Flaherty & Crumrine/Claymore Total Return Fund Inc-Quarterly Schedule of Portfolio Holdings of Registered Management In... (N-Q)

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM N-Q

QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS OF REGISTERED
MANAGEMENT INVESTMENT COMPANY

Investment Company Act file number 811-21380

Flaherty & Crumrine/Claymore Total Return Fund Incorporated

(Exact name of registrant as specified in charter)

301 E. Colorado Boulevard, Suite 720
Pasadena, CA 91101

(Address of principal executive offices) (Zip code)

Donald F. Crumrine
Flaherty & Crumrine Incorporated
301 E. Colorado Boulevard, Suite 720
Pasadena, CA 91101

(Name and address of agent for service)

Registrant's telephone number, including area code: 626-795-7300

Date of fiscal year end: November 30

Date of reporting period: February 29, 2008

Form N-Q is to be used by management investment companies, other than small business investment companies registered on Form N-5 (ss.ss. 239.24 and 274.5 of this chapter), to file reports with the Commission, not later than 60 days after the close of the first and third fiscal quarters, pursuant to rule 30b1-5 under the Investment Company Act of 1940 (17 CFR 270.30b1-5). The Commission may use the information provided on Form N-Q in its regulatory, disclosure review, inspection, and policymaking roles.

A registrant is required to disclose the information specified by Form N-Q, and the Commission will make this information public. A registrant is not required to respond to the collection of information contained in Form N-Q unless the Form displays a currently valid Office of Management and Budget ("OMB") control number. Please direct comments concerning the accuracy of the information collection burden estimate and any suggestions for reducing the burden to the Secretary, Securities and Exchange Commission, 100 F Street, NE, Washington, DC 20549. The OMB has reviewed this collection of information under the clearance requirements of 44 U.S.C. ss. 3507.

ITEM 1. SCHEDULE OF INVESTMENTS.
The Schedule(s) of Investments is attached herewith.

FLAHERTY & CRUMRINE/CLAYMORE TOTAL RETURN FUND

To the Shareholders of the Flaherty & Crumrine/Claymore Total Return Fund:

The Fund's performance during the first fiscal quarter of 2008, which ended on February 29th, is summarized below:

Total Return on Net Asset Value 1: - 2.0% Total Return on Market Value 2: + 5.3%

While these returns were not impressive on an absolute basis, they actually were quite good given the turbulent securities markets we saw during the quarter. We believe the Fund's portfolio of investments remains sound and will continue to provide common stock shareholders with high current income.

Conditions in the financial markets remain difficult as many of the adverse trends that surfaced in the second half of 2007 have persisted during the first few months of 2008. The dramatic downturn in the housing market is clearly at the root of our current economic problems. The housing bubble, fueled by lenders willing to fund anyone who could fog a mirror, is correcting itself at a jarring pace. In addition, the impact has been magnified because the alchemists of Wall Street, with an assist from the rating agencies, took these leaden mortgages and turned them not into gold, but rather into an alphabet soup of mortgage-backed securities, some of which turned out to be toxic waste.

The Fund never invested in these structured mortgage products, but we did underestimate the impact they would have on many of the companies we own. Since the beginning of the credit crisis last year, financial companies have written off more than $200 billion of bad loans and investments, and they have lost about 27.4% 3 of their equity market value. While common equity holders will ultimately bear the brunt of these losses, the preferred securities of many financial companies have fallen sharply in market price. Financial companies comprise more than 75% of the preferred security universe, and, given the mandate of the Fund, the portfolio will always own a lot of these financial issues.

As of February 29th, 57.2% of the portfolio was invested in preferred securities of the financial sector. Commercial banks comprised 29% of the total portfolio, along with 8% in finance companies (including investment banks and brokers), 20% in insurance companies and 0.2% in the housing agencies Freddie Mac and Fannie Mae. The remainder of the portfolio is mostly utilities, other energy companies, and cash.

Another topic in the news recently is the collapse of the auction rate preferred market. A wide range of entities have issued this type of security, and for years it was an effective way to borrow money. Last fall, the auction process began to break down. In February the auction market suddenly collapsed and the long-term viability of the product became in doubt.

Many closed-end funds have issued auction rate preferred as a means to enhance income for the common shareholders. Historically, rates PAID by the Fund (on the preferred stock) have been well below what the Fund EARNS on its investments.

1 Based on monthly data provided by Lipper Inc. in each calendar month during the quarter. Distributions are assumed to be reinvested at NAV in accordance with Lipper's practice, which may differ from other methodology used elsewhere in this report.
2 Based on Bloomberg data; distributions are assumed to be reinvested at market price.
3 The return on the Standard and Poor's 500 Financial index for the period 6/30/07 through 2/29/08, price change only.

As you know, FLC employs leverage and therefore has two classes of shareholders--common stock and auction market preferred stock. Both share in the income generated by the investment portfolio, but in a different way. The amount paid to holders of the preferred stock is determined periodically via a Dutch auction process. These auctions are designed to determine a rate that will "clear" the market, i.e., attract enough buyers to absorb any shares being sold. There is, however, a maximum rate at each auction based on a formula. If the maximum rate is not sufficient to attract enough buyers, the auction is said to "fail" and holders wishing to sell cannot. The terminology is unfortunate: a "failed" auction means sellers can't sell, but it has nothing to do with the Fund's ability to distribute income.

The dividend paid to common stock shareholders is simply the income left over after paying preferred stock dividends and other expenses of the Fund. Thus, the higher the rates paid by the Fund on its preferred stock, the less income available for common shareholders. Under current market conditions, even with preferred stock dividends being at the current maximum rate, THE YIELD EARNED ON THE PORTFOLIO REMAINS WELL ABOVE THE COST OF LEVERAGE.

The breakdown of the auction market is a symptom of a larger malady affecting financial markets--illiquidity. Just as banks and other traditional lenders have dramatically cut back on making certain types of loans, investors have become much less willing to part with cash. Since July 2007, additions to money market funds (a substitute for cash) have increased by nearly one trillion dollars.

And while many are hoarding cash, others are scrambling to raise it. It is clear that as a nation we had purchased too many things with borrowed money. This was obviously the case in the housing market, and now many homeowners are being forced to sell. In the securities markets, it has become apparent that many hedge funds and other investment firms were operating without sufficient capital and are also being forced to sell assets. There is ample evidence that in aggregate, hedge funds have been shrinking their investment portfolios, and we have observed several of our trading partners at brokerage firms aggressively trying to reduce their trading positions.

Another source of selling pressure has come from a steady supply of new issues, as companies have sought to shore up their balance sheets after taking big write downs. It wasn't long ago that the decision to issue new equity, whether common or preferred, was based on strategic or opportunistic factors. Now, many companies are being forced to issue to rebuild capital for defensive reasons, and they are paying rates that are historically high (in relation to risk-free U.S. Treasury securities).

Every financial bubble eventually bursts and asset prices fall to sustainable levels. Tulips and dot-com companies are one thing, but the U.S. housing market is a whole different ballgame in terms of its economic impact. In order for the U.S. economy to avoid a deep and lasting recession, the housing sector will need to stabilize. For this to happen, the glut of homes for sale must shrink. This in turn will likely require some relief for over-extended borrowers and a return to more normal mortgage markets. For that to happen, home prices will need to fall to a "clearing" level that certainly is lower than today's prices. However, lower home prices, while necessary, may amplify current economic weakness. Needless to say, the path to economic recovery will be bumpy and hard to navigate.

We are cautiously optimistic that the extraordinary steps taken by the Federal Reserve Bank will be effective in avoiding a severe economic downturn. The Fed's objective is to make certain that capital markets in general, and the banking system in particular, are functioning properly and providing adequate liquidity to businesses and individuals. The financial system is far more complex today than just a few years ago, making the Fed's job much more difficult. We encourage you to read our Quarterly Economic Update on the Fund's website for a more detailed discussion of current conditions in the housing sector and our thoughts on the economy in general.

Our job remains the same--research each and every credit in the portfolio, and try to construct the best portfolio of securities that will enable the Fund to meet its objectives. While market sentiment is certainly depressed at the moment, we see tremendous long-term value in preferred securities at today's prices.

During periods of unusual market volatility, these letters provide a welcome opportunity to step back and discuss a wide variety of items affecting your Fund. Some of these deserve more attention than space here allows and are covered in greater depth on the Fund's website. Other situations, like the status of our auction preferred stock, are rapidly changing, and we'll post to the website as much up-to-date information as possible.

We may never know the origins of the old curse "may you live in interesting times," but whoever coined it certainly got his wish.

Sincerely,

 /s/ Donald F. Crumrine /s/ Robert M. Ettinger

 Donald F. Crumrine Robert M. Ettinger
 Chairman of the Board President

April 9, 2008

Flaherty & Crumrine/Claymore Total Return Fund Incorporated
PORTFOLIO OVERVIEW
FEBRUARY 29, 2008 (UNAUDITED)

FUND STATISTICS ON 02/29/08

Net Asset Value $ 18.92
Market Price $ 17.50
Discount 7.51%
Yield on Market Price 8.91%
Common Stock Shares Outstanding 9,776,333

MOODY'S RATINGS % OF PORTFOLIO
--------------------------------------------------------------------------------
AA 5.2%
A 15.8%
BBB 52.6%
BB 17.6%
Below "BB" 1.5%
Not Rated 3.8%
--------------------------------------------------------------------------------
Below Investment Grade* 17.3%

* BELOW INVESTMENT GRADE BY BOTH MOODY'S AND S&P.

INDUSTRY CATEGORIES % OF PORTFOLIO

[THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.]

Banking 29%
Utilities 26%
Insurance 20%
Financial Services 8%
Energy 7%
REITs 4%
Other 6%

TOP 10 HOLDINGS BY ISSUER % OF PORTFOLIO
--------------------------------------------------------------------------------
Midamerican Energy 5.4%
Banco Santander 4.3%
Liberty Mutual Group 4.0%
Entergy Louisiana 3.8%
AON Corp 3.1%
Wisconsin Energy 2.8%
Wachovia Corp 2.7%
Merrill Lynch 2.6%
Nexen 2.5%
National City 2.4%

 % OF PORTFOLIO**
--------------------------------------------------------------------------------
Holdings Generating Qualified Dividend Income (QDI) for Individuals 26%
Holdings Generating Income Eligible for the Corporate Dividend
 Received Deduction (DRD) 18%
--------------------------------------------------------------------------------

** THIS DOES NOT REFLECT YEAR-END RESULTS OR ACTUAL TAX CATEGORIZATION OF
 FUND DISTRIBUTIONS. THESE PERCENTAGES CAN, AND DO, CHANGE, PERHAPS
 SIGNIFICANTLY, DEPENDING ON MARKET CONDITIONS. INVESTORS SHOULD CONSULT
 THEIR TAX ADVISOR REGARDING THEIR PERSONAL SITUATION.

Flaherty & Crumrine/Claymore Total Return Fund Incorporated
PORTFOLIO OF INVESTMENTS
FEBRUARY 29, 2008 (UNAUDITED)

SHARES/$ PAR VALUE
--------------- ----------------
PREFERRED SECURITIES -- 79.4%
 BANKING -- 28.7%
------------------------------------------------------------------------------------------------------------------------------------
$ 5,750,000 Astoria Capital Trust I, 9.75% 11/01/29, Series B ....................................... $ 6,131,800
 Banco Santander:
 381,000 6.50% Pfd. ........................................................................... 8,417,738**(1)
 214,920 6.80% Pfd. ........................................................................... 4,949,887**(1)
$ 500,000 Bank of America Corp., 8.00% ............................................................ 518,600*
$ 8,965,000 Capital One Capital III, 7.686% 08/15/36 ................................................ 6,850,156
$ 6,800,000 CBG Florida REIT Corporation, 7.114%, 144A**** .......................................... 5,106,800
 52,000 Citigroup Capital VIII, 6.95% Pfd. 09/15/31 ............................................. 1,246,378
 88,250 Citigroup, Inc., 8.125% Pfd., Series AA ................................................. 2,249,493*
 40,000 Citizens Funding Trust I, 7.50% Pfd. 09/15/66 ........................................... 871,252
 40,000 Cobank, ACB, 7.00% Pfd., 144A**** ....................................................... 2,000,800*
 22,800 Colonial Capital Trust IV, 7.875% Pfd. .................................................. 547,200(2)
$ 6,263,000 Comerica Capital Trust II, 6.576% 02/20/37 .............................................. 4,452,367
 7,000 FBOP Corporation, Adj. Rate Pfd., 144A**** .............................................. 6,545,000*
$ 400,000 First Empire Capital Trust I, 8.234% 02/01/27 ........................................... 416,288
$ 1,900,000 First Hawaiian Capital I, 8.343% 07/01/27, Series B ..................................... 1,983,429(1)
$ 100,000 First Tennessee Capital I, 8.07% 01/06/27, Series A ..................................... 104,179
 2 FT Real Estate Securities Company, 9.50% Pfd., 144A**** ................................. 2,246,330
$ 1,000,000 HBOS PLC, 6.657%, 144A**** .............................................................. 796,400**(1)
$ 855,000 HSBC USA Capital Trust II, 8.38% 05/15/27, 144A**** ..................................... 894,333(1)
$ 662,000 JPMorgan Chase Capital XXIII, Adj. Rate 05/15/47 ........................................ 503,120
 82,000 Keycorp Capital IX, 6.75% Pfd. 12/15/66 ................................................. 1,829,625
 4,995 National City Capital Trust II, 6.625% Pfd. 11/15/36 .................................... 104,271
 40,000 National City Corporation, 9.875% Pfd. .................................................. 1,077,600*
$ 3,000,000 National City Preferred Capital Trust I, 12.00% ......................................... 3,099,300
 151,059 PFGI Capital Corporation, 7.75% Pfd. .................................................... 3,308,192
$ 1,000,000 PNC Preferred Funding Trust III, 8.70%, 144A**** ........................................ 999,900
$ 700,000 Regions Financing Trust II, 6.625% 05/15/47 ............................................. 547,366
 Roslyn Real Estate:
 25 8.95% Pfd., Series C, 144A**** ....................................................... 2,603,401
 10 Adj. Rate Pfd., Series D, 144A**** ................................................... 1,008,125
 33,100 Sovereign Bancorp, 7.30% Pfd., Series C ................................................. 763,369*
 191,525 Sovereign Capital Trust V, 7.75% Pfd. 05/22/36 .......................................... 4,428,537
$ 1,000,000 Sovereign Capital Trust VI, 7.908% 06/13/36 ............................................. 825,500
 U.S. Bancorp, Auction Pass-Through Trust, Cl. B:
 15 Series 2006-5, Variable Rate Pfd., 144A**** .......................................... 7,500*+
 15 Series 2006-6, Variable Rate Pfd., 144A**** .......................................... 7,500*+
$ 670,000 Wachovia Capital Trust V, 7.965% 06/01/27, 144A**** ..................................... 677,236