-family: 'Times New Roman', Times">FLAHERTY&#160;&#038;
    CRUMRINE PREFERRED INCOME FUND&#160;INCORPORATED (NYSE: PFD)<BR>
    FLAHERTY&#160;&#038; CRUMRINE PREFERRED INCOME OPPORTUNITY
    FUND&#160;INCORPORATED (NYSE: PFO)<BR>
    FLAHERTY&#160;&#038; CRUMRINE/CLAYMORE PREFERRED SECURITIES
    INCOME FUND&#160;INCORPORATED (NYSE:&#160;FFC)<BR>
    FLAHERTY&#160;&#038;&#160;CRUMRINE/CLAYMORE TOTAL RETURN
    FUND&#160;INCORPORATED (NYSE: FLC)</FONT></B>
</DIV>

<DIV style="margin-top: 9pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <FONT style="font-family: 'Times New Roman', Times">301&#160;E.&#160;Colorado
    Boulevard, Suite&#160;720<BR>
    Pasadena, California 91101
    </FONT>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 9pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">NOTICE OF
    ANNUAL MEETINGS OF SHAREHOLDERS</FONT></B>
</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    To Be Held on April&#160;15, 2011
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    To the Shareholders:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Notice is hereby given that the Annual Meetings of Shareholders
    of Flaherty&#160;&#038; Crumrine Preferred Income
    Fund&#160;Incorporated, Flaherty&#160;&#038; Crumrine Preferred
    Income Opportunity Fund&#160;Incorporated, Flaherty&#160;&#038;
    Crumrine/Claymore Preferred Securities Income
    Fund&#160;Incorporated and Flaherty&#160;&#038;
    Crumrine/Claymore Total Return Fund&#160;Incorporated (each, a
    &#147;Fund&#148; and collectively, the &#147;Funds&#148;), each
    a Maryland corporation, will be held at the offices of
    Flaherty&#160;&#038; Crumrine Incorporated,
    301&#160;E.&#160;Colorado Boulevard, Suite&#160;720, Pasadena,
    California 91101 at 8:30&#160;a.m.&#160;PT, on April&#160;15,
    2011, for the following purposes:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Each Fund:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="6%"></TD>
    <TD width="90%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    1.&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    To elect Directors of each Fund (Proposal&#160;1).
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    2.&#160;&#160;&#160;&#160;&#160;
</TD>
    <TD align="left">
    To transact such other business as may properly come before the
    Annual Meetings or any adjournments thereof.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">Your vote
    is important!</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The Board of Directors of each Fund has fixed the close of
    business on January&#160;21, 2011 as the record date for the
    determination of shareholders of each Fund entitled to notice of
    and to vote at the Annual Meetings and any adjournments or
    postponements thereof.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="43%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="15%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="42%">&nbsp;</TD>	<!-- colindex=02 type=maindata -->
</TR>
<!-- Table Width Row END -->
<!-- TableOutputHead -->
<!-- TableOutputBody -->
<TR valign="bottom">
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    By Order of the Boards of Directors,
</TD>
</TR>
<TR valign="bottom" style="line-height: 48pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
    February&#160;25, 2011
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    CHAD C. CONWELL<BR>
     <I>Secretary </I>
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">

</DIV>

<DIV style="margin-top: 9pt; font-size: 1pt">&nbsp;</DIV>
<DIV style="width: 100%; border-top: 1px solid #000000; padding-top: 6pt; border-right: 1px solid #000000; padding-right: 6pt; border-bottom: 1px solid #000000; padding-bottom: 6pt; border-left: 1px solid #000000; padding-left: 6pt"><!-- Begin box 1 -->

<DIV align="center" style="margin-left: 1%; margin-right: 1%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <B><FONT style="font-size: 11pt">Important Notice Regarding the
    Availability of Proxy Materials for the <BR>
    Shareholder Meeting to&#160;Be Held on April&#160;15,
    2011.</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 1%; margin-right: 1%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <B>The notice of Annual Meetings of Shareholders, joint proxy
    statement and proxy cards for the Funds are available to you on
    each Fund&#146;s website&#160;- www.preferredincome.com for PFD
    and PFO and www.fcclaymore.com for FFC and FLC. You are
    encouraged to review all of the information contained in the
    proxy materials before voting.</B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 1%; margin-right: 1%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <B>To obtain directions to attend the Annual Meetings and vote
    in person, please call 1-626-795-7300.</B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 1%; margin-right: 1%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <B>SEPARATE PROXY CARDS ARE ENCLOSED FOR EACH FUND&#160;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.</B>
</DIV>
</DIV><!-- End box 1 -->

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>
<!-- XBRL Pagebreak Begin -->

<P align="left" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">

</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">INSTRUCTIONS&#160;FOR
    SIGNING PROXY CARDS</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    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.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    1.&#160;&#160;&#160;&#160;&#160;Individual Accounts: Sign your
    name exactly as it appears in the registration on the proxy
    card(s).
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    2.&#160;&#160;&#160;&#160;&#160;Joint Accounts: Either party may
    sign, but the name of the party signing should conform exactly
    to a name shown in the registration.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    3.&#160;&#160;&#160;&#160;&#160;All Other Accounts: The capacity
    of the individual signing the proxy card should be indicated
    unless it is reflected in the form registration. For example:
</DIV>

<DIV style="margin-top: 9pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="52%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="15%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="33%">&nbsp;</TD>	<!-- colindex=02 type=maindata -->
</TR>
<!-- Table Width Row END -->
<!-- TableOutputHead -->
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <FONT style="font-size: 10pt">Registration
    </FONT>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <FONT style="font-size: 10pt">Valid Signature
    </FONT>
</DIV>
</TD>
</TR>
<TR style="line-height: 10pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<!-- TableOutputBody -->
<TR valign="bottom">
<TD nowrap align="left" valign="top">
    Corporate Accounts
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="line-height: 10pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
    (1)&#160;&#160;&#160;&#160;&#160;ABC Corp.&#160;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
    ABC Corp.
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
    (2)&#160;&#160;&#160;&#160;&#160;ABC Corp.&#160;
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    John Doe, Treasurer
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
    (3)&#160;&#160;&#160;&#160;&#160;ABC Corp.
    <FONT style="white-space: nowrap">c/o&#160;John</FONT>
    Doe, Treasurer
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
    John Doe
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
    (4)&#160;&#160;&#160;&#160;&#160;ABC Corp. Profit Sharing Plan
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    John Doe, Trustee
</TD>
</TR>
<TR valign="bottom" style="line-height: 16pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
    Trust&#160;Accounts
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="line-height: 10pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
    (1)&#160;&#160;&#160;&#160;&#160;ABC Trust
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    Jane B. Doe, Trustee
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
<DIV style="text-indent: -32pt; margin-left: 32pt">
    (2)&#160;&#160;&#160;&#160;&#160;Jane B. Doe, Trustee
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    Jane B. Doe
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
    &#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;u/t/d
    12/28/78
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="line-height: 16pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
    Custodian or Estate Accounts
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="line-height: 10pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
<DIV style="text-indent: -32pt; margin-left: 32pt">
    (1)&#160;&#160;&#160;&#160;&#160;John B. Smith, Cust.,
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
    &#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;f/b/o
    John B. Smith, Jr. UGMA
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    John B. Smith
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
<DIV style="text-indent: -32pt; margin-left: 32pt">
    (2)&#160;&#160;&#160;&#160;&#160;John B. Smith, Executor,
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
    &#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;Estate
    of Jane Smith
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    John B. Smith, Jr., Executor
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">

</DIV>
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<P align="left" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">

</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 9pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-size: 7pt; font-family: 'Times New Roman', Times">FLAHERTY&#160;&#038;
    CRUMRINE PREFERRED INCOME FUND&#160;INCORPORATED (NYSE: PFD)<BR>
    FLAHERTY&#160;&#038; CRUMRINE PREFERRED INCOME OPPORTUNITY
    FUND&#160;INCORPORATED (NYSE: PFO)<BR>
    FLAHERTY&#160;&#038; CRUMRINE/CLAYMORE PREFERRED SECURITIES
    INCOME FUND INCORPORATED&#160;(NYSE:FFC) <BR>
    FLAHERTY&#160;&#038; CRUMRINE/CLAYMORE TOTAL RETURN
    FUND&#160;INCORPORATED (NYSE: FLC)</FONT></B>
</DIV>

<DIV style="margin-top: 9pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <FONT style="font-family: 'Times New Roman', Times">301&#160;E.&#160;Colorado
    Boulevard, Suite&#160;720<BR>
    Pasadena, California 91101
    </FONT>
</DIV>

<DIV style="margin-top: 9pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 9pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">ANNUAL
    MEETINGS OF SHAREHOLDERS<BR>
    </FONT></B><FONT style="font-size: 10pt"><FONT style="font-family: 'Times New Roman', Times">April&#160;15,
    2011</FONT>
    </FONT>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 9pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">JOINT
    PROXY STATEMENT</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    This document is a joint proxy statement (&#147;Joint Proxy
    Statement&#148;) for Flaherty&#160;&#038; Crumrine Preferred
    Income Fund&#160;Incorporated (&#147;Preferred Income Fund&#148;
    or &#147;PFD&#148;), Flaherty&#160;&#038; Crumrine Preferred
    Income Opportunity Fund&#160;Incorporated (&#147;Preferred
    Income Opportunity Fund&#148; or &#147;PFO&#148;),
    Flaherty&#160;&#038; Crumrine/Claymore Preferred Securities
    Income Fund&#160;Incorporated (&#147;Preferred Securities Income
    Fund&#148; or &#147;FFC&#148;) and Flaherty&#160;&#038;
    Crumrine/Claymore Total Return Fund&#160;Incorporated
    (&#147;Total Return Fund&#148; or &#147;FLC&#148;) (each a
    &#147;Fund&#148; and collectively, the &#147;Funds&#148;). This
    Joint Proxy Statement is furnished in connection with the
    solicitation of proxies by each Fund&#146;s Board of Directors
    (each, a &#147;Board&#148; and collectively, the
    &#147;Boards&#148;) for use at the Annual Meeting of
    Shareholders of each Fund to be held on April&#160;15, 2011, at
    8:30&#160;a.m.&#160;PT, at the offices of Flaherty&#160;&#038;
    Crumrine Incorporated, 301&#160;E.&#160;Colorado Boulevard,
    Suite&#160;720, Pasadena, California 91101 and at any
    adjournments or postponements thereof (each a
    &#147;Meeting&#148; and collectively, the &#147;Meetings&#148;).
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    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&#160;25, 2011, primarily by mail, but proxy
    solicitations may also be made by telephone, telefax or personal
    interviews conducted by officers of each Fund,
    Flaherty&#160;&#038; Crumrine Incorporated
    (&#147;Flaherty&#160;&#038; Crumrine&#148;), the investment
    adviser of each Fund, Guggenheim Funds Distributors, Inc., the
    servicing agent of FFC and FLC, and BNY Mellon Investment
    Servicing (US) Inc. (&#147;BNY Mellon&#148;), the transfer agent
    and administrator of each Fund. 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 Joint Proxy Statement and form of proxy are first being
    sent to shareholders on or about February&#160;25, 2011.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <B>THE ANNUAL REPORT OF EACH FUND, INCLUDING AUDITED FINANCIAL
    STATEMENTS FOR THE FISCAL YEAR ENDED NOVEMBER 30, 2010, IS
    AVAILABLE UPON REQUEST, WITHOUT CHARGE, BY WRITING TO BNY MELLON
    SHAREOWNER SERVICES, P.O. BOX 358035, PITTSBURGH, PENNSYLVANIA
    <FONT style="white-space: nowrap">15252-8035,</FONT>
    OR CALLING 1-866-351-7446. EACH FUND&#146;S ANNUAL REPORT IS
    ALSO AVAILABLE ON THE FUNDS&#146; WEBSITES -
    WWW.PREFERREDINCOME.COM FOR PFD AND PFO AND WWW.FCCLAYMORE.COM
    FOR FFC AND FLC&#160;- THE SECURITIES AND EXCHANGE
    COMMISSION&#146;S (&#147;SEC&#148;) WEBSITE (WWW.SEC.GOV) OR,
    FOR FFC AND FLC ONLY, BY CALLING GUGGENHEIM FUNDS DISTRIBUTORS,
    INC. AT 1-866-233-4001.</B>
</DIV>

<DIV style="margin-top: 9pt; font-size: 1pt">&nbsp;</DIV>
<DIV style="width: 100%; border-top: 1px solid #000000; padding-top: 6pt; border-right: 1px solid #000000; padding-right: 6pt; border-bottom: 1px solid #000000; padding-bottom: 6pt; border-left: 1px solid #000000; padding-left: 6pt"><!-- Begin box 1 -->

<DIV align="center" style="margin-left: 1%; margin-right: 1%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <B><FONT style="font-size: 11pt">Important Notice Regarding the
    Availability of Proxy Materials for the <BR>
    Shareholder Meeting to Be Held on April&#160;15, 2011.</FONT></B>
</DIV>

<DIV style="margin-top: 9pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 1%; margin-right: 1%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <B>The notice of Annual Meetings of Shareholders, joint proxy
    statement and proxy cards for the Funds are available to you on
    each Fund&#146;s website&#160;- www.preferredincome.com for PFD
    and PFO and www.fcclaymore.com for FFC and FLC. You are
    encouraged to review all of the information contained in the
    proxy materials before voting.</B>
</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 1%; margin-right: 1%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <B>To obtain directions to attend the Annual Meetings and vote
    in person, please call 1-626-795-7300.</B>
</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 1%; margin-right: 1%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <B>SEPARATE PROXY CARDS ARE ENCLOSED FOR EACH FUND&#160;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.</B>
</DIV>
</DIV><!-- End box 1 -->
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <BR>
    1
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    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 &#147;FOR&#148; 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.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    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
    &#147;Quorum&#148;) at that Fund&#146;s Meeting. 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 to vote &#147;FOR&#148; a proposal in
    favor of such an adjournment with respect to that proposal and
    will vote those proxies required to be voted &#147;AGAINST&#148;
    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.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Each Fund has one class of capital stock outstanding: common
    stock, par value $0.01 per share (the &#147;Common Stock&#148;
    or the &#147;Shares&#148;). Each Share is entitled to one vote
    at the Meeting with respect to matters to be voted on, with pro
    rata voting rights for any fractional Shares. On the record
    date, January&#160;21, 2011, the following number of Shares of
    each Fund were issued and outstanding:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="81%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="17%">&nbsp;</TD>	<!-- colindex=02 type=maindata -->
</TR>
<!-- Table Width Row END -->
<!-- TableOutputHead -->
<TR style="font-size: 10pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    Common Stock<BR>
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <FONT style="font-size: 10pt">Name of Fund
    </FONT>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <FONT style="font-size: 10pt">Outstanding
    </FONT>
</DIV>
</TD>
</TR>
<TR style="line-height: 10pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<!-- TableOutputBody -->
<TR valign="bottom" style="line-height: 10pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Preferred Income Fund (PFD)
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    10,767,784
</TD>
</TR>
<TR valign="bottom" style="line-height: 10pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Preferred Income Opportunity Fund (PFO)
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    12,003,099
</TD>
</TR>
<TR valign="bottom" style="line-height: 10pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Preferred Securities Income Fund (FFC)
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    42,866,396
</TD>
</TR>
<TR valign="bottom" style="line-height: 10pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Total Return Fund (FLC)
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    9,807,738
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">

</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    To the knowledge of each Fund and its Board, the following
    shareholder(s), or &#147;group&#148; as that term is defined in
    Section&#160;13(d) of the Securities Exchange Act of 1934, as
    amended (the &#147;1934&#160;Act&#148;), is the beneficial owner
    or owner of record of more than 5% of the relevant Fund&#146;s
    outstanding Shares as of January&#160;21,
    2011<SUP style="font-size: 85%; vertical-align: top">*</SUP>:

</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="41%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="14%">&nbsp;</TD>	<!-- colindex=02 type=maindata -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=03 type=gutter -->
    <TD width="27%">&nbsp;</TD>	<!-- colindex=03 type=maindata -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=04 type=gutter -->
    <TD width="15%">&nbsp;</TD>	<!-- colindex=04 type=maindata -->
</TR>
<!-- Table Width Row END -->
<!-- TableOutputHead -->
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
    <FONT style="font-size: 10pt">Name and Address of<BR>
    </FONT>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    <FONT style="font-size: 10pt">Amount and Nature<BR>
    </FONT>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    Beneficial/Record Owner
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    Title of Class
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    of Ownership
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    Percent of Class
</DIV>
</TD>
</TR>
<TR style="line-height: 10pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<!-- TableOutputBody -->
<TR valign="bottom" style="line-height: 10pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
    Cede&#160;&#038; Co.**<BR>
    Depository Trust&#160;Company<BR>
    55 Water Street,
    25<SUP style="font-size: 85%; vertical-align: top">th</SUP>

    Floor<BR>
    New York, NY 10041
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
    Common Stock
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    PFD&#160;&#150;&#160;10,331,655 (record)<BR>
    PFO&#160;&#150;&#160;11,531,381 (record)<BR>
    FFC&#160;&#150;&#160;42,786,996 (record)<BR>
    FLC&#160;&#150;&#160;9,796,788 (record)
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
    95.95%<BR>
    96.07%<BR>
    99.81%<BR>
    99.89%
</TD>
</TR>
<TR valign="bottom" style="line-height: 10pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
    First Trust&#160;Portfolios
    L.P.<SUP style="font-size: 85%; vertical-align: top">1<BR>

    </SUP>First Trust&#160;Advisors L.P.<BR>
    The Charger Corporation<BR>
    120 East Liberty Drive, Suite&#160;400<BR>
    Wheaton, IL 60187
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
    Common Stock
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
    FFC&#160;&#150;&#160;2,384,528 (beneficial)
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
    5.60%
</TD>
</TR>
</TABLE>
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <BR>
    2
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->
<!-- XBRL Table Pagebreak -->

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="41%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="14%">&nbsp;</TD>	<!-- colindex=02 type=maindata -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=03 type=gutter -->
    <TD width="27%">&nbsp;</TD>	<!-- colindex=03 type=maindata -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=04 type=gutter -->
    <TD width="15%">&nbsp;</TD>	<!-- colindex=04 type=maindata -->
</TR>
<!-- Table Width Row END -->
<!-- TableOutputHead -->
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
    <FONT style="font-size: 10pt">Name and Address of<BR>
    </FONT>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    <FONT style="font-size: 10pt">Amount and Nature<BR>
    </FONT>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    Beneficial/Record Owner
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    Title of Class
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    of Ownership
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    Percent of Class
</DIV>
</TD>
</TR>
<TR style="line-height: 10pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<!-- TableOutputBody -->
<TR valign="bottom" style="line-height: 10pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
    Claymore Securities Defined<BR>
    Portfolios, Series&#160;305, 352, 390, 434,<BR>
    453, 494, 590, 592, 596, 601, 614,<BR>
    621, 635, 644, 651, 652, 661, 664,<BR>
    672, 683, 713; and Guggenheim Defined<BR>
    Portfolios,
    Series&#160;742<SUP style="font-size: 85%; vertical-align: top">2<BR>

    </SUP>2455 Corporate West Drive<BR>
    Lisle, IL 60532
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
    Common Stock
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
    FLC&#160;&#150;&#160;672,476 (beneficial)
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
    6.86%
</TD>
</TR>
<TR valign="bottom" style="line-height: 10pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
    Spectrum Asset Management, Inc.<BR>
    2 High Ridge Park<BR>
    Stamford, CT 06905
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
    Common Stock
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
    FFC&#160;&#150;&#160;2,960,500<SUP style="font-size: 85%; vertical-align: top">3</SUP>

    (beneficial)
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
    6.93%
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">

</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="font-size: 1pt; margin-left: 0%; width: 13%;  align: left; border-bottom: 1pt solid #000000"></DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>



<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">

<TR>
    <TD width="2%"></TD>
    <TD width="1%"></TD>
    <TD width="97%"></TD>
</TR>

<TR>
    <TD valign="top">
    <FONT style="font-size: 9pt">*&#160;
    </FONT></TD>
    <TD></TD>
    <TD valign="bottom">
    <FONT style="font-size: 9pt">As of January&#160;21, 2011, the
    Directors and officers, as a group, owned less than 1% of the
    Shares of each Fund.
    </FONT></TD>
</TR>




<TR>
    <TD valign="top">
    <FONT style="font-size: 9pt">1
    </FONT></TD>
    <TD></TD>
    <TD valign="bottom">
    <FONT style="font-size: 9pt">Information obtained from a
    Schedule&#160;13G filed by First Trust&#160;Portfolios L.P.
    (&#147;FT Portfolios&#148;) First Trust&#160;Advisors L.P.
    (&#147;FT Advisors&#148;) and The Charger Corporation
    (&#147;Charger&#148;) with the SEC reporting share ownership as
    of December&#160;31, 2010. Based on that filing, FT Portfolios,
    FT Advisors and Charger have the shared power to vote or direct
    the vote or dispose or direct the disposition of
    2,384,528&#160;Shares of Common Stock.
    </FONT></TD>
</TR>




<TR>
    <TD valign="top">
    <FONT style="font-size: 9pt">2
    </FONT></TD>
    <TD></TD>
    <TD valign="bottom">
    <FONT style="font-size: 9pt">Information obtained from a
    Schedule&#160;13G/A filed by Guggenheim Funds Distributors, Inc.
    with the SEC reporting share ownership as of December&#160;31,
    2010. Based on that filing, Claymore Securities Defined
    Portfolios and Guggenheim Defined Portfolios, Series&#160;742
    has the sole power to vote or direct the vote or dispose or
    direct the disposition of 672,476&#160;Shares of Common Stock.
    </FONT></TD>
</TR>




<TR>
    <TD valign="top">
    <FONT style="font-size: 9pt">3
    </FONT></TD>
    <TD></TD>
    <TD valign="bottom">
    <FONT style="font-size: 9pt">Information obtained from a
    Schedule&#160;13G filed by Spectrum Asset Management, Inc.
    (&#147;Spectrum&#148;) with the SEC reporting share ownership as
    of December&#160;31, 2010. Based on that filing, Spectrum and
    Principal Financial Group Inc. (&#147;Principal&#148;) have the
    shared power to vote or direct the vote or dispose or direct the
    disposition of 2,960,500&#160;Shares of Common Stock.
    </FONT></TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    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.
    Shareholders of each Fund will vote separately for each of PFD,
    PFO, FFC and FLC on the 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. <I>Shareholders of each Fund are entitled
    to vote on the proposal pertaining to that Fund.</I>
</DIV>

<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">PROPOSAL&#160;1:
    ELECTION OF DIRECTORS</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    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.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">Nominees
    for the Boards of Directors</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    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.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Mr.&#160;Gale and Ms.&#160;Hogan, each a Class&#160;I Director
    of PFD, have each been nominated for a three-year term to expire
    at PFD&#146;s 2014 Annual Meeting of Shareholders and until
    their successors are duly elected and qualified. Mr.&#160;Gust
    and Ms.&#160;Hogan, each a Class&#160;III Director of PFO, have
    each been nominated for a three-year term to expire
</DIV>
<!-- XBRL Paragraph Pagebreak -->
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    3
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    at PFO&#146;s 2014 Annual Meeting of Shareholders and until
    their successors are duly elected and qualified. Mr.&#160;Gale,
    a Class&#160;I Director of FFC and FLC, has been nominated for a
    three-year term to expire at each Fund&#146;s 2014 Annual
    Meeting of Shareholders and until his successor is duly elected
    and qualified. Shareholders of each Fund&#146;s Common Stock are
    entitled to elect the nominees for election to the Board of the
    relevant Fund.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <U>Information About Each Director&#146;s Experience,
    Qualifications, Attributes or Skills</U>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Directors of the Funds, together with information as to their
    positions with the Funds, principal occupations and other board
    memberships for the past five years, are shown below.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 9pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="23%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="13%">&nbsp;</TD>	<!-- colindex=02 type=maindata -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=03 type=gutter -->
    <TD width="18%">&nbsp;</TD>	<!-- colindex=03 type=maindata -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=04 type=gutter -->
    <TD width="18%">&nbsp;</TD>	<!-- colindex=04 type=maindata -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=05 type=gutter -->
    <TD width="8%">&nbsp;</TD>	<!-- colindex=05 type=maindata -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=06 type=gutter -->
    <TD width="13%">&nbsp;</TD>	<!-- colindex=06 type=maindata -->
</TR>
<!-- Table Width Row END -->
<!-- TableOutputHead -->
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
    Number of<BR>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
    Funds in<BR>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
    Other Public<BR>
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
    Current<BR>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
    Fund<BR>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
    Company Board<BR>
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
    Position(s)<BR>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
    Term of Office and<BR>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
    Principal Occupation<BR>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
    Complex<BR>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
    Memberships<BR>
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
    Held with<BR>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
    Length of Time<BR>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
    During Past Five<BR>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
    Overseen by<BR>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
    During Past 5<BR>
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    Name, Address and Age
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    Funds
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    Served**
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    Years
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    Director*
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    Years
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<!-- TableOutputBody -->
<TR valign="bottom" style="line-height: 6pt">
<TD colspan="11">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD colspan="11" valign="top">
    <B><U>Non-Interested Directors:</U></B>
</TD>
</TR>
<TR valign="bottom" style="line-height: 9pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
    <B>David Gale<BR>
    </B>Delta Dividend Group, Inc. 220 Montgomery Street
    Suite&#160;426 <BR>
    San&#160;Francisco, CA 94104 Age: 61
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
    Director
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    <B>Class I Director</B> <BR>
    PFD&#160;&#150;&#160;since 1997 <BR>
    PFO&#160;&#150;&#160;since 1997 <BR>
    FFC&#160;&#150;&#160;since inception <BR>
    FLC&#160;&#150;&#160;since inception
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    President of Delta Dividend Group, Inc. (investments)
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="top">
    4
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    Metromedia <BR>
    International <BR>
    Group, Inc.
</TD>
</TR>
<TR valign="bottom" style="line-height: 6pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
    <B>Morgan Gust</B> 301&#160;E.&#160;Colorado Boulevard
    Suite&#160;720 <BR>
    Pasadena, CA 91101 <BR>
    Age: 63
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    Director and <BR>
    Nominating and <BR>
    Governance <BR>
    Committee <BR>
    Chairman
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
<DIV style="text-indent: -0pt; margin-left: 0pt;">
<B>Class&#160;III Director</B> <BR>PFD&#160;&#150;&#160;since inception <BR>PFO&#160;&#150;&#160;since inception <BR><BR><B>Class&#160;II Director</B> <BR>FFC&#160;&#150;&#160;since inception <BR>FLC&#160;&#150;&#160;since inception
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    Owner and operator of various entities engaged in agriculture
    and real estate; Former President of Giant Industries, Inc.
    (petroleum refining and marketing) from March 2002 through June
    2007
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="top">
    4
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    CoBiz Financial, <BR>
    Inc. (financial <BR>
    services)
</TD>
</TR>
<TR valign="bottom" style="line-height: 6pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
    <B>Karen H. Hogan</B> 301&#160;E.&#160;Colorado Boulevard
    Suite&#160;720 <BR>
    Pasadena, CA 91101 <BR>
    Age: 49
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
    Director
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
<DIV style="text-indent: -0pt; margin-left: 0pt;">
<B>Class I Director<BR></B>PFD&#160;&#150;&#160;since 2005 <BR><BR><B>Class&#160;III Director</B> <BR>PFO&#160;&#150;&#160;since 2005 <BR><BR><B>Class&#160;II Director</B> <BR>FFC&#160;&#150;&#160;since 2005 <BR>FLC&#160;&#150;&#160;since 2005
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    Active Committee Member and Volunteer to several non-profit
    organizations; from September 1985 to January 1997, Senior Vice
    President of Preferred Stock Origination at Lehman Brothers and
    Previously, Vice President of New Product Development
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="top">
    4
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
    None
</TD>
</TR>
<TR valign="bottom" style="line-height: 6pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
    <B>Robert F. Wulf</B> <BR>
    P.O.&#160;Box&#160;753 <BR>
    Neskowin, OR 97149 <BR>
    Age: 73
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    Director and Audit Committee Chairman
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
<DIV style="text-indent: -0pt; margin-left: 0pt;">
<B>Class&#160;II Director</B> <BR>PFD&#160;&#150;&#160;since inception <BR>PFO&#160;&#150;&#160;since inception <BR><BR><B>Class&#160;III Director</B> <BR>FFC&#160;&#150;&#160;since inception <BR>FLC&#160;&#150;&#160;since inception
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    Financial Consultant; Trustee, University of Oregon Foundation;
    Trustee, San&#160;Francisco Theological Seminary
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="top">
    4
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
    None
</TD>
</TR>
</TABLE>
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <BR>
    4
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->
<!-- XBRL Table Pagebreak -->

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 9pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="23%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="13%">&nbsp;</TD>	<!-- colindex=02 type=maindata -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=03 type=gutter -->
    <TD width="18%">&nbsp;</TD>	<!-- colindex=03 type=maindata -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=04 type=gutter -->
    <TD width="18%">&nbsp;</TD>	<!-- colindex=04 type=maindata -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=05 type=gutter -->
    <TD width="8%">&nbsp;</TD>	<!-- colindex=05 type=maindata -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=06 type=gutter -->
    <TD width="13%">&nbsp;</TD>	<!-- colindex=06 type=maindata -->
</TR>
<!-- Table Width Row END -->
<!-- TableOutputHead -->
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
    Number of<BR>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
    Funds in<BR>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
    Other Public<BR>
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
    Current<BR>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
    Fund<BR>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
    Company Board<BR>
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
    Position(s)<BR>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
    Term of Office and<BR>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
    Principal Occupation<BR>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
    Complex<BR>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
    Memberships<BR>
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
    Held with<BR>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
    Length of Time<BR>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
    During Past Five<BR>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
    Overseen by<BR>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
    During Past 5<BR>
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    Name, Address and Age
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    Funds
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    Served**
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    Years
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    Director*
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    Years
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<!-- TableOutputBody -->
<TR valign="bottom" style="line-height: 6pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
    <B><U>Interested Director:</U></B>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="line-height: 6pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
    <B>Donald F.
    Crumrine</B><SUP style="font-size: 85%; vertical-align: top">(1)<BR>

    </SUP>301&#160;E.&#160;Colorado Boulevard Suite&#160;720 <BR>
    Pasadena, CA 91101 <BR>
    Age: 63
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    Director, Chairman of the Board and Chief Executive Officer
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
<DIV style="text-indent: -0pt; margin-left: 0pt;">
<B>Class&#160;II Director</B> <BR>PFD&#160;&#150;&#160;since inception <BR>PFO&#160;&#150;&#160;since inception <BR><BR><B>Class&#160;III Director</B> <BR>FFC&#160;&#150;&#160;since inception <BR>FLC&#160;&#150;&#160;since inception
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    Chairman of the Board and Director of Flaherty &#038; Crumrine
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="top">
    4
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
    None
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">

</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="font-size: 1pt; margin-left: 0%; width: 13%;  align: left; border-bottom: 1pt solid #000000"></DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>



<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">

<TR>
    <TD width="2%"></TD>
    <TD width="1%"></TD>
    <TD width="97%"></TD>
</TR>

<TR>
    <TD valign="top">
    <FONT style="font-size: 9pt">*
    </FONT></TD>
    <TD></TD>
    <TD valign="bottom">
    <FONT style="font-size: 9pt">The Funds in the fund complex are:
    Flaherty&#160;&#038; Crumrine Preferred Income Fund
    Incorporated, Flaherty&#160;&#038; Crumrine Preferred Income
    Opportunity Fund&#160;Incorporated, Flaherty&#160;&#038;
    Crumrine/Claymore Preferred Securities Income
    Fund&#160;Incorporated and Flaherty&#160;&#038;
    Crumrine/Claymore Total Return Fund&#160;Incorporated.
    </FONT></TD>
</TR>




<TR>
    <TD valign="top">
    <FONT style="font-size: 9pt">**
    </FONT></TD>
    <TD></TD>
    <TD valign="bottom">
    <FONT style="font-size: 9pt">The Class&#160;I Directors of PFD,
    and the Class&#160;I Director of FFC and FLC and the
    Class&#160;III Directors of PFO will serve until each
    Fund&#146;s Annual Meeting of Shareholders in 2014 and until
    their successors are duly elected and qualified. The
    Class&#160;II Directors of PFO and the Class&#160;III Directors
    of PFD, FFC and FLC will serve until each Fund&#146;s 2013
    Annual Meeting of Shareholders and until their successors are
    duly elected and qualified. The Class&#160;I Director of PFO,
    the Class&#160;II Directors of PFD, FFC and FLC will serve until
    each Fund&#146;s Annual Meeting of Shareholders in 2012 and
    until their successors are duly elected and qualified.
    </FONT></TD>
</TR>




<TR>
    <TD valign="top">
    <FONT style="font-size: 9pt"><SUP style="font-size: 85%; vertical-align: top">(1)</SUP></FONT></TD>
    <TD></TD>
    <TD valign="bottom">
    <FONT style="font-size: 9pt">&#147;Interested person&#148; of
    the Funds as defined in the Investment Company Act of 1940 (the
    &#147;1940 Act&#148;). Mr.&#160;Crumrine is considered an
    &#147;interested person&#148; because of his affiliation with
    Flaherty&#160;&#038; Crumrine.
    </FONT></TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Each Director has been a Director of the Funds for at least five
    years. Additional information about each Director follows
    (supplementing the information provided in the table above) that
    describes some of the specific experiences, qualifications,
    attributes or skills that each Director possesses which the
    Boards believe have prepared them to be effective Directors. The
    Boards believe that Directors need to have the ability to
    critically review, evaluate, question and discuss information
    provided to them, and to interact effectively with Fund
    management, service providers and counsel, in order to exercise
    effective business judgment in the performance of their duties;
    the Boards believe that their members satisfy this standard.
    Experience relevant to having this ability may be achieved
    through a Director&#146;s educational background; business,
    professional training or practice (<I>e.g</I>., accounting or
    law); public service or academic positions; experience from
    service as a board member (including the Boards of the Funds) or
    as an executive of investment funds, public companies or
    significant private or
    <FONT style="white-space: nowrap">not-for-profit</FONT>
    entities or other organizations;
    <FONT style="white-space: nowrap">and/or</FONT> other
    life experiences. The charters for the Boards&#146; Nominating
    and Governance Committees contain certain other factors
    considered by the Committees in identifying and evaluating
    potential Director nominees. To assist them in evaluating
    matters under federal and state law, the Independent Directors
    (defined below) are counseled by their own independent legal
    counsel, who participates in Board meetings and interacts with
    Flaherty&#160;&#038; Crumrine, and also may benefit from
    information provided by the Funds&#146; and Flaherty&#160;&#038;
    Crumrine&#146;s counsel; both counsel to the Independent
    Directors and counsel to the Funds and Flaherty&#160;&#038;
    Crumrine have significant experience advising funds and fund
    directors. The Boards and their committees have the ability to
    engage other experts as appropriate. The Boards evaluate their
    performance on an annual basis.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    <U>Donald F. Crumrine</U>&#160;&#150; Mr.&#160;Crumrine has been
    the Chairman of the Boards since each Fund&#146;s inception.
    Mr.&#160;Crumrine has over 35&#160;years of experience managing
    portfolios of preferred securities. He co-founded
    Flaherty&#160;&#038; Crumrine in 1983, after spending twelve
    years at Scudder, Stevens&#160;&#038; Clark, to focus on
    managing preferred portfolios and associated hedges.
    Mr.&#160;Crumrine is actively involved in the
    <FONT style="white-space: nowrap">day-to-day</FONT>
    management of all Flaherty&#160;&#038; Crumrine client
    portfolios, including those of the Funds, and directs client
    service and marketing efforts at Flaherty&#160;&#038; Crumrine.
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    <U>David Gale</U>&#160;&#150; In addition to his tenure as a
    Director of the Funds, Mr.&#160;Gale has been President and
    Chief Executive Officer of Delta Dividend Group, Inc, a
    San&#160;Francisco-based investment management firm, since 1992.
    Prior to joining Delta Dividend Group, Inc., Mr.&#160;Gale was a
    Principal with Morgan Stanley from
</TD>
</TR>
<!-- XBRL Paragraph Pagebreak -->

</TABLE>
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    5
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>
</TD>
    <TD align="left">
    February 1983 to January 1990, and a Managing Director of Lehman
    Brothers Holdings Inc. from January 1990 to January 1992.
    Mr.&#160;Gale also served as a director of Metromedia
    International Group, Inc., a telecommunications company from
    2005 through August&#160;30, 2008.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    <U>Morgan Gust</U>&#160;&#150; In addition to his tenure as a
    Director of the Funds, Mr.&#160;Gust is the owner and operator
    of various entities engaged in agriculture and real estate. From
    1990 to 2007, Mr.&#160;Gust served in various capacities,
    including President, Executive Vice President, General Counsel
    and Corporate Secretary, of Giant Industries, Inc., a petroleum
    refining and marketing company listed on the New York Stock
    Exchange.
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    <U>Karen H. Hogan</U>&#160;&#150; In addition to her tenure as a
    Director of the Funds, Ms.&#160;Hogan has served as a board
    member and committee member of charitable and non-profit
    organizations. From September 1985 to January 1997,
    Ms.&#160;Hogan served as Senior Vice President of Preferred
    Stock Origination, and previously Vice President of New Product
    Development, at Lehman Brothers Holdings Inc.
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    <U>Robert F. Wulf</U>&#160;&#150; In addition to his tenure as a
    Director of the Funds, Mr.&#160;Wulf has worked as a financial
    consultant for over 26&#160;years. Mr.&#160;Wulf also serves as
    a board member of two non-profit organizations.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <U>Board Composition and Leadership Structure</U>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The 1940 Act requires that at least 40% of the Funds&#146;
    Directors not be &#147;interested persons&#148; (as defined in
    the 1940 Act) of the Funds, and therefore not affiliated with
    Flaherty&#160;&#038; Crumrine (&#147;Independent
    Directors&#148;). To rely on certain exemptive rules under the
    1940 Act, a majority of the Funds&#146; Directors must be
    Independent Directors and, for certain important matters, such
    as the approval of investment advisory agreements or
    transactions with affiliates, the 1940 Act or the rules
    thereunder require the approval of a majority of the Independent
    Directors. Currently, four of the Funds&#146; five Directors are
    Independent Directors. The Chairman of the Boards is an
    interested person of the Funds. The four Independent Directors
    interact directly with the Chairman and other senior management
    of Flaherty&#160;&#038; Crumrine at scheduled meetings and
    between meetings as appropriate. Independent Directors have been
    designated to chair the Audit Committee and the Nominating and
    Corporate Governance Committee, and the Independent Directors
    rotate the responsibility for chairing meetings of Independent
    Directors. In addition, from time to time one or more
    Independent Directors may be designated, formally or informally,
    to take the lead in addressing with management or their
    independent legal counsel matters or issues of concern to the
    Boards. As a result, the Boards have determined that their
    leadership structures, in which no individual Independent
    Director has been designated to lead all the Independent
    Directors, are appropriate in light of the Boards&#146; size and
    the cooperative and dynamic working relationship among the
    Independent Directors and the Independent Directors&#146; open
    lines of communication with Fund management. The Boards have
    determined that their leadership structures, in which the
    Chairman of the Boards is an &#147;interested&#148; person of
    the Funds and 80% of the Directors are Independent Directors,
    are appropriate in light of the services that
    Flaherty&#160;&#038; Crumrine provides to the Funds and
    potential conflicts of interest that could arise from these
    relationships.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <U>Boards&#146; Oversight Role in Management</U>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The Boards&#146; role in management of the Funds is oversight.
    As is the case with virtually all investment companies (as
    distinguished from operating companies), service providers to
    the Funds, primarily Flaherty&#160;&#038; Crumrine, have
    responsibility for the
    <FONT style="white-space: nowrap">day-to-day</FONT>
    management of the Funds, which includes responsibility for risk
    management (including management of investment performance and
    investment risk, valuation risk, issuer and counterparty credit
    risk, compliance risk and operational risk). As part of its
    oversight, the Boards, acting at their scheduled meetings, or
    the Chairman, acting between Board meetings, regularly interacts
    with and receives reports from senior personnel of service
    providers, including the Funds&#146; and Flaherty&#160;&#038;
    Crumrine&#146;s Chief Compliance Officer and portfolio
    management personnel. The Boards&#146; Audit Committees (which
    consist of all the Independent Director) meet during their
    scheduled meetings, and between meetings the Audit Committee
    chairs maintain contact, with the Funds&#146; independent
    registered public accounting firm and the Funds&#146; Chief
    Financial Officer. The Boards also receive periodic
    presentations from senior personnel of Flaherty&#160;&#038;
    Crumrine regarding risk management generally, as well as
    periodic presentations regarding specific operational,
    compliance or investment areas, such as business continuity,
    personal trading, valuation and credit. The Boards have adopted
    policies and procedures designed to address certain risks to the
    Funds. In addition, Flaherty&#160;&#038; Crumrine and other
    service providers to the Funds have adopted a variety of
    policies, procedures and controls designed to address particular
    risks to the Funds.
</DIV>
<!-- XBRL Paragraph Pagebreak -->
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <BR>
    6
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Different processes, procedures and controls are employed with
    respect to different types of risks. However, it is not possible
    to eliminate all of the risks applicable to the Funds. The
    Boards also receive reports from counsel to the Funds and
    Flaherty&#160;&#038; Crumrine and the Independent
    Directors&#146; own independent legal counsel regarding
    regulatory, compliance and governance matters. The Boards&#146;
    oversight role does not make the Boards guarantors of the
    Funds&#146; investments or activities.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">Beneficial
    Ownership of Shares in Funds and Fund&#160;Complex for each
    Director and Nominee for Election as Director</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    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&#160;&#038; Crumrine Fund&#160;Family
    beneficially owned by each Director.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="39%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=02 type=maindata -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=03 type=gutter -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=03 type=maindata -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=04 type=gutter -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=04 type=maindata -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=05 type=gutter -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=05 type=maindata -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=06 type=gutter -->
    <TD width="35%">&nbsp;</TD>	<!-- colindex=06 type=maindata -->
</TR>
<!-- Table Width Row END -->
<!-- TableOutputHead -->
<TR style="font-size: 9pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="7" nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    Aggregate Dollar Range of Equity<BR>
</TD>
</TR>
<TR style="font-size: 9pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="7" nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    Securities in All Registered Investment<BR>
</TD>
</TR>
<TR style="font-size: 9pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="7" nowrap align="left" valign="bottom">
    Dollar Range of Equity<BR>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    Companies Overseen by Director in <BR>
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <FONT style="font-size: 9pt">Name of Director or Nominee
    </FONT>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="7" nowrap align="left" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <FONT style="font-size: 9pt">Securities Held in Fund*(1)
    </FONT>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <FONT style="font-size: 9pt">Family of Investment Companies*(2)
    </FONT>
</DIV>
</TD>
</TR>
<TR style="font-size: 9pt" valign="bottom" align="center">
<TD colspan="11" nowrap align="left" valign="bottom">
    &#160;&#160;
</TD>
</TR>
<TR style="font-size: 9pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    PFD
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    PFO
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    FFC
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    FLC
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    Total
</DIV>
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<!-- TableOutputBody -->
<TR valign="bottom" style="line-height: 10pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <B>NON-INTERESTED DIRECTORS:</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="line-height: 10pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    David Gale
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
    D
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
    D
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
    D
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
    D
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
    E
</TD>
</TR>
<TR valign="bottom" style="line-height: 10pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Morgan Gust
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
    D
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
    C
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
    C
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
    C
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
    E
</TD>
</TR>
<TR valign="bottom" style="line-height: 10pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Karen H. Hogan
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
    B
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
    B
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
    B
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
    B
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
    C
</TD>
</TR>
<TR valign="bottom" style="line-height: 10pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Robert F. Wulf
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
    C
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
    B
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
    C
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
    C
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
    D
</TD>
</TR>
<TR valign="bottom" style="line-height: 10pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <B>INTERESTED DIRECTOR:</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="line-height: 10pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Donald F. Crumrine
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
    E<SUP style="font-size: 85%; vertical-align: top">(3)</SUP>

</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
    E<SUP style="font-size: 85%; vertical-align: top">(3)</SUP>

</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
    E<SUP style="font-size: 85%; vertical-align: top">(3)</SUP>

</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
    E<SUP style="font-size: 85%; vertical-align: top">(3)</SUP>

</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
    E<SUP style="font-size: 85%; vertical-align: top">(3)</SUP>

</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">

</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="font-size: 1pt; margin-left: 0%; width: 13%;  align: left; border-bottom: 1pt solid #000000"></DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>



<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">

<TR>
    <TD width="2%"></TD>
    <TD width="1%"></TD>
    <TD width="97%"></TD>
</TR>

<TR>
    <TD valign="top">
    <FONT style="font-size: 9pt">*&#160;
    </FONT></TD>
    <TD></TD>
    <TD valign="bottom">
    <FONT style="font-size: 9pt">Key to Dollar Ranges
    </FONT></TD>
</TR>




<TR>
    <TD valign="top">
    <FONT style="font-size: 9pt">A.
    </FONT></TD>
    <TD></TD>
    <TD valign="bottom">
    <FONT style="font-size: 9pt">None
    </FONT></TD>
</TR>




<TR>
    <TD valign="top">
    <FONT style="font-size: 9pt">B.
    </FONT></TD>
    <TD></TD>
    <TD valign="bottom">
    <FONT style="font-size: 9pt">$1&#160;- $10,000
    </FONT></TD>
</TR>




<TR>
    <TD valign="top">
    <FONT style="font-size: 9pt">C.
    </FONT></TD>
    <TD></TD>
    <TD valign="bottom">
    <FONT style="font-size: 9pt">$10,001&#160;-&#160;$50,000
    </FONT></TD>
</TR>




<TR>
    <TD valign="top">
    <FONT style="font-size: 9pt">D.
    </FONT></TD>
    <TD></TD>
    <TD valign="bottom">
    <FONT style="font-size: 9pt">$50,001&#160;- $100,000
    </FONT></TD>
</TR>




<TR>
    <TD valign="top">
    <FONT style="font-size: 9pt">E.
    </FONT></TD>
    <TD></TD>
    <TD valign="bottom">
    <FONT style="font-size: 9pt">over $100,000
    </FONT></TD>
</TR>




<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="bottom">
    <FONT style="font-size: 9pt">All shares were valued as of
    January&#160;21, 2011.
    </FONT></TD>
</TR>




<TR>
    <TD valign="top">
    <FONT style="font-size: 9pt"><SUP style="font-size: 85%; vertical-align: top">(1)</SUP></FONT></TD>
    <TD></TD>
    <TD valign="bottom">
    <FONT style="font-size: 9pt">This information has been furnished
    by each Director as of January&#160;21, 2011. &#147;Beneficial
    Ownership&#148; is determined in accordance with
    <FONT style="white-space: nowrap">Rule&#160;16a-1(a)(2)</FONT>
    under the 1934&#160;Act.
    </FONT></TD>
</TR>




<TR>
    <TD valign="top">
    <FONT style="font-size: 9pt"><SUP style="font-size: 85%; vertical-align: top">(2)</SUP></FONT></TD>
    <TD></TD>
    <TD valign="bottom">
    <FONT style="font-size: 9pt">The Directors, Nominees and
    executive officers of each Fund, as a group, own less than 1% of
    each Fund.
    </FONT></TD>
</TR>




<TR>
    <TD valign="top">
    <FONT style="font-size: 9pt"><SUP style="font-size: 85%; vertical-align: top">(3)</SUP></FONT></TD>
    <TD></TD>
    <TD valign="bottom">
    <FONT style="font-size: 9pt">Includes shares of the Fund held by
    Flaherty&#160;&#038; Crumrine, of which the reporting person is
    a shareholder and director.
    </FONT></TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Prior to January&#160;26, 2010, each Director of each Fund who
    is not a director, officer or employee of Flaherty&#160;&#038;
    Crumrine or any of its affiliates received 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, prior to February&#160;1, 2010, the Audit Committee
    Chairman received from each Fund an annual fee of $2,500. As of
    January&#160;26, 2010, each Director of each Fund who is not a
    director, officer or employee of Flaherty&#160;&#038; Crumrine
    or any of its affiliates receives from each Fund a fee of $9,000
    per annum plus $750 for each in-person meeting attended, and
    $250 for each telephone meeting attended. In addition, as of
    February&#160;1, 2010, the Audit Committee Chairman receives
    from each Fund an annual fee of $3,000. Each Director of each
    Fund is reimbursed for travel and
    <FONT style="white-space: nowrap">out-of-pocket</FONT>
    expenses associated with attending Board and committee meetings.
    During the fiscal year ended November&#160;30, 2010, the Board
    of Directors held seven meetings for PFD (three of which were
    held by telephone conference call), seven meetings for PFO
    (three of which were held by telephone conference call), six
    meetings for FFC (two of which were held by telephone conference
    call) and six meetings for FLC (two of which were held by
    telephone conference call). Each Director of each Fund attended
    at least 75% of the meetings of Directors and of any Committee
    of which he or she is
</DIV>
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    <BR>
    7
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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
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<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    a member. The aggregate remuneration paid to the Directors of
    each Fund for the fiscal year ended November&#160;30, 2010 is
    set forth below:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="6%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="12%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="19%">&nbsp;</TD>	<!-- colindex=02 type=maindata -->
    <TD width="12%">&nbsp;</TD>	<!-- colindex=03 type=gutter -->
    <TD width="17%">&nbsp;</TD>	<!-- colindex=03 type=maindata -->
    <TD width="12%">&nbsp;</TD>	<!-- colindex=04 type=gutter -->
    <TD width="22%">&nbsp;</TD>	<!-- colindex=04 type=maindata -->
</TR>
<!-- Table Width Row END -->
<!-- TableOutputHead -->
<TR style="font-size: 10pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    Board Meeting and<BR>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    Committee Meeting<BR>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    Travel and Out-of-Pocket<BR>
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <FONT style="font-size: 10pt">Annual Director Fees
    </FONT>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <FONT style="font-size: 10pt">Fees
    </FONT>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <FONT style="font-size: 10pt">Expenses*
    </FONT>
</DIV>
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<!-- TableOutputBody -->
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    PFD
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $36,000
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $32,167
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $2,716
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    PFO
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $36,000
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $32,167
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $2,716
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    FFC
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $36,000
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $31,567
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $2,716
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    FLC
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $36,000
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $31,567
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $2,716
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">

</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="font-size: 1pt; margin-left: 0%; width: 13%;  align: left; border-bottom: 1pt solid #000000"></DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>



<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">

<TR>
    <TD width="1%"></TD>
    <TD width="1%"></TD>
    <TD width="98%"></TD>
</TR>

<TR>
    <TD valign="top">
    <FONT style="font-size: 9pt">*
    </FONT></TD>
    <TD></TD>
    <TD valign="bottom">
    <FONT style="font-size: 9pt">Includes reimbursement for travel
    and
    <FONT style="white-space: nowrap">out-of-pocket</FONT>
    expenses for both &#147;interested&#148; and Independent
    Directors.
    </FONT></TD>
</TR>

</TABLE>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">Officers
    of the Funds</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The following table provides information concerning each of the
    officers of the Funds.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 9pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="25%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="23%">&nbsp;</TD>	<!-- colindex=02 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=03 type=gutter -->
    <TD width="23%">&nbsp;</TD>	<!-- colindex=03 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=04 type=gutter -->
    <TD width="23%">&nbsp;</TD>	<!-- colindex=04 type=maindata -->
</TR>
<!-- Table Width Row END -->
<!-- TableOutputHead -->
<TR style="font-size: 10pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    Term of Office and<BR>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    Principal Occupation <BR>
</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    Current Position(s)<BR>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    Length of Time<BR>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    During Past <BR>
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <FONT style="font-size: 10pt">Name, Address and Age
    </FONT>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <FONT style="font-size: 10pt">Held with Funds
    </FONT>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <FONT style="font-size: 10pt">Served**
    </FONT>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <FONT style="font-size: 10pt">Five Years
    </FONT>
</DIV>
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<!-- TableOutputBody -->
<TR valign="bottom" style="line-height: 12pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
    <B>Robert M. Ettinger</B> 301&#160;E.&#160;Colorado Boulevard
    Suite&#160;720 <BR>
    Pasadena, CA 91101 <BR>
    Age:&#160;52
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
    President
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    PFD&#160;&#150;&#160;since 2002 PFO&#160;&#150;&#160;since 2002
    FFC&#160;&#150;&#160;since inception FLC&#160;&#150;&#160;since
    inception
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    President and Director of Flaherty &#038; Crumrine
</TD>
</TR>
<TR valign="bottom" style="line-height: 12pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
    <B>R. Eric Chadwick</B> 301&#160;E.&#160;Colorado Boulevard
    Suite&#160;720 <BR>
    Pasadena, CA 91101 <BR>
    Age:&#160;35
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    Chief Financial <BR>
    Officer, Vice <BR>
    President and <BR>
    Treasurer
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    PFD&#160;&#150;&#160;since 2004 PFO&#160;&#150;&#160;since 2004
    FFC&#160;&#150;&#160;since 2004 FLC&#160;&#150;&#160;since 2004
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    Director of Flaherty &#038; Crumrine since June 2006; Vice
    President of Flaherty &#038; Crumrine
</TD>
</TR>
<TR valign="bottom" style="line-height: 12pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
    <B>Chad C. Conwell</B> 301&#160;E.&#160;Colorado Boulevard
    Suite&#160;720 <BR>
    Pasadena, CA 91101 <BR>
    Age:&#160;38
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    Chief Compliance <BR>
    Officer, Vice <BR>
    President and <BR>
    Secretary
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    PFD&#160;&#150;&#160;since 2005 PFO&#160;&#150;&#160;since 2005
    FFC&#160;&#150;&#160;since 2005 FLC&#160;&#150;&#160;since 2005
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    Chief Compliance Officer and Vice President of Flaherty &#038;
    Crumrine since 2005
</TD>
</TR>
<TR valign="bottom" style="line-height: 12pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
    <B>Linda M. Puchalski</B> 301&#160;E.&#160;Colorado Boulevard
    Suite&#160;720 <BR>
    Pasadena, CA 91101 <BR>
    Age:&#160;54
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
    Assistant Treasurer
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    PFD&#160;&#150;&#160;since 2010 PFO&#160;&#150;&#160;since 2010
    FFC&#160;&#150;&#160;since 2010 FLC&#160;&#150;&#160;since 2010
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    Administrator of Flaherty &#038; Crumrine Since July 2004
</TD>
</TR>
<TR valign="bottom" style="line-height: 12pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
    <B>Bradford S. Stone</B> <BR>
    47 Maple Street <BR>
    Suite&#160;403 <BR>
    Summit NJ 07901 <BR>
    Age:&#160;51
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    Vice President and Assistant <BR>
    Treasurer
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    PFD&#160;&#150;&#160;since 2003 PFO&#160;&#150;&#160;since 2003
    FFC&#160;&#150;&#160;since 2003 FLC&#160;&#150;&#160;since
    inception
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    Director of Flaherty &#038; Crumrine since June 2006; Vice
    President of Flaherty &#038; Crumrine
</TD>
</TR>
<TR valign="bottom" style="line-height: 12pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
    <B>Laurie C. Lodolo</B> 301&#160;E.&#160;Colorado Boulevard
    Suite&#160;720 <BR>
    Pasadena, CA 91101 <BR>
    Age:&#160;47
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    Assistant <BR>
    Compliance Officer, Assistant Treasurer and Assistant Secretary
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    PFD&#160;&#150;&#160;since 2004 PFO&#160;&#150;&#160;since 2004
    FFC&#160;&#150;&#160;since 2004 FLC&#160;&#150;&#160;since 2004
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    Assistant Compliance Officer and Secretary of Flaherty &#038;
    Crumrine
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">

</DIV>
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    <BR>
    8
</DIV><!-- END PAGE WIDTH -->
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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
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<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">Audit
    Committee Report</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The role of each Fund&#146;s Audit Committee is to assist the
    Board of Directors in its oversight of: (i)&#160;the integrity
    of each Fund&#146;s financial statements and the independent
    audit thereof; (ii)&#160;each Fund&#146;s accounting and
    financial reporting policies and practices, its internal
    controls and, as appropriate, the internal controls of certain
    service providers; (iii)&#160;each Fund&#146;s compliance with
    legal and regulatory requirements; and (iv)&#160;the independent
    auditor&#146;s qualifications, independence and performance.
    Each Fund&#146;s Audit Committee is also required to prepare an
    audit committee report pursuant to the rules of the SEC for
    inclusion in each Fund&#146;s annual proxy statement. Each Audit
    Committee operates pursuant to a charter (the &#147;Audit
    Committee Charter&#148; or &#147;Charter&#148;) that was most
    recently reviewed and approved by the Board of Directors of each
    Fund on January&#160;25, 2011 and which is available on PFD and
    PFO&#146;s website at www.preferredincome.com and FFC and
    FLC&#146;s website at www.fcclaymore.com. As set forth in the
    Charter, management is responsible for the (i)&#160;preparation,
    presentation and integrity of each Fund&#146;s financial
    statements, (ii)&#160;maintenance of appropriate accounting and
    financial reporting principles and policies and
    (iii)&#160;maintenance of internal controls and procedures
    designed to assure compliance with accounting standards and
    applicable laws and regulations. The Funds&#146; independent
    registered public accounting firm, KPMG LLP (the
    &#147;independent accountants&#148; or &#147;KPMG&#148;), is
    responsible for planning and carrying out proper audits and
    reviews of each Fund&#146;s financial statements and expressing
    an opinion as to their conformity with accounting principles
    generally accepted in the United States of America.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    In performing its oversight function, at a meeting held on
    January&#160;24, 2011, 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&#160;30, 2010, and
    discussed the audit of such financial statements with the
    independent accountants.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    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.&#160;61, as amended (AICPA,
    <I>Professional Standards</I>, Vol. 1 AU Section&#160;380), as
    adopted by the Public Accounting Oversight Board in
    Rule&#160;3200T. The Audit Committee also received from the
    independent accountants the written disclosures and statements
    required by the SEC&#146;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.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    As set forth above, and as more fully set forth in each
    Fund&#146;s Audit Committee Charter, the Audit Committee has
    significant duties and powers in its oversight role with respect
    to the Fund&#146;s financial reporting procedures, internal
    control systems, and the independent audit process.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    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&#146;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&#146;s
    considerations and discussions referred to above do not provide
    assurance that the audit of each Fund&#146;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.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    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&#146;s Annual Report for the fiscal year ended
    November&#160;30, 2010.
</DIV>
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    <BR>
    9
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<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">This
    report was submitted by the Audit Committee of each Fund&#146;s
    Board of Directors</FONT></B>
</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    David Gale
</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Morgan Gust
</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Karen H. Hogan
</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Robert F. Wulf (Chairman)
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    January&#160;24, 2011
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Each Audit Committee was established in accordance with
    Section&#160;3(a)(58)(A) of the 1934&#160;Act. Each Audit
    Committee met four times in connection with its Board of
    Directors&#146; regularly scheduled meetings during the fiscal
    year ended November&#160;30, 2010. Each Audit Committee is
    composed entirely of each Fund&#146;s Independent (as such term
    is defined by the New York Stock Exchange (&#147;NYSE&#148;)
    listing standards applicable to closed-end funds, as may be
    modified or supplemented (the &#147;NYSE Listing
    Standards&#148;)) Directors, namely Ms.&#160;Hogan and
    Messrs.&#160;Gale, Gust and Wulf.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">Nominating
    and Governance Committee</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Each Board of Directors has a Nominating and Governance
    Committee composed entirely of each Fund&#146;s Independent (as
    such term is defined by the NYSE Listing Standards) Directors,
    namely Ms.&#160;Hogan and Messrs.&#160;Gale, Gust and Wulf. The
    Nominating and Governance Committee of each Fund met twice
    during the fiscal year ended November&#160;30, 2010. The
    Nominating and Governance Committee is responsible for
    identifying individuals believed to be qualified to become Board
    members; for recommending to the Board of Directors such
    nominees to stand for election as directors at each Fund&#146;s
    annual meeting of shareholders and to fill any vacancies on the
    Board; and for overseeing the Board of Directors&#146;
    governance practices. Each Fund&#146;s Nominating and Governance
    Committee has a charter which is available on its website. PFD
    and PFO&#146;s website address is www.preferredincome.com and
    FFC and FLC&#146;s website address is www.fcclaymore.com.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Each Fund&#146;s Nominating and Governance 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 and Governance Committees
    have not established a formal process for identifying candidates
    where a vacancy exists on the Board. In nominating candidates,
    the Nominating and Governance Committee shall take into
    consideration such factors as it deems appropriate, including
    educational background; business, professional training or
    practice (e.g., accounting or law); public service or academic
    positions; experience from service as a board member (including
    the Boards of the Funds) or as an executive of investment funds,
    public companies or significant private or
    <FONT style="white-space: nowrap">not-for-profit</FONT>
    entities or other organizations;
    <FONT style="white-space: nowrap">and/or</FONT> other
    life experiences. Each Fund&#146;s Nominating and Governance
    Committee may consider whether a potential nominee&#146;s
    professional experience, education, skills, and other individual
    qualities and attributes, including gender, race or national
    origin, would provide beneficial diversity of skills, experience
    or perspective to the Board&#146;s membership and collective
    attributes. Each Fund&#146;s Nominating and Governance 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
    &#147;Submission of Shareholder Proposals&#148; below.)
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">Other
    Board-Related Matters</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    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&#146;s attention.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    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&#160;22, 2010
    Annual Meetings of Shareholders. The Directors of PFD or PFO did
    not attend the Fund&#146;s Reconvened Annual Meeting of
    Shareholders held on May&#160;18, 2010.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">Compensation</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The following table sets forth certain information regarding the
    compensation of each Fund&#146;s Directors for the fiscal year
    ended November&#160;30, 2010. No executive officer or person
    affiliated with a Fund received compensation
</DIV>
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    <BR>
    10
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
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<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    from a Fund during the fiscal year ended November&#160;30, 2010
    in excess of $120,000. Directors and executive officers of the
    Funds do not receive pension or retirement benefits from the
    Funds.
</DIV>

<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">COMPENSATION
    TABLE</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 9pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="60%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="15%">&nbsp;</TD>	<!-- colindex=02 type=maindata -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=03 type=gutter -->
    <TD width="23%">&nbsp;</TD>	<!-- colindex=03 type=maindata -->
</TR>
<!-- Table Width Row END -->
<!-- TableOutputHead -->
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
    <FONT style="font-size: 10pt">Name of<BR>
    </FONT>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    <FONT style="font-size: 10pt">Aggregate<BR>
    </FONT>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    <FONT style="font-size: 10pt">Total Compensation from<BR>
    </FONT>
</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
    Person and<BR>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    Compensation<BR>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    the Funds and Fund<BR>
</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    Position
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    from each Fund
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    Complex Paid to Directors*
</DIV>
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<!-- TableOutputBody -->
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="top">
<DIV style="text-indent: -9pt; margin-left: 9pt">
    Donald F. Crumrine
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
    $0
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
    $0 (4)
</TD>
</TR>
<TR valign="bottom">
<TD colspan="5" valign="top">
<DIV style="text-indent: -9pt; margin-left: 9pt">
    Director, Chairman of the Board and Chief Executive Officer
</DIV>
</TD>
</TR>
<TR valign="bottom" style="line-height: 9pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="top">
    David Gale<BR>
    Director
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
    $16,350&#160;&#150;&#160;PFD<BR>
    $16,350&#160;&#150;&#160;PFO<BR>
    $16,200&#160;&#150;&#160;FFC<BR>
    $16,200&#160;&#150;&#160;FLC
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
    $65,100 (4)
</TD>
</TR>
<TR valign="bottom" style="line-height: 9pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
    Morgan Gust <BR>
    Director; Nominating and Governance Committee Chairman
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
    $16,200&#160;&#150;&#160;PFD<BR>
    $16,200&#160;&#150;&#160;PFO<BR>
    $16,050&#160;&#150;&#160;FFC<BR>
    $16,050&#160;&#150;&#160;FLC
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
    $64,500 (4)
</TD>
</TR>
<TR valign="bottom" style="line-height: 9pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="top">
    Karen H. Hogan <BR>
    Director
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
    $16,350&#160;&#150;&#160;PFD<BR>
    $16,350&#160;&#150;&#160;PFO<BR>
    $16,200&#160;&#150;&#160;FFC<BR>
    $16,200&#160;&#150;&#160;FLC
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="top">
    $65,100 (4)
</TD>
</TR>
<TR valign="bottom" style="line-height: 9pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
    Robert F. Wulf <BR>
    Director; Audit Committee Chairman
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    $19,266.67&#160;&#150;&#160;PFD $19,266.67&#160;&#150;&#160;PFO
    $19,116.67&#160;&#150;&#160;FFC $19,116.67&#160;&#150;&#160;FLC
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="top">
    $76,767 (4)
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">

</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="font-size: 1pt; margin-left: 0%; width: 13%;  align: left; border-bottom: 1pt solid #000000"></DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>



<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">

<TR>
    <TD width="1%"></TD>
    <TD width="1%"></TD>
    <TD width="98%"></TD>
</TR>

<TR>
    <TD valign="top">
    <FONT style="font-size: 9pt">*
    </FONT></TD>
    <TD></TD>
    <TD valign="bottom">
    <FONT style="font-size: 9pt">Represents the total compensation
    paid for the fiscal year ended November&#160;30, 2010, to such
    persons by the Funds and the other funds in the
    Flaherty&#160;&#038; Crumrine Fund&#160;Family, which are
    considered part of the same &#147;fund complex&#148; 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&#160;30,
    2010.
    </FONT></TD>
</TR>

</TABLE>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">Required
    Vote</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The election of Mr.&#160;Gale and Ms.&#160;Hogan as Directors of
    PFD will require the affirmative vote of a plurality of the
    votes cast by the holders of the Shares of the Common Stock of
    PFD at the Meeting in person or by proxy. The election of
    Mr.&#160;Gust and Ms.&#160;Hogan as Directors of PFO will
    require the affirmative vote of a plurality of the vote cast by
    holders of the Shares of Common Stock of PFO at the Meeting in
    person or by proxy. The election of Mr.&#160;Gale as a Director
    of each of FFC and FLC will require the affirmative vote of a
    plurality of the votes cast by holders of the Shares of Common
    Stock of each such Fund at the Meeting in person or by proxy.
</DIV>

<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">SUBMISSION
    OF SHAREHOLDER PROPOSALS</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    All proposals by shareholders of each Fund that are intended to
    be presented at each Fund&#146;s next Annual Meeting of
    Shareholders to be held in 2012 must be received by the relevant
    Fund for consideration for inclusion in the relevant Fund&#146;s
    proxy statement relating to the meeting no later than
    October&#160;27, 2011, and must satisfy the requirements of
    federal securities laws.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Each Fund&#146;s Bylaws require shareholders wishing to nominate
    Directors or make proposals to be voted on at the Fund&#146;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
</DIV>
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    <BR>
    11
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    forth on the first page of this proxy statement not later than
    60&#160;days prior to the date of the meeting; provided,
    however, that if less than 70&#160;days&#146; 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&#160;day following the day on which notice of the date of
    the annual meeting was given or such public disclosure was made.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Any such notice by a shareholder shall set forth the information
    required by the Fund&#146;s Bylaws with respect to each matter
    the shareholder proposes to bring before the annual meeting.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">ADDITIONAL
    INFORMATION</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">Independent
    Registered Public Accounting Firm</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    KPMG, Two Financial Center, 60 South Street, Boston,
    Massachusetts 02111, has been selected to serve as each
    Fund&#146;s independent registered public accounting firm for
    each Fund&#146;s fiscal year ending November&#160;30, 2011. KPMG
    acted as the independent registered public accounting firm for
    each Fund for the fiscal year ended November&#160;30, 2010. 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 Meetings, but will be available by telephone
    to respond to appropriate questions and will have an opportunity
    to make a statement, if asked.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    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&#160;30, 2009 and
    2010, respectively.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="11%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="6%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="16%">&nbsp;</TD>	<!-- colindex=02 type=maindata -->
    <TD width="6%">&nbsp;</TD>	<!-- colindex=03 type=gutter -->
    <TD width="9%">&nbsp;</TD>	<!-- colindex=03 type=maindata -->
    <TD width="6%">&nbsp;</TD>	<!-- colindex=04 type=gutter -->
    <TD width="12%">&nbsp;</TD>	<!-- colindex=04 type=maindata -->
    <TD width="6%">&nbsp;</TD>	<!-- colindex=05 type=gutter -->
    <TD width="9%">&nbsp;</TD>	<!-- colindex=05 type=maindata -->
    <TD width="6%">&nbsp;</TD>	<!-- colindex=06 type=gutter -->
    <TD width="13%">&nbsp;</TD>	<!-- colindex=06 type=maindata -->
</TR>
<!-- Table Width Row END -->
<!-- TableOutputHead -->
<TR style="font-size: 10pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    Fiscal Year Ended<BR>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    Audit-Related<BR>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <FONT style="font-size: 10pt">Fund
    </FONT>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <FONT style="font-size: 10pt">November&#160;30
    </FONT>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <FONT style="font-size: 10pt">Audit Fees
    </FONT>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <FONT style="font-size: 10pt">Fees
    </FONT>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <FONT style="font-size: 10pt">Tax Fees*
    </FONT>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <FONT style="font-size: 10pt">All Other Fees
    </FONT>
</DIV>
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<!-- TableOutputBody -->
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    PFD
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    2009<BR>
    2010
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $44,000<BR>
    $44,000
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $0<BR>
    $0
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $8,100<BR>
    $8,100
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $8,600**<BR>
    $0
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    PFO
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    2009<BR>
    2010
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $44,000<BR>
    $44,000
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $0<BR>
    $0
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $8,100<BR>
    $8,100
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $8,600**<BR>
    $0
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    FFC
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    2009<BR>
    2010
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $46,400<BR>
    $46,400
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $0<BR>
    $0
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $8,100<BR>
    $8,100
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $8,600**<BR>
    $0
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    FLC
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    2009<BR>
    2010
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $46,400<BR>
    $46,400
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $0<BR>
    $0
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $8,100<BR>
    $8,100
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $8,600**<BR>
    $0
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">

</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="font-size: 1pt; margin-left: 0%; width: 13%;  align: left; border-bottom: 1pt solid #000000"></DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>



<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">

<TR>
    <TD width="2%"></TD>
    <TD width="1%"></TD>
    <TD width="97%"></TD>
</TR>

<TR>
    <TD valign="top">
    <FONT style="font-size: 9pt">*&#160;
    </FONT></TD>
    <TD></TD>
    <TD valign="bottom">
    <FONT style="font-size: 9pt">&#147;Tax Fees&#148; are those fees
    billed to each Fund by KPMG in connection with tax consulting
    services, including primarily the review of each Fund&#146;s
    income tax returns.
    </FONT></TD>
</TR>




<TR>
    <TD valign="top">
    <FONT style="font-size: 9pt">**
    </FONT></TD>
    <TD></TD>
    <TD valign="bottom">
    <FONT style="font-size: 9pt">&#147;All Other Fees&#148; are
    those fees billed to each Fund by KPMG in connection with the
    preparation of a quarterly
    <FONT style="white-space: nowrap">agreed-upon-procedures</FONT>
    report. These
    <FONT style="white-space: nowrap">Agreed-Upon-Procedures</FONT>
    (&#147;AUP&#148;) were required pursuant to each Fund&#146;s
    Articles&#160;Supplementary when the Fund had preferred stock
    outstanding. Specifically, Moody&#146;s Investors Service and
    Fitch, Inc. each required that such AUP be undertaken and a
    report be provided in order to maintain their ratings on the
    preferred stock. As of November&#160;30, 2009, the Funds did not
    have any issued or outstanding preferred stock, which was
    redeemed during the course of each Fund&#146;s 2009 fiscal year.
    </FONT></TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Each Fund&#146;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&#146;s investment adviser and any entity
    controlling, controlled by or under common control with the
    Funds&#146; investment adviser (&#147;affiliates&#148;) that
    provide on-going services to each Fund, if the engagement
    relates directly to the 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&#160;30, 2009 and November&#160;30, 2010 were
    pre-approved by the Audit Committee.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    For each Fund&#146;s fiscal years ended November&#160;30, 2009
    and November&#160;30, 2010, KPMG did not provide any non-audit
    services (or bill any fees for such services) to the Funds&#146;
    investment adviser or any affiliates.
</DIV>
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <BR>
    12
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">Investment
    Adviser, Administrator and Servicing Agent</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Flaherty&#160;&#038; Crumrine serves as the investment adviser
    to each Fund, and its business address is
    301&#160;E.&#160;Colorado Boulevard, Suite&#160;720, Pasadena,
    California 91101. BNY Mellon acts as the administrator to each
    Fund and is located at 4400 Computer Drive, Westborough,
    Massachusetts 01581. Guggenheim Funds Distributors, Inc. acts as
    the servicing agent to FFC and FLC and is located at 2455
    Corporate West Drive, Lisle, Illinois 60532.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">Compliance
    with the Securities Exchange Act of 1934</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Section&#160;16(a) of the 1934&#160;Act and Section&#160;30(h)
    of the 1940 Act require each Fund&#146;s Directors and executive
    officers, certain persons affiliated with Flaherty&#160;&#038;
    Crumrine and persons who beneficially own more than 10% of a
    registered class of each Fund&#146;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
    2010, all such filing requirements applicable to such persons
    were met.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">Broker
    Non-Vote and Abstentions</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    A proxy which is properly executed and returned accompanied by
    instructions to withhold authority to vote represents a broker
    &#147;non-vote&#148; (i.e., shares held by brokers or nominees
    as to which (i)&#160;instructions have not been received from
    the beneficial owners or the persons entitled to vote and
    (ii)&#160;the broker or nominee does not have discretionary
    voting power on a particular matter). Proxies that reflect
    abstentions or broker non-votes (collectively,
    &#147;abstentions&#148;) 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&#160;1, abstentions do not constitute a vote
    &#147;for&#148; or &#147;against&#148; the proposal and will be
    disregarded in determining the &#147;votes cast&#148; on the
    proposal.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">OTHER
    MATTERS TO COME BEFORE THE MEETING</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    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.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">VOTING
    RESULTS</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    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.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">NOTICE TO
    BANKS, BROKER/DEALERS AND VOTING TRUSTEES AND THEIR
    NOMINEES</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Please advise the Funds whether other persons are the beneficial
    owners of Fund&#160;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&#160;Shares.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <B>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.</B>
</DIV>
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <BR>
    13
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="2" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="20%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">

<TD valign="top" colspan="3" style="border-top: 1px solid #000000; border-bottom: 1px solid #000000"><FONT style="font-size:12pt"><B>Proxy &#150; FLAHERTY &#038; CRUMRINE/CLAYMORE TOTAL RETURN FUND INCORPORATED</B></font></TD>

</TR>
<TR valign="bottom" style="line-height: 0pt"><!-- Blank Space -->
 <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="text-align: justify">&nbsp;</DIV></TD>
</TR>

<TR valign="bottom">
<TD valign="top"><FONT style="font-size:10pt"><B>PROXY IN CONNECTION WITH THE ANNUAL
 MEETING OF SHAREHOLDERS<br>TO BE HELD ON APRIL 15, 2011</B></font></TD>
    <TD style="border-top: 0px solid #000000">&nbsp;</TD>
<TD valign="top">
<DIV style="border-top: 1px solid #000000; border-left: 1px solid #000000; border-right: 1px solid #000000; border-bottom: 1px solid #000000">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<br><br></DIV></TD>
</TR>

<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 6pt"><B>Important Notice Regarding the Availability of Proxy Materials for the Shareholder Meeting to be
held on April&nbsp;15, 2011.</B>
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 6pt"><B>The notice of annual meetings of shareholders, joint proxy statement and proxy card for the Fund
are available on the Fund&#146;s website at </B><U><B>www.fcclaymore.com</B></U>.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 6pt"><B>PROXY SOLICITED BY BOARD OF DIRECTORS</B>
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 6pt">The undersigned holder of shares of Common Stock of Flaherty &#038; Crumrine/Claymore Total Return
Fund Incorporated, a Maryland corporation (the &#147;Fund&#148;), hereby appoints Donald F. Crumrine, Robert
M. Ettinger and Chad C. Conwell, 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 Flaherty &#038; Crumrine Incorporated, 301 East Colorado Boulevard,
Suite&nbsp;720, Pasadena, California 91101 at 8:30 a.m. PT, on April&nbsp;15, 2011, and any adjournments or
postponements thereof. The undersigned hereby acknowledges receipt of the Notice of Annual Meeting
and Proxy Statement and hereby instructs said 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 proxies previously given.
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="33%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="50%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->

<TR valign="bottom">
    <TD valign="top"><DIV style="text-align: justify"><DIV style="text-align: justify"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></DIV></DIV></TD>
    <TD>&nbsp;</TD>

    <TD>
<DIV style="text-align: justify"><FONT style="font-size:8pt"><b>NOTE:</b> Please
sign this proxy exactly as your name(s) appear(s) on the books of the Fund. Joint owners should
each sign personally. Trustees and other fiduciaries should indicate the capacity in which they
sign, and where more than one name appears, a majority must sign. If a corporation, the signature
should be that of an authorized officer who should state his or her title.</font></DIV></TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="center">
<TABLE style="font-size: 8pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom" style="line-height: 18pt"><!-- Blank Space -->
    <TD width="1%">&nbsp;</TD>
    <TD width="41%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
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    <TD>&nbsp;</TD>

<TD><DIV style="text-align: justify"><DIV style="font-size: 1pt; border-top: 0px solid #000000">&nbsp;</DIV>

</DIV></TD>
    <TD>&nbsp;</TD>

<TD><DIV style="text-align: justify"><DIV style="font-size: 1pt; border-top: 0px solid #000000">&nbsp;</DIV>

</DIV></TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="text-align: justify">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="text-align: justify"><DIV style="text-align: justify"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></DIV></DIV></TD>
    <TD>&nbsp;</TD>

<TD><DIV style="text-align: justify"><DIV style="font-size: 1pt; border-top: 1px solid #000000">&nbsp;</DIV>
<FONT style="font-size:8pt">Signature</font>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="text-align: justify"><DIV style="font-size: 1pt; border-top: 1px solid #000000">&nbsp;</DIV>
<FONT style="font-size:8pt">Date</font>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="text-align: justify">&nbsp;</DIV></TD>
</TR>

<TR valign="bottom" style="line-height: 12pt"><!-- Blank Space -->
    <TD valign="top"><DIV style="text-align: justify"><DIV style="text-align: justify"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></DIV></DIV></TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="text-align: justify">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="text-align: justify">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="text-align: justify">&nbsp;</DIV></TD>
</TR>
<TR valign="top">
    <TD valign="top"><DIV style="text-align: justify"><DIV style="text-align: justify"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></DIV></DIV></TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="text-align: justify"><DIV style="font-size: 1pt; border-top: 1px solid #000000">&nbsp;</DIV>
<FONT style="font-size:8pt">Signature (Joint Owners)</font>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="text-align: justify"><DIV style="font-size: 1pt; border-top: 1px solid #000000">&nbsp;</DIV>
<FONT style="font-size:8pt">Date</font>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="text-align: justify">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom" style="line-height: 0pt"><!-- Blank Space -->
    <TD valign="top"><DIV style="text-align: justify"><DIV style="text-align: justify"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></DIV></DIV></TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="text-align: justify">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="text-align: justify">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="text-align: justify">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom" style="line-height: 9pt"><!-- Blank Space -->
     <TD valign="top" style="border-bottom: 1px solid #000000;  border-left: 1px solid #000000; border-right: 0px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="text-align: justify">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD> <DIV style="text-align: justify"><FONT style="font-size:8pt">&nbsp;&nbsp;&nbsp;&nbsp;FLC-CMN-PXC 1.02</FONT></DIV></TD>
    <TD>&nbsp;</TD>
<TD valign="top" style="border-bottom: 1px solid #000000;  border-left: 0px solid #000000; border-right: 1px solid #000000"><DIV style="text-align: justify">&nbsp;</DIV></TD>
</TR>
<!-- End Table Body -->
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<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">

<DIV align="justify" style="font-size: 0pt; margin-top: 0pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<DIV style="width: 100%; border-bottom: 1px solid #000000; FONT-size: 1px">&nbsp;</DIV>
</DIV>
<DIV align="justify" style="font-size: 12pt; margin-top: 3pt"><B>Annual Meeting Proxy Card</B>
</DIV>


<DIV align="justify" style="font-size: 0pt; margin-top: 3pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<DIV style="width: 100%; border-bottom: 1px solid #000000; FONT-size: 1px">&nbsp;</DIV>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="70%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="text-align: justify"><DIV style="text-align: justify"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></DIV></DIV></TD>
    <TD>&nbsp;</TD>

<TD nowrap><DIV style="text-align: justify"><FONT style="font-size:8pt">Please mark your votes as</font></DIV></TD>
    <TD rowspan="2" valign="middle"><DIV style="text-align: justify"><FONT style="font-family: Wingdings">&#110;</FONT></DIV></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">

<TD valign="top" nowrap><DIV style="text-align: justify"><DIV style="text-align: justify"><DIV style="margin-left:0px; text-indent:-0px">
<FONT style="font-size:10pt"><B>Election
of Director - The Board of Directors recommends a vote
&#147;FOR&#148; the nominee listed.</B></font>
</DIV></DIV></DIV></TD>
    <TD>&nbsp;</TD>

<TD nowrap><DIV style="text-align: justify"><FONT style="font-size:8pt">indicated
in this example</font></DIV></TD>


    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="top" style="line-height: 6pt"><!-- Blank Space -->
    <TD width="15%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="65%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="text-align: justify">
<DIV style="text-align: justify"><DIV style="margin-left:0px; text-indent:-0px"><FONT style="font-size:8pt"><B>1. Nominee:</B></font>
</DIV></DIV></DIV></TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="text-align: justify"><FONT style="font-size:8pt"><B>FOR</B></font>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="text-align: justify"><FONT style="font-size:8pt"><B>WITHHOLD</B></font>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="text-align: justify">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom" style="line-height: 3pt"><!-- Blank Space -->
    <TD>&nbsp;</TD>
</TR>
 <TR style="font-size: 6pt" valign="bottom">
  <TD nowrap align="center">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="text-align: justify"><DIV style="text-align: justify"><DIV style="margin-left:0px; text-indent:-0px">01 &#150; David Gale
</DIV></DIV></DIV></TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="text-align: center"><FONT style="font-family: Wingdings"><b>&#111;</b></FONT>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="text-align: center"><FONT style="font-family: Wingdings"><b>&#111;</b></FONT></DIV></TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="text-align: justify">&nbsp;</DIV></TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="justify" style="font-size: 8pt; margin-top: 6pt">This proxy, if properly executed, will be voted in the manner directed by the undersigned shareholder. IF NO<BR>
DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR THE ELECTION OF THE NOMINEE AS DIRECTOR.

</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 65pt"><B>Non-Voting Items<BR>
Change of Address </B>&#150; Please print new address below.</DIV>

<DIV style="width: 100%; border: 1px solid black; padding: 16px; margin-top: 2pt">

<DIV align="justify" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</DIV>
</DIV>



<DIV align="center" style="font-size: 10pt; margin-top: 25pt"><b>PLEASE SIGN ON REVERSE SIDE</b>
</DIV>


<DIV align="right" style="font-size: 8pt; margin-top: 3pt">FLC-CMN-PXC 1.01
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
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