SCHEDULE 14A
PROXY
STATEMENT
PURSUANT TO SECTION 14(A) OF THE
SECURITIES EXCHANGE ACT OF 1934
Filed by Registrant [X]
Filed by Party other than the Registrant
Check the appropriate box:
[ ]
Preliminary Proxy Statement
[ ] Confidential
for Use of the Commission Only as permitted by Rule 14a-6(e)(2)
[X]
Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ]
Soliciting Material Pursuant to Rule 14a-11c or Rule 14a-12
Flaherty & Crumrine Total Return Fund Incorporated
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(Name of Registrant as
Specified in Its Charter)
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(Name of Person(s) Filing Proxy
Statement)
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Payment of Filing Fee (Check the
appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules
14a-6(i)(1) and 0-11
(1)
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Title of each class of securities to which transaction
applies:
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(2)
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Aggregate number of securities to which transaction
applies:
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(3)
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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):
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(4)
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Proposed maximum aggregate value of
transaction:
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(5)
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Total fee paid:
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[ ] Fee paid previously with preliminary
materials.
[ ] Check box if any part of the fee is
offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for
which the offsetting fee was paid previously. Identify the previous filing by
registration statement number, or the Form or Schedule and the date of its
filing.
(1)
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Amount previously paid:
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(2)
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Form, Schedule or Registration Statement
No.:
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(3)
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Filing Party:
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(4)
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Date Filed:
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FLAHERTY & CRUMRINE PREFERRED
INCOME FUND INCORPORATED (NYSE: PFD)
FLAHERTY & CRUMRINE PREFERRED INCOME OPPORTUNITY FUND INCORPORATED
(NYSE: PFO)
FLAHERTY & CRUMRINE PREFERRED SECURITIES INCOME FUND
INCORPORATED (NYSE: FFC)
FLAHERTY & CRUMRINE TOTAL RETURN FUND
INCORPORATED (NYSE: FLC)
301 E. Colorado Boulevard, Suite
720
Pasadena, California 91101
NOTICE OF ANNUAL MEETINGS OF
SHAREHOLDERS
To Be Held on April 18,
2013
To the Shareholders:
Notice is
hereby given that the Annual Meetings of Shareholders of Flaherty & Crumrine
Preferred Income Fund Incorporated, Flaherty & Crumrine Preferred Income
Opportunity Fund Incorporated, Flaherty & Crumrine Preferred Securities
Income Fund Incorporated and Flaherty & Crumrine Total Return Fund
Incorporated (each, a Fund and collectively, the Funds), each a Maryland
corporation, will be held at the offices of Flaherty & Crumrine
Incorporated, 301 E. Colorado Boulevard, Suite 720, Pasadena, California 91101
at 8:30 a.m. PT, on April 18, 2013, for the following purposes:
Each Fund:
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1.
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To elect Directors of
each Fund (Proposal 1).
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2.
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To transact such other
business as may properly come before the Annual Meetings or any
adjournments thereof.
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Your vote is important!
The Board of
Directors of each Fund has fixed the close of business on January 18, 2013 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.
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By Order of the Boards of
Directors,
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March 11, 2013
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CHAD C. CONWELL
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Secretary
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Important Notice Regarding the
Availability of Proxy Materials for the Shareholder Meeting to Be
Held
on April 18, 2013.
The notice of Annual Meetings
of Shareholders, joint proxy statement, proxy cards and each Funds annual
report for the fiscal year ended November 30, 2012 are available to you on
the Funds website - www.preferredincome.com. You are encouraged to review
all of the information contained in the proxy materials before
voting.
To obtain directions to attend
the Annual Meetings and vote in person, please call
1-626-795-7300.
SEPARATE PROXY CARDS ARE
ENCLOSED FOR EACH FUND IN WHICH YOU OWN SHARES. SHAREHOLDERS WHO DO NOT
EXPECT TO ATTEND THE ANNUAL MEETINGS ARE REQUESTED TO COMPLETE, SIGN AND
DATE THE ENCLOSED PROXY CARD(S). The proxy card(s) should be returned in
the enclosed envelope, which needs no postage if mailed in the continental
United States. Instructions for the proper execution of proxies are set
forth on the inside cover.
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INSTRUCTIONS FOR SIGNING PROXY
CARDS
The following
general rules for signing proxy cards may be of assistance to you and may
minimize the time and expense to the Fund(s) involved in validating your vote if
you fail to sign your proxy card(s) properly.
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1.
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Individual Accounts:
Sign your name exactly as it appears in the registration on the proxy
card(s).
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2.
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Joint Accounts: Either
party may sign, but the name of the party signing should conform exactly
to a name shown in the registration.
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3.
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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:
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Registration
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Valid Signature
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Corporate Accounts
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(1)
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ABC Corp.
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ABC
Corp.
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(2)
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ABC Corp.
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John Doe, Treasurer
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(3)
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ABC Corp. c/o John
Doe, Treasurer
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John Doe
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(4)
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ABC Corp. Profit Sharing Plan
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John Doe, Trustee
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Trust Accounts
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(1)
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ABC Trust
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Jane B. Doe,
Trustee
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(2)
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Jane B. Doe, Trustee
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Jane B. Doe
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u/t/d 12/28/78
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Custodian or Estate Accounts
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(1)
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John B. Smith,
Cust.,
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John B.
Smith
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f/b/o John B. Smith,
Jr. UGMA
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(2)
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John B. Smith, Executor,
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John B. Smith, Executor
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Estate of Jane Smith
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FLAHERTY & CRUMRINE PREFERRED
INCOME FUND INCORPORATED (NYSE: PFD)
FLAHERTY & CRUMRINE PREFERRED INCOME OPPORTUNITY FUND INCORPORATED
(NYSE: PFO)
FLAHERTY & CRUMRINE PREFERRED SECURITIES INCOME FUND
INCORPORATED (NYSE: FFC)
FLAHERTY & CRUMRINE TOTAL RETURN FUND
INCORPORATED (NYSE: FLC)
301 E. Colorado Boulevard, Suite 720
Pasadena, California 91101
ANNUAL MEETINGS OF
SHAREHOLDERS
April 18, 2013
JOINT PROXY STATEMENT
This document
is a joint proxy statement (Joint Proxy Statement) for Flaherty & Crumrine
Preferred Income Fund Incorporated (Preferred Income Fund or PFD), Flaherty
& Crumrine Preferred Income Opportunity Fund Incorporated (Preferred Income
Opportunity Fund or PFO), Flaherty & Crumrine Preferred Securities Income
Fund Incorporated (Preferred Securities Income Fund or FFC) and Flaherty
& Crumrine Total Return Fund Incorporated (Total Return Fund or FLC)
(each, a Fund and collectively, the Funds). This Joint Proxy Statement is
furnished in connection with the solicitation of proxies by each Funds Board of
Directors (each, a Board and collectively, the Boards) for use at the Annual
Meeting of Shareholders of each Fund to be held on April 18, 2013, at 8:30 a.m.
PT, at the offices of Flaherty & Crumrine Incorporated, 301 E. Colorado
Boulevard, Suite 720, Pasadena, California 91101 and at any adjournments or
postponements thereof (each, a Meeting and collectively, the Meetings).
A Notice of Annual Meetings of Shareholders and proxy card for each Fund
in which you own shares accompany this Joint Proxy Statement. Proxy
solicitations will be made, beginning on or about March 11, 2013, primarily by
mail, but proxy solicitations may also be made by telephone, telefax or personal
interviews conducted by officers of each Fund, Flaherty
& Crumrine Incorporated (Flaherty & Crumrine), the investment
adviser of each Fund, and BNY Mellon Investment Servicing (US) Inc. (BNY
Mellon), the transfer agent and administrator of each Fund. With respect to FFC
and FLC, proxy solicitations may also be made by Destra Capital Investments LLC,
the servicing agent of FFC and FLC. 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 11, 2013.
THE ANNUAL REPORT OF EACH FUND, INCLUDING AUDITED FINANCIAL
STATEMENTS FOR THE FISCAL YEAR ENDED NOVEMBER 30, 2012, IS AVAILABLE UPON
REQUEST, WITHOUT CHARGE, BY WRITING TO BNY MELLON INVESTMENT SERVICING (US)
INC., P.O. BOX 358035, PITTSBURGH, PENNSYLVANIA 15252-8035, OR CALLING
1-866-351-7446. EACH FUNDS ANNUAL REPORT IS ALSO AVAILABLE ON THE FUNDS
WEBSITE - WWW.PREFERREDINCOME.COM - THE SECURITIES AND EXCHANGE COMMISSIONS
(SEC) WEBSITE (WWW.SEC.GOV) OR, FOR FFC AND FLC ONLY, BY CALLING DESTRA
CAPITAL INVESTMENTS LLC AT 1-866-233-4001.
Important Notice Regarding the
Availability of Proxy Materials for the Shareholder Meeting to Be
Held
on April 18, 2013.
The notice of Annual Meetings
of Shareholders, joint proxy statement, proxy cards and each Funds annual
report for the fiscal year ended November 30, 2012 are available to you on
the Funds website - www.preferredincome.com. You are encouraged to review
all of the information contained in the proxy materials before voting.
To obtain directions to attend
the Annual Meetings and vote in person, please call
1-626-795-7300.
SEPARATE PROXY CARDS ARE
ENCLOSED FOR EACH FUND IN WHICH YOU OWN SHARES. SHAREHOLDERS WHO DO NOT
EXPECT TO ATTEND THE ANNUAL MEETINGS ARE REQUESTED TO COMPLETE, SIGN AND
DATE THE ENCLOSED PROXY CARD(S). The proxy card(s) should be returned in
the enclosed envelope, which needs no postage if mailed in the continental
United States. Instructions for the proper execution of proxies are set
forth on the inside cover.
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1
If the
enclosed proxy card is properly executed and returned in time to be voted at the
relevant Meeting, the Shares (as defined below) represented thereby will be
voted in accordance with the instructions marked thereon. Unless instructions to
the contrary are marked thereon, a proxy will be voted FOR the election of the
nominees for Director. Any shareholder who has given a proxy has the right to
revoke it at any time prior to its exercise either by attending the relevant
Meeting and voting his or her Shares in person or by submitting a letter of
revocation or a later-dated proxy to the appropriate Fund delivered at the above
address prior to the date of the Meeting.
Under the Bylaws of each Fund, the presence in person or by proxy of the
holders of a majority of the outstanding shares of the Fund entitled to vote
shall be necessary and sufficient to constitute a quorum for the transaction of
business (a Quorum) at that Funds 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 FOR a proposal in favor of such an adjournment
with respect to that proposal and will vote those proxies required to be voted
AGAINST a proposal against any such adjournment with respect to that proposal.
A shareholder vote may be taken on a proposal in the Joint Proxy Statement prior
to any such adjournment if sufficient votes have been received for approval of
that proposal. Once a Quorum has been established at the Meeting, shareholders
may continue to transact business, notwithstanding the withdrawal of
shareholders and the loss of a Quorum.
Each Fund has one class of capital stock outstanding: common stock, par
value $0.01 per share (the Common Stock or the Shares). 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
18, 2013, the following number of Shares of each Fund were issued and
outstanding:
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Common Stock
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Name of Fund
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Outstanding
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Preferred Income Fund (PFD)
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10,944,857
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Preferred Income Opportunity Fund (PFO)
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12,238,314
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Preferred Securities Income Fund (FFC)
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43,346,214
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Total Return Fund (FLC)
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9,884,939
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To the knowledge of each Fund and its Board, the following
shareholder(s), or group as that term is defined in Section 13(d) of the
Securities Exchange Act of 1934, as amended (the 1934 Act), is the beneficial
owner or owner of record of more than 5% of the relevant Funds outstanding
Shares as of January 18, 2013*:
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Name and Address
of
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Amount and Nature
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Beneficial/Record Owner
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Title of Class
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of Ownership
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Percent of Class
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Cede & Co.**
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Common
Stock
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PFD 10,531,591
(record)
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96.2%
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Depository Trust
Company
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PFO 11,772,730 (record)
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96.2%
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55 Water Street, 25
th
Floor
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FFC 43,267,819
(record)
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99.8%
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New York, NY
10041
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FLC 9,872,485 (record)
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99.8%
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2
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Name and Address of
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Amount and Nature
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Beneficial/Record Owner
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Title of
Class
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of
Ownership
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Percent of
Class
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Guggenheim Capital LLC, Guggenheim
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Common Stock
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FLC
608,266
1
(beneficial)
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6.17%
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Partners, LLC, GP Holdco, GPFT Holdco,
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LLC,
Guggenheim Funds Services, LLC
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and
Guggenheim Funds Distributors, LLC
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(GFD), Claymore Securities Defined
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Portfolios, Series 494, 592, 644, 661; and
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Guggenheim Defined Portfolios, Series
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754,
761, 765, 766, 771, 781, 788, 789,
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793,
812, 813, 833, 840, 846, 853, 874,
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876,
887, 894, 895, 909, 910, 911, 912,
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921,
963, 965, 979, 980 & 982
1
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2455
Corporate West Drive
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Lisle, IL 60532
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____________________
*
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As of January 18,
2013, the Directors and officers, as a group, owned less than 1% of the
Shares of each Fund.
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**
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A nominee partnership
of The Depository Trust Company.
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1
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Information obtained
from a Schedule 13G/A filed by Guggenheim Capital LLC, Guggenheim
Partners, LLC, GP Holdco, GPFT Holdco, LLC, Guggenheim Funds Services, LLC
and GFD. GFD filed as sponsor for Claymore Securities Defined Portfolios
and Guggenheim Defined Portfolios (together the Filing Entities), with
the SEC reporting share ownership as of December 31, 2012. Based on that
filing, the Filing Entities have the shared power to vote or direct the
vote or dispose or direct the disposition of 608,266
Shares.
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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.
3
PROPOSAL 1: ELECTION OF
DIRECTORS
At the
Meetings, shareholders are being asked to consider the election of Directors of
each Fund. The Board of each Fund is divided into three classes, each class
having a term of three years. Each year the term of office of one class expires
and the successor or successors elected to such class serve for a three-year
term and until their successors are duly elected and qualified.
Nominees for the Boards of Directors
Each nominee named below has consented to serve as a Director if elected
at the relevant Meeting. If a designated nominee declines or otherwise becomes
unavailable for election, however, the proxy confers discretionary power on the
persons named therein to vote in favor of a substitute nominee or nominees. Each
nominee has been nominated for a three-year term to expire at each Funds 2016
Annual Meeting of Shareholders and until his or her successor is duly elected
and qualified. Shareholders of each Funds Common Stock are entitled to elect
the nominees for election to the Board of the relevant Fund.
Fund
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Nominees For
Election
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PFD
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Morgan Gust
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PFO
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Donald F. Crumrine
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Robert F. Wulf
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FFC
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Donald F. Crumrine
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Robert F. Wulf
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FLC
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Donald F. Crumrine
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Robert F.
Wulf
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Information About Each Directors or
Nominee for Election as Directors Experience, Qualifications, Attributes or
Skills
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.
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Number of
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Funds in
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Other Public
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Current
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Fund
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Company Board
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Position(s)
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Term of Office and
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Principal Occupation
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Complex
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Memberships
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Held with
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Length of Time
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During Past Five
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Overseen by
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During Past Five
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Name, Address and
Age
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Funds
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Served*
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Years
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Director**
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Years
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Non-Interested
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Directors/Nominees:
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David Gale
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Director
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Class I Director
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President of Delta
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4
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Metromedia
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Delta Dividend Group, Inc.
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PFD since 1997
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Dividend Group, Inc.
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International
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220 Montgomery Street
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PFO since 1997
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(investments)
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Group, Inc.
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Suite 426
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FFC since inception
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and Emmis
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San Francisco, CA 94104
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FLC since inception
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Communications
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Age: 64
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Morgan Gust
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Director and
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Class II Director
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Owner and
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4
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CoBiz Financial,
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301 E. Colorado Boulevard
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Nominating
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FFC since inception
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operator of various
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Inc. (financial
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Suite 720
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and
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FLC since inception
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entities engaged in
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services)
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Pasadena, CA 91101
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Governance
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agriculture and real
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Age: 65
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Committee
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Class III
Director
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estate
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Chairman
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PFD since inception
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PFO since inception
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4
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Number of
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Funds in
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Other Public
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Current
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Fund
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Company Board
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Position(s)
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Term of Office and
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Principal Occupation
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Complex
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Memberships
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Held with
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Length of Time
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During Past Five
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Overseen by
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During Past Five
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Name, Address and Age
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Funds
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Served*
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Years
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Director**
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Years
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Karen H. Hogan
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Director
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Class I
Director
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Board
Member,
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4
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None
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301 E. Colorado
Boulevard
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PFD since
2005
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IKAR, a
non-profit
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Suite 720
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organization;
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Pasadena, CA
91101
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Class III
Director
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Active
Member,
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Age: 51
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PFO since
2005
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Committee
Member
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and Volunteer
to
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Class II
Director
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several
non-profit
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FFC since
2005
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organizations.
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FLC since
2005
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Robert F. Wulf
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Director
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Class II
Director
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Financial
Consultant;
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4
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None
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1000 S.W. Vista
Avenue,
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and Audit
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PFD since
inception
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Former
Trustee,
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Apt. 314
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Committee
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PFO since
inception
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University of
Oregon
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Portland, OR
97205
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Chairman
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Foundation;
Trustee,
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Age:75
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|
|
|
Class III
Director
|
|
San
Francisco
|
|
|
|
|
|
|
|
|
FFC since
inception
|
|
Theological
|
|
|
|
|
|
|
|
|
FLC since
inception
|
|
Seminary
|
|
|
|
|
|
Interested
|
|
|
|
|
|
|
|
|
|
|
Director/Nominee:
|
|
|
|
|
|
|
|
|
|
|
|
Donald F. Crumrine
(1)
|
|
Director,
|
|
Class II
Director
|
|
Chairman of
the
|
|
4
|
|
None
|
301 E. Colorado
Boulevard
|
|
Chairman of
|
|
PFD since
inception
|
|
Board and Director
of
|
|
|
|
|
Suite 720
|
|
the Board
|
|
PFO since
inception
|
|
Flaherty &
Crumrine
|
|
|
|
|
Pasadena, CA
91101
|
|
and Chief
|
|
|
|
|
|
|
|
|
Age: 65
|
|
Executive
|
|
Class III
Director
|
|
|
|
|
|
|
|
|
Officer
|
|
FFC since
inception
|
|
|
|
|
|
|
|
|
|
|
FLC since
inception
|
|
|
|
|
|
|
____________________
*
|
|
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 Funds 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
Funds Annual Meeting of Shareholders in 2015 and until their successors
are duly elected and qualified. The Class II Nominees of PFO and the Class
III Nominees of PFD, FFC and FLC, if elected, will serve until each Funds
2016 Annual Meeting of Shareholders and until their successors are duly
elected and qualified.
|
**
|
|
The Flaherty & Crumrine fund
complex consists solely of the Funds.
|
(1)
|
|
Interested person (as defined
in the Investment Company Act of 1940, as amended (the 1940 Act)) of the
Funds. Mr. Crumrine is considered an interested person because of his
affiliation with Flaherty & Crumrine.
|
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 Directors 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
5
private or not-for-profit entities or
other organizations; and/or other life experiences. The charters for the Boards
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 & Crumrine,
and also may benefit from information provided by the Funds and Flaherty &
Crumrines counsel; both counsel to the Independent Directors and counsel to the
Funds and Flaherty & 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.
-
Donald F. Crumrine
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 Funds
inception. Mr. Crumrine has over 36 years of
experience managing portfolios of preferred securities. He co-founded
Flaherty & Crumrine in 1983, after
spending
twelve years at Scudder, Stevens & Clark, to focus on managing preferred
securities portfolios
and associated hedges.
Mr. Crumrine is actively involved in the day-to-day management of all Flaherty
&
Crumrine client portfolios, including
those of the Funds, and directs client service and marketing efforts at
Flaherty & Crumrine.
-
David Gale
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.
-
Morgan Gust
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 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 (the NYSE). Mr. Gust
currently serves as lead Director of CoBiz Financial, Inc., a publicly
traded bank holding company. He is also a
member of the Arizona State Bar.
-
Karen H. Hogan
In addition to her tenure
as a Director of the Funds, Ms. Hogan serves as a board member and
committee member of several 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.
-
Robert F. Wulf
In addition to his tenure
as a Director of the Funds, Mr. Wulf has worked as a financial
consultant
for over 29 years. Mr. Wulf also
served as a board member of two non-profit organizations.
Board Composition and Leadership
Structure
The 1940 Act
requires that at least 40% of the Funds Directors not be interested persons
(as defined in the 1940 Act) of the Funds, and therefore not affiliated with
Flaherty & Crumrine (Independent Directors). To rely on certain exemptive
rules under the 1940 Act, a majority of the Funds 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 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 & Crumrine at scheduled meetings and between meetings
as appropriate. Independent Directors have been designated to chair the Audit
Committees and the Nominating and 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 size and the cooperative and dynamic working relationship among the
Independent Directors and the Independent Directors open lines of communication
with Fund management. The Boards have determined that their leadership
structures and composition, in which the Chairman
6
of the Boards is an interested person
of the Funds and 80% of the Directors are Independent Directors, are appropriate
in light of the services that Flaherty & Crumrine provides to the Funds and
potential conflicts of interest that could arise from these
relationships.
Boards Oversight Role in
Management
The Boards 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 & 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 and Flaherty &
Crumrines Chief Compliance Officer and portfolio management personnel. The
Boards 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 independent registered public accounting firm
and the Funds Chief Financial Officer. The Boards also receive periodic
presentations from senior personnel of Flaherty & 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
& 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 & Crumrine and the Independent Directors own
independent legal counsel regarding regulatory, compliance and governance
matters. The Boards oversight role does not make the Boards guarantors of the
Funds investments or activities.
Beneficial Ownership of Shares in
Funds and Fund Complex for each Director and Nominee for Election as Director
Set forth in the table below is the dollar range of equity securities in each
Fund and the aggregate dollar range of equity securities in the Flaherty &
Crumrine Fund Family beneficially owned by each Director and Nominee for
Election as Director.
|
|
|
|
|
|
|
|
|
|
Aggregate Dollar
Range of Equity
|
|
|
|
|
|
|
|
|
|
|
Securities in All
Registered Investment
|
|
|
Dollar Range of
Equity
|
|
Companies Overseen by
Director in Family
|
Name of Director or Nominee
|
|
Securities Held in Fund*(1)
|
|
of Investment Companies*(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PFD
|
|
PFO
|
|
FFC
|
|
FLC
|
|
Total
|
|
NON-INTERESTED
|
|
|
|
|
|
|
|
|
|
|
DIRECTORS/NOMINEES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David Gale
|
|
D
|
|
D
|
|
D
|
|
D
|
|
E
|
|
|
|
|
|
|
|
|
|
|
|
Morgan Gust
|
|
D
|
|
D
|
|
C
|
|
C
|
|
E
|
|
|
|
|
|
|
|
|
|
|
|
Karen H.
Hogan
|
|
B
|
|
B
|
|
B
|
|
B
|
|
C
|
|
|
|
|
|
|
|
|
|
|
|
Robert F.
Wulf
|
|
C
|
|
C
|
|
E
|
|
E
|
|
E
|
|
|
|
|
|
|
|
|
|
|
|
INTERESTED DIRECTOR/NOMINEE:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Donald F.
Crumrine
|
|
E
(3)
|
|
E
(3)
|
|
E
(3)
|
|
E
(3)
|
|
E
(3)
|
7
____________________
*
|
|
Key to Dollar
Ranges
|
A.
|
|
None
|
B.
|
|
$1 - $10,000
|
C.
|
|
$10,001 -$50,000
|
D.
|
|
$50,001 - $100,000
|
E.
|
|
over
$100,000
|
|
|
All shares were
valued as of January 18, 2013.
|
(1)
|
|
This information has
been furnished by each Director/Nominee as of January 18, 2013.
Beneficial ownership is determined in accordance with Rule 16a-1(a)(2)
under the 1934 Act.
|
(2)
|
|
The Directors,
Nominees and executive officers of each Fund, as a group, own less than 1%
of each Fund.
|
(3)
|
|
Includes shares of
the Fund held by Flaherty & Crumrine, of which Mr. Crumrine is a
shareholder and Director.
|
Officers of the Funds
The following table provides information concerning each of the officers of the
Funds.
|
|
Current Position(s)
|
|
Term of Office and Length of
|
|
Principal Occupation
During
|
Name, Address and Age
|
|
Held with Funds
|
|
Time Served*
|
|
Past Five Years
|
Robert M. Ettinger
|
|
President
|
|
PFD since
2002
|
|
President and
Director
|
301 E. Colorado
Boulevard
|
|
|
|
PFO since
2002
|
|
of Flaherty &
Crumrine
|
Suite 720
|
|
|
|
FFC since
inception
|
|
|
Pasadena, CA
91101
|
|
|
|
FLC since
inception
|
|
|
Age: 54
|
|
|
|
|
|
|
|
R. Eric Chadwick
|
|
Chief
Financial
|
|
PFD since
2004
|
|
Vice President and
Director of
|
301 E. Colorado
Boulevard
|
|
Officer,
Vice
|
|
PFO since
2004
|
|
Flaherty &
Crumrine
|
Suite 720
|
|
President
and
|
|
FFC since
2004
|
|
|
Pasadena, CA
91101
|
|
Treasurer
|
|
FLC since
2004
|
|
|
Age: 37
|
|
|
|
|
|
|
|
Chad C. Conwell
|
|
Chief
Compliance
|
|
PFD since
2005
|
|
Chief Compliance
Officer and Vice
|
301 E. Colorado
Boulevard
|
|
Officer,
Vice
|
|
PFO since
2005
|
|
President of Flaherty
& Crumrine;
|
Suite 720
|
|
President
and
|
|
FFC since
2005
|
|
Director of Flaherty
& Crumrine
|
Pasadena, CA
91101
|
|
Secretary
|
|
FLC since
2005
|
|
since January
2011
|
Age: 40
|
|
|
|
|
|
|
|
Bradford S. Stone
|
|
Vice President
and
|
|
PFD since
2003
|
|
Vice President and
Director of
|
47 Maple
Street
|
|
Assistant
|
|
PFO since
2003
|
|
Flaherty &
Crumrine
|
Suite 403
|
|
Treasurer
|
|
FFC since
2003
|
|
|
Summit, NJ
07901
|
|
|
|
FLC since
inception
|
|
|
Age: 53
|
|
|
|
|
|
|
|
Laurie C. Lodolo
|
|
Assistant
Compliance
|
|
PFD since
2004
|
|
Assistant Compliance
Officer and
|
301 E. Colorado
Boulevard
|
|
Officer,
Assistant
|
|
PFO since
2004
|
|
Secretary of Flaherty
& Crumrine
|
Suite 720
|
|
Treasurer
and
|
|
FFC since
2004
|
|
|
Pasadena, CA
91101
|
|
Assistant
Secretary
|
|
FLC since
2004
|
|
|
Age: 49
|
|
|
|
|
|
|
|
Linda M. Puchalski
|
|
Assistant
Treasurer
|
|
PFD since
2010
|
|
Administrator of
Flaherty & Crumrine
|
301 E. Colorado
Boulevard
|
|
|
|
PFO since
2010
|
|
|
Suite 720
|
|
|
|
FFC since
2010
|
|
|
Pasadena, CA
91101
|
|
|
|
FLC since
2010
|
|
|
Age: 56
|
|
|
|
|
|
|
____________________
*
Each officer serves until his or her successor is elected and qualified or until
his or her earlier resignation or removal.
8
Audit Committee Report
The role of each Funds Audit Committee is to assist the Board of Directors in
its oversight of: (i) the integrity of the Funds financial statements and the
independent audit thereof; (ii) the Funds accounting and financial reporting
policies and practices, its internal controls and, as appropriate, the internal
controls of certain service providers; (iii) the Funds compliance with legal
and regulatory requirements; and (iv) the independent auditors qualifications,
independence and performance. Each Funds Audit Committee is also required to
prepare an audit committee report pursuant to the rules of the SEC for inclusion
in the Funds annual proxy statement. Each Audit Committee operates pursuant to
a charter (the Audit Committee Charter or Charter) that was most recently
reviewed and approved by the Board of Directors of each Fund on January 22, 2013
and which is available at www.preferredincome.com. As set forth in the Charter,
management is responsible for the (i) preparation, presentation and integrity of
each Funds financial statements, (ii) maintenance of appropriate accounting and
financial reporting principles and policies and (iii) maintenance of internal
controls and procedures designed to assure compliance with accounting standards
and applicable laws and regulations. The Funds independent registered public
accounting firm, KPMG LLP (the independent accountants or KPMG), is
responsible for planning and carrying out proper audits and reviews of each
Funds financial statements and expressing an opinion as to their conformity
with accounting principles generally accepted in the United States of America.
In
performing its oversight function, at a meeting held on January 22, 2013, 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, 2012, and discussed the audit of such
financial statements with the independent accountants.
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,
Professional Standards
,
Vol. 1 AU Section 380), as adopted by the Public Company Accounting Oversight
Board in Rule 3200T. Each Audit Committee also received from the independent
accountants the written disclosures and statements required by the SECs
independence rules, 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.
As
set forth above, and as more fully set forth in each Funds Audit Committee
Charter, the Audit Committee has significant duties and powers in its oversight
role with respect to the Funds financial reporting procedures, internal control
systems, and the independent audit process.
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 Committees 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
Committees considerations and discussions referred to above do not provide
assurance that the audit of each Funds financial statements has been carried
out in accordance with generally accepted accounting standards or that the
financial statements are presented in accordance with generally accepted
accounting principles.
Based on its consideration of the audited financial statements and the
discussions referred to above with management and the independent accountants,
and subject to the limitations on the responsibilities and role of the Audit
Committee set forth in the Charter and those discussed above, the Audit
Committee of each Fund recommended to that Funds Board that the audited
financial statements be included in the Funds Annual Report for the fiscal year
ended November 30, 2012.
This report was submitted by the
Audit Committee of each Funds Board of Directors
David Gale
Morgan Gust
Karen H. Hogan
Robert F. Wulf (Chairman)
January 22, 2013
9
Each Audit Committee was established in accordance with Section 3(a)(58)(A) of
the 1934 Act. Each Audit Committee met four times in connection with its Board
of Directors regularly scheduled meetings during the fiscal year ended November
30, 2012. Each Audit Committee is composed entirely of each Funds Independent
Directors who are also independent (as such term is defined by the NYSE under
the listing standards applicable to closed-end funds, as may be modified or
supplemented (the NYSE Listing Standards)), namely Ms. Hogan and Messrs. Gale,
Gust and Wulf.
Nominating and Governance Committee
Each Board of Directors has a Nominating and Governance Committee composed
entirely of each Funds Independent Directors who are also independent (as
such term is defined by the NYSE Listing Standards), 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, 2012. The Nominating
and Governance Committee is responsible for identifying individuals believed to
be qualified to become Board members; for recommending to the Board such
nominees to stand for election as directors at each Funds annual meeting of
shareholders and to fill any vacancies on the Board; and for overseeing the
Boards governance practices. Each Funds Nominating and Governance Committee
has a charter which is available on its website, www.preferredincome.com.
Each Funds 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. 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 Funds
Nominating and Governance Committee may consider whether a potential nominees
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 Boards membership and
collective attributes. Each Funds 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 Submission of Shareholder Proposals below.)
Other Board-Related Matters
Shareholders who wish to send communications to the Board should send them to
the address of their Fund(s) and to the attention of the Board. All such
communications will be directed to the Boards attention.
The Funds do not have a formal policy regarding Board member attendance at the
Annual Meeting of Shareholders. However, all of the Directors of each Fund
attended the April 19, 2012 Annual Meetings of Shareholders.
Board Compensation
Each Director of each Fund who is not a director, officer or employee of
Flaherty & Crumrine or any of its affiliates receives from each Fund a fee
of $9,000 per annum plus $750 for each in-person Board of Directors or Audit
Committee meeting attended, $500 for each in-person Nominating and Governance
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, 2012, the Board of Directors for each Fund held
six meetings (two of which were
10
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, 2012
is set forth below:
|
|
|
|
Board Meeting
|
|
|
|
|
|
|
and Committee
|
|
Travel and Out-of-Pocket
|
|
|
Annual Director Fees
|
|
Meeting Fees
|
|
Expenses*
|
PFD
|
|
$36,000
|
|
$33,000
|
|
$3,148
|
PFO
|
|
$36,000
|
|
$33,000
|
|
$3,098
|
FFC
|
|
$36,000
|
|
$33,000
|
|
$3,098
|
FLC
|
|
$36,000
|
|
$33,000
|
|
$3,098
|
____________________
*
Includes reimbursement for travel and out-of-pocket expenses for both
interested and Independent Directors.
The following table sets forth
additional information regarding the compensation of each Funds Directors for
the fiscal year ended November 30, 2012. No executive officer or person
affiliated with a Fund received compensation from a Fund during the fiscal year
ended November 30, 2012 in excess of $60,000. Directors and executive officers
of the Funds do not receive pension or retirement benefits from the Funds.
COMPENSATION TABLE
Name of
|
|
Aggregate
|
|
Total Compensation from
|
Person and
|
|
Compensation
|
|
the Funds and Fund
|
Position
|
|
from each Fund
|
|
Complex Paid to Directors*
|
Donald F.
Crumrine
|
|
$0
|
|
$0 (4)
|
Director, Chairman of
the Board and Chief Executive Officer
|
|
|
|
|
|
David Gale
|
|
$16,500
PFD
|
|
$66,000
(4)
|
Director
|
|
$16,500
PFO
|
|
|
|
|
$16,500
FFC
|
|
|
|
|
$16,500
FLC
|
|
|
|
Morgan Gust
|
|
$16,500
PFD
|
|
$66,000
(4)
|
Director, Nominating
and Governance Committee Chairman
|
|
$16,500
PFO
|
|
|
|
|
$16,500
FFC
|
|
|
|
|
$16,500
FLC
|
|
|
|
Karen H.
Hogan
|
|
$16,500
PFD
|
|
$66,000
(4)
|
Director
|
|
$16,500
PFO
|
|
|
|
|
$16,500
FFC
|
|
|
|
|
$16,500
FLC
|
|
|
|
Robert F.
Wulf
|
|
$19,500
PFD
|
|
$78,000
(4)
|
Director, Audit
Committee Chairman
|
|
$19,500
PFO
|
|
|
|
|
$19,500
FFC
|
|
|
|
|
$19,500
FLC
|
|
|
____________________
*
|
|
Represents the total compensation
paid for the fiscal year ended November 30, 2012, to such persons by the
Funds, which are considered part of the same fund complex because they
have a common adviser. The parenthetical number represents the total
number of investment company directorships held by the Director or Nominee
in the fund complex as of November 30, 2012.
|
11
Required Vote
The election of Mr. Gust as a Director of PFD and the election of Mr. Crumrine
and Mr. Wulf as Directors of PFO, FFC and FLC, will require the affirmative vote
of a plurality of the vote cast by holders of the Shares of Common Stock of each
such Fund at the Meeting in person or by proxy.
SUBMISSION OF SHAREHOLDER
PROPOSALS
All proposals by shareholders of each Fund that are intended to be presented at
each Funds next Annual Meeting of Shareholders to be held in 2014 must be
received by the relevant Fund for consideration for inclusion in the relevant
Funds proxy statement relating to the meeting no later than November 11, 2013,
and must satisfy the requirements of federal securities laws.
Each Funds Bylaws require shareholders wishing to nominate Directors or make
proposals to be voted on at the Funds 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
th
day nor later than 5:00
p.m., Eastern Time, on the 120
th
day prior to the first anniversary
of the date of the proxy statement for the preceding years 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 years annual meeting, notice by the shareholder to be timely
must be so delivered not earlier than the 150
th
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
th
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.
Any such notice by a shareholder shall set forth the information required by the
Funds Bylaws with respect to each matter the shareholder proposes to bring
before the annual meeting.
ADDITIONAL INFORMATION
Independent Registered Public
Accounting Firm
KPMG, Two Financial Center, 60 South Street, Boston, Massachusetts 02111, has
been selected to serve as each Funds independent registered public accounting
firm for each Funds fiscal year ending November 30, 2013. KPMG acted as the
independent registered public accounting firm for each Fund for the fiscal year
ended November 30, 2012. 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.
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, 2011 and 2012, respectively.
|
|
Fiscal Year Ended
|
|
|
|
Audit-Related
|
|
|
|
|
Fund
|
|
November 30
|
|
Audit Fees
|
|
Fees
|
|
Tax Fees*
|
|
All Other Fees
|
PFD
|
|
2011
|
|
$45,000
|
|
$0
|
|
$8,270
|
|
$0
|
|
|
2012
|
|
$45,000
|
|
$0
|
|
$8,650
|
|
$0
|
|
PFO
|
|
2011
|
|
$45,000
|
|
$0
|
|
$8,270
|
|
$0
|
|
|
2012
|
|
$45,000
|
|
$0
|
|
$8,650
|
|
$0
|
|
FFC
|
|
2011
|
|
$47,500
|
|
$0
|
|
$8,270
|
|
$0
|
|
|
2012
|
|
$47,500
|
|
$0
|
|
$8,650
|
|
$0
|
|
FLC
|
|
2011
|
|
$47,500
|
|
$0
|
|
$8,270
|
|
$0
|
|
|
2012
|
|
$47,500
|
|
$0
|
|
$8,650
|
|
$0
|
____________________
*
|
|
Tax Fees are those fees billed
to each Fund by KPMG in connection with tax consulting services, including
primarily the review of each Funds income tax
returns.
|
12
Each Funds 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 Funds investment adviser and any entity
controlling, controlled by or under common control with the Funds investment
adviser (affiliates) that provide on-going services to each Fund, if the
engagement relates directly to the 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, 2011 and November 30, 2012 were pre-approved by the
Audit Committee.
For each Funds fiscal years ended November 30, 2011 and November 30, 2012, KPMG
did not provide any non-audit services (or bill any fees for such services) to
the Funds investment adviser or any affiliates.
Investment Adviser, Administrator
and Servicing Agent
Flaherty & Crumrine serves as the investment adviser to each Fund, and its
business address is 301 E. Colorado Boulevard, Suite 720, Pasadena, California
91101. BNY Mellon acts as the administrator to each Fund and is located at 4400
Computer Drive, Westborough, Massachusetts 01581. Destra Capital Investments LLC
acts as the servicing agent to FFC and FLC and is located at 901 Warrenville
Road, Suite 15, Lisle, IL 60532.
Compliance with the Securities
Exchange Act of 1934
Section 16(a) of the 1934 Act and Section 30(h) of the 1940 Act require each
Funds Directors and executive officers, certain persons affiliated with
Flaherty & Crumrine and persons who beneficially own more than 10% of a
registered class of each Funds 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 2012, all such filing
requirements applicable to such persons were met.
Broker Non-Votes and Abstentions
A
proxy which is properly executed and returned accompanied by instructions to
withhold authority to vote represents a broker non-vote (i.e., shares held by
brokers or nominees as to which (i) instructions have not been received from the
beneficial owners or the persons entitled to vote and (ii) the broker or nominee
does not have discretionary voting power on a particular matter). Proxies that
reflect abstentions or broker non-votes (collectively, abstentions) will be
counted as Shares that are present and entitled to vote at the meeting for
purposes of determining the presence of a Quorum. With respect to Proposal 1,
abstentions do not constitute a vote for or against the proposal and will be
disregarded in determining the votes cast on the proposal.
OTHER MATTERS TO COME BEFORE THE
MEETING
Each Fund does not intend to present any other business at the relevant Meeting,
nor is any Fund aware that any shareholder intends to do so. If, however, any
other matters are properly brought before the Meeting, the persons named in the
accompanying form of proxy will vote thereon in accordance with their judgment.
VOTING RESULTS
Each Fund will advise its shareholders of the voting results of the matters
voted upon at its Meeting in its next Semi-Annual Report to Shareholders.
13
NOTICE TO BANKS, BROKER/DEALERS AND
VOTING TRUSTEES AND THEIR NOMINEES
Please advise the Funds whether other persons are the beneficial owners of Fund
Shares for which proxies are being solicited from you, and, if so, the number of
copies of the Joint Proxy Statement and other soliciting material you wish to
receive in order to supply copies to the beneficial owners of Fund Shares.
IT IS IMPORTANT THAT PROXIES BE
RETURNED PROMPTLY. SHAREHOLDERS WHO DO NOT EXPECT TO ATTEND THE MEETINGS ARE
THEREFORE URGED TO COMPLETE, SIGN, DATE AND RETURN ALL PROXY CARDS AS SOON AS
POSSIBLE IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
14
FLAHERTY &
CRUMRINE
TOTAL RETURN FUND INCORPORATED
Important Annual Meeting
Information
Using a
black ink
pen, mark your votes with an X as shown
in this example. Please do not write outside the designated
areas.
|
|
X
|
Annual Meeting Proxy Card
PLEASE FOLD ALONG THE
PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED
ENVELOPE.
|
|
A. Proposal - The Board of Directors
recommends a vote
FOR
the nominees
listed.
1. Election
of Directors:
|
|
01 Donald
F. Crumrine
|
|
02 Robert F. Wulf
|
|
|
|
|
|
|
|
|
|
Mark here to vote
FOR
all nominees
|
|
|
|
Mark here to
WITHHOLD
vote from all nominees
|
|
|
|
For All
EXCEPT
- To withhold authority to vote
for any
|
|
|
|
|
|
|
|
|
|
|
|
nominee(s), write the name(s) of such
nominee(s) below
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
B.
Non-Voting Items
Change of Address
- Please print
new address below.
|
Comments
Please print your
comments
below.
|
C.
Authorized Signatures This Section must be completed for
your vote to be counted. Date and Sign Below
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.
Date (mm/dd/yyyy)
Please print date below.
|
|
Signature 1 Please keep signature
within the box.
|
|
Signature 2 Please keep signature
within the box.
|
|
|
|
|
|
/
|
/
|
|
|
|
|
|
The Notice of Annual Meeting
of Shareholders, Joint Proxy Statement and proxy
card
|
for the Fund
are available on the Funds website at
www.preferredincome.com
.
|
PLEASE FOLD ALONG
THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED
ENVELOPE.
|
|
Proxy - FLAHERTY & CRUMRINE TOTAL
RETURN FUND INCORPORATED
PROXY IN CONNECTION WITH THE ANNUAL
MEETING OF SHAREHOLDERS TO BE HELD ON APRIL 18, 2013
Important Notice Regarding the
Availability of Proxy Materials for the Shareholder Meeting to be held on April
18, 2013.
The Notice of Annual Meeting of
Shareholders, Joint Proxy Statement and proxy card for the Fund are available on
the Funds website at www.preferredincome.com.
PROXY SOLICITED BY BOARD OF
DIRECTORS
The undersigned holder of shares of
Common Stock of Flaherty & Crumrine Total Return Fund Incorporated, a
Maryland corporation (the Fund), 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 & Crumrine Incorporated, 301 East Colorado
Boulevard, Suite 720, Pasadena, California 91101 at 8:30 a.m. PT, on April 18,
2013, and any adjournments or postponements thereof. The undersigned hereby
acknowledges receipt of the Notice of Annual Meeting and Joint 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.
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