<SEC-DOCUMENT>0001206774-12-000990.txt : 20120308
<SEC-HEADER>0001206774-12-000990.hdr.sgml : 20120308
<ACCEPTANCE-DATETIME>20120308140900
ACCESSION NUMBER:		0001206774-12-000990
CONFORMED SUBMISSION TYPE:	DEFR14A
PUBLIC DOCUMENT COUNT:		2
FILED AS OF DATE:		20120308
DATE AS OF CHANGE:		20120308
EFFECTIVENESS DATE:		20120308

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			Flaherty & Crumrine PREFERRED INCOME OPPORTUNITY FUND INC
		CENTRAL INDEX KEY:			0000882071
		IRS NUMBER:				954355600
		STATE OF INCORPORATION:			MD
		FISCAL YEAR END:			1130

	FILING VALUES:
		FORM TYPE:		DEFR14A
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	811-06495
		FILM NUMBER:		12676896

	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 COLORADO BLVD STE 720
		STREET 2:		C/O FLAHERTY & CRUMRINE INC
		CITY:			PASADENA
		STATE:			CA
		ZIP:			91101

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	PREFERRED INCOME OPPORTUNITY FUND INC
		DATE OF NAME CHANGE:	19920929
</SEC-HEADER>
<DOCUMENT>
<TYPE>DEFR14A
<SEQUENCE>1
<FILENAME>flaherty_defr14a.htm
<DESCRIPTION>DEFINITIVE REVISED PROXY SOLICITING MATERIALS
<TEXT>

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<P align=center><FONT face="Times New Roman" size=2>SCHEDULE 14A<BR>PROXY
STATEMENT<BR></FONT><FONT face="Times New Roman" size=2>PURSUANT TO SECTION
14(A) OF THE SECURITIES EXCHANGE ACT OF 1934 </FONT></P>
<P align=left><FONT face="Times New Roman" size=2>Filed by Registrant
[X]</FONT><BR><FONT face="Times New Roman" size=2>Filed by Party other than the
Registrant</FONT></P>
<P align=left><FONT face="Times New Roman" size=2>Check the appropriate  box:<BR>[ ] Preliminary Proxy
Statement<BR></FONT><FONT face="Times New Roman" size=2>[ ] Confidential for Use of the Commission Only as permitted by Rule
14a-6(e)(2)<BR>[X] Definitive Proxy Statement<BR>[ ] Definitive Additional  Materials<BR>[ ] Soliciting Material Pursuant to
Rule 14a-11c or Rule  14a-12</FONT></P>
<DIV align=center>
<TABLE style="LINE-HEIGHT: 14pt; BORDER-COLLAPSE: collapse" cellSpacing=0 cellPadding=0 width="10%" border=0>

  <TR vAlign=bottom>
    <TD style="BORDER-BOTTOM: #000000 1pt solid; TEXT-ALIGN: center" noWrap width="100%"><FONT face="Times New Roman" size=2>Flaherty &amp; Crumrine
      Preferred Income Opportunity Fund Incorporated</FONT></TD></TR>
  <TR>
    <TD style="TEXT-ALIGN: center" width="100%"><FONT face="Times New Roman" size=2>(Name of Registrant as Specified in Its
  Charter)</FONT></TD></TR></TABLE><BR>
<TABLE style="LINE-HEIGHT: 14pt; BORDER-COLLAPSE: collapse" cellSpacing=0 cellPadding=0 width="10%" border=0>

  <TR vAlign=bottom>
    <TD style="BORDER-BOTTOM: #000000 1pt solid; TEXT-ALIGN: center" width="100%"><FONT size=2 face="Times New Roman"></FONT></TD></TR>
  <TR vAlign=bottom>
    <TD style="TEXT-ALIGN: center" noWrap width="100%"><FONT face="Times New Roman" size=2>&nbsp;&nbsp;&nbsp;(Name of Person(s) Filing
      Proxy Statement)&nbsp;&nbsp;&nbsp;</FONT></TD></TR></TABLE></DIV><BR>
<P align=left><FONT face="Times New Roman" size=2>Payment of Filing Fee (Check
the appropriate box):</FONT></P>
<P align=left><FONT face="Times New Roman" size=2>[X] No fee
required</FONT><BR><FONT face="Times New Roman" size=2>[ ] Fee computed on table
below per Exchange Act Rules 14a-6(i)(1) and 0-11 </FONT></P>
<TABLE cellSpacing=0 cellPadding=0 border=0>

  <TR>
    <TD vAlign=top noWrap><FONT face="Times New Roman" size=2>(1)</FONT></TD>
    <TD vAlign=top noWrap></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" width="100%"><FONT face="Times New Roman" size=2>Title of each class of securities to which
      transaction applies:<BR>&nbsp;</FONT></TD></TR>
  <TR>
    <TD vAlign=top noWrap></TD>
    <TD vAlign=top noWrap>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD width="100%"></TD></TR>
  <TR>
    <TD vAlign=top noWrap><FONT face="Times New Roman" size=2>(2)</FONT></TD>
    <TD vAlign=top noWrap></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" width="100%"><FONT face="Times New Roman" size=2>Aggregate number of securities to which
      transaction applies:<BR>&nbsp;</FONT></TD></TR>
  <TR>
    <TD colSpan=3>&nbsp;</TD></TR>
  <TR>
    <TD vAlign=top noWrap><FONT face="Times New Roman" size=2>(3)</FONT></TD>
    <TD vAlign=top noWrap></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid; TEXT-ALIGN: justify" width="100%"><FONT face="Times New Roman" size=2>Per unit price or other
      underlying value of transaction computed pursuant to Exchange Act Rule
      0-11. (Set forth the amount on which the filing fee is calculated and
      state how it was determined):<BR>&nbsp;</FONT></TD></TR>
  <TR>
    <TD colSpan=3>&nbsp;</TD></TR>
  <TR>
    <TD vAlign=top noWrap><FONT face="Times New Roman" size=2>(4)</FONT></TD>
    <TD vAlign=top noWrap></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" width="100%"><FONT face="Times New Roman" size=2>Proposed maximum aggregate value of
      transaction:<BR>&nbsp;</FONT></TD></TR>
  <TR>
    <TD colSpan=3>&nbsp;</TD></TR>
  <TR>
    <TD vAlign=top noWrap><FONT face="Times New Roman" size=2>(5)</FONT></TD>
    <TD vAlign=top noWrap></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" width="100%"><FONT face="Times New Roman" size=2>Total fee
  paid:<BR>&nbsp;</FONT></TD></TR></TABLE>
<P align=left><FONT face="Times New Roman" size=2>[ ] Fee paid previously with
preliminary materials.</FONT></P>
<P style="TEXT-ALIGN: justify"><FONT face="Times New Roman" size=2>[ ] Check box
if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and
identify the filing for which the offsetting fee was paid previously. Identify
the previous filing by registration statement number, or the Form or Schedule
and the date of its filing.</FONT></P>
<TABLE cellSpacing=0 cellPadding=0 border=0>

  <TR>
    <TD vAlign=top noWrap><FONT face="Times New Roman" size=2>(1)</FONT></TD>
    <TD vAlign=top noWrap></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" width="100%"><FONT face="Times New Roman" size=2>Amount previously
  paid:<BR>&nbsp;</FONT></TD></TR>
  <TR>
    <TD vAlign=top noWrap></TD>
    <TD vAlign=top noWrap>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD width="100%"></TD></TR>
  <TR>
    <TD vAlign=top noWrap><FONT face="Times New Roman" size=2>(2)</FONT></TD>
    <TD vAlign=top noWrap></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" width="100%"><FONT face="Times New Roman" size=2>Form, Schedule or Registration Statement
      No.:<BR>&nbsp;</FONT></TD></TR>
  <TR>
    <TD colSpan=3>&nbsp;</TD></TR>
  <TR>
    <TD vAlign=top noWrap><FONT face="Times New Roman" size=2>(3)</FONT></TD>
    <TD vAlign=top noWrap></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" width="100%"><FONT face="Times New Roman" size=2>Filing Party:<BR>&nbsp;</FONT></TD></TR>
  <TR>
    <TD colSpan=3>&nbsp;</TD></TR>
  <TR>
    <TD vAlign=top noWrap><FONT face="Times New Roman" size=2>(4)</FONT></TD>
    <TD vAlign=top noWrap></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" width="100%"><FONT face="Times New Roman" size=2>Date
Filed:<BR>&nbsp;</FONT></TD></TR></TABLE><BR>
<HR align=center width="100%" noShade SIZE=2>




<div style="PAGE-BREAK-BEFORE: always"></div>
<BR>
<P align=center><B><FONT face="Times New Roman" size=2>FLAHERTY &amp; CRUMRINE PREFERRED
INCOME FUND INCORPORATED (NYSE: PFD)<BR></FONT></B><B><FONT face="Times New Roman" size=2>FLAHERTY &amp; CRUMRINE PREFERRED INCOME OPPORTUNITY FUND INCORPORATED
(NYSE: PFO)<BR>FLAHERTY &amp; CRUMRINE/CLAYMORE PREFERRED SECURITIES INCOME FUND
INCORPORATED (NYSE: FFC)<BR>FLAHERTY &amp; CRUMRINE/CLAYMORE TOTAL RETURN FUND
INCORPORATED (NYSE: FLC)<BR><BR></FONT></B><FONT face="Times New Roman" size=2>301 E. Colorado
Boulevard, Suite 720<BR>Pasadena, California 91101 </FONT></P>
<P align=center><B><FONT face="Times New Roman" size=2>QUESTIONS AND ANSWERS</FONT></B></P>
<P align=justify><B><FONT face="Times New Roman" size=2>What am I being asked to vote for in
Proposal 2 for each Fund?</FONT></B></P>
<P align=justify><FONT face="Times New Roman" size=2>You are being asked to approve one or
more changes to each Fund&rsquo;s current fundamental policy relating to concentration
of investments, as summarized below.</FONT></P>
<P align=justify><FONT STYLE="font: x-small Times New Roman"><U>Proposal 2-A (PFD, FFC and FLC only)</U>: With respect to
Flaherty &amp; Crumrine Preferred Income Fund (PFD), Flaherty &amp; Crumrine/Claymore Preferred Securities Income Fund (FFC) and
Flaherty &amp; Crumrine/Claymore Total Return Fund (FLC), shareholders are being asked to approve a revision to each Fund&rsquo;s
concentration policy to eliminate the requirement that it concentrate its investments in the banking industry and instead
require each Fund to concentrate in the financials sector. This proposed revision would require the Fund, under normal market
conditions, to invest at least 25% of its total assets in the financials sector, which for this purpose is comprised of the
bank, thrifts &amp; mortgage finance, diversified financial services, finance, consumer finance, capital markets, asset
management &amp; custody, investment banking &amp; brokerage, insurance, insurance brokers and real estate investment trust (REIT)
industries. From time to time, a Fund may have 25% or more of its total assets invested in any one of these industries. In
2009, shareholders of Flaherty &amp; Crumrine Preferred Income Opportunity Fund (PFO) approved a similar investment policy to
concentrate PFO&rsquo;s investments in the financial services sector. </FONT></P>
<P align=justify><U><FONT face="Times New Roman" size=2>Proposal 2-B (PFD, PFO, FFC and
FLC)</FONT></U><FONT face="Times New Roman" size=2>: Each Fund&rsquo;s current fundamental
investment policy regarding concentration requires it to concentrate its
investments in the utilities industry so that, under normal market conditions,
more than 25% of each Fund&rsquo;s total assets must be invested in securities issued
by companies in the utilities industry. Shareholders of each Fund are being
asked to approve a revision to the Fund&rsquo;s concentration policy to eliminate the
requirement that the Fund concentrate its investments in the utilities industry.
If Proposal 2-B is approved by a Fund&rsquo;s shareholders, that Fund may not invest
more than 25% of its total assets in the utilities industry. </FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>You can find greater detail on both
proposals beginning on page 12 of this proxy statement. </FONT></P>
<P align=justify><B><FONT face="Times New Roman" size=2>Why are the Funds&rsquo; Boards of
Directors recommending changes to the Funds&rsquo; industry concentration
policies?</FONT></B></P>

<P align=justify><FONT face="Times New Roman" size=2>Each Fund, like all registered funds, is required by law to have a fundamental policy regarding concentration. If a fund has stated that it will be concentrated in an industry (or a sector comprised of a group of industries), it must maintain at least 25% of its assets invested in that industry (or a sector comprised of a group of industries). Similarly, if a fund has not stated that it will be concentrated in an industry, it may not invest more than 25% of its assets in that industry.</FONT></P>

<P STYLE="text-align: justify"><FONT STYLE="font: x-small Times New Roman">Given this legal requirement, the Funds&rsquo; Boards of Directors have recommended the proposed concentration policy changes so that each Fund can more effectively invest its portfolio in the various types of industries that issue preferred securities. The only sector of the preferred securities market that is greater than 25% is the financials sector. This sector alone represents more than 80% of outstanding preferred securities. On the other hand, utility preferred securities represent less than 5% of all outstanding preferred securities. As such, the Boards of Directors recommend that PFD, FFC and FLC concentrate its investments in the financials sector (similar to what PFO has already implemented) and that all Funds no longer concentrate their investments in the utilities industry.
</FONT></P>
<P align=justify><B><FONT face="Times New Roman" size=2>What if I have additional
questions?</FONT></B></P>
<P align=justify><FONT face="Times New Roman" size=2>The Funds have engaged The Altman
Group, Inc. to assist in the solicitation of proxies. The Altman Group has set
up a toll-free number, (866) 751-6315, for you to call with any additional
questions.</FONT></P>
<HR align=center width="100%" noShade SIZE=2>

<DIV style="PAGE-BREAK-BEFORE: always"></DIV><BR>
<P align=center><B><FONT face="Times New Roman" size=2>FLAHERTY &amp; CRUMRINE PREFERRED
INCOME FUND INCORPORATED (NYSE: PFD)<BR>FLAHERTY &amp; CRUMRINE PREFERRED INCOME
OPPORTUNITY FUND INCORPORATED (NYSE: PFO)<BR>FLAHERTY &amp; CRUMRINE/CLAYMORE
PREFERRED SECURITIES INCOME FUND INCORPORATED (NYSE: FFC)<BR>FLAHERTY &amp;
CRUMRINE/CLAYMORE TOTAL RETURN FUND INCORPORATED (NYSE: FLC) </FONT></B></P>
<P align=center><FONT face="Times New Roman" size=2>301 E. Colorado Boulevard, Suite
720<BR>Pasadena, California 91101 </FONT></P>
<P align=center><B><FONT face="Times New Roman" size=2>NOTICE OF ANNUAL MEETINGS OF
SHAREHOLDERS <BR></FONT></B><FONT face="Times New Roman" size=2>To Be Held on April 19, 2012
</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>To the Shareholders:</FONT></P>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp; <FONT face="Times New Roman" size=2>Notice is
hereby given that the Annual Meetings of Shareholders of Flaherty &amp; Crumrine
Preferred Income Fund Incorporated, Flaherty &amp; Crumrine Preferred Income
Opportunity Fund Incorporated, Flaherty &amp; Crumrine/Claymore Preferred
Securities Income Fund Incorporated and Flaherty &amp; Crumrine/Claymore Total
Return Fund Incorporated (each, a &ldquo;Fund&rdquo; and collectively, the &ldquo;Funds&rdquo;), each a
Maryland corporation, will be held at the offices of Flaherty &amp; Crumrine
Incorporated, 301 E. Colorado Boulevard, Suite 720, Pasadena, California 91101
at 8:30 a.m. PT, on April 19, 2012, for the following purposes:</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2><FONT size=3 face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;
</FONT>Each Fund:</FONT></P>

<TABLE style="TEXT-ALIGN: justify" cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR>
    <TD vAlign=top width="1%" ><FONT size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    </FONT></TD>
    <TD vAlign=top width="1%"><FONT size=2>1.</FONT></TD>
    <TD vAlign=top width="1%"><FONT size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    </FONT></TD>
    <TD vAlign=top width="97%"><FONT size=2>To elect Directors of each Fund (Proposal
      1).</FONT></TD></TR>
  <TR>
    <TD vAlign=top width="1%" ></TD>
    <TD vAlign=top width="1%"></TD>
    <TD vAlign=top width="1%"><FONT size=2>&nbsp;</FONT></TD>
    <TD vAlign=top width="97%"></TD></TR>
  <TR>
    <TD vAlign=top width="1%" ></TD>
    <TD vAlign=top width="1%"><FONT size=2>2.</FONT></TD>
    <TD vAlign=top width="1%"><FONT size=2>&nbsp;</FONT></TD>
    <TD vAlign=top width="97%"><FONT size=2>To approve one or more changes to each
      Fund&#146;s fundamental investment policy regarding concentration of
      investments (Proposal 2).</FONT></TD></TR>
  <TR>
    <TD vAlign=top width="1%" ></TD>
    <TD vAlign=top width="1%">&nbsp;</TD>
    <TD vAlign=top width="1%"><FONT size=2>&nbsp;</FONT></TD>
    <TD vAlign=top width="97%"></TD></TR>
  <TR>
    <TD vAlign=top width="1%" ></TD>
    <TD vAlign=top width="1%"><FONT size=2>3.</FONT></TD>
    <TD vAlign=top width="1%"><FONT size=2>&nbsp;</FONT></TD>
    <TD vAlign=top width="97%"><FONT size=2>To transact such other business as may
      properly come before the Annual Meetings or any adjournments
      thereof.</FONT></TD></TR></TABLE><BR>
<P align=justify><B><FONT face="Times New Roman" size=2>Your vote is
important!</FONT></B></P>
<P align=justify><B><FONT face="Times New Roman" size=2></FONT></B>&nbsp;&nbsp;&nbsp;&nbsp;
<FONT face="Times New Roman" size=2>The Board of Directors of each Fund has fixed the close
of business on January 20, 2012 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.</FONT></P>
<TABLE style="LINE-HEIGHT: 14pt; BORDER-COLLAPSE: collapse" cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=bottom>
    <TD noWrap align=left width="9%"></TD>
    <TD noWrap align=left width="60%"></TD>
    <TD noWrap align=left width="30%"><FONT face="Times New Roman" size=2>By Order of the Boards of
    Directors,</FONT></TD></TR>
  <TR>
    <TD width="99%" colSpan=3>&nbsp;</TD></TR>
  <TR>
    <TD width="99%" colSpan=3>&nbsp;</TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="69%" colSpan=2><FONT face="Times New Roman" size=2>March 6,
      2012</FONT> <FONT face="Times New Roman" size=2></FONT></TD>
    <TD noWrap align=left width="30%"><FONT face="Times New Roman" size=2>CHAD C. CONWELL</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="9%"></TD>
    <TD noWrap align=left width="60%"></TD>
    <TD noWrap align=left width="30%"><I><FONT face="Times New Roman" size=2>Secretary</FONT></I></TD></TR></TABLE><BR>
<div style="padding: 4pt; border: solid 1pt black">

<div align=center><B><FONT face="Times New Roman" size=2>Important Notice Regarding the
Availability of Proxy Materials for the Shareholder Meeting to Be<BR>Held on
April 19, 2012. </FONT></B></div>
<P align=justify><B><FONT face="Times New Roman" size=2>The notice of Annual Meetings of
Shareholders, joint proxy statement and proxy cards for the Funds are available
to you on each Fund&rsquo;s website - 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. </FONT></B></P>
<P align=justify><B><FONT face="Times New Roman" size=2>To obtain directions to attend the
Annual Meetings and vote in person, please call 1-626-795-7300 or
1-866-751-6315. </FONT></B></P>
<div align=justify><B><FONT face="Times New Roman" size=2>SEPARATE PROXY CARDS ARE ENCLOSED
FOR EACH FUND IN WHICH YOU OWN SHARES. SHAREHOLDERS WHO DO NOT EXPECT TO ATTEND
THE ANNUAL MEETINGS ARE REQUESTED TO COMPLETE, SIGN AND DATE THE ENCLOSED PROXY
CARD(S). The proxy card(s) should be returned in the enclosed envelope, which
needs no postage if mailed in the continental United States. Instructions for
the proper execution of proxies are set forth on the inside cover.
</FONT></B></div></div>
<BR>
<HR align=center width="100%" noShade SIZE=2>

<DIV style="PAGE-BREAK-BEFORE: always"></DIV><BR>
<P align=center><B><FONT face="Times New Roman" size=2>INSTRUCTIONS FOR SIGNING PROXY
CARDS</FONT></B></P>
<P align=justify><B><FONT face="Times New Roman" size=2></FONT></B>&nbsp;&nbsp;&nbsp;&nbsp;
<FONT face="Times New Roman" size=2>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.</FONT></P>

<TABLE style="TEXT-ALIGN: justify" cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR>
    <TD vAlign=top width="1%" ><FONT size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    </FONT></TD>
    <TD vAlign=top width="1%"><FONT size=2>1.</FONT></TD>
    <TD vAlign=top width="1%"><FONT size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    </FONT></TD>
    <TD vAlign=top width="97%"><FONT size=2>Individual Accounts: Sign your name exactly
      as it appears in the registration on the proxy card(s).</FONT></TD></TR>
  <TR>
    <TD vAlign=top width="1%" ></TD>
    <TD vAlign=top width="1%"></TD>
    <TD vAlign=top width="1%"><FONT size=2>&nbsp;</FONT></TD>
    <TD vAlign=top width="97%"></TD></TR>
  <TR>
    <TD vAlign=top width="1%" ></TD>
    <TD vAlign=top width="1%"><FONT size=2>2.</FONT></TD>
    <TD vAlign=top width="1%"><FONT size=2>&nbsp;</FONT></TD>
    <TD vAlign=top width="97%"><FONT size=2>Joint Accounts: Either party may sign, but
      the name of the party signing should conform exactly to a name shown in
      the registration.</FONT></TD></TR>
  <TR>
    <TD vAlign=top width="1%" ></TD>
    <TD vAlign=top width="1%">&nbsp;</TD>
    <TD vAlign=top width="1%"><FONT size=2>&nbsp;</FONT></TD>
    <TD vAlign=top width="97%"></TD></TR>
  <TR>
    <TD vAlign=top width="1%" ></TD>
    <TD vAlign=top width="1%"><FONT size=2>3.</FONT></TD>
    <TD vAlign=top width="1%"><FONT size=2>&nbsp;</FONT></TD>
    <TD vAlign=top width="97%"><FONT size=2>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:</FONT></TD></TR></TABLE><BR>
<DIV align=center>
<TABLE style="LINE-HEIGHT: 14pt; BORDER-COLLAPSE: collapse" cellSpacing=0 cellPadding=0 width="80%" border=0>

  <TR vAlign=bottom>
    <TD noWrap align=left width="49%" colSpan=3><FONT style="BORDER-BOTTOM: black 1pt solid" face="Times New Roman" size=2>Registration</FONT>&nbsp;&nbsp;</TD>
    <TD noWrap align=left width="1%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD noWrap align=left width="49%"><FONT style="BORDER-BOTTOM: black 1pt solid" face="Times New Roman" size=2>Valid
      Signature</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="49%" bgColor=#c0c0c0 colSpan=3><FONT face="Times New Roman" size=2>Corporate Accounts</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="49%" bgColor=#c0c0c0></TD></TR>
  <TR>
    <TD width="99%" colSpan=5>&nbsp;</TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>(1)</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD noWrap align=left width="47%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>ABC Corp.</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="49%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>ABC Corp.</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="1%"><FONT face="Times New Roman" size=2>(2)</FONT></TD>
    <TD noWrap align=left width="1%">&nbsp;</TD>
    <TD noWrap align=left width="47%"><FONT face="Times New Roman" size=2>ABC
      Corp.</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="49%"><FONT face="Times New Roman" size=2>John
      Doe, Treasurer</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>(3)</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2></FONT></TD>
    <TD noWrap align=left width="47%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>ABC Corp. c/o John Doe, Treasurer</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
    <TD noWrap align=left width="49%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>John Doe</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="1%"><FONT face="Times New Roman" size=2>(4)</FONT></TD>
    <TD noWrap align=left width="1%"><FONT face="Times New Roman" size=2></FONT></TD>
    <TD noWrap align=left width="47%"><FONT face="Times New Roman" size=2>ABC
      Corp. Profit Sharing Plan</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="49%"><FONT face="Times New Roman" size=2>John
      Doe, Trustee</FONT></TD></TR>
  <TR>
    <TD align=left width="99%" colSpan=5>&nbsp;</TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="49%" bgColor=#c0c0c0 colSpan=3><FONT face="Times New Roman" size=2>Trust Accounts</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="49%" bgColor=#c0c0c0></TD></TR>
  <TR>
    <TD align=left width="99%" colSpan=5>&nbsp;</TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>(1)</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2></FONT></TD>
    <TD noWrap align=left width="47%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>ABC Trust</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="49%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>Jane B. Doe, Trustee</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="1%"><FONT face="Times New Roman" size=2>(2)</FONT></TD>
    <TD noWrap align=left width="1%"><FONT face="Times New Roman" size=2></FONT></TD>
    <TD noWrap align=left width="47%"><FONT face="Times New Roman" size=2>Jane
      B. Doe, Trustee</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="49%"><FONT face="Times New Roman" size=2>Jane
      B. Doe</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="47%"><FONT face="Times New Roman" size=2>u/t/d 12/28/78</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="49%"></TD></TR>
  <TR>
    <TD align=left width="99%" colSpan=5>&nbsp;</TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="49%" bgColor=#c0c0c0 colSpan=3><FONT face="Times New Roman" size=2>Custodian or Estate Accounts</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="49%" bgColor=#c0c0c0></TD></TR>
  <TR>
    <TD align=left width="99%" colSpan=5>&nbsp;</TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>(1)</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2></FONT></TD>
    <TD noWrap align=left width="47%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>John B. Smith, Cust.,</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="49%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>John B. Smith</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="47%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>f/b/o John B. Smith, Jr. UGMA</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="49%" bgColor=#c0c0c0></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="1%"><FONT face="Times New Roman" size=2>(2)</FONT></TD>
    <TD noWrap align=left width="1%"><FONT face="Times New Roman" size=2></FONT></TD>
    <TD noWrap align=left width="47%"><FONT face="Times New Roman" size=2>John
      B. Smith, Executor,</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="49%"><FONT face="Times New Roman" size=2>John
      B. Smith, Jr., Executor</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="47%"><FONT face="Times New Roman" size=2>Estate of Jane Smith</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="49%"></TD></TR></TABLE></DIV><BR>

<HR align=center width="100%" noShade SIZE=2>

<DIV style="PAGE-BREAK-BEFORE: always"></DIV><BR>
<P align=center><B><FONT face="Times New Roman" size=2>FLAHERTY &amp; CRUMRINE PREFERRED
INCOME FUND INCORPORATED (NYSE: PFD)<BR></FONT></B><B><FONT face="Times New Roman" size=2>FLAHERTY &amp; CRUMRINE PREFERRED INCOME OPPORTUNITY FUND INCORPORATED
(NYSE: PFO)<BR>FLAHERTY &amp; CRUMRINE/CLAYMORE PREFERRED SECURITIES INCOME FUND
INCORPORATED (NYSE:FFC)<BR>FLAHERTY &amp; CRUMRINE/CLAYMORE TOTAL RETURN FUND
INCORPORATED (NYSE: FLC)</FONT></B></P>
<P align=center><FONT face="Times New Roman" size=2>301 E. Colorado Boulevard, Suite
720<BR>Pasadena, California 91101 </FONT></P>
<P align=center><B><FONT face="Times New Roman" size=2>ANNUAL MEETINGS OF SHAREHOLDERS
<BR></FONT></B><FONT face="Times New Roman" size=2>April 19, 2012 </FONT></P>
<P align=center><B><FONT face="Times New Roman" size=2>JOINT PROXY STATEMENT </FONT></B></P>
<P align=justify><B><FONT face="Times New Roman" size=2></FONT></B>&nbsp;&nbsp;&nbsp;&nbsp;
<FONT face="Times New Roman" size=2>This document is a joint proxy statement (&ldquo;Joint Proxy
Statement&rdquo;) for Flaherty &amp; Crumrine Preferred Income Fund Incorporated
(&ldquo;Preferred Income Fund&rdquo; or &ldquo;PFD&rdquo;), Flaherty &amp; Crumrine Preferred Income
Opportunity Fund Incorporated (&ldquo;Preferred Income Opportunity Fund&rdquo; or &ldquo;PFO&rdquo;),
Flaherty &amp; Crumrine/Claymore Preferred Securities Income Fund Incorporated
(&ldquo;Preferred Securities Income Fund&rdquo; or &ldquo;FFC&rdquo;) and Flaherty &amp;
Crumrine/Claymore Total Return Fund Incorporated (&ldquo;Total Return Fund&rdquo; or &ldquo;FLC&rdquo;)
(each, a &ldquo;Fund&rdquo; and collectively, the &ldquo;Funds&rdquo;). This Joint Proxy Statement is
furnished in connection with the solicitation of proxies by each Fund&rsquo;s Board of
Directors (each, a &ldquo;Board&rdquo; and collectively, the &ldquo;Boards&rdquo;) for use at the Annual
Meeting of Shareholders of each Fund to be held on April 19, 2012, at 8:30 a.m.
PT, at the offices of Flaherty &amp; Crumrine Incorporated, 301 E. Colorado
Boulevard, Suite 720, Pasadena, California 91101 and at any adjournments or
postponements thereof (each, a &ldquo;Meeting&rdquo; and collectively, the
&ldquo;Meetings&rdquo;).</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2><FONT size=3 face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;
</FONT>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 March 6, 2012, primarily by mail, but proxy solicitations may also be made by telephone, telefax or personal interviews conducted by officers of each Fund, Flaherty &amp; Crumrine Incorporated (&ldquo;Flaherty &amp; Crumrine&rdquo;), the investment adviser of each Fund, Guggenheim Funds Distributors, Inc., the servicing agent of FFC and FLC, and BNY Mellon Investment Servicing (US) Inc. (&ldquo;BNY Mellon&rdquo;), the transfer agent and administrator of each Fund. In addition, the Funds have also retained The Altman Group, Inc. (&ldquo;The Altman Group&rdquo;), a proxy solicitation firm, to assist in the solicitation of proxies. Other 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 March 6, 2012.
</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2></FONT><FONT face="Times New Roman" size=2><FONT size=3 face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp; </FONT><STRONG>THE ANNUAL REPORT OF EACH FUND,
INCLUDING AUDITED FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED NOVEMBER 30,
2011, IS AVAILABLE UPON REQUEST, WITHOUT CHARGE, BY WRITING TO BNY MELLON
SHAREOWNER SERVICES, P.O. BOX 358035, PITTSBURGH, PENNSYLVANIA 15252-8035, OR
CALLING 1-866-351-7446. EACH FUND&rsquo;S ANNUAL REPORT IS ALSO AVAILABLE ON THE
FUNDS&rsquo; WEBSITES - WWW.PREFERREDINCOME.COM FOR PFD AND PFO AND WWW.FCCLAYMORE.COM
FOR FFC AND FLC - THE SECURITIES AND EXCHANGE COMMISSION&rsquo;S (&ldquo;SEC&rdquo;) WEBSITE
(WWW.SEC.GOV) OR, FOR FFC AND FLC ONLY, BY CALLING GUGGENHEIM FUNDS
DISTRIBUTORS, INC. AT 1-866-233-4001.</STRONG></FONT></P>


<div style="padding: 4pt; border: 1pt solid black">
<div align=center><B><FONT face="Times New Roman" size=2>Important Notice Regarding the
Availability of Proxy Materials for the Shareholder Meeting to Be<BR>Held on
April 19, 2012. </FONT></B></div>
<P align=justify><B><FONT face="Times New Roman" size=2>The notice of Annual Meetings of
Shareholders, joint proxy statement and proxy cards for the Funds are available
to you on each Fund&rsquo;s website - 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.</FONT></B></P>
<P align=justify><B><FONT face="Times New Roman" size=2>To obtain directions to attend the
Annual Meetings and vote in person, please call 1-626-795-7300 or
1-866-751-6315.</FONT></B></P>
<div align=justify><B><FONT face="Times New Roman" size=2>SEPARATE PROXY CARDS ARE ENCLOSED
FOR EACH FUND IN WHICH YOU OWN SHARES. SHAREHOLDERS WHO DO NOT EXPECT TO ATTEND
THE ANNUAL MEETINGS ARE REQUESTED TO COMPLETE, SIGN AND DATE THE ENCLOSED PROXY
CARD(S). The proxy card(s) should be returned in the enclosed envelope, which
needs no postage if mailed in the continental United States. Instructions for
the proper execution of proxies are set forth on the inside
cover.</FONT></B></div></div>
<P align=center><FONT face="Times New Roman" size=2>1</FONT></P>
<HR align=center width="100%" noShade SIZE=2>

<DIV style="PAGE-BREAK-BEFORE: always"></DIV><BR>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp; <FONT face="Times New Roman" size=2>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 &ldquo;FOR&rdquo; Proposal 1 and
Proposals 2-A and 2-B. 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.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2><FONT size=3 face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;
</FONT>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 &ldquo;Quorum&rdquo;) at that Fund&rsquo;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 &ldquo;FOR&rdquo; a proposal in favor of such an adjournment
with respect to that proposal and will vote those proxies required to be voted
&ldquo;AGAINST&rdquo; 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. Once a Quorum has been established at the Meeting, shareholders
may continue to transact business, notwithstanding the withdrawal of enough
shareholders to leave less than a Quorum. </FONT></P>
<P align=justify><FONT face="Times New Roman" size=2><FONT size=3 face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;
</FONT>Each Fund has one class of capital stock outstanding: common stock, par
value $0.01 per share (the &ldquo;Common Stock&rdquo; or the &ldquo;Shares&rdquo;). 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
20, 2012, the following number of Shares of each Fund were issued and
outstanding:</FONT></P>
<TABLE style="LINE-HEIGHT: 14pt; BORDER-COLLAPSE: collapse" cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=bottom>
    <TD noWrap align=left width="1%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD noWrap align=left width="49%" colSpan=2></TD>
    <TD noWrap align=left width="1%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="6%"><FONT face="Times New Roman" size=2>Common Stock</FONT></TD>
    <TD noWrap align=left width="43%">&nbsp;</TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="6%"><FONT face="Times New Roman" size=2>Name of Fund</FONT></TD>
    <TD noWrap align=left width="43%">&nbsp;</TD>
    <TD noWrap align=left width="1%"></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="6%"><FONT face="Times New Roman" size=2>Outstanding</FONT></TD>
    <TD noWrap align=left width="43%">&nbsp;</TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="49%" bgColor=#c0c0c0 colSpan=2><FONT face="Times New Roman" size=2>Preferred Income Fund (PFD)</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="49%" bgColor=#c0c0c0 colSpan=2><FONT face="Times New Roman" size=2>10,858,133</FONT></TD></TR>
  <TR>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="49%" colSpan=2>&nbsp;</TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="49%" colSpan=2></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="49%" bgColor=#c0c0c0 colSpan=2><FONT face="Times New Roman" size=2>Preferred Income Opportunity Fund (PFO)</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="49%" bgColor=#c0c0c0 colSpan=2><FONT face="Times New Roman" size=2>12,114,299</FONT></TD></TR>
  <TR>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="49%" colSpan=2>&nbsp;</TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="49%" colSpan=2></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="49%" bgColor=#c0c0c0 colSpan=2><FONT face="Times New Roman" size=2>Preferred Securities Income Fund (FFC)</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="49%" bgColor=#c0c0c0 colSpan=2><FONT face="Times New Roman" size=2>43,089,646</FONT></TD></TR>
  <TR>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="49%" colSpan=2>&nbsp;</TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="49%" colSpan=2></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="49%" bgColor=#c0c0c0 colSpan=2><FONT face="Times New Roman" size=2>Total Return Fund (FLC)</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="49%" bgColor=#c0c0c0 colSpan=2><FONT face="Times New Roman" size=2>9,839,825</FONT></TD></TR></TABLE><BR>

<P align=center><FONT face="Times New Roman" size=2>2</FONT></P>
<HR align=center width="100%" noShade SIZE=2>

<DIV style="PAGE-BREAK-BEFORE: always"></DIV><BR>
<P align=justify><FONT size=3 face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;
</FONT><FONT face="Times New Roman" size=2>To the knowledge of each Fund and its
Board, the following shareholder(s), or &ldquo;group&rdquo; as that term is defined in
Section 13(d) of the Securities Exchange Act of 1934, as amended (the &ldquo;1934
Act&rdquo;), is the beneficial owner or owner of record of more than 5% of the
relevant Fund&rsquo;s outstanding Shares as of January 20,
2012<SUP>*</SUP>:</FONT></P>

<TABLE style="LINE-HEIGHT: 14pt; BORDER-COLLAPSE: collapse" cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=bottom>
    <TD style="WIDTH: 1%; BACKGROUND-COLOR: white; TEXT-ALIGN: left" noWrap>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD noWrap align=left width="75%" colSpan=2><FONT face="Times New Roman" size=2>Name and Address of</FONT></TD>
    <TD noWrap align=left width="1%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD noWrap align=left width="7%"></TD>
    <TD noWrap align=left width="1%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD noWrap align=left width="8%"><FONT face="Times New Roman" size=2>Amount and Nature</FONT></TD>
    <TD noWrap align=left width="1%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD noWrap align=left width="5%"></TD></TR>
  <TR vAlign=bottom>
    <TD style="WIDTH: 1%; BACKGROUND-COLOR: white; TEXT-ALIGN: left" noWrap></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="10%"><FONT size=+0><FONT face="Times New Roman" size=2>Beneficial/Record Owner</FONT></FONT></TD>
    <TD noWrap align=left width="65%">&nbsp;</TD>
    <TD noWrap align=left width="1%"></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="7%"><FONT face="Times New Roman" size=2>Title of Class</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="8%"><FONT face="Times New Roman" size=2>of Ownership</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="5%"><FONT face="Times New Roman" size=2>Percent of
  Class</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD style="WIDTH: 1%; BACKGROUND-COLOR: white; TEXT-ALIGN: left" noWrap>&nbsp;</TD>
    <TD noWrap align=left width="75%" bgColor=#c0c0c0 colSpan=2><FONT face="Times New Roman" size=2>Cede &amp; Co.<SUP>**</SUP></FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
    <TD noWrap align=left width="7%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>Common Stock</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="8%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>PFD &#150; 10,277,155 (record)</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="5%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>94.6%</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD style="WIDTH: 1%; BACKGROUND-COLOR: white; TEXT-ALIGN: left" noWrap></TD>
    <TD noWrap align=left width="75%" bgColor=#c0c0c0 colSpan=2><FONT face="Times New Roman" size=2>Depository Trust Company</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="7%" bgColor=#c0c0c0>&nbsp;</TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="8%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>PFO &#150; 11,446,939 (record)</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="5%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>94.4%</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD style="WIDTH: 1%; BACKGROUND-COLOR: white; TEXT-ALIGN: left" noWrap></TD>
    <TD noWrap align=left width="75%" bgColor=#c0c0c0 colSpan=2><FONT face="Times New Roman" size=2>55 Water Street, 25<SUP>th
    </SUP>Floor</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="7%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="8%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>FFC &#150; 42,980,749 (record)</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
    <TD noWrap align=left width="5%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>99.7%</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD style="WIDTH: 1%; BACKGROUND-COLOR: white; TEXT-ALIGN: left" noWrap></TD>
    <TD noWrap align=left width="75%" bgColor=#c0c0c0 colSpan=2><FONT face="Times New Roman" size=2>New York, NY 10041</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="7%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
    <TD noWrap align=left width="8%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>FLC &#150;&nbsp;&nbsp;&nbsp;9,825,841 (record)</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="5%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>99.9%</FONT></TD></TR>
  <TR>
    <TD style="WIDTH: 1%; BACKGROUND-COLOR: white"></TD>
    <TD width="98%" colSpan=8>&nbsp;</TD></TR>
  <TR vAlign=bottom>
    <TD style="WIDTH: 1%; BACKGROUND-COLOR: white; TEXT-ALIGN: left" noWrap></TD>
    <TD noWrap align=left width="75%" bgColor=#c0c0c0 colSpan=2><FONT face="Times New Roman" size=2>Fifth Third BanCorp<SUP>1</SUP></FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="7%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>Common Stock</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="8%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>PFO &#150; 626,553<SUP>1
    </SUP>(beneficial)</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="5%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>5.19%</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD style="WIDTH: 1%; BACKGROUND-COLOR: white; TEXT-ALIGN: left" noWrap></TD>
    <TD noWrap align=left width="75%" bgColor=#c0c0c0 colSpan=2><FONT face="Times New Roman" size=2>Fifth Third Center</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="7%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="8%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="5%" bgColor=#c0c0c0></TD></TR>
  <TR vAlign=bottom>
    <TD style="WIDTH: 1%; BACKGROUND-COLOR: white; TEXT-ALIGN: left" noWrap></TD>
    <TD noWrap align=left width="75%" bgColor=#c0c0c0 colSpan=2><FONT face="Times New Roman" size=2>Cincinnati, OH 45263</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="7%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="8%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="5%" bgColor=#c0c0c0></TD></TR>
  <TR>
    <TD style="BACKGROUND-COLOR: white; TEXT-ALIGN: left" noWrap>&nbsp;</TD>
    <TD style="TEXT-ALIGN: left" noWrap colSpan=2>&nbsp;</TD>
    <TD style="TEXT-ALIGN: left" noWrap>&nbsp;</TD>
    <TD style="TEXT-ALIGN: left" noWrap>&nbsp;</TD>
    <TD style="TEXT-ALIGN: left" noWrap>&nbsp;</TD>
    <TD style="TEXT-ALIGN: left" noWrap>&nbsp;</TD>
    <TD style="TEXT-ALIGN: left" noWrap>&nbsp;</TD>
    <TD style="TEXT-ALIGN: left" noWrap>&nbsp;</TD></TR>
  <TR style="BACKGROUND-COLOR: silver">
    <TD style="WIDTH: 1%; BACKGROUND-COLOR: white; TEXT-ALIGN: left" noWrap>&nbsp;</TD>
    <TD noWrap align=left width="75%" colSpan=2><FONT face="Times New Roman" size=2>Claymore Securities Defined</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="7%"><FONT face="Times New Roman" size=2>Common Stock</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="8%"><FONT face="Times New Roman" size=2>FLC &#150;
      822,873<SUP>2 </SUP>(beneficial)</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="5%"><FONT face="Times New Roman" size=2>8.37%</FONT></TD></TR>
  <TR style="BACKGROUND-COLOR: silver">
    <TD style="WIDTH: 1%; BACKGROUND-COLOR: white; TEXT-ALIGN: left" noWrap></TD>
    <TD noWrap align=left width="75%" colSpan=2><FONT face="Times New Roman" size=2>Portfolios, Series 390, 434,</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="7%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="8%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="5%">&nbsp;</TD></TR>
  <TR style="BACKGROUND-COLOR: silver">
    <TD style="WIDTH: 1%; BACKGROUND-COLOR: white; TEXT-ALIGN: left" noWrap></TD>
    <TD noWrap align=left width="75%" colSpan=2><FONT face="Times New Roman" size=2>453, 494, 592, 644, 651, 652, 661,</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="7%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="8%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="5%"></TD></TR>
  <TR style="BACKGROUND-COLOR: silver">
    <TD style="WIDTH: 1%; BACKGROUND-COLOR: white; TEXT-ALIGN: left" noWrap></TD>
    <TD noWrap align=left width="75%" colSpan=2><FONT face="Times New Roman" size=2>664, 683, 713; and Guggenheim</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="7%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="8%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="5%"></TD></TR>
  <TR style="BACKGROUND-COLOR: silver">
    <TD style="WIDTH: 1%; BACKGROUND-COLOR: white; TEXT-ALIGN: left" noWrap></TD>
    <TD noWrap align=left width="75%" colSpan=2><FONT face="Times New Roman" size=2>Defined Portfolios, Series 742, 750,</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="7%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="8%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="5%"></TD></TR>
  <TR style="BACKGROUND-COLOR: silver">
    <TD style="WIDTH: 1%; BACKGROUND-COLOR: white; TEXT-ALIGN: left" noWrap></TD>
    <TD noWrap align=left width="75%" colSpan=2><FONT face="Times New Roman" size=2>754, 761, 765, 766, 771, 777, 779,</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="7%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="8%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="5%"></TD></TR>
  <TR style="BACKGROUND-COLOR: silver">
    <TD style="WIDTH: 1%; BACKGROUND-COLOR: white; TEXT-ALIGN: left" noWrap></TD>
    <TD noWrap align=left width="75%" colSpan=2><FONT face="Times New Roman" size=2>781, 788, 789, 793, 811, 812, 813,</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="7%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="8%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="5%"></TD></TR>
  <TR style="BACKGROUND-COLOR: silver">
    <TD style="WIDTH: 1%; BACKGROUND-COLOR: white; TEXT-ALIGN: left" noWrap></TD>
    <TD noWrap align=left width="75%" colSpan=2><FONT face="Times New Roman" size=2>833, 840, 846<SUP>2</SUP></FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="7%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="8%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="5%"></TD></TR>
  <TR style="BACKGROUND-COLOR: silver">
    <TD style="WIDTH: 1%; BACKGROUND-COLOR: white; TEXT-ALIGN: left" noWrap></TD>
    <TD noWrap align=left width="75%" colSpan=2><FONT face="Times New Roman" size=2>2455 Corporate West Drive</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="7%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="8%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="5%"></TD></TR>
  <TR style="BACKGROUND-COLOR: silver">
    <TD style="WIDTH: 1%; BACKGROUND-COLOR: white; TEXT-ALIGN: left" noWrap></TD>
    <TD noWrap align=left width="75%" colSpan=2><FONT face="Times New Roman" size=2>Lisle, IL 60532</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="7%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="8%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="5%"></TD></TR>
  <TR>
    <TD style="WIDTH: 1%; BACKGROUND-COLOR: white"></TD>
    <TD width="98%" colSpan=8>&nbsp; </TD></TR>
  <TR vAlign=bottom>
    <TD style="WIDTH: 1%; BACKGROUND-COLOR: white; TEXT-ALIGN: left" noWrap></TD>
    <TD noWrap align=left width="75%" bgColor=#c0c0c0 colSpan=2><FONT face="Times New Roman" size=2>Spectrum Asset Management,
      Inc.<SUP>3</SUP></FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2></FONT></TD>
    <TD noWrap align=left width="7%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>Common Stock</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="8%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>FFC &#150; 2,534,057<SUP>3
      </SUP>(beneficial)</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="5%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>5.90%</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD style="WIDTH: 1%; BACKGROUND-COLOR: white; TEXT-ALIGN: left" noWrap></TD>
    <TD noWrap align=left width="75%" bgColor=#c0c0c0 colSpan=2><FONT face="Times New Roman" size=2>2 High Ridge Park</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="7%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="8%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="5%" bgColor=#c0c0c0></TD></TR>
  <TR vAlign=bottom>
    <TD style="WIDTH: 1%; BACKGROUND-COLOR: white; TEXT-ALIGN: left" noWrap></TD>
    <TD noWrap align=left width="75%" bgColor=#c0c0c0 colSpan=2><FONT face="Times New Roman" size=2>Stamford, CT 06905</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="7%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="8%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="5%" bgColor=#c0c0c0></TD></TR></TABLE>____________________<BR>&nbsp;<BR>
<TABLE style="BORDER-COLLAPSE: collapse" cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=bottom>
    <TD vAlign=top noWrap align=left width="1%"><FONT face="Times New Roman" size=1>*</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD ALIGN="LEFT" WIDTH="96%" STYLE="text-align: justify"><FONT face="Times New Roman" size=2>As of January 20, 2012, the Directors and officers, as a group, owned less than 1% of the Shares of each Fund.</FONT></TD>
    <TD noWrap align=left width="1%"></TD></TR>
  <TR vAlign=bottom>
    <TD vAlign=top noWrap align=left width="1%"><FONT face="Times New Roman" size=2>**</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD ALIGN="LEFT" WIDTH="96%" STYLE="text-align: justify"><FONT face="Times New Roman" size=2>A nominee partnership of The Depository Trust Company.</FONT></TD>
    <TD noWrap align=left width="1%"></TD></TR>
  <TR vAlign=bottom>
    <TD vAlign=top noWrap align=left width="1%"><FONT face="Times New Roman" size=2>1</FONT></TD>
    <TD noWrap align=left width="1%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD ALIGN="LEFT" WIDTH="97%" COLSPAN="2" STYLE="text-align: justify"><FONT face="Times New Roman" size=2>Information obtained
    from a Schedule 13G/A filed by Fifth Third BanCorp (&ldquo;FTB&rdquo;) and Fifth Third Bank- Ohio (&ldquo;FTBO&rdquo;) with
    the SEC reporting share ownership as of December 31, 2011. Based on that filing, FTB has the sole power to vote or direct the
    vote of 624,288 Shares and has the sole power to dispose of 595,639 Shares. FTB and FTBO have the shared power to dispose of 28,315
    Shares.  </FONT></TD></TR>
  <TR vAlign=bottom>
    <TD vAlign=top noWrap align=left width="1%"><FONT face="Times New Roman" size=2>2</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD ALIGN="LEFT" WIDTH="97%" COLSPAN="2" STYLE="text-align: justify"><FONT face="Times New Roman" size=2>Information obtained from a Schedule 13G/A filed by Guggenheim Funds Distributors, Inc. (as Sponsor for Claymore Securities Defined Portfolios and Guggenheim Defined Portfolios (the &ldquo;Filing Entities&rdquo;)), with the SEC reporting share ownership as of December 31, 2011. Based on that filing, the Filing Entities have the sole power to vote or direct the vote or dispose or direct the disposition of 822,873 Shares.</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD vAlign=top noWrap align=left width="1%"><FONT face="Times New Roman" size=2>3</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD ALIGN="LEFT" WIDTH="97%" COLSPAN="2" STYLE="text-align: justify"><FONT face="Times New Roman" size=2>Information obtained from a Schedule 13G filed by Spectrum
      Asset Management, Inc. (&ldquo;Spectrum&rdquo;) with the SEC reporting share ownership
      as of December 31, 2011. Based on that filing, Spectrum and Principal
      Financial Group Inc. have the shared power to vote or direct
      the vote or dispose or direct the disposition of 2,534,057
    Shares.</FONT></TD></TR></TABLE><BR>
<P align=justify><FONT face="Times New Roman" size=2></FONT>&nbsp;&nbsp;&nbsp;&nbsp; <FONT face="Times New Roman" size=2>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 each proposal on which shareholders of that
Fund are entitled to vote. Separate proxy cards are enclosed for each Fund in
which a shareholder is a record owner of Shares. Thus, if a proposal is approved
by shareholders of one or more Funds and not approved by shareholders of one or
more other Funds, the proposal will be implemented for the Fund or Funds that
approved the proposal and will not be implemented for any Fund that did not
approve the proposal. It is therefore essential that shareholders complete, date
and sign each enclosed proxy card. Shareholders of each Fund are entitled to
vote on the proposal pertaining to that Fund.</FONT></P>
<P align=center><FONT face="Times New Roman" size=2>3 </FONT></P>
<HR align=center width="100%" noShade SIZE=2>

<DIV style="PAGE-BREAK-BEFORE: always"></DIV><BR>
<P align=center><B><FONT face="Times New Roman" size=2>SUMMARY OF PROXY
PROPOSALS</FONT></B></P>
<P align=justify><B><U><FONT face="Times New Roman" size=2>Preferred Income Fund
(PFD)</FONT></U></B></P>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp; <FONT size=2 face="Times New Roman"><STRONG><FONT face="Times New Roman"><U>PROPOSALS</U></FONT></STRONG></FONT></P>
<DIV style="PADDING-LEFT: 30pt">
<P align=justify><FONT face="Times New Roman" size=2>1.</FONT><FONT face="Times New Roman" size=2>
</FONT><FONT face="Times New Roman" size=2>Election of Directors &#150; Elect two Directors:
Donald F. Crumrine and Robert F. Wulf </FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>2.</FONT><FONT face="Times New Roman" size=2>
</FONT><FONT face="Times New Roman" size=2>Changes in Fundamental Investment Policy
Regarding Concentrations of Investments (2-A and 2-B)</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>3.</FONT><FONT face="Times New Roman" size=2>
</FONT><FONT face="Times New Roman" size=2>Other Business </FONT></P></DIV>
<P align=justify><B><U><FONT face="Times New Roman" size=2>Preferred Income Opportunity Fund
(PFO)</FONT></U></B><B><FONT face="Times New Roman" size=2> </FONT></B></P>
<P align=justify><FONT face="Times New Roman" size=2><FONT size=3 face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;
</FONT><STRONG><U>PROPOSALS</U></STRONG></FONT><FONT face="Times New Roman" size=2><STRONG>
</STRONG></FONT></P>
<DIV style="PADDING-LEFT: 30pt">
<P align=justify><FONT face="Times New Roman" size=2>1.</FONT><FONT face="Times New Roman" size=2>
</FONT><FONT face="Times New Roman" size=2>Election of Directors &#150; Elect one Director: David
Gale </FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>2.</FONT><FONT face="Times New Roman" size=2>
</FONT><FONT face="Times New Roman" size=2>Changes in Fundamental Investment Policy
Regarding Concentrations of Investments (2-B only) </FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>3.</FONT><FONT face="Times New Roman" size=2>
</FONT><FONT face="Times New Roman" size=2>Other Business </FONT></P></DIV>
<P align=justify><B><U><FONT face="Times New Roman" size=2>Preferred Securities Income Fund
(FFC)</FONT></U></B><B><FONT face="Times New Roman" size=2> </FONT></B></P>
<P align=justify><FONT face="Times New Roman" size=2><FONT size=3 face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;
</FONT><STRONG><U>PROPOSALS</U></STRONG></FONT><FONT face="Times New Roman" size=2><STRONG>
</STRONG></FONT></P>
<DIV style="PADDING-LEFT: 30pt">
<P align=justify><FONT face="Times New Roman" size=2>1.</FONT><FONT face="Times New Roman" size=2>
</FONT><FONT face="Times New Roman" size=2>Election of Directors &#150; Elect two Directors:
Morgan Gust and Karen H. Hogan </FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>2.</FONT><FONT face="Times New Roman" size=2>
</FONT><FONT face="Times New Roman" size=2>Changes in Fundamental Investment Policy
Regarding Concentrations of Investments (2-A and 2-B) </FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>3.</FONT><FONT face="Times New Roman" size=2>
</FONT><FONT face="Times New Roman" size=2>Other Business </FONT></P></DIV>
<P align=justify><B><U><FONT face="Times New Roman" size=2>Total Return Fund
(FLC)</FONT></U></B><B><FONT face="Times New Roman" size=2> </FONT></B></P>
<P align=justify><FONT face="Times New Roman" size=2><FONT size=3 face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;
</FONT><STRONG><U>PROPOSALS</U></STRONG></FONT><FONT face="Times New Roman" size=2><STRONG>
</STRONG></FONT></P>
<DIV style="PADDING-LEFT: 30pt">
<P align=justify><FONT face="Times New Roman" size=2>1.</FONT><FONT face="Times New Roman" size=2>
</FONT><FONT face="Times New Roman" size=2>Election of Directors &#150; Elect two Directors:
Morgan Gust and Karen H. Hogan </FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>2.</FONT><FONT face="Times New Roman" size=2>
</FONT><FONT face="Times New Roman" size=2>Changes in Fundamental Investment Policy
Regarding Concentrations of Investments (2-A and 2-B) </FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>3.</FONT><FONT face="Times New Roman" size=2>
</FONT><FONT face="Times New Roman" size=2>Other Business </FONT></P></DIV>
<P align=center><B><FONT face="Times New Roman" size=2>PROPOSAL 1: ELECTION OF DIRECTORS
</FONT></B></P>
<P align=justify><B><FONT face="Times New Roman" size=2></FONT></B>&nbsp;&nbsp;&nbsp;&nbsp;
<FONT face="Times New Roman" size=2>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.</FONT></P>
<P align=justify><B><FONT face="Times New Roman" size=2>Nominees for the Boards of
Directors</FONT></B></P>
<P align=justify><B><FONT face="Times New Roman" size=2></FONT></B><FONT face="Times New Roman" size=2><FONT size=3 face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp; </FONT>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. Each nominee has been nominated for a three-year term to expire at each Fund&rsquo;s 2015 Annual Meeting of Shareholders and until his or her successor is duly elected and qualified. Shareholders of each Fund&rsquo;s Common Stock are entitled to elect the nominees for election to the Board of the relevant Fund.</FONT></P>

<TABLE style="LINE-HEIGHT: 14pt; BORDER-COLLAPSE: collapse; padding-left: 4pt; padding-right: 4pt" cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=bottom>
    <TD style="BORDER-TOP: #000000 1pt solid; BORDER-LEFT: #000000 1pt solid; BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="49%"><B><FONT face=serif size=2>Fund</FONT></B></TD>
    <TD style="BORDER-RIGHT: #000000 1pt solid; BORDER-TOP: #000000 1pt solid; BORDER-LEFT: #000000 1pt solid; BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="50%"><B><FONT face=serif size=2>Nominees For
    Election</FONT></B></TD></TR>
  <TR vAlign=bottom>
    <TD style="BORDER-LEFT: #000000 1pt solid" noWrap align=left width="49%"><FONT face=serif size=2>PFD</FONT></TD>
    <TD style="BORDER-RIGHT: #000000 1pt solid; BORDER-LEFT: #000000 1pt solid" noWrap align=left width="50%"><FONT face=serif size=2>Donald F. Crumrine</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD style="BORDER-LEFT: #000000 1pt solid; BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="49%"></TD>
    <TD style="BORDER-RIGHT: #000000 1pt solid; BORDER-LEFT: #000000 1pt solid; BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="50%"><FONT face=serif size=2>Robert F. Wulf</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD style="BORDER-LEFT: #000000 1pt solid; BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="49%"><FONT face=serif size=2>PFO</FONT></TD>
    <TD style="BORDER-RIGHT: #000000 1pt solid; BORDER-LEFT: #000000 1pt solid; BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="50%"><FONT face=serif size=2>David Gale</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD style="BORDER-LEFT: #000000 1pt solid" noWrap align=left width="49%"><FONT face=serif size=2>FFC</FONT></TD>
    <TD style="BORDER-RIGHT: #000000 1pt solid; BORDER-LEFT: #000000 1pt solid" noWrap align=left width="50%"><FONT face=serif size=2>Morgan Gust</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD style="BORDER-LEFT: #000000 1pt solid; BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="49%"></TD>
    <TD style="BORDER-RIGHT: #000000 1pt solid; BORDER-LEFT: #000000 1pt solid; BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="50%"><FONT face=serif size=2>Karen H. Hogan</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD style="BORDER-LEFT: #000000 1pt solid" noWrap align=left width="49%"><FONT face=serif size=2>FLC</FONT></TD>
    <TD style="BORDER-RIGHT: #000000 1pt solid; BORDER-LEFT: #000000 1pt solid" noWrap align=left width="50%"><FONT face=serif size=2>Morgan Gust</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD style="BORDER-LEFT: #000000 1pt solid; BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="49%"></TD>
    <TD style="BORDER-RIGHT: #000000 1pt solid; BORDER-LEFT: #000000 1pt solid; BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="50%"><FONT face=serif size=2>Karen H.
Hogan</FONT></TD></TR></TABLE><BR>


<P align=center><FONT face="Times New Roman" size=2>4 </FONT></P>
<HR align=center width="100%" noShade SIZE=2>

<DIV style="PAGE-BREAK-BEFORE: always"></DIV><BR>
<P align=justify><U><FONT face="Times New Roman" size=2>Information About Each Director&rsquo;s or
Nominee for Election as Director&rsquo;s Experience, Qualifications, Attributes or
</FONT></U><U><FONT face="Times New Roman" size=2>Skills</FONT></U><FONT face="Times New Roman" size=2>
</FONT></P>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp; <FONT face="Times New Roman" size=2>Directors or
Nominees for Election as 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. </FONT></P>
<TABLE style="LINE-HEIGHT: 14pt; BORDER-COLLAPSE: collapse" cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=bottom>
    <TD noWrap align=left width="57%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="7%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%"></TD>
    <TD noWrap style="text-align: center" width="1%"></TD>
    <TD noWrap style="text-align: center" width="5%"><FONT face="Times New Roman" size=2>Number of</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="5%"></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="57%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="7%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%"></TD>
    <TD noWrap style="text-align: center" width="1%"></TD>
    <TD noWrap style="text-align: center" width="5%"><FONT face="Times New Roman" size=2>Funds in</FONT></TD>
    <TD noWrap style="text-align: center" width="1%"></TD>
    <TD noWrap style="text-align: center" width="5%"><FONT face="Times New Roman" size=2>Other Public</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="57%"></TD>
    <TD noWrap style="text-align: center" width="1%"></TD>
    <TD noWrap style="text-align: center" width="7%"><FONT face="Times New Roman" size=2>Current</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%"></TD>
    <TD noWrap style="text-align: center" width="1%"></TD>
    <TD noWrap style="text-align: center" width="5%"><FONT face="Times New Roman" size=2>Fund</FONT></TD>
    <TD noWrap style="text-align: center" width="1%"></TD>
    <TD noWrap style="text-align: center" width="5%"><FONT face="Times New Roman" size=2>Company Board</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="57%"></TD>
    <TD noWrap align=right width="1%"></TD>
    <TD noWrap style="text-align: center" width="7%"><FONT face="Times New Roman" size=2>Position(s)</FONT></TD>
    <TD noWrap style="text-align: center" width="1%"></TD>
    <TD noWrap style="text-align: center" width="10%"><FONT face="Times New Roman" size=2>Term of Office and</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap style="text-align: center" width="10%"><FONT face="Times New Roman" size=2>Principal Occupation</FONT></TD>
    <TD noWrap style="text-align: center" width="1%"></TD>
    <TD noWrap style="text-align: center" width="5%"><FONT face="Times New Roman" size=2>Complex</FONT></TD>
    <TD noWrap style="text-align: center" width="1%"></TD>
    <TD noWrap style="text-align: center" width="5%"><FONT face="Times New Roman" size=2>Memberships</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="57%"></TD>
    <TD noWrap style="text-align: center" width="1%"></TD>
    <TD noWrap style="text-align: center" width="7%"><FONT face="Times New Roman" size=2>Held with</FONT></TD>
    <TD noWrap style="text-align: center" width="1%"></TD>
    <TD noWrap style="text-align: center" width="10%"><FONT face="Times New Roman" size=2>Length of Time</FONT></TD>
    <TD noWrap style="text-align: center" width="1%"></TD>
    <TD noWrap style="text-align: center" width="10%"><FONT face="Times New Roman" size=2>During Past Five</FONT></TD>
    <TD noWrap style="text-align: center" width="1%"></TD>
    <TD noWrap style="text-align: center" width="5%"><FONT face="Times New Roman" size=2>Overseen by</FONT></TD>
    <TD noWrap style="text-align: center" width="1%"></TD>
    <TD noWrap style="text-align: center" width="5%"><FONT face="Times New Roman" size=2>During Past 5</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD style="BORDER-BOTTOM: #000000 1pt solid; text-align: center" noWrap width="57%"><FONT face="Times New Roman" size=2>Name, Address and Age</FONT></TD>
    <TD noWrap style="text-align: center" width="1%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid; text-align: center" noWrap width="7%"><FONT face="Times New Roman" size=2>Funds</FONT></TD>
    <TD noWrap style="text-align: center" width="1%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid; text-align: center" noWrap width="10%"><FONT face="Times New Roman" size=2>Served*</FONT></TD>
    <TD noWrap style="text-align: center" width="1%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid; text-align: center" noWrap width="10%"><FONT face="Times New Roman" size=2>Years</FONT></TD>
    <TD noWrap style="text-align: center" width="1%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid; text-align: center" noWrap width="5%"><FONT face="Times New Roman" size=2>Director**</FONT></TD>
    <TD noWrap style="text-align: center" width="1%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid; text-align: center" noWrap width="5%"><FONT face="Times New Roman" size=2>Years</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="57%" bgColor=#c0c0c0><B><U><FONT face="Times New Roman" size=2>Non-Interested</FONT></U></B></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="7%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="5%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="5%" bgColor=#c0c0c0></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="57%" bgColor=#c0c0c0><B><U><FONT face="Times New Roman" size=2>Directors/Nominees:</FONT></U></B></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="7%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="5%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="5%" bgColor=#c0c0c0></TD></TR>
  <TR>
    <TD width="99%" colSpan=11>&nbsp;</TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="57%" bgColor=#c0c0c0><B><FONT face="Times New Roman" size=2>David Gale</FONT></B></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="7%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>Director</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0><B><FONT face="Times New Roman" size=2>Class I Director</FONT></B></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>President of
    Delta</FONT></TD>
    <TD noWrap style="text-align: center" width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap style="text-align: center" width="5%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>4</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="5%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>Metromedia</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="57%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>Delta Dividend Group,
      Inc.</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="7%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>PFD &#151; since 1997</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>Dividend Group,
    Inc.</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="5%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="5%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>International</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="57%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>220 Montgomery
      Street</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="7%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>PFO &#151; since 1997</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>(investments)</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="5%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
    <TD noWrap align=left width="5%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>Group, Inc.
  and</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="57%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>Suite 426</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="7%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>FFC &#151; since
      inception</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="5%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="5%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>Emmis</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="57%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>San Francisco, CA
      94104</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="7%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>FLC &#151; since
      inception</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="5%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="5%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>Communications</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="57%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>Age: 63</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="7%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="5%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="5%" bgColor=#c0c0c0></TD></TR>
  <TR>
    <TD width="99%" colSpan=11>&nbsp;</TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="57%" bgColor=#c0c0c0><B><FONT face="Times New Roman" size=2>Morgan Gust</FONT></B></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="7%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>Director and</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0><B><FONT face="Times New Roman" size=2>Class III Director</FONT></B></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>Owner and
    operator</FONT></TD>
    <TD noWrap style="text-align: center" width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap style="text-align: center" width="5%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>4</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="5%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>CoBiz
  Financial,</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="57%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>301 E. Colorado
      Boulevard</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="7%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>Nominating</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>PFD &#151; since
      inception</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>of various
    entities</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="5%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="5%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>Inc.
  (financial</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="57%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>Suite 720</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="7%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>and</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>PFO &#151; since
      inception</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>engaged in</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="5%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="5%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>services)</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="57%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>Pasadena, CA
    91101</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="7%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>Governance</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>agriculture and
    real</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="5%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="5%" bgColor=#c0c0c0></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="57%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>Age: 64</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="7%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>Committee</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0><B><FONT face="Times New Roman" size=2>Class II Director</FONT></B></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>estate; Former</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="5%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="5%" bgColor=#c0c0c0></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="57%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="7%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>Chairman</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>FFC &#151; since
      inception</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>President of
    Giant</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="5%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="5%" bgColor=#c0c0c0></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="57%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="7%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>FLC &#151; since
      inception</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>Industries, Inc.</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="5%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="5%" bgColor=#c0c0c0></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="57%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="7%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>(petroleum
    refining</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="5%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="5%" bgColor=#c0c0c0></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="57%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="7%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>and marketing)
    from</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="5%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="5%" bgColor=#c0c0c0></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="57%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="7%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>March 2002
    through</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="5%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="5%" bgColor=#c0c0c0></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="57%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="7%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>June 2007</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="5%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="5%" bgColor=#c0c0c0></TD></TR>
  <TR>
    <TD width="99%" colSpan=11>&nbsp;</TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="57%" bgColor=#c0c0c0><B><FONT face="Times New Roman" size=2>Karen H. Hogan</FONT></B></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="7%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>Director</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0><B><FONT face="Times New Roman" size=2>Class I Director</FONT></B></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>Financial
      Consultant;</FONT></TD>
    <TD noWrap style="text-align: center" width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap style="text-align: center" width="5%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>4</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="5%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>None</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="57%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>301 E. Colorado
      Boulevard</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="7%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>PFD &#151; since 2005</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>Active Community</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="5%" bgColor=#c0c0c0>&nbsp;</TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="5%" bgColor=#c0c0c0></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="57%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>Suite 720</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="7%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>Volunteer and
    Board</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
    <TD noWrap align=left width="5%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="5%" bgColor=#c0c0c0></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="57%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>Pasadena, CA
    91101</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="7%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0><B><FONT face="Times New Roman" size=2>Class III Director</FONT></B></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>Member of IKAR,
a</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="5%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="5%" bgColor=#c0c0c0></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="57%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>Age: 50</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="7%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>PFO &#151; since 2005</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>non-profit</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="5%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="5%" bgColor=#c0c0c0></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="57%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="7%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>organization</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="5%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="5%" bgColor=#c0c0c0></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="57%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="7%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0><B><FONT face="Times New Roman" size=2>Class II Director</FONT></B></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="5%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="5%" bgColor=#c0c0c0></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="57%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="7%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>FFC &#151; since 2005</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="5%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="5%" bgColor=#c0c0c0></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="57%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="7%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>FLC &#151; since 2005</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="5%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="5%" bgColor=#c0c0c0></TD></TR>
  <TR>
    <TD width="99%" colSpan=11>&nbsp;</TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="57%" bgColor=#c0c0c0><B><FONT face="Times New Roman" size=2>Robert F. Wulf</FONT></B></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="7%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>Director</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0><B><FONT face="Times New Roman" size=2>Class II Director</FONT></B></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>Financial
      Consultant;</FONT></TD>
    <TD noWrap style="text-align: center" width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap style="text-align: center" width="5%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>4</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="5%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>None</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="57%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>47-154 El Merana
      Circle</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="7%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>and Audit</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>PFD &#151; since
      inception</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>Former Trustee,</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="5%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="5%" bgColor=#c0c0c0></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="57%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>Palm Desert, CA
      92260</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="7%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>Committee</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>PFO &#151; since
      inception</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>University of
    Oregon</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="5%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="5%" bgColor=#c0c0c0></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="57%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>Age: 74</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="7%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>Chairman</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>Foundation from</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="5%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="5%" bgColor=#c0c0c0></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="57%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="7%" bgColor=#c0c0c0>&nbsp;</TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0><B><FONT face="Times New Roman" size=2>Class III Director</FONT></B></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>October 1998 to
    June</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="5%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="5%" bgColor=#c0c0c0></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="57%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="7%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>FFC &#151; since
      inception</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>2008; Former</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="5%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="5%" bgColor=#c0c0c0></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="57%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="7%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>FLC &#151; since
      inception</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>Trustee, San</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="5%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="5%" bgColor=#c0c0c0></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="57%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="7%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>Francisco</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="5%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="5%" bgColor=#c0c0c0></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="57%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
    <TD noWrap align=left width="7%" bgColor=#c0c0c0>&nbsp;</TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>Theological</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="5%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="5%" bgColor=#c0c0c0></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="57%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="7%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>Seminary from</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="5%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="5%" bgColor=#c0c0c0></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="57%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="7%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>October 2001 to</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="5%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="5%" bgColor=#c0c0c0></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="57%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="7%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>October 2011</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="5%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="5%" bgColor=#c0c0c0></TD></TR>
  <TR>
    <TD noWrap align=left width="57%">&nbsp;</TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="7%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="5%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="5%"></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="57%" bgColor=#c0c0c0><B><U><FONT face="Times New Roman" size=2>Interested
      Director:</FONT></U></B></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="7%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="5%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="5%" bgColor=#c0c0c0></TD></TR>
  <TR>
    <TD width="99%" colSpan=11>&nbsp; </TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="57%" bgColor=#c0c0c0><B><FONT face="Times New Roman" size=2>Donald F. Crumrine </FONT></B><FONT face="Times New Roman" size=2><SUP>(1)</SUP></FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="7%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>Director,</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0><B><FONT face="Times New Roman" size=2>Class II Director</FONT></B></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>Chairman of the</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="5%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>4</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="5%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>None</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="57%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>301 E. Colorado
      Boulevard</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="7%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>Chairman of</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>PFD &#151; since
      inception</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>Board and
    Director</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="5%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="5%" bgColor=#c0c0c0></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="57%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>Suite 720</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="7%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>the Board</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>PFO &#151; since
      inception</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>of Flaherty
&amp;</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="5%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="5%" bgColor=#c0c0c0></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="57%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>Pasadena, CA
    91101</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="7%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>and Chief</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>Crumrine</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="5%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="5%" bgColor=#c0c0c0></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="57%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>Age: 64</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="7%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>Executive</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0><B><FONT face="Times New Roman" size=2>Class III Director</FONT></B></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="5%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="5%" bgColor=#c0c0c0></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="57%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="7%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>Officer</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>FFC &#151; since
      inception</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="5%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="5%" bgColor=#c0c0c0></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="57%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="7%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>FLC &#151; since
      inception</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="5%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="5%" bgColor=#c0c0c0></TD></TR></TABLE>____________________<BR>&nbsp;<BR>
<TABLE style="BORDER-COLLAPSE: collapse" cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=bottom>
    <TD vAlign=top noWrap align=left width="1%"><FONT face="Times New Roman" size=2>*</FONT></TD>
    <TD noWrap align=left width="1%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD ALIGN="LEFT" WIDTH="97%" STYLE="text-align: justify"><FONT face="Times New Roman" size=2>The Class II Directors of PFO and the Class
      III Directors of PFD, FFC and FLC will serve until each Fund&rsquo;s 2013 Annual
      Meeting of Shareholders and until their successors are duly elected and
      qualified. The Class I Directors of PFD, the Class I Director of FFC and
      FLC and the Class III Directors of PFO will serve until each Fund&rsquo;s Annual
      Meeting of Shareholders in 2014 and until their successors are duly
      elected and qualified. The Class I Director of PFO and the Class II
      Directors of PFD, FFC and FLC will serve until each Fund&rsquo;s Annual Meeting
      of Shareholders in 2015 and until their successors are duly elected and
      qualified.</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD vAlign=top noWrap align=left width="1%"><FONT face="Times New Roman" size=2>**</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD ALIGN="LEFT" WIDTH="97%" STYLE="text-align: justify"><FONT face="Times New Roman" size=2>The Flaherty &amp; Crumrine fund complex
      consists solely of the Funds.</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD NOWRAP WIDTH="1%" STYLE="text-align: left; vertical-align: top"><FONT face="Times New Roman" size=1><sup>(1)</sup></FONT></TD>
    <TD noWrap align=left width="1%"><FONT face="Times New Roman" size=1></FONT></TD>
    <TD ALIGN="LEFT" WIDTH="97%" STYLE="text-align: justify"><FONT face="Times New Roman" size=2>&ldquo;Interested person&rdquo; of the Funds as defined
      in the Investment Company Act of 1940, as amended (the &ldquo;1940 Act&rdquo;). Mr.
      Crumrine is considered an &ldquo;interested person&rdquo; because of his affiliation
      with Flaherty &amp; Crumrine.</FONT></TD></TR></TABLE><BR>
<P align=center><FONT face="Times New Roman" size=2>5</FONT></P>
<HR align=center width="100%" noShade SIZE=2>

<DIV style="PAGE-BREAK-BEFORE: always"></DIV><BR>
<P align=justify><FONT face="Times New Roman" size=2></FONT>&nbsp;&nbsp;&nbsp;&nbsp; <FONT face="Times New Roman" size=2>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&rsquo;s educational background;
business, professional training or practice (</FONT><I><FONT face="Times New Roman" size=2>e.g</FONT></I><FONT face="Times New Roman" size=2>., 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 not-for-profit entities or other
organizations; and/or other life experiences. The charters for the Boards&rsquo;
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 &amp; Crumrine,
and also may benefit from information provided by the Funds&rsquo; and Flaherty &amp;
Crumrine&rsquo;s counsel; both counsel to the Independent Directors and counsel to the
Funds and Flaherty &amp; 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. </FONT></P>
<UL style="FONT-SIZE: 10pt; TEXT-ALIGN: justify">
  <LI><U><FONT face="Times New Roman" size=2>Donald F. Crumrine</FONT></U><FONT face="Times New Roman" size=2> &#150; Mr. Crumrine has been the Chairman of the Boards of PFD and PFO
  since 2002 and Chairman of the Boards of FFC and FLC since each Fund&rsquo;s
  inception. Mr. Crumrine has over 35 years of experience managing portfolios of
  preferred securities. He co-founded Flaherty &amp; Crumrine in 1983, after
  spending twelve years at Scudder, Stevens &amp; Clark, to focus on managing
  preferred portfolios and associated hedges. Mr. Crumrine is actively involved
  in the day-to-day management of all Flaherty &amp; Crumrine client portfolios,
  including those of the Funds, and directs client service and marketing efforts
  at Flaherty &amp; Crumrine.<BR>&nbsp;</FONT> </lI>
  <LI><U><FONT face="Times New Roman" size=2>David Gale</FONT></U><FONT face="Times New Roman" size=2> &#150;
  In addition to his tenure as a Director of the Funds, Mr. Gale has been
  President and Chief Executive Officer of Delta Dividend Group, Inc, a San
  Francisco-based investment management firm, since 1992. Prior to joining Delta
  Dividend Group, Inc., Mr. Gale was a Principal with Morgan Stanley from
  February 1983 to January 1990, and a Managing Director of Lehman Brothers
  Holdings Inc. from January 1990 to January 1992. Mr. Gale currently serves as
  a director of Emmis Communications and served as a director of Metromedia
  International Group, Inc., a telecommunications company from 2005 through
  August 30, 2008. <BR>&nbsp;</FONT> </lI>
  <LI><U><FONT face="Times New Roman" size=2>Morgan Gust</FONT></U><FONT face="Times New Roman" size=2>
  &#150; In addition to his tenure as a Director of the Funds, Mr. Gust is the owner
  and operator of various entities engaged in agriculture and real estate. From
  1990 to 2007, Mr. Gust served in various </FONT><FONT face="Times New Roman" size=2>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.<BR>&nbsp;</FONT></lI>
  <LI><U><FONT face="Times New Roman" size=2>Karen H. Hogan</FONT></U><FONT face="Times New Roman" size=2> &#150; In addition to her tenure as a Director of the Funds, Ms. Hogan has
  served as a board member and committee member of charitable and non-profit
  organizations. From September 1985 to January 1997, Ms. Hogan served as Senior
  Vice President of Preferred Stock Origination, and previously Vice President
  of New Product Development, at Lehman Brothers Holdings Inc. Ms. Hogan also
  serves as a board member of a non-profit organization.&nbsp;<BR>&nbsp;</FONT></li>
  <LI><U><FONT face="Times New Roman" size=2>Robert F. Wulf</FONT></U><FONT face="Times New Roman" size=2> &#150; In addition to his tenure as a Director of the Funds, Mr. Wulf has
  worked as a financial consultant for over 28 years. Mr. Wulf also served as a
  board member of two non-profit organizations.</FONT></LI></UL>
<P align=center><FONT face="Times New Roman" size=2>6</FONT></P>
<HR align=center width="100%" noShade SIZE=2>

<DIV style="PAGE-BREAK-BEFORE: always"></DIV><BR>

<P align=justify><U><FONT face="Times New Roman" size=2>Board Composition and Leadership
Structure</FONT></U><FONT face="Times New Roman" size=2> </FONT></P>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp; <FONT face="Times New Roman" size=2>The 1940 Act
requires that at least 40% of the Funds&rsquo; Directors not be &ldquo;interested persons&rdquo;
(as defined in the 1940 Act) of the Funds, and therefore not affiliated with
Flaherty &amp; Crumrine (&ldquo;Independent Directors&rdquo;). To rely on certain exemptive
rules under the 1940 Act, a majority of the Funds&rsquo; 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&rsquo; 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 &amp; Crumrine at scheduled meetings and between meetings
as appropriate. Independent Directors have been designated to chair the Audit
Committees and the Nominating and Corporate Governance Committees, 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 and composition, in which no individual Independent
Director has been designated to lead all the Independent Directors, are
appropriate in light of the Boards&rsquo; size and the cooperative and dynamic working
relationship among the Independent Directors and the Independent Directors&rsquo; open
lines of communication with Fund management. The Boards have determined that
their leadership structures and composition, in which the Chairman of the Boards
is an &ldquo;interested person&rdquo; of the Funds and 80% of the Directors are Independent
Directors, are appropriate in light of the services that Flaherty &amp; Crumrine
provides to the Funds and potential conflicts of interest that could arise from
these relationships. </FONT></P>
<P align=justify><U><FONT face="Times New Roman" size=2>Boards&rsquo; Oversight Role in
Management</FONT></U><FONT face="Times New Roman" size=2> </FONT></P>
<P align=justify><FONT face="Times New Roman" size=2><FONT size=3 face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;
</FONT>The Boards&rsquo; 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 &amp; Crumrine,
have responsibility for the day-to-day 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 their 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&rsquo; and Flaherty &amp;
Crumrine&rsquo;s Chief Compliance Officer and portfolio management personnel. The
Boards&rsquo; Audit Committees (which consist of all the Independent Directors) meet
during their scheduled meetings, and between meetings the Audit Committee chairs
maintain contact, with the Funds&rsquo; independent registered public accounting firm
and the Funds&rsquo; Chief Financial Officer. The Boards also receive periodic
presentations from senior personnel of Flaherty &amp; 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
&amp; 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. 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 &amp; Crumrine and the Independent Directors&rsquo; own
independent legal counsel regarding regulatory, compliance and governance
matters. The Boards&rsquo; oversight role does not make the Boards guarantors of the
Funds&rsquo; investments or activities. </FONT></P>
<P align=justify><B><FONT face="Times New Roman" size=2>Beneficial Ownership of Shares in
Funds and Fund Complex for each Director and Nominee for Election as
Director</FONT></B></P>
<P align=justify><B><FONT face="Times New Roman" size=2></FONT></B><FONT face="Times New Roman" size=2><FONT size=3 face="Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp; </FONT>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 &amp; Crumrine Fund Family
beneficially owned by each Director and Nominee for Election as
Director.</FONT></P>
<P align=center><FONT face="Times New Roman" size=2>7 </FONT></P>
<HR align=center width="100%" noShade SIZE=2>
<DIV style="PAGE-BREAK-BEFORE: always"></DIV><BR>

<TABLE style="LINE-HEIGHT: 14pt; BORDER-COLLAPSE: collapse" cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=bottom>
    <TD noWrap align=left width="63%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="3%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="3%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="3%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="3%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="20%" colSpan=2><FONT face="Times New Roman" size=2>Aggregate Dollar Range of Equity</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="63%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="3%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="3%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="3%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="3%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="20%" colSpan=2><FONT face="Times New Roman" size=2>Securities in All Registered Investment</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="63%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="15%" colSpan=7><FONT face="Times New Roman" size=2>Dollar Range of Equity</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="20%" colSpan=2><FONT face="Times New Roman" size=2>Companies Overseen by Director in Family</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="63%"><FONT style="BORDER-BOTTOM: black 1pt solid" face="Times New Roman" size=2>Name
      of Director or Nominee</FONT></TD>
    <TD noWrap align=left width="1%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="15%" colSpan=7><FONT face="Times New Roman" size=2>Securities Held in
      Fund*(1)</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="20%" colSpan=2><FONT face="Times New Roman" size=2>of Investment
      Companies*(2)</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="63%"></TD>
    <TD noWrap align=left width="1%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="3%"><FONT face="Times New Roman" size=2>PFD</FONT></TD>
    <TD noWrap align=left width="1%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="3%"><FONT face="Times New Roman" size=2>PFO</FONT></TD>
    <TD noWrap align=left width="1%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="3%"><FONT face="Times New Roman" size=2>FFC</FONT></TD>
    <TD noWrap align=left width="1%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="3%"><FONT face="Times New Roman" size=2>FLC</FONT></TD>
    <TD noWrap align=left width="1%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="2%"><FONT face="Times New Roman" size=2>Total</FONT></TD>
    <TD noWrap align=left width="18%">&nbsp;</TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="63%" bgColor=#c0c0c0><B><FONT face="Times New Roman" size=2>NON-INTERESTED DIRECTORS:</FONT></B></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="3%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="3%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="3%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="3%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="20%" bgColor=#c0c0c0 colSpan=2></TD></TR>
  <TR>
    <TD noWrap align=left width="63%">&nbsp;</TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="3%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="3%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="3%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="3%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="20%" colSpan=2></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="63%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>David Gale</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="3%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>D</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="3%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>D</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="3%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>D</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="3%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>D</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="20%" bgColor=#c0c0c0 colSpan=2><FONT face="Times New Roman" size=2>E</FONT></TD></TR>
  <TR>
    <TD noWrap align=left width="63%">&nbsp;</TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="3%"></TD>
    <TD noWrap align=left width="1%">&nbsp;</TD>
    <TD noWrap align=left width="3%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="3%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="3%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="20%" colSpan=2></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="63%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>Morgan Gust</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="3%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>D</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="3%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>D</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="3%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>C</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="3%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>C</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="20%" bgColor=#c0c0c0 colSpan=2><FONT face="Times New Roman" size=2>E</FONT></TD></TR>
  <TR>
    <TD noWrap align=left width="63%">&nbsp;</TD>
    <TD noWrap align=left width="1%">&nbsp;</TD>
    <TD noWrap align=left width="3%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="3%">&nbsp;</TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="3%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="3%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="20%" colSpan=2></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="63%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>Karen H. Hogan</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="3%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>B</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="3%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>B</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="3%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>B</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="3%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>B</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="20%" bgColor=#c0c0c0 colSpan=2><FONT face="Times New Roman" size=2>C</FONT></TD></TR>
  <TR>
    <TD noWrap align=left width="63%">&nbsp;</TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="3%">&nbsp;</TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="3%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="3%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="3%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="20%" colSpan=2></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="63%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>Robert F. Wulf</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="3%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>C</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="3%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>B</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="3%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>C</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="3%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>C</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
    <TD noWrap align=left width="20%" bgColor=#c0c0c0 colSpan=2><FONT face="Times New Roman" size=2>D</FONT></TD></TR>
  <TR>
    <TD noWrap align=left width="63%">&nbsp;</TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="3%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="3%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="3%">&nbsp;</TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="3%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="20%" colSpan=2></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="63%" bgColor=#c0c0c0><B><FONT face="Times New Roman" size=2>INTERESTED DIRECTOR:</FONT></B></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="3%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="3%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="3%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="3%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="20%" bgColor=#c0c0c0 colSpan=2></TD></TR>
  <TR>
    <TD noWrap align=left width="63%">&nbsp;</TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="3%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="3%"></TD>
    <TD noWrap align=left width="1%">&nbsp;</TD>
    <TD noWrap align=left width="3%"></TD>
    <TD noWrap align=left width="1%">&nbsp;</TD>
    <TD noWrap align=left width="3%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="20%" colSpan=2></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="63%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>Donald F. Crumrine</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="3%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>E<SUP>(3)</SUP></FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="3%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>E<SUP>(3)</SUP></FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="3%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>E<SUP>(3)</SUP></FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="3%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>E<SUP>(3)</SUP></FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="20%" bgColor=#c0c0c0 colSpan=2><FONT face="Times New Roman" size=2>E<SUP>(3)</SUP></FONT></TD></TR></TABLE>____________________<BR>&nbsp;<BR>

<TABLE style="LINE-HEIGHT: normal; BORDER-COLLAPSE: collapse" cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=bottom>
    <TD noWrap align=left width="1%"><FONT face="Times New Roman" size=2>*</FONT></TD>
    <TD noWrap align=left width="1%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </TD>
    <TD noWrap align=left width="98%"><FONT face="Times New Roman" size=2>Key
      to Dollar Ranges</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="1%"><FONT face="Times New Roman" size=2>A.</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="98%"><FONT face="Times New Roman" size=2>None</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="1%"><FONT face="Times New Roman" size=2>B.</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD align=left width="98%"><FONT face="Times New Roman" size=2>$1 -
      $10,000</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="1%"><FONT face="Times New Roman" size=2>C.</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD align=left width="98%"><FONT face="Times New Roman" size=2>$10,001
      -$50,000</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="1%"><FONT face="Times New Roman" size=2>D.</FONT></TD>
    <TD noWrap align=left width="1%">&nbsp;</TD>
    <TD align=left width="98%"><FONT face="Times New Roman" size=2>$50,001 -
      $100,000</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="1%"><FONT face="Times New Roman" size=2>E.</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD align=left width="98%"><FONT face="Times New Roman" size=2>over
      $100,000</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD style="TEXT-ALIGN: justify" align=left width="98%"><FONT face="Times New Roman" size=2>All shares were valued as of January 20,
      2012.</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD style="VERTICAL-ALIGN: top; TEXT-ALIGN: left" noWrap width="1%"><FONT face="Times New Roman" size=1><SUP>(1)</SUP></FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD style="TEXT-ALIGN: justify" align=left width="98%"><FONT face="Times New Roman" size=2>This information has been furnished by each
      Director as of January 20, 2012. &#147;Beneficial Ownership&#148; is determined in
      accordance with Rule 16a-1(a)(2) under the 1934 Act.</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD style="VERTICAL-ALIGN: top; TEXT-ALIGN: left" noWrap width="1%"><FONT face="Times New Roman" size=1><SUP>(2)</SUP></FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD style="TEXT-ALIGN: justify" align=left width="98%"><FONT face="Times New Roman" size=2>The Directors, nominees and executive
      officers of each Fund, as a group, own less than 1% of each
  Fund.</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD style="VERTICAL-ALIGN: top; TEXT-ALIGN: left" noWrap width="1%"><FONT face="Times New Roman" size=1><SUP>(3)</SUP></FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD style="TEXT-ALIGN: justify" align=left width="98%"><FONT face="Times New Roman" size=2>Includes shares of the Fund held by Flaherty
      &amp; Crumrine, of which Mr. Crumrine is a shareholder and
    Director.</FONT></TD></TR></TABLE><BR>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp; <FONT face="Times New Roman" size=2>Each Director of each Fund who is not a director, officer or employee of
Flaherty &amp; Crumrine or any of its affiliates receives from each Fund a fee
of $9,000 per annum plus $750 for each in-person Board of Directors or Audit
Committee meeting attended, $500 for each in-person Nominating Committee meeting
attended, and $250 for each telephone meeting attended. In addition, the Audit
Committee Chairman receives from each Fund an annual fee of $3,000. Each
Director of each Fund is reimbursed for travel and out-of-pocket expenses
associated with attending Board and committee meetings. During the fiscal year
ended November 30, 2011, 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), seven meetings for FFC
(three of which were held by telephone conference call) and seven meetings for
FLC (three 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 a member. The aggregate remuneration paid to the
Directors of each Fund for the fiscal year ended November 30, 2011 is set forth
below:</FONT></P>

<TABLE style="LINE-HEIGHT: 14pt; BORDER-COLLAPSE: collapse" cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=bottom>
    <TD noWrap align=left width="71%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%"><FONT face="Times New Roman" size=2>Board Meeting and</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="6%"></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="71%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%"><FONT face="Times New Roman" size=2>Committee Meeting</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="6%"><FONT face="Times New Roman" size=2>Travel and Out-of-Pocket</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="71%"></TD>
    <TD noWrap align=left width="1%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="10%"><FONT face="Times New Roman" size=2>Annual Director
    Fees</FONT></TD>
    <TD noWrap align=left width="1%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="10%"><FONT face="Times New Roman" size=2>Fees</FONT></TD>
    <TD noWrap align=left width="1%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="6%"><FONT face="Times New Roman" size=2>Expenses*</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="71%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>PFD</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>$36,000</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>$34,000</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
    <TD noWrap align=left width="6%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>$2,815</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="71%"><FONT face="Times New Roman" size=2>PFO</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%"><FONT face="Times New Roman" size=2>$36,000</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%"><FONT face="Times New Roman" size=2>$34,000</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="6%"><FONT face="Times New Roman" size=2>$2,815</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="71%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>FFC</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>$36,000</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>$34,000</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="6%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>$2,815</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="71%"><FONT face="Times New Roman" size=2>FLC</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%"><FONT face="Times New Roman" size=2>$36,000</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%"><FONT face="Times New Roman" size=2>$34,000</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="6%"><FONT face="Times New Roman" size=2>$2,815</FONT></TD></TR></TABLE>____________________<BR>&nbsp;<BR>
<TABLE style="TEXT-ALIGN: justify" cellSpacing=0 cellPadding=0 border=0>

  <TR>
    <TD vAlign=top noWrap><FONT face="Times New Roman" size=2>*</FONT></TD>
    <TD vAlign=top noWrap>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </TD>
    <TD width="100%"><FONT face="Times New Roman" size=2>Includes
      reimbursement for travel and out-of-pocket expenses for both &ldquo;interested&rdquo;
      and Independent Directors.</FONT></TD></TR></TABLE>
<P align=center><FONT face="Times New Roman" size=2>8</FONT></P>
<HR align=center width="100%" noShade SIZE=2>

<DIV style="PAGE-BREAK-BEFORE: always"></DIV><BR>

<P align=justify><B><FONT face="Times New Roman" size=2>Officers of the Funds
</FONT></B></P>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp; <FONT face="Times New Roman" size=2>The following table provides information concerning each of the officers
of the Funds. </FONT></P>
<TABLE style="LINE-HEIGHT: 14pt; BORDER-COLLAPSE: collapse" cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=bottom>
    <TD noWrap align=left width="65%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%"><FONT face="Times New Roman" size=2>Current Position(s)</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%"><FONT face="Times New Roman" size=2>Term
      of Office and Length of Time</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="11%"><FONT face="Times New Roman" size=2>Principal Occupation During</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="65%"><FONT style="BORDER-BOTTOM: black 1pt solid" face="Times New Roman" size=2>Name, Address and Age</FONT></TD>
    <TD noWrap align=left width="1%">&nbsp;&nbsp;&nbsp;&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="10%"><FONT face="Times New Roman" size=2>Held with Funds</FONT></TD>
    <TD noWrap align=left width="1%">&nbsp;&nbsp;&nbsp;&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="10%"><FONT face="Times New Roman" size=2>Served</FONT></TD>
    <TD noWrap align=left width="1%">&nbsp;&nbsp;&nbsp;&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="11%"><FONT face="Times New Roman" size=2>Past Five
  Years</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="65%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2><STRONG>Robert M.
Ettinger</STRONG></FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>President</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>PFD &#150; since 2002</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="11%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>President and Director</FONT></TD></TR>
  <TR>
    <TD noWrap align=left width="65%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>301 E. Colorado Boulevard</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>PFO &#150; since 2002</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="11%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>of Flaherty &amp; Crumrine</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="65%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>Suite 720</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0>&nbsp;</TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>FFC &#150; since inception</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
    <TD noWrap align=left width="11%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2></FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="65%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>Pasadena, CA 91101</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>FLC &#150; since inception</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="11%" bgColor=#c0c0c0></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="65%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>Age: 53</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2></FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="11%" bgColor=#c0c0c0></TD></TR>
  <TR>
    <TD width="99%" colSpan=7>&nbsp;&nbsp;</TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="65%" bgColor=#c0c0c0><B><FONT face="Times New Roman" size=2>R. Eric Chadwick</FONT></B></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>Chief Financial</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>PFD &#150; since 2004</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="11%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>Vice President and Director of Flaherty
      &amp;</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="65%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>301 E. Colorado Boulevard</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>Officer, Vice</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>PFO &#150; since 2004</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="11%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>Crumrine</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="65%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>Suite 720</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>President and</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>FFC &#150; since 2004</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="11%" bgColor=#c0c0c0></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="65%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>Pasadena, CA 91101</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>Treasurer</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>FLC &#150; since 2004</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="11%" bgColor=#c0c0c0></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="65%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>Age: 36</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="11%" bgColor=#c0c0c0></TD></TR>
  <TR>
    <TD width="99%" colSpan=7>&nbsp;</TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="65%" bgColor=#c0c0c0><B><FONT face="Times New Roman" size=2>Chad C. Conwell</FONT></B></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>Chief Compliance</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>PFD &#150; since 2005</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="11%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>Chief Compliance Officer and
  Vice</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="65%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>301 E. Colorado Boulevard</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>Officer, Vice</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>PFO &#150; since 2005</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="11%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>President of Flaherty &amp;
    Crumrine;</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="65%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>Suite 720</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>President and</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>FFC &#150; since 2005</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="11%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>Director of Flaherty &amp; Crumrine
      since</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="65%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>Pasadena, CA 91101</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>Secretary</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>FLC &#150; since 2005</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="11%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>January 2011</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="65%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>Age: 39</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="11%" bgColor=#c0c0c0></TD></TR>
  <TR>
    <TD width="99%" colSpan=7>&nbsp;</TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="65%" bgColor=#c0c0c0><B><FONT face="Times New Roman" size=2>Bradford S. Stone</FONT></B></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>Vice President and</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>PFD &#150; since 2003</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="11%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>Vice President and Director of Flaherty
      &amp;</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="65%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>47 Maple Street</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>Assistant</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>PFO &#150; since 2003</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="11%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>Crumrine</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="65%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>Suite 403</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>Treasurer</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>FFC &#150; since 2003</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="11%" bgColor=#c0c0c0></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="65%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>Summit NJ 07901</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>FLC &#150; since inception</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="11%" bgColor=#c0c0c0></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="65%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>Age: 52</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="11%" bgColor=#c0c0c0></TD></TR>
  <TR>
    <TD width="99%" colSpan=7>&nbsp;</TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="65%" bgColor=#c0c0c0><B><FONT face="Times New Roman" size=2>Laurie C. Lodolo</FONT></B></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>Assistant</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>PFD &#150; since 2004</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="11%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>Assistant Compliance Officer
and</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="65%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>301 E. Colorado Boulevard</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>Compliance</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>PFO &#150; since 2004</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="11%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>Secretary of Flaherty &amp;
    Crumrine</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="65%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>Suite 720</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>Officer, Assistant</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>FFC &#150; since 2004</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="11%" bgColor=#c0c0c0></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="65%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>Pasadena, CA 91101</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>Treasurer and</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>FLC &#150; since 2004</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="11%" bgColor=#c0c0c0></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="65%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>Age: 48</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>Assistant Secretary</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="11%" bgColor=#c0c0c0></TD></TR>
  <TR>
    <TD width="99%" colSpan=7>&nbsp;</TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="65%" bgColor=#c0c0c0><B><FONT face="Times New Roman" size=2>Linda M. Puchalski</FONT></B></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>Assistant Treasurer</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>PFD &#150; since 2010</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="11%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>Administrator of Flaherty &amp;
      Crumrine</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="65%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>301 E. Colorado Boulevard</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>PFO &#150; since 2010</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="11%" bgColor=#c0c0c0></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="65%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>Suite 720</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>FFC &#150; since 2010</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="11%" bgColor=#c0c0c0></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="65%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>Pasadena, CA 91101</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>FLC &#150; since 2010</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="11%" bgColor=#c0c0c0></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="65%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>Age: 55</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="11%" bgColor=#c0c0c0></TD></TR></TABLE><BR>
<P align=justify><B><FONT face="Times New Roman" size=2>Audit Committee
Report</FONT></B></P>
<P align=justify><B><FONT face="Times New Roman" size=2></FONT></B>&nbsp;&nbsp;&nbsp;&nbsp; <FONT face="Times New Roman" size=2>The role of each Fund&rsquo;s Audit Committee is to assist the Board of
Directors in its oversight of: (i) the integrity of the Fund&rsquo;s financial
statements and the independent audit thereof; (ii) the Fund&rsquo;s accounting and
financial reporting policies and practices, its internal controls and, as
appropriate, the internal controls of certain service providers; (iii) the
Fund&rsquo;s compliance with legal and regulatory requirements; and (iv) the
independent auditor&rsquo;s qualifications, independence and performance. Each Fund&rsquo;s
Audit Committee is also required to prepare an audit committee report pursuant
to the rules of the SEC for inclusion in the Fund&rsquo;s annual proxy statement. Each
Audit Committee operates pursuant to a charter (the &ldquo;Audit Committee Charter&rdquo; or
&ldquo;Charter&rdquo;) that was most recently reviewed and approved by the Board of
Directors of each Fund on January 24, 2012 and which is available on PFD and
PFO&rsquo;s website at www.preferredincome.com and FFC and FLC&rsquo;s website at
www.fcclaymore.com. As set forth in the Charter, management is responsible for
the (i) preparation, presentation and integrity of each Fund&rsquo;s financial
statements, (ii) maintenance of appropriate accounting and financial reporting
principles and policies and (iii) maintenance of internal controls and
procedures designed to assure compliance with accounting standards and
applicable laws and regulations. The Funds&rsquo; independent registered public
accounting firm, KPMG LLP (the &ldquo;independent accountants&rdquo; or &ldquo;KPMG&rdquo;), is
responsible for planning and carrying out proper audits and reviews of each
Fund&rsquo;s financial statements and expressing an opinion as to their conformity
with accounting principles generally accepted in the United States of
America.</FONT></P>
<P align=center><FONT face="Times New Roman" size=2>9</FONT></P>
<HR align=center width="100%" noShade SIZE=2>

<DIV style="PAGE-BREAK-BEFORE: always"></DIV><BR>

<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp; <FONT face="Times New Roman" size=2>In
performing its oversight function, at a meeting held on January 24, 2012, each
Audit Committee reviewed and discussed with management of the Fund and the
independent accountants, the audited financial statements of the Fund as of and
for the fiscal year ended November 30, 2011, and discussed the audit of such
financial statements with the independent accountants.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2><FONT face="Times New Roman" size=3>&nbsp;&nbsp;&nbsp;&nbsp; </FONT>In addition, each
Audit Committee discussed with the independent accountants the accounting
principles applied by the Fund and such other matters brought to the attention
of the Audit Committee by the independent accountants required by Statement of
Auditing Standards No. 61, as amended (AICPA, </FONT><I><FONT face="Times New Roman" size=2>Professional Standards</FONT></I><FONT face="Times New Roman" size=2>, Vol. 1 AU Section 380), as adopted by the Public
Accounting Oversight Board in Rule 3200T. Each Audit Committee also received
from the independent accountants the written disclosures and statements required
by the SEC&rsquo;s independence rules</FONT><I><FONT face="Times New Roman" size=2>,
</FONT></I><FONT face="Times New Roman" size=2>delineating relationships between
the independent accountants and the Fund and discussed the impact that any such
relationships might have on the objectivity and independence of the independent
accountants.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2><FONT face="Times New Roman" size=3>&nbsp;&nbsp;&nbsp;&nbsp; </FONT>As set forth
above, and as more fully set forth in each Fund&rsquo;s Audit Committee Charter, the
Audit Committee has significant duties and powers in its oversight role with
respect to the Fund&rsquo;s financial reporting procedures, internal control systems,
and the independent audit process.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2><FONT face="Times New Roman" size=3>&nbsp;&nbsp;&nbsp;&nbsp; </FONT>The members of
each 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 the 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&rsquo;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&rsquo;s considerations and discussions referred to above do not provide
assurance that the audit of each Fund&rsquo;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.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2><FONT face="Times New Roman" size=3>&nbsp;&nbsp;&nbsp;&nbsp; </FONT>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 that Fund&rsquo;s Board that the audited financial statements be
included in the Fund&rsquo;s Annual Report for the fiscal year ended November 30,
2011.</FONT></P>
<P align=justify><B><FONT face="Times New Roman" size=2>This report was
submitted by the Audit Committee of each Fund&rsquo;s Board of
Directors</FONT></B><BR><FONT face="Times New Roman" size=2>David Gale<BR>Morgan
Gust<BR>Karen H. Hogan<BR></FONT><FONT face="Times New Roman" size=2>Robert F.
Wulf (Chairman)</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>January 24, 2012
</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2><FONT face="Times New Roman" size=3>&nbsp;&nbsp;&nbsp;&nbsp; </FONT>Each Audit
Committee was established in accordance with Section 3(a)(58)(A) of the 1934
Act. Each Audit Committee met four times in connection with its Board of
Directors&rsquo; regularly scheduled meetings during the fiscal year ended November
30, 2011. Each Audit Committee is composed entirely of each Fund&rsquo;s Independent
(as such term is defined by the New York Stock Exchange (the &ldquo;NYSE&rdquo;) listing
standards applicable to closed-end funds, as may be modified or supplemented
(the &ldquo;NYSE Listing Standards&rdquo;)) Directors, namely Ms. Hogan and Messrs. Gale,
Gust and Wulf.</FONT></P>
<P align=center><FONT face="Times New Roman" size=2>10</FONT></P>
<HR align=center width="100%" noShade SIZE=2>

<DIV style="PAGE-BREAK-BEFORE: always"></DIV><BR>
<P align=justify><B><FONT face="Times New Roman" size=2>Nominating and
Governance Committee</FONT></B></P>
<P align=justify><B><FONT face="Times New Roman" size=2></FONT></B>&nbsp;&nbsp;&nbsp;&nbsp; <FONT face="Times New Roman" size=2>Each Board of Directors has a Nominating and Governance Committee
composed entirely of each Fund&rsquo;s Independent (as such term is defined by the
NYSE Listing Standards) Directors, namely Ms. Hogan and Messrs. Gale, Gust and
Wulf. The Nominating and Governance Committee of each Fund met twice during the
fiscal year ended November 30, 2011. 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&rsquo;s annual meeting of shareholders and to fill
any vacancies on the Board; and for overseeing the Board of Directors&rsquo;
governance practices. Each Fund&rsquo;s Nominating and Governance Committee has a
charter which is available on its website. PFD and PFO&rsquo;s website address is
www.preferredincome.com and FFC and FLC&rsquo;s website address is
www.fcclaymore.com.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2><FONT face="Times New Roman" size=3>&nbsp;&nbsp;&nbsp;&nbsp; </FONT>Each Fund&rsquo;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, each 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 not-for-profit
entities or other organizations; and/or other life experiences. Each Fund&rsquo;s
Nominating and Governance Committee may consider whether a potential nominee&rsquo;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&rsquo;s membership and
collective attributes. Each Fund&rsquo;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 &ldquo;Submission of Shareholder Proposals&rdquo; below.)</FONT></P>
<P align=justify><B><FONT face="Times New Roman" size=2>Other Board-Related
Matters</FONT></B></P>
<P align=justify><B><FONT face="Times New Roman" size=2></FONT></B><FONT face="Times New Roman" size=2><FONT face="Times New Roman" size=3>&nbsp;&nbsp;&nbsp;&nbsp; </FONT>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&rsquo;s attention.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2><FONT face="Times New Roman" size=3>&nbsp;&nbsp;&nbsp;&nbsp; </FONT>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 19,
2011 Annual Meetings of Shareholders. </FONT></P>
<P align=justify><B><FONT face="Times New Roman" size=2>Compensation</FONT></B></P>
<P align=justify><B><FONT face="Times New Roman" size=2></FONT></B><FONT face="Times New Roman" size=2><FONT face="Times New Roman" size=3>&nbsp;&nbsp;&nbsp;&nbsp; </FONT>The following table sets forth certain
information regarding the compensation of each Fund&rsquo;s Directors for the fiscal
year ended November 30, 2011. No executive officer or person affiliated with a
Fund received compensation from a Fund during the fiscal year ended November 30,
2011 in excess of $60,000. Directors and executive officers of the Funds do not
receive pension or retirement benefits from the Funds.</FONT></P>
<P align=center><B><FONT face="Times New Roman" size=2>COMPENSATION TABLE
</FONT></B></P>
<TABLE style="LINE-HEIGHT: 14pt; BORDER-COLLAPSE: collapse" cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=bottom>
    <TD style="TEXT-ALIGN: center" noWrap width="78%"><FONT face="Times New Roman" size=2>Name of</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%"><FONT face="Times New Roman" size=2>Aggregate</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%"><FONT face="Times New Roman" size=2>Total Compensation from</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD style="TEXT-ALIGN: center" noWrap width="78%"><FONT face="Times New Roman" size=2>Person and</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%"><FONT face="Times New Roman" size=2>Compensation</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="10%"><FONT face="Times New Roman" size=2>the
      Funds and Fund</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD style="BORDER-BOTTOM: #000000 1pt solid; TEXT-ALIGN: center" noWrap width="78%"><FONT face="Times New Roman" size=2>Position</FONT></TD>
    <TD noWrap align=left width="1%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="10%"><FONT face="Times New Roman" size=2>from each Fund</FONT></TD>
    <TD noWrap align=left width="1%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="10%"><FONT face="Times New Roman" size=2>Complex Paid to
      Directors</FONT><FONT face="Times New Roman" size=2>*</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="78%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>Donald F. Crumrine</FONT></TD>
    <TD noWrap align=right width="1%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2></FONT></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>$0</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>$0 (4)</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="78%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>Director, Chairman of the Board and Chief
      Executive Officer</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0></TD></TR>
  <TR>
    <TD width="100%" colSpan=5>&nbsp;</TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="78%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>David Gale</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>$16,750 &#150; PFD</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>$67,000 (4)</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="78%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>Director</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>$16,750 &#150; PFO</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="78%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>$16,750 &#150; FFC</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="78%" bgColor=#c0c0c0>&nbsp;</TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>$16,750 &#150; FLC</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0></TD></TR>
  <TR>
    <TD width="100%" colSpan=5>&nbsp;</TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="78%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>Morgan Gust</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="78%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>Director; Nominating and Governance
      Committee Chairman</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>$16,750 &#150; PFD</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>$67,000 (4)</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="78%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>$16,750 &#150; PFO</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="78%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>$16,750 &#150; FFC</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="78%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>$16,750 &#150; FLC</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0></TD></TR>
  <TR>
    <TD noWrap align=left width="78%">&nbsp;</TD>
    <TD noWrap align=right width="1%"></TD>
    <TD noWrap align=right width="10%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=right width="10%"></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="78%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>Karen H. Hogan</FONT></TD>
    <TD noWrap align=right width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>$16,750 &#150; PFD</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2></FONT></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>$67,000 (4)</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="78%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>Director</FONT></TD>
    <TD noWrap align=right width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>$16,750 &#150; PFO</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>&nbsp;</FONT></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="78%" bgColor=#c0c0c0></TD>
    <TD noWrap align=right width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>$16,750 &#150; FFC</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2></FONT></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="78%" bgColor=#c0c0c0></TD>
    <TD noWrap align=right width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>$16,750 &#150; FLC</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2></FONT></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0></TD></TR>
  <TR>
    <TD width="100%" colSpan=5>&nbsp;</TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="78%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>Robert F. Wulf</FONT></TD>
    <TD noWrap align=right width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>$19,750 &#150; PFD</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2></FONT></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>$79,000 (4)</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="78%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>Director; Audit Committee Chairman</FONT></TD>
    <TD noWrap align=right width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>$19,750 &#150; PFO</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2></FONT></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="78%" bgColor=#c0c0c0></TD>
    <TD noWrap align=right width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>$19,750 &#150; FFC</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2></FONT></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="78%" bgColor=#c0c0c0></TD>
    <TD noWrap align=right width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>$19,750 &#150; FLC</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2></FONT></TD>
    <TD noWrap align=left width="10%" bgColor=#c0c0c0></TD></TR></TABLE>____________________<BR>&nbsp;<BR>
<TABLE cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=bottom>
    <TD vAlign=top noWrap align=left width="1%"><FONT face="Times New Roman" size=2>*</FONT></TD>
    <TD vAlign=top noWrap align=left width="1%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    </TD>
    <TD VALIGN="TOP" ALIGN="LEFT" WIDTH="98%" STYLE="text-align: justify"><FONT face="Times New Roman" size=2>Represents the total compensation paid for the fiscal year ended
      November 30, 2011, to such persons by the Funds, which are considered part
      of the same &ldquo;fund complex&rdquo; because they have a common adviser. The
      parenthetical number represents the total number of investment company
      directorships held by the Director or nominee in the fund complex as of
      November 30, 2011.</FONT></TD></TR></TABLE><BR>
<P align=center><FONT face="Times New Roman" size=2>11</FONT></P>
<HR align=center width="100%" noShade SIZE=2>

<DIV style="PAGE-BREAK-BEFORE: always"></DIV><BR>
<P align=justify><B><FONT face="Times New Roman" size=2>Required
Vote</FONT></B></P>
<P align=justify><B><FONT face="Times New Roman" size=2></FONT></B>&nbsp;&nbsp;&nbsp;&nbsp; <FONT face="Times New Roman" size=2>The election of Mr. Crumrine and Mr. Wulf 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. Gale as a Director 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. Gust and Ms. Hogan as
Directors 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.</FONT></P>
<P align=center><B><FONT face="Times New Roman" size=2>PROPOSAL 2: TO APPROVE
ONE OR MORE CHANGES TO EACH FUND&rsquo;S FUNDAMENTAL INVESTMENT<BR>POLICY REGARDING
CONCENTRATION OF INVESTMENTS </FONT></B></P>
<P align=justify><B><FONT face="Times New Roman" size=2></FONT></B><FONT face="Times New Roman" size=2><FONT face="Times New Roman" size=3>&nbsp;&nbsp;&nbsp;&nbsp; </FONT>Each Fund, like all registered funds, is
required by law to have policies governing certain of its investment practices
that may only be changed with the prior approval of the holders of a majority of
its outstanding voting securities.</FONT></P>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp; <FONT face=serif size=2>These policies
are referred to as &#147;fundamental.&#148; Under Section 8(b)(1) of the 1940 Act, a fund
is required to include in its registration statement a recital of its policy
regarding concentration, and such policy must be a fundamental policy. If a fund
has stated that it will be concentrated in an industry (or a sector comprised of
a group of industries), it must maintain at least 25% of its total assets
invested in that industry (or a sector comprised of a group of industries).
Similarly, if a fund has not stated that it will be concentrated in an industry,
it may not invest more than 25% of its total assets in that industry, although
the holdings in that industry may increase to above 25% due to market action and
in some other cases.</FONT></P>
<P align=justify><FONT face=serif size=2><FONT size=3>&nbsp;&nbsp;&nbsp;&nbsp;
</FONT>In Proposal 2-A, shareholders of PFD, FFC and FLC are being asked to
approve a revision to each Fund&#146;s concentration policy to eliminate the
requirement that it concentrate its investments in the banking industry and to
require the Fund to concentrate in the financials sector. This proposed revision
would require each Fund, under normal market conditions, to invest at least 25%
of its total assets in the financials sector, which for this purpose is
comprised of the bank, thrifts &amp; mortgage finance, diversified financial
services, finance, consumer finance, capital markets, asset management &amp;
custody, investment banking &amp; brokerage, insurance, insurance brokers and
real estate investment trust (REIT) industries. From time to time, a Fund may
have 25% or more of its total assets invested in any one of these
industries.</FONT></P>

<P align=justify><FONT face="Times New Roman" size=2><FONT face="Times New Roman" size=3>&nbsp;&nbsp;&nbsp;&nbsp; </FONT>In addition, each
Fund&rsquo;s current fundamental investment policy regarding concentration requires it
to concentrate its investments in the utilities industry so that, under normal
market conditions, more than 25% of each Fund&rsquo;s total assets are invested in
securities issued by companies in the utilities industry. In Proposal 2-B,
shareholders of each Fund are being asked to approve a revision to the Fund&rsquo;s
concentration policy to eliminate the requirement that the Fund concentrate its
investments in the utilities industry. If Proposal 2-B is approved by a Fund&rsquo;s
shareholders, that Fund may not invest more than 25% of its total assets in the
utilities industry.</FONT></P>
<P align=center><FONT face="Times New Roman" size=2>12</FONT></P>
<HR align=center width="100%" noShade SIZE=2>

<DIV style="PAGE-BREAK-BEFORE: always"></DIV><BR>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp; <FONT face="Times New Roman" size=2>Each Fund&rsquo;s current
fundamental investment policy regarding concentration is set forth below. Each
Fund may not: </FONT></P>
<DIV align=center>
<TABLE style="PADDING-RIGHT: 6pt; PADDING-LEFT: 6pt; PADDING-BOTTOM: 6pt; PADDING-TOP: 6pt" cellSpacing=0 cellPadding=0 width="80%" border=0>

  <TR vAlign=bottom>
    <TD VALIGN="TOP" NOWRAP ALIGN="JUSTIFY" WIDTH="4%" STYLE="border: #000000 1pt solid; text-align: left"><B><FONT face="Times New Roman" size=2>PFD</FONT></B></TD>
    <TD VALIGN="TOP" ALIGN="JUSTIFY" WIDTH="95%" STYLE="border: #000000 1pt solid; text-align: justify"><B><FONT face="Times New Roman" size=2>Invest more than 25% of its total assets in securities of issuers
      in a single industry other than each of the utilities and banking
      industries, except that this limitation will not be applicable to the
      purchase of Government Securities.</FONT></B></TD></TR>
  <TR vAlign=bottom>
    <TD VALIGN="TOP" NOWRAP ALIGN="JUSTIFY" WIDTH="4%" STYLE="border: #000000 1pt solid; text-align: left"><B><FONT face="Times New Roman" size=2>PFO</FONT></B></TD>
    <TD VALIGN="TOP" ALIGN="JUSTIFY" WIDTH="95%" STYLE="border: #000000 1pt solid; text-align: justify"><B><FONT face="Times New Roman" size=2>Invest more than 25% of its total assets in securities of issuers
      in a single industry, except that this limitation will not be applicable
      to the purchase of Government Securities, provided that the Fund will
      invest at least 25% of its total assets in each of the utilities industry
      and financial services sector.</FONT></B></TD></TR>
  <TR vAlign=bottom>
    <TD VALIGN="TOP" NOWRAP ALIGN="JUSTIFY" WIDTH="4%" STYLE="border: #000000 1pt solid; text-align: left"><B><FONT face="Times New Roman" size=2>FFC</FONT></B></TD>
    <TD VALIGN="TOP" ALIGN="JUSTIFY" WIDTH="95%" STYLE="border: #000000 1pt solid; text-align: justify"><B><FONT face="Times New Roman" size=2>Invest more than 25% of its total assets in securities of issuers
      in a single industry other than each of the utilities and banking
      industries, except that this limitation will not be applicable to the
      purchase of Government Securities.</FONT></B></TD></TR>
  <TR vAlign=bottom>
    <TD VALIGN="TOP" NOWRAP ALIGN="JUSTIFY" WIDTH="4%" STYLE="border: #000000 1pt solid; text-align: left"><B><FONT face="Times New Roman" size=2>FLC</FONT></B></TD>
    <TD VALIGN="TOP" ALIGN="JUSTIFY" WIDTH="95%" STYLE="border: #000000 1pt solid; text-align: justify"><B><FONT face="Times New Roman" size=2>Invest more than 25% of its total assets in securities of issuers
      in a single industry, except that this limitation will not be applicable
      to the purchase of Government Securities; provided that the Fund will
      invest at least 25% of its total assets in each of the utilities and
      banking industries.</FONT></B></TD></TR></TABLE></DIV><BR>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp; <FONT face="Times New Roman" size=2>If shareholders of each
Fund approve the relevant aspects of the proposal, each Fund&rsquo;s current
fundamental policy relating to concentration of investments will be revised so
that the Fund may not:</FONT></P>
<DIV align=center>
<TABLE style="PADDING-RIGHT: 6pt; PADDING-LEFT: 6pt; PADDING-BOTTOM: 6pt; PADDING-TOP: 6pt" cellSpacing=0 cellPadding=0 width="80%" border=0>

  <TR vAlign=bottom>
    <TD style="BORDER-RIGHT: #000000 1pt solid; BORDER-TOP: #000000 1pt solid; BORDER-LEFT: #000000 1pt solid; BORDER-BOTTOM: #000000 1pt solid" vAlign=top noWrap align=justify width="7%"><B><FONT face="Times New Roman" size=2>PFD</FONT></B></TD>
    <TD VALIGN="TOP" ALIGN="JUSTIFY" WIDTH="92%" STYLE="border: #000000 1pt solid; text-align: justify"><B><FONT face="Times New Roman" size=2>Invest more than 25% of its total assets in securities of issuers in a single industry, except that this limitation will not be applicable to the purchase of Government Securities, provided that the Fund will invest at least 25% of its total assets in the financials sector, which for this purpose is comprised of the bank, thrifts &amp; mortgage finance, diversified financial services, finance, consumer finance, capital markets, asset management &amp; custody, investment banking &amp; brokerage, insurance, insurance brokers and real estate investment trust (REIT) industries.

</FONT></B></TD></TR>
  <TR vAlign=bottom>
    <TD style="BORDER-RIGHT: #000000 1pt solid; BORDER-TOP: #000000 1pt solid; BORDER-LEFT: #000000 1pt solid; BORDER-BOTTOM: #000000 1pt solid" vAlign=top noWrap align=justify width="7%"><B><FONT face="Times New Roman" size=2>PFO</FONT></B></TD>
    <TD VALIGN="TOP" ALIGN="JUSTIFY" WIDTH="92%" STYLE="border: #000000 1pt solid; text-align: justify"><B><FONT face="Times New Roman" size=2>Invest more than 25% of its total assets in securities of issuers
      in a single industry, except that this limitation will not be applicable
      to the purchase of Government Securities, provided that the Fund will
      invest at least 25% of its total assets in the financial services
      sector.</FONT></B></TD></TR>
  <TR vAlign=bottom>
    <TD style="BORDER-RIGHT: #000000 1pt solid; BORDER-TOP: #000000 1pt solid; BORDER-LEFT: #000000 1pt solid; BORDER-BOTTOM: #000000 1pt solid" vAlign=top noWrap align=justify width="7%"><B><FONT face="Times New Roman" size=2>FFC</FONT></B></TD>
    <TD VALIGN="TOP" ALIGN="JUSTIFY" WIDTH="92%" STYLE="border: #000000 1pt solid; text-align: justify"><B><FONT face="Times New Roman" size=2>Invest more than 25% of its total assets in securities of issuers in a single industry, except that this limitation will not be applicable to the purchase of Government Securities, provided that the Fund will invest at least 25% of its total assets in the financials sector, which for this purpose is comprised of the bank, thrifts &amp; mortgage finance, diversified financial services, finance, consumer finance, capital markets, asset management &amp; custody, investment banking &amp; brokerage, insurance, insurance brokers and real estate investment trust (REIT) industries.

</FONT></B></TD></TR>
  <TR vAlign=bottom>
    <TD style="BORDER-RIGHT: #000000 1pt solid; BORDER-TOP: #000000 1pt solid; BORDER-LEFT: #000000 1pt solid; BORDER-BOTTOM: #000000 1pt solid" vAlign=top noWrap align=justify width="7%"><B><FONT face="Times New Roman" size=2>FLC</FONT></B></TD>
    <TD VALIGN="TOP" ALIGN="JUSTIFY" WIDTH="92%" STYLE="border: #000000 1pt solid; text-align: justify"><B><FONT face="Times New Roman" size=2>Invest more than 25% of its total assets in securities of issuers in a single industry, except that this limitation will not be applicable to the purchase of Government Securities, provided that the Fund will invest at least 25% of its total assets in the financials sector, which for this purpose is comprised of the bank, thrifts &amp; mortgage finance, diversified financial services, finance, consumer finance, capital markets, asset management &amp; custody, investment banking &amp; brokerage, insurance, insurance brokers and real estate investment trust (REIT) industries.
</FONT></B></TD></TR></TABLE></DIV><BR>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp; <FONT face="Times New Roman" size=2>Shareholders of each Fund will vote separately from shareholders of the
other Funds with respect to their Fund&rsquo;s concentration policy. In addition,
shareholders will be asked to vote separately on each proposed revision to a
Fund&rsquo;s concentration policy contained in Proposals 2-A and 2-B. For PFD, FFC and
FLC, approval of either Proposal 2-A or 2-B is not contingent on the approval of
the other Proposal. As a result, it may be the case that only one provision of a
Fund&rsquo;s concentration policy will be amended, while the other provision may not.
If a Proposal is not approved for a Fund, the Fund&rsquo;s existing concentration
policy, or portion thereof, will remain in effect. </FONT></P>
<P align=center><FONT face="Times New Roman" size=2>13</FONT></P>
<HR align=center width="100%" noShade SIZE=2>

<DIV style="PAGE-BREAK-BEFORE: always"></DIV><BR>
<P align=justify><B><FONT face="Times New Roman" size=2>Proposal 2-A: Revise the
fundamental policy relating to concentration of investments in the banking
industry. (PFD, FFC and FLC)</FONT></B><FONT face="Times New Roman" size=2>
</FONT></P>
<P align=justify><B><FONT face="Times New Roman" size=2></FONT></B>&nbsp;&nbsp;&nbsp;&nbsp; <FONT face="Times New Roman" size=2>Preferred securities issuers have changed dramatically since the Funds
were launched. Since September 2008, the U.S. financial system and the preferred
securities market have undergone, and continue to undergo, a profound
transformation. Since each Fund&rsquo;s inception, it has sought to achieve its
primary investment objective of high current income by investing at least 80% of
its assets in preferred securities. The preferred securities market has
historically been comprised of regulated industries, including utilities and
financial services companies, such as banks, broker-dealers, finance and
insurance companies.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2><FONT face="Times New Roman" size=3>&nbsp;&nbsp;&nbsp;&nbsp; </FONT>Flaherty &amp;
Crumrine estimates that the $362 billion preferred securities market is
comprised of the following industries: </FONT></P>
<TABLE style="LINE-HEIGHT: 14pt; BORDER-COLLAPSE: collapse" cellSpacing=0 cellPadding=0 width="30%" border=0>

  <TR vAlign=bottom>
    <TD noWrap align=left width="1%" ><FONT size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT></TD>
    <TD noWrap align=left width="96%" bgColor=#c0c0c0><FONT face=serif size=2>Financials
Sector</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="1%" ></TD>
    <TD noWrap align=left width="96%"><FONT face=serif size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
      Banking</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=right width="1%"><FONT face=serif size=2>59.3</FONT></TD>
    <TD noWrap align=left width="1%"><FONT face=serif size=2>%</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="1%" ></TD>
    <TD noWrap align=left width="96%" bgColor=#c0c0c0><FONT face=serif size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Finance</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=right width="1%" bgColor=#c0c0c0><FONT face=serif size=2>8.4</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0><FONT face=serif size=2>%</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="1%" >&nbsp;</TD>
    <TD noWrap align=left width="96%"><FONT face=serif size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
      Insurance</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=right width="1%"><FONT face=serif size=2>14.7</FONT></TD>
    <TD noWrap align=left width="1%"><FONT face=serif size=2>%</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="1%" ></TD>
    <TD noWrap align=left width="96%" bgColor=#c0c0c0><FONT face=serif size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; REIT</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=right width="1%" bgColor=#c0c0c0><FONT face=serif size=2>6.3</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0><FONT face=serif size=2>%</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="1%" ></TD>
    <TD noWrap align=left width="96%"><FONT size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
      <EM>Subtotal</EM></FONT></TD>
    <TD noWrap align=left width="1%">&nbsp;</TD>
    <TD noWrap align=right width="1%"><FONT face=serif size=2>88.7</FONT></TD>
    <TD noWrap align=left width="1%"><FONT face=serif size=2>%</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="1%" ></TD>
    <TD noWrap align=left width="96%" bgColor=#c0c0c0><FONT face=serif size=2>Utility</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=right width="1%" bgColor=#c0c0c0><FONT face=serif size=2>4.7</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0><FONT face=serif size=2>%</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="1%" ></TD>
    <TD noWrap align=left width="96%"><FONT face=serif size=2>Energy</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=right width="1%"><FONT face=serif size=2>1.1</FONT></TD>
    <TD noWrap align=left width="1%"><FONT face=serif size=2>%</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="1%" ></TD>
    <TD noWrap align=left width="96%" bgColor=#c0c0c0><FONT face=serif size=2>Communications</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=right width="1%" bgColor=#c0c0c0><FONT face=serif size=2>2.1</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0><FONT face=serif size=2>%</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="1%" ></TD>
    <TD noWrap align=left width="96%"><FONT face=serif size=2>Miscellaneous</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=right width="1%"><FONT face=serif size=2>3.3</FONT></TD>
    <TD noWrap align=left width="1%"><FONT face=serif size=2>%</FONT></TD></TR></TABLE>
<BR>




<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp; <FONT face=serif size=2>In recent
years and throughout much of its history, each Fund has invested at least 25% of
its total assets in banking companies. Separately, each Fund has traditionally
had meaningful exposure to other parts of the financials sector, including
broker-dealers, insurance companies and other finance companies &#150; but has been
limited in its ability to invest in any one particular type of those companies.
</FONT></P>
<P align=justify><FONT face=serif size=2><FONT size=3>&nbsp;&nbsp;&nbsp;&nbsp;
</FONT>The Funds historically defined the various types of companies in the
financials sector as distinct industries and consequently have not invested more
than 25% of its total assets in any one type of company in the financials
sector, other than banks. Under its current industry definitions, as of December
31, 2011, each of PFD, FFC and FLC had approximately 40.9%, 39% and 37.9% of its
total assets invested in banks, another 21.2%, 24.2% and 24.6% invested in
insurance companies, and a total of 63.2%, 65.1% and 64.7%, respectively,
invested in the financials sector. </FONT></P>
<P align=justify><FONT face=serif size=2><FONT size=3>&nbsp;&nbsp;&nbsp;&nbsp;
</FONT>The proposed concentration policy would require each of PFD, FFC and FLC
to invest, under normal market conditions, more than 25% of its total assets in
the financials sector, which for this purpose is comprised of the bank, thrifts
&amp; mortgage finance, diversified financial services, finance, consumer
finance, capital markets, asset management &amp; custody, investment banking
&amp; brokerage, insurance, insurance brokers and real estate investment trust
(REIT) industries. From time to time, a Fund may have 25% or more of its total
assets invested in any one of these industries. </FONT></P>
<P align=justify><FONT face=serif size=2><FONT size=3>&nbsp;&nbsp;&nbsp;&nbsp;
</FONT>Flaherty &amp; Crumrine has recommended the proposed concentration policy
so that each of PFD, FFC and FLC can more effectively invest its portfolio in
companies in the various industries comprising the financials sector. Under each
Fund&rsquo;s current policy, it cannot invest more than 25% of its total assets in any
particular type of company in the financials sector, other than banks. Under the
proposed policy, each Fund would have the flexibility to go above or below 25%
in any one type of company in the financials sector as long as at least 25% of
its total assets was invested in the financials sector in the aggregate. For
example, a Fund could have more than 25% of its total assets in insurance
companies, while at other times it could have that portion invested in banks. At
all times, though, a Fund would have at least 25% of its total assets invested
in the financials sector. Further, Flaherty &amp; Crumrine intends to diversify
its investments as appropriate in light of current market and credit
conditions.</FONT></P>
<P align=justify><FONT face=serif size=2><FONT size=3>&nbsp;&nbsp;&nbsp;&nbsp;
</FONT>Flaherty &amp; Crumrine has advised the Board of Directors of each of
PFD, FFC and FLC that it believes preferred securities of companies in the
financials sector on average currently represent the highest yielding preferred
securities and that investing more than 25% of its total assets in preferred
securities issued by companies in the financials sector will afford each Fund
greater flexibility in meeting its primary investment objective of high current
income.</FONT></P>


<P align=center><FONT face="Times New Roman" size=2>14</FONT></P>
<HR align=center width="100%" noShade SIZE=2>

<DIV style="PAGE-BREAK-BEFORE: always"></DIV><BR>

<P align=justify><FONT face=serif size=2></FONT>&nbsp;&nbsp;&nbsp;&nbsp; <FONT face=serif size=2><I><B>The following describes risks associated with investing
in the financials sector. As noted above, each Fund already is subject to these
risks because of its current large position in preferred securities of various
types of financial services companies.</B></I></FONT></P>
<P align=justify><FONT face=serif size=2><FONT size=3>&nbsp;&nbsp;&nbsp;&nbsp;
</FONT>Because each Fund will invest at least 25% of its total assets in the
financials sector, it will be more susceptible to adverse economic or regulatory
occurrences affecting this sector, such as changes in interest rates, loan
concentration and competition. To the extent that a Fund invests 25% or more of
its total assets in any of the industries that comprise the financials sector,
that Fund may be more exposed to the particular risks associated with that
industry. </FONT></P>



<P align=justify><FONT face="Times New Roman" size=2><FONT face="Times New Roman" size=3>&nbsp;&nbsp;&nbsp;&nbsp; </FONT>U.S. and foreign laws and regulations
require banks and bank holding companies to maintain minimum levels of capital
and liquidity and to establish loan loss reserves. A bank&rsquo;s failure to maintain
specified capital ratios may trigger dividend restrictions, suspensions on
payments on subordinated debt and preferred securities, and limitations on
growth. Bank regulators have broad authority in these instances and can
ultimately impose sanctions, such as imposing resolution authority,
conservatorship or receivership, on such non-complying banks even when these
banks continue to be solvent, thereby possibly resulting in the elimination of
stockholders&rsquo; equity. Unless a bank holding company has subsidiaries other than
banks that generate substantial revenues, the holding company&rsquo;s cash flow and
ability to declare dividends may be impaired severely by restrictions on the
ability of its bank subsidiaries to declare dividends or ultimately to redeem
its securities (as they mature). </FONT></P>
<P align=justify><FONT face="Times New Roman" size=2><FONT face="Times New Roman" size=3>&nbsp;&nbsp;&nbsp;&nbsp; </FONT>Similarly, U.S.
and foreign laws and regulations require insurance companies to maintain minimum
levels of capital and liquidity. An insurance company&rsquo;s failure to maintain
these capital ratios may also trigger dividend restrictions, suspensions on
payments of subordinated debt, and limitations on growth. Insurance regulators
(at the state-level in the United States) have broad authority in these
instances and can ultimately impose sanctions, including conservatorship or
receivership, on such non-complying insurance companies even when these
companies continue to be solvent, thereby possibly resulting in the elimination
of shareholders&rsquo; equity. In addition, insurance regulators have extensive
authority in some categories of insurance of approving premium levels and
setting required levels of underwriting. </FONT></P>



<P align=justify><FONT face=serif size=2><FONT size=3>&nbsp;&nbsp;&nbsp;&nbsp;
</FONT>Companies engaged in stock brokerage, commodity brokerage, investment
banking, investment management or related investment advisory services are
closely tied economically to the securities and commodities markets and can
suffer during a decline in either market. These companies also are subject to
the regulatory environment and changes in regulations, pricing pressure, the
availability of Funds to borrow and interest rates. </FONT></P>
<P align=justify><FONT face=serif size=2><FONT size=3>&nbsp;&nbsp;&nbsp;&nbsp;
</FONT>Investments in real estate investment trusts (&ldquo;REITs&rdquo;) expose the Funds
to risks similar to investing directly in real estate. The value of these
underlying investments may be affected by changes in the value of the underlying
real estate, the quality of the property management, the creditworthiness of the
issuer of the investments, and changes in property taxes, interest rates and the
real estate regulatory environment. Investments in REITs are also affected by
general economic conditions. </FONT></P>
<P align=justify><FONT face=serif size=2><FONT size=3>&nbsp;&nbsp;&nbsp;&nbsp;
</FONT>Governmental fiscal and monetary policies and general economic and
political conditions can affect the availability and cost of funds to companies
in the financials sector, loan demand and asset quality and thereby impact the
earnings and financial condition of those companies. In addition, the enactment
of new legislation and regulation, as well as changes in the interpretation and
enforcement of existing laws and regulations, may directly affect the manner of
operations and profitability of participants in the financials sector. Downturns
in a national, regional or local economy or in the general business cycle or
depressed conditions in an industry, for example, may adversely affect the
quality or volume of a bank&rsquo;s loan portfolio or an insurance company&rsquo;s
investment portfolio, particularly if the portfolio is concentrated in the
affected region, industry or market sector. From time to time, general economic
conditions have adversely affected financial institutions&rsquo; energy, agricultural,
commercial and/or residential real estate, less developed country, venture
capital, technology, telecommunications, and highly leveraged loan portfolios.
</FONT></P>

<P align=justify><FONT face=serif size=2><FONT size=3>&nbsp;&nbsp;&nbsp;&nbsp;
</FONT>Since September 2008, the financials sector experienced unprecedented
turbulence. The U.S. economy&rsquo;s recession, led by the downturn in the housing
industry, adversely affected the quality of most financial services companies&rsquo;
loan and securities portfolios. In response, U.S. and foreign governments and
rating agencies are expected to require banks to maintain higher quality and
levels of capital. </FONT></P>

<P align=justify><B><FONT face=serif size=2>THE BOARD OF DIRECTORS OF PFD, FFC
AND FLC, INCLUDING ALL OF THE INDEPENDENT DIRECTORS, UNANIMOUSLY RECOMMENDS THAT
SHAREHOLDERS VOTE &ldquo;FOR&rdquo; PROPOSAL 2-A. </FONT></B></P>

<P align="justify">
<B><FONT size=2 face="serif">Proposal 2-B: Revise the fundamental policy relating to concentration of investments in the utilities industry. (PFD, PFO, FFC and FLC) </FONT></B></P>

<P align=justify><FONT face="Times New Roman" size=2><FONT face="Times New Roman" size=3>&nbsp;&nbsp;&nbsp;&nbsp; </FONT>Each Fund
currently has a fundamental policy relating to concentration of investments in
the utilities industry. Since each Fund&rsquo;s inception, it has sought to achieve
its primary investment objective of high current income by investing at least
80% of its assets in preferred securities.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2><FONT face="Times New Roman" size=3>&nbsp;&nbsp;&nbsp;&nbsp; </FONT>As discussed in
Proposal 2-A above, the preferred securities market has historically been
comprised of regulated industries, including utilities and financial services
companies, such as banks, broker-dealers, finance and insurance companies. Over
the past 10 years, as financial services companies have issued increasingly
greater amounts of preferred securities, utilities have reduced the amount of
their preferred securities outstanding. In fact, many utilities have even
eliminated the use of any preferreds in their capital structure. Flaherty &amp;
Crumrine estimates that over the past 5 years (from January 2007 through January
2012), the percentage of the preferred securities market issued by utilities has
decreased from 6% to 4.5%. Similarly, in that same time period, it estimated
that the number of utility issuers has shrunk by more than 25%, and the number
of utility preferred securities has shrunk by more than 20%.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2><FONT face="Times New Roman" size=3>&nbsp;&nbsp;&nbsp;&nbsp; </FONT>Despite this
headwind of a shrinking investment universe, each Fund has maintained its policy
of concentrating its investments in utilities. As a result, each has maintained
between 25-30% of its total assets in utilities over the past several years. As of December 31,
2011, PFD had 25.8% of its total assets in utilities, PFO had 26.5%, FFC had
25.8% and FLC had 25.4%. </FONT></P>
<P align=center><FONT face="Times New Roman" size=2>15</FONT></P>
<HR align=center width="100%" noShade SIZE=2>

<DIV style="PAGE-BREAK-BEFORE: always"></DIV><BR>

<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp; <FONT face="Times New Roman" size=2>It
has been difficult for each Fund to achieve because there are simply not enough
attractive (from both a credit and market perspective) utility securities. At
times Flaherty &amp; Crumrine has found better opportunities for meeting its
concentration policies and objectives by investing in utilities through lower
yielding common stocks or senior debt securities.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2><FONT face="Times New Roman" size=3>&nbsp;&nbsp;&nbsp;&nbsp; </FONT>Flaherty &amp;
Crumrine has recommended eliminating the utilities concentration policy so that
each Fund can more effectively invest its portfolio in a manner that better
correlates with the preferred securities market. Nonetheless, Flaherty &amp;
Crumrine intends to continue diversifying its investments as appropriate in
light of current market and credit conditions.</FONT></P>
<P align=justify><B><FONT face="Times New Roman" size=2>THE BOARD OF DIRECTORS
OF EACH FUND, INCLUDING ALL OF THE INDEPENDENT DIRECTORS, UNANIMOUSLY RECOMMENDS
THAT PFD, PFO, FFC AND FLC SHAREHOLDERS VOTE &ldquo;FOR&rdquo; PROPOSAL 2-B. </FONT></B></P>
<P align=justify><B><FONT face="Times New Roman" size=2>Required
Vote</FONT></B></P>
<P align=justify><B><FONT face="Times New Roman" size=2></FONT></B><FONT face="Times New Roman" size=2><FONT face="Times New Roman" size=3>&nbsp;&nbsp;&nbsp;&nbsp; </FONT>Approval of the change in each Fund&rsquo;s
fundamental policy, with respect to each of Proposals 2-A and 2-B, will require
the approval of the holders of a majority of the relevant Fund&rsquo;s outstanding
voting securities. A &ldquo;majority of the Fund&rsquo;s outstanding voting securities&rdquo; for
this purpose means the lesser of (1) 67% or more of the Shares of Common Stock,
present at a meeting of shareholders, if the holders of more than 50% of such
Shares are present or represented by proxy at the meeting, or (2) more than 50%
of the outstanding Shares. </FONT></P>
<P align=center><B><FONT face="Times New Roman" size=2>SUBMISSION OF SHAREHOLDER
PROPOSALS </FONT></B></P>
<P align=justify><B><FONT face=serif size=2></FONT></B>&nbsp;&nbsp;&nbsp;&nbsp;
<FONT face=serif size=2>All proposals by shareholders of each Fund that are
intended to be presented at each Fund&rsquo;s next Annual Meeting of Shareholders to
be held in 2013 must be received by the relevant Fund for consideration for
inclusion in the relevant Fund&rsquo;s proxy statement relating to the meeting no
later than November 8, 2012, and must satisfy the requirements of federal
securities laws.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2><FONT face="Times New Roman" size=3>&nbsp;&nbsp;&nbsp;&nbsp; </FONT>Each Fund&rsquo;s Bylaws
require shareholders wishing to nominate Directors or make proposals to be voted
on at the Fund&rsquo;s Annual Meeting to provide timely advance notice of the proposal
in writing. To be considered timely, any such advance notice must be in writing
delivered to or mailed and received at the principal executive offices of the
Fund at the address set forth on the first page of this proxy statement not
earlier than the 150<SUP>th</SUP> day nor later than 5:00 p.m., Eastern Time, on
the 120<SUP>th</SUP> day prior to the first anniversary of the date of the proxy
statement for the preceding year&rsquo;s annual meeting; provided, however, that in
the event that the date of the annual meeting is advanced or delayed by more
than 30 days from the first anniversary of the date of the preceding year&rsquo;s
annual meeting, notice by the shareholder to be timely must be so delivered not
earlier than the 150<SUP>th</SUP> day prior to the date of such annual meeting
and not later than 5:00 p.m., Eastern Time, on the later of the 120<SUP>th</SUP>
day prior to the date of such annual meeting, as originally convened, or the
tenth day following the day on which public announcement of the date of such
meeting is first made. </FONT></P>
<P align=justify><FONT face="Times New Roman" size=2><FONT face="Times New Roman" size=3>&nbsp;&nbsp;&nbsp;&nbsp; </FONT>Any such notice by
a shareholder shall set forth the information required by the Fund&rsquo;s Bylaws with
respect to each matter the shareholder proposes to bring before the annual
meeting.</FONT></P>
<P align=center><B><FONT face="Times New Roman" size=2>ADDITIONAL INFORMATION
</FONT></B></P>
<P align=justify><B><FONT face="Times New Roman" size=2>Independent Registered
Public Accounting Firm</FONT></B></P>
<P align=justify><B><FONT face="Times New Roman" size=2></FONT></B><FONT face="Times New Roman" size=2><FONT face="Times New Roman" size=3>&nbsp;&nbsp;&nbsp;&nbsp; </FONT>KPMG, Two Financial Center, 60 South
Street, Boston, Massachusetts 02111, has been selected to serve as each Fund&rsquo;s
independent registered public accounting firm for each Fund&rsquo;s fiscal year ending
November 30, 2012. KPMG acted as the independent registered public accounting
firm for each Fund for the fiscal year ended November 30, 2011. 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.</FONT></P>
<P align=center><FONT face="Times New Roman" size=2>16</FONT></P>
<HR align=center width="100%" noShade SIZE=2>

<DIV style="PAGE-BREAK-BEFORE: always"></DIV><BR>
<P align=justify><FONT face="Times New Roman" size=3>&nbsp;&nbsp;&nbsp;&nbsp; </FONT><FONT face="Times New Roman" size=2>Set forth in the table
below are audit fees and non-audit related fees billed to each Fund by KPMG for
professional services for the fiscal years ended November 30, 2010 and 2011,
respectively.</FONT></P>
<TABLE style="LINE-HEIGHT: 14pt; BORDER-COLLAPSE: collapse" cellSpacing=0 cellPadding=0 width="80%" border=0>

  <TR vAlign=bottom>
    <TD noWrap align=left width="63%" colSpan=2></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="6%"><FONT face="Times New Roman" size=2>Fiscal Year Ended</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="6%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="6%"><FONT face="Times New Roman" size=2>Audit-Related</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="6%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="7%"></TD></TR>
  <TR vAlign=bottom>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="2%"><FONT face="Times New Roman" size=2>Fund</FONT></TD>
    <TD noWrap align=left width="61%">&nbsp;</TD>
    <TD noWrap align=left width="1%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="6%"><FONT face="Times New Roman" size=2>November 30</FONT></TD>
    <TD style="TEXT-ALIGN: center" noWrap width="1%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid; TEXT-ALIGN: center" noWrap width="6%"><FONT face="Times New Roman" size=2>Audit Fees</FONT></TD>
    <TD style="TEXT-ALIGN: center" noWrap width="1%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="6%"><FONT face="Times New Roman" size=2>Fees</FONT></TD>
    <TD noWrap align=left width="1%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="6%"><FONT face="Times New Roman" size=2>Tax Fees*</FONT></TD>
    <TD noWrap align=left width="1%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="7%"><FONT face="Times New Roman" size=2>All Other Fees</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="63%" bgColor=#c0c0c0 colSpan=2><FONT face="Times New Roman" size=2>PFD</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="6%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>2010</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="6%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>$44,000</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="6%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>$0</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
    <TD noWrap align=left width="6%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>$8,100</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="7%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>$0</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="63%" colSpan=2></TD>
    <TD noWrap align=left width="1%">&nbsp;</TD>
    <TD noWrap align=left width="6%"><FONT face="Times New Roman" size=2>2011</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="6%"><FONT face="Times New Roman" size=2>$45,000</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="6%"><FONT face="Times New Roman" size=2>$0</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="6%"><FONT face="Times New Roman" size=2>$8,270</FONT></TD>
    <TD noWrap align=left width="1%">&nbsp;</TD>
    <TD noWrap align=left width="7%"><FONT face="Times New Roman" size=2>$0</FONT></TD></TR>
  <TR>
    <TD noWrap align=left width="63%" colSpan=2></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="6%">&nbsp;</TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="6%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="6%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="6%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="7%"></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="63%" bgColor=#c0c0c0 colSpan=2><FONT face="Times New Roman" size=2>PFO</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="6%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>2010</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
    <TD noWrap align=left width="6%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>$44,000</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="6%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>$0</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="6%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>$8,100</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="7%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>$0</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="63%" colSpan=2></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="6%"><FONT face="Times New Roman" size=2>2011</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="6%"><FONT face="Times New Roman" size=2>$45,000</FONT></TD>
    <TD noWrap align=left width="1%">&nbsp;</TD>
    <TD noWrap align=left width="6%"><FONT face="Times New Roman" size=2>$0</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="6%"><FONT face="Times New Roman" size=2>$8,270</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="7%"><FONT face="Times New Roman" size=2>$0</FONT></TD></TR>
  <TR>
    <TD noWrap align=left width="63%" colSpan=2></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="6%">&nbsp;</TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="6%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="6%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="6%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="7%"></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="63%" bgColor=#c0c0c0 colSpan=2><FONT face="Times New Roman" size=2>FFC</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="6%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>2010</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="6%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>$46,400</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="6%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>$0</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="6%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>$8,100</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0>&nbsp;</TD>
    <TD noWrap align=left width="7%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>$0</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="63%" colSpan=2></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="6%"><FONT face="Times New Roman" size=2>2011</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="6%"><FONT face="Times New Roman" size=2>$47,500</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="6%"><FONT face="Times New Roman" size=2>$0</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="6%"><FONT face="Times New Roman" size=2>$8,270</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="7%"><FONT face="Times New Roman" size=2>$0</FONT></TD></TR>
  <TR>
    <TD noWrap align=left width="63%" colSpan=2></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="6%">&nbsp;</TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="6%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="6%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="6%"></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="7%"></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="63%" bgColor=#c0c0c0 colSpan=2><FONT face="Times New Roman" size=2>FLC</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="6%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>2010</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="6%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>$46,400</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="6%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>$0</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="6%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>$8,100</FONT></TD>
    <TD noWrap align=left width="1%" bgColor=#c0c0c0></TD>
    <TD noWrap align=left width="7%" bgColor=#c0c0c0><FONT face="Times New Roman" size=2>$0</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="63%" colSpan=2></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="6%"><FONT face="Times New Roman" size=2>2011</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="6%"><FONT face="Times New Roman" size=2>$47,500</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="6%"><FONT face="Times New Roman" size=2>$0</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="6%"><FONT face="Times New Roman" size=2>$8,270</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="7%"><FONT face="Times New Roman" size=2>$0</FONT></TD></TR></TABLE>____________________<BR>&nbsp;<BR>
<TABLE style="TEXT-ALIGN: justify" cellSpacing=0 cellPadding=0 border=0>

  <TR>
    <TD vAlign=top noWrap><FONT face="Times New Roman" size=2>*</FONT></TD>
    <TD vAlign=top noWrap>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </TD>
    <TD width="100%"><FONT face="Times New Roman" size=2>&ldquo;Tax Fees&rdquo; are those
      fees billed to each Fund by KPMG in connection with tax consulting
      services, including primarily the review of each Fund&rsquo;s income tax
      returns.</FONT></TD></TR></TABLE>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp; <FONT face="Times New Roman" size=2>Each Fund&rsquo;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&rsquo;s investment adviser and any entity
controlling, controlled by or under common control with the Funds&rsquo; investment
adviser (&ldquo;affiliates&rdquo;) 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 30, 2010 and November 30, 2011 were pre-approved by the
Audit Committee.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2><FONT face="Times New Roman" size=3>&nbsp;&nbsp;&nbsp;&nbsp; </FONT>For each Fund&rsquo;s
fiscal years ended November 30, 2010 and November 30, 2011, KPMG did not provide
any non-audit services (or bill any fees for such services) to the Funds&rsquo;
investment adviser or any affiliates. </FONT></P>
<P align=justify><B><FONT face="Times New Roman" size=2>Investment Adviser,
Administrator and Servicing Agent</FONT></B></P>
<P align=justify><B><FONT face="Times New Roman" size=2></FONT></B><FONT face="Times New Roman" size=2><FONT face="Times New Roman" size=3>&nbsp;&nbsp;&nbsp;&nbsp; </FONT>Flaherty &amp; Crumrine serves as the
investment adviser to each Fund, and its business address is 301 E. Colorado
Boulevard, Suite 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.</FONT></P>
<P align=justify><B><FONT face="Times New Roman" size=2>Compliance with the
Securities Exchange Act of 1934</FONT></B></P>
<P align=justify><B><FONT face="Times New Roman" size=2></FONT></B><FONT face="Times New Roman" size=2><FONT face="Times New Roman" size=3>&nbsp;&nbsp;&nbsp;&nbsp; </FONT>Section 16(a) of the 1934 Act and Section
30(h) of the 1940 Act require each Fund&rsquo;s Directors and executive officers,
certain persons affiliated with Flaherty &amp; Crumrine and persons who
beneficially own more than 10% of a registered class of each Fund&rsquo;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
2011, all such filing requirements applicable to such persons were met.
</FONT></P>
<P align=justify><B><FONT face="Times New Roman" size=2>Broker Non-Vote and
Abstentions</FONT></B></P>
<P align=justify><B><FONT face="Times New Roman" size=2></FONT></B><FONT face="Times New Roman" size=2><FONT face="Times New Roman" size=3>&nbsp;&nbsp;&nbsp;&nbsp; </FONT>A proxy which is properly executed and
returned accompanied by instructions to withhold authority to vote represents a
broker &ldquo;non-vote&rdquo; (i.e., shares held by brokers or nominees as to which (i)
instructions have not been received from the beneficial owners or the persons
entitled to vote and (ii) the broker or nominee does not have discretionary
voting power on a particular matter). Proxies that reflect abstentions or broker
non-votes (collectively, &ldquo;abstentions&rdquo;) will be counted as Shares that are
present and entitled to vote at the meeting for purposes of determining the
presence of a Quorum. With respect to Proposal 1, abstentions do not constitute
a vote &ldquo;for&rdquo; or &ldquo;against&rdquo; the proposal and will be disregarded in determining
the &ldquo;votes cast&rdquo; on the proposal. With respect to Proposal 2, abstentions do not
constitute a vote &ldquo;for&rdquo; the proposal and will instead
count as a vote &ldquo;against&rdquo; the proposal. </FONT></P>
<P align=center><FONT face="Times New Roman" size=2>17</FONT></P>
<HR align=center width="100%" noShade SIZE=2>

<DIV style="PAGE-BREAK-BEFORE: always"></DIV><BR>

<P align=center><B><FONT face="Times New Roman" size=2>OTHER MATTERS TO COME
BEFORE THE MEETING </FONT></B></P>
<P align=justify><B><FONT face="Times New Roman" size=2></FONT></B>&nbsp;&nbsp;&nbsp;&nbsp; <FONT face="Times New Roman" size=2>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.</FONT></P>
<P align=center><B><FONT face="Times New Roman" size=2>EXPENSES OF PROXY
SOLICITATION </FONT></B></P>

<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp; <FONT face=serif size=2>The total
expenses of the Meetings, including the solicitation of proxies and the expenses
incurred in connection with the preparation of this Joint Proxy Statement, are
approximately $27,000 for PFD, $26,000 for PFO, $65,000 for FFC and $28,000 for
FLC. In addition, Flaherty &amp; Crumrine has retained The Altman Group, a proxy
solicitation firm, to assist in the solicitation of proxies for the Funds. It is
anticipated that The Altman Group will be paid approximately $18,000 by PFD,
$15,000 by PFO, $44,000 by FFC and $16,000 by FLC for such solicitation services
(plus reimbursements of out-of-pocket expenses). The Altman Group also may
solicit proxies personally and by telephone. </FONT></P>
<P align=center><B><FONT face="Times New Roman" size=2>VOTING RESULTS
</FONT></B></P>
<P align=justify><B><FONT face="Times New Roman" size=2></FONT></B><FONT face="Times New Roman" size=2><FONT face="Times New Roman" size=3>&nbsp;&nbsp;&nbsp;&nbsp; </FONT>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.</FONT></P>
<P align=center><B><FONT face="Times New Roman" size=2>NOTICE TO BANKS,
BROKER/DEALERS AND VOTING TRUSTEES AND THEIR NOMINEES </FONT></B></P>
<P align=justify><B><FONT face="Times New Roman" size=2></FONT></B><FONT face="Times New Roman" size=2><FONT face="Times New Roman" size=3>&nbsp;&nbsp;&nbsp;&nbsp; </FONT>Please advise the Funds whether other
persons are the beneficial owners of Fund Shares for which proxies are being
solicited from you, and, if so, the number of copies of the joint proxy
statement and other soliciting material you wish to receive in order to supply
copies to the beneficial owners of Fund Shares.</FONT></P>
<P align=justify><B><FONT face="Times New Roman" size=2>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.</FONT></B></P>
<P align=center><FONT face="Times New Roman" size=2>18</FONT></P>

<HR align=center width="100%" noShade SIZE=2>



<DIV style="PAGE-BREAK-BEFORE: always"></DIV><BR>
<P align=justify><FONT face="Times New Roman">Proxy - FLAHERTY &amp; CRUMRINE PREFERRED
INCOME OPPORTUNITY FUND INCORPORATED</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>PROXY IN CONNECTION WITH THE ANNUAL
MEETING OF SHAREHOLDERS<BR></FONT><FONT face="Times New Roman" size=2>TO BE HELD ON APRIL
19, 2012 </FONT></P><BR>

<P align=justify><B><FONT face="Times New Roman" size=2>Important Notice Regarding the
Availability of Proxy Materials for the Shareholder Meeting to be held on April
19, 2012. </FONT></B></P>
<P align=justify><B><FONT face="Times New Roman" size=2>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 www.preferredincome.com. </FONT></B></P>
<P align=justify><FONT face="Times New Roman" size=2>PROXY SOLICITED BY BOARD OF
DIRECTORS</FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>The undersigned holder of shares of
Common Stock of Flaherty &amp; Crumrine Preferred Income Opportunity 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 &amp; Crumrine Incorporated,
301 East Colorado Boulevard, Suite 720, Pasadena, California 91101 at 8:30 a.m.
PT, on April 19, 2012, 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 proxy previously given.</FONT></P>
<DIV align=right>
<TABLE style="LINE-HEIGHT: 14pt; BORDER-COLLAPSE: collapse" cellSpacing=0 cellPadding=0 width="50%" border=0>

  <TR style="LINE-HEIGHT: normal">
    <TD align=left width="99%" colSpan=3>
      <P align=justify><FONT face="Times New Roman" size=1>NOTE: 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></P></TD></TR>
  <TR>
    <TD noWrap align=left width="72%">&nbsp;</TD>
    <TD noWrap align=right width="2%"></TD>
    <TD noWrap align=right width="25%"></TD></TR>
  <TR>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="72%"></TD>
    <TD noWrap align=right width="2%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=right width="25%"></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="72%"><FONT face="Times New Roman" size=1>Signature</FONT></TD>
    <TD noWrap align=left width="2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD noWrap align=left width="25%"><FONT face="Times New Roman" size=1>Date</FONT></TD></TR>
  <TR>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="72%">&nbsp;</TD>
    <TD noWrap align=left width="2%"></TD>
    <TD style="BORDER-BOTTOM: #000000 1pt solid" noWrap align=left width="25%"></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="72%"><FONT face="Times New Roman" size=1>Signature (Joint Owners)</FONT></TD>
    <TD noWrap align=left width="2%"></TD>
    <TD noWrap align=left width="25%"><FONT face="Times New Roman" size=1>Date</FONT></TD></TR></TABLE></DIV><BR>
<P style="TEXT-ALIGN: right"><FONT face="Times New Roman" size=1>PFO-CMN-PXC</FONT></P>
<HR align=center width="100%" noShade SIZE=2>

<DIV style="PAGE-BREAK-BEFORE: always"></DIV><BR>
<P align=justify><FONT face="Times New Roman">Annual Meeting Proxy Card</FONT></P>
<TABLE style="LINE-HEIGHT: 14pt; BORDER-COLLAPSE: collapse" cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=bottom style="LINE-HEIGHT: normal">
    <TD noWrap align=left width="15%"></TD>
    <TD noWrap align=left width="10%"></TD>
    <TD noWrap align=left width="52%"></TD>
    <TD noWrap align=left width="21%"><FONT face="Times New Roman" size=1>Please mark your votes as</FONT></TD></TR>
  <TR vAlign=bottom style="LINE-HEIGHT: normal">
    <TD noWrap align=left width="15%"></TD>
    <TD noWrap align=left width="10%"></TD>
    <TD noWrap align=left width="52%"></TD>
    <TD noWrap align=left width="21%"><FONT face="Times New Roman" size=1>indicated in this example</FONT></TD></TR>
  <TR vAlign=bottom>
    <TD noWrap align=left width="77%" colSpan=3><FONT face="Times New Roman" size=2>Election of Director
      - The Board of Directors recommends a vote &#147;FOR&#148; the nominee
    listed.</FONT></TD>
    <TD noWrap align=left width="21%">&nbsp;</TD></TR>
    <TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="text-align: left">&nbsp;&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: left">&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: left">&nbsp;</TD>
    <TD NOWRAP STYLE="text-align: left">&nbsp;</TD></TR>
<TR vAlign=bottom>
    <TD noWrap align=left width="15%"><FONT face="Times New Roman" size=1>1. Nominee:</FONT></TD>
    <TD noWrap align=left width="10%"><FONT face="Times New Roman" size=1>FOR</FONT></TD>
    <TD noWrap align=left width="52%"><FONT face="Times New Roman" size=1>WITHHOLD</FONT></TD>
    <TD noWrap align=left width="21%"></TD></TR>
  <TR>
    <TD noWrap align=left width="15%">&nbsp;</TD>
    <TD noWrap align=left width="10%">&nbsp;</TD>
    <TD noWrap align=left width="52%"></TD>
    <TD noWrap align=left width="21%"></TD></TR>
  <TR>
    <TD noWrap align=left width="15%"><FONT size=1 face="Times New Roman">01 - David Gale</FONT></TD>
    <TD noWrap align=left width="10%"></TD>
    <TD noWrap align=left width="52%"></TD>
    <TD noWrap align=left width="21%"></TD></TR></TABLE><BR>
<P align=justify><FONT face="Times New Roman" size=2>Investment Proposal &#150; The Board of
Directors recommends a vote &#147;FOR&#148; Proposal 2-B. </FONT></P>
<TABLE style="LINE-HEIGHT: 14pt; BORDER-COLLAPSE: collapse" cellSpacing=0 cellPadding=0 width="70%" border=0>

  <TR vAlign=bottom>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="76%"></TD>
    <TD noWrap align=left width="1%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </TD>
    <TD noWrap align=left width="5%"><FONT face="Times New Roman" size=1>FOR</FONT></TD>
    <TD noWrap align=left width="1%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </TD>
    <TD noWrap align=left width="7%"><FONT face="Times New Roman" size=1>AGAINST</FONT></TD>
    <TD noWrap align=left width="1%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </TD>
    <TD noWrap align=left width="7%"><FONT face="Times New Roman" size=1>ABSTAIN</FONT></TD></TR>
  <TR style="LINE-HEIGHT: normal" vAlign=bottom>
    <TD style="VERTICAL-ALIGN: top; TEXT-ALIGN: left" noWrap width="1%"><FONT face="Times New Roman" size=1>2-B.&nbsp; </FONT></TD>
    <TD noWrap align=left width="76%"><FONT face="Times New Roman" size=1>Revise the Fund&#146;s fundamental policy<BR>relating to concentration
      of investments in the utilities<BR>industry.</FONT></TD>
    <TD noWrap align=left width="1%"></TD>
    <TD noWrap align=left width="5%">&nbsp;</TD>
    <TD noWrap align=left width="1%">&nbsp;</TD>
    <TD noWrap align=left width="7%">&nbsp;</TD>
    <TD noWrap align=left width="1%">&nbsp;</TD>
    <TD noWrap align=left width="7%">&nbsp;</TD></TR></TABLE>
<BR>
<P align=justify><FONT face="Times New Roman" size=1>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 AND FOR PROPOSAL 2-B.</FONT></P>
<P align=justify><FONT face="Times New Roman" size=1>Please refer to the Proxy Statement for
a discussion of the Proposals. </FONT></P>
<P align=justify><FONT face="Times New Roman" size=2>Non-Voting Items<BR></FONT><FONT face="Times New Roman" size=2>Change of Address - Please print new address below.</FONT></P><BR><BR><BR><BR><BR>
<P align=center><FONT face="Times New Roman" size=2>PLEASE SIGN ON REVERSE SIDE</FONT></P>
<P align=right><FONT face="Times New Roman" size=1>PFO-CMN-PXC</FONT></P>
<HR align=center width="100%" noShade SIZE=2>

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end
</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
