FLC Flaherty and Crumrine Total Return Fund Inc

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

FORM N-Q

QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS OF REGISTERED
MANAGEMENT INVESTMENT COMPANY

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 Flaherty & Crumrine/Claymore Total Return Fund:

Stating the obvious, we are facing extraordinary and unprecedented times in the financial markets. The events that ultimately culminated in the government's massive financial rescue plan have impacted the market for preferred securities particularly hard. As a result, for the quarter ended August 31, 2008, the Fund's common shareholders experienced a total return on net asset value of -11.0%, subsequent to the quarter-end and through the date of this letter, the net asset value has continued to decline significantly.

Prices on long-term US Treasury bonds rose during the quarter, as investors sought the safety of government bonds despite historically low yields. On the flip side, there were few buyers and abundant sellers of most preferred securities and corporate bonds. A downward cycle for prices ensued, as selling pressure pushed prices lower which in turn led to more selling pressure.

This pattern of selling begetting selling is an effect of severe bear market psychology. In addition, investors and lenders, seeking the safety and security of cash, withhold capital from borrowers. Since the free flow of capital is essential to our economy, and economic growth is a key factor in security valuation, concerns about price declines become self-fulfilling. The bears clearly were in control both during and subsequent to the quarter.

The root cause of the current financial problems remains unresolved-residential real estate markets have yet to stabilize. The speculative component of residential housing has resulted in "bubble and crash" cycles in the past, but the current adjustment is unlike any we can recall. Far too many people wanted to buy homes under the "greater fool" plan and lenders were far too willing to help. The real estate market will eventually return to equilibrium and the dramatic measures taken by the government will help calm the markets. In the meantime we must deal with circumstances at hand.

Since the end of our fiscal quarter events have transpired at a breathtaking pace - particularly relating to the Fund's use of leverage and its dividend. Our website allows for much more frequent communication than our quarterly letters. We have posted updates throughout this financial crisis and we encourage you to continue visiting us at www.fcclaymore.com.

In addition to managing your Fund, we are also shareholders. We understand your concerns about recent events and we are doing our best to respond to them. Nonetheless, our goals remain constant - conduct exhaustive research and construct an investment portfolio that is designed to deliver high current income consistent with the objectives and guidelines of the Fund.

Sincerely,

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

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

October 16, 2008

Flaherty & Crumrine/Claymore Total Return Fund Incorporated

PORTFOLIO OVERVIEW

AUGUST 31, 2008 (UNAUDITED)

FUND STATISTICS ON 8/31/08
--------------------------
Net Asset Value $ 14.84
Market Price $ 13.15
Discount 11.39%
Yield on Market Price 12.46%
Common Stock Shares Outstanding 9,776,333

MOODY'S RATINGS % OF PORTFOLIO
--------------- --------------
AA 5.6%
A 19.2%
BBB 52.0%
BB 17.4%
Below "BB" 0.1%
Not Rated 3.3%
 ----
Below Investment Grade* 12.4%

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

(PIE CHART)

INDUSTRY CATEGORIES % OF PORTFOLIO
------------------- --------------
Banking 33%
Utilities 26%
Insurance 21%
Financial Services 7%
Energy 5%
REITs 3%
Other 5%

TOP 10 HOLDINGS BY ISSUER % OF PORTFOLIO
------------------------- --------------
Midamerican Energy 6.5%
Liberty Mutual Group 4.6%
Banco Santander 4.6%
AON Corp 3.5%
Wachovia Corp 2.8%
Sovereign Bancorp 2.7%
Dominion Resources 2.6%
Merrill Lynch 2.5%
Unum Group 2.5%
Astoria Financial 2.3%

 % OF PORTFOLIO**
 ----------------
Holdings Generating Qualified
 Dividend Income (QDI) for Individuals 30%
Holdings Generating Income Eligible for
 the Corporate Dividend Received
 Deduction (DRD) 24%

Flaherty & Crumrine/Claymore Total Return Fund Incorporated

PORTFOLIO OF INVESTMENTS

AUGUST 31, 2008 (UNAUDITED)

SHARES/$ PAR VALUE
------------ ------------
PREFERRED SECURITIES -- 88.6%
 BANKING -- 32.6%
$ 5,750,000 Astoria Capital Trust I, 9.75% 11/01/29, Series B ........... $ 5,788,525
 Banco Santander:
 366,000 6.50% Pfd. ............................................... 7,331,456**(1)(2)
 196,620 6.80% Pfd. ............................................... 4,215,041**(1)(2)
$ 7,500,000 Capital One Capital III, 7.686% 08/15/36 .................... 5,568,000(1)
$ 10,000,000 CBG Florida REIT Corporation, 7.114%, 144A**** .............. 3,128,000
 Citigroup, Inc.:
 56,975 8.125% Pfd., Series AA ................................... 1,121,695*(1)
 202,800 8.50% Pfd., Series F ..................................... 4,364,256*(1)
 40,000 Citizens Funding Trust I, 7.50% Pfd. 09/15/66 ............... 502,500(1)
 40,000 Cobank, ACB, 7.00% Pfd., 144A**** ........................... 1,314,400*(1)
 7,200 Colonial Capital Trust IV, 7.875% Pfd. 10/01/33 ............. 117,720
$ 7,000,000 Comerica Capital Trust II, 6.576% 02/20/37 .................. 3,984,400(1)
 7,000 FBOP Corporation, Adj. Rate Pfd., 144A**** .................. 3,850,000*
$ 400,000 First Empire Capital Trust I, 8.234% 02/01/27 ............... 371,186(1)
$ 1,900,000 First Hawaiian Capital I, 8.343% 07/01/27, Series B ......... 1,834,640(1)(2)
$ 100,000 First Tennessee Capital I, 8.07% 01/06/27, Series A ......... 63,900(1)
$ 600,000 First Union Capital II, 7.95% 11/15/29 ...................... 559,774(1)
 2 FT Real Estate Securities Company, 9.50% Pfd., 144A**** ..... 1,847,783
$ 1,000,000 HBOS PLC, 6.657%, 144A**** .................................. 628,700**(1)(2)
$ 855,000 HSBC USA Capital Trust II, 8.38% 05/15/27, 144A**** ......... 839,501(1)(2)
 143,750 HSBC USA, Inc., 6.50% Pfd., Series H ........................ 3,249,109*(1)
$ 4,000,000 JPMorgan Chase & Co., 7.90%, Series I ....................... 3,645,200*(1)
 82,000 Keycorp Capital IX, 6.75% Pfd. 12/15/66 ..................... 1,235,125(1)
 54,995 National City Corporation, 9.875% Pfd. ...................... 1,082,302*(1)
$ 2,500,000 National City Preferred Capital Trust I, 12.00% ............. 1,554,250(1)
 151,059 PFGI Capital Corporation, 7.75% Pfd. ........................ 2,382,200(1)
$ 3,500,000 PNC Preferred Funding Trust III, 8.70%, 144A**** ............ 3,355,800(1)
$ 1,000,000 Regions Financing Trust II, 6.625% 05/15/47 ................. 528,800(1)
 93,100 Sovereign Bancorp, 7.30% Pfd., Series C ..................... 1,492,514*(1)
 191,525 Sovereign Capital Trust V, 7.75% Pfd. 05/22/36 .............. 3,503,471
 2,000 Sovereign REIT, 12.00% Pfd., Series A, 144A**** ............. 1,907,720
 U.S. Bancorp, Auction Pass-Through Trust, Cl. B:
 15 Series 2006-5, Variable Rate Pfd., 144A**** .............. 375*+
 15 Series 2006-6, Variable Rate Pfd., 144A**** .............. 375*+

Flaherty & Crumrine/Claymore Total Return Fund Incorporated

PORTFOLIO OF INVESTMENTS (CONTINUED)

AUGUST 31, 2008 (UNAUDITED)

SHARES/$ PAR VALUE
------------ ------------
PREFERRED SECURITIES -- (CONTINUED)
 BANKING -- (CONTINUED)
 Wachovia Corporation:
$ 2,000,000 7.98% .................................................... $ 1,526,600*(1)
 195,000 8.00% Pfd., Series J ..................................... 3,634,800*(1)
 84,900 Wachovia Preferred Funding, 7.25% Pfd., Series A ............ 1,439,267(1)
$ 2,800,000 Webster Capital Trust IV, 7.65% 06/15/37 .................... 1,806,840
$ 2,000,000 Wells Fargo Capital XIII, 7.70% ............................. 1,917,800(1)
 30,000 Wells Fargo Capital XIV, 8.625% Pfd. 09/14/68 ............... 773,400
 ------------
 82,467,425
 ------------
 FINANCIAL SERVICES -- 5.8%
 CIT Group, Inc.:
 13,900 5.189% Pfd., Series B .................................... 640,512*(1)
$ 3,250,000 6.10% 03/15/67 ........................................... 1,322,425(1)
 68,800 6.35% Pfd., Series A ..................................... 966,124*(1)
 23,898 First Republic Bank, 7.25% Pfd. ............................. 479,454(1)
 2,000 First Republic Preferred Capital Corporation,
 10.50% Pfd., 144A****..................................... 2,114,440(1)
 Goldman Sachs:
 29,100 Adj. Rate Pfd., Series D ................................. 452,869*
 28,000 Cabco Trust Capital I, Adj. Rate Pfd. 02/15/34 ........... 393,190(1)
 1,500 STRIPES Custodial Receipts, Pvt .......................... 15*+
$ 3,000,000 Gulf Stream-Compass 2005 Composite Notes, 144A**** .......... 2,203,080
 Lehman Brothers Holdings, Inc.:
 20,000 5.67% Pfd., Series D ..................................... 549,200*(1)
 85,000 7.95% Pfd. ............................................... 1,322,600*(1)
 Merrill Lynch:
 160,000 6.25% Pfd. ............................................... 2,849,600*(1)
 80,000 Adj. Rate Pfd., Series 5 ................................. 945,000*(1)
 20,000 Fixed Income Pass-Through 2007-A, Cl. B, Adj
 Rate Pfd., 144A**** ................................... 200*+
 3,000 Series II STRIPES Custodial Receipts, Pvt ................ 30*+
 11,000 SLM Corporation, Adj. Rate Pfd., Series B ................... 444,125*(1)
 ------------
 14,682,864
 ------------
 INSURANCE -- 15.5%
$ 2,305,000 AMBAC Financial Group, Inc., 6.15% 02/15/37 ................. 814,356
$ 9,511,000 AON Capital Trust A, 8.205% 01/01/27 ........................ 8,906,414(1)
 Arch Capital Group Ltd.:
 28,650 7.875% Pfd., Series B .................................... 663,428**(1)(2)
 47,100 8.00% Pfd., Series A ..................................... 1,080,356**(1)(2)

Flaherty & Crumrine/Claymore Total Return Fund Incorporated

PORTFOLIO OF INVESTMENTS (CONTINUED)

AUGUST 31, 2008 (UNAUDITED)

SHARES/$ PAR VALUE
------------ ------------
PREFERRED SECURITIES -- (CONTINUED)
 INSURANCE -- (CONTINUED)
 Axis Capital Holdings:
 23,030 7.25% Pfd., Series A ..................................... $ 508,099**(1)(2)
 66,600 7.50% Pfd., Series B ..................................... 5,210,118(1)(2)
 160,000 Delphi Financial Group, 7.376% Pfd. 05/15/37 ................ 2,805,008(1)
$ 5,500,000 Everest Re Holdings, 6.60% 05/15/37 ......................... 3,641,000(1)
$ 845,000 Great West Life & Annuity Insurance, 7.153% 05/16/46,
 144A**** ................................................. 701,519
 Liberty Mutual Group:
$ 6,500,000 7.80% 03/15/37, 144A**** ................................. 4,852,250
$ 1,000,000 10.75% 06/15/58, 144A**** ................................ 911,200
$ 1,000,000 MetLife Capital Trust X, 9.25% 04/08/38, 144A**** ........... 1,014,900(1)
 114,000 MetLife, Inc., 6.50% Pfd., Series B ......................... 2,394,285*
$ 300,000 PartnerRe Finance II, 6.44% 12/01/66 ........................ 231,660(1)(2)
 109,000 Scottish Re Group Ltd., 7.25% Pfd. .......................... 231,625**(2)+
$ 3,615,000 USF&G Capital, 8.312% 07/01/46, 144A**** .................... 3,888,493(1)
$ 1,500,000 ZFS Finance USA Trust V, 6.50% 05/09/37, 144A**** ........... 1,294,253(1)
 ------------
 39,148,964
 ------------
 UTILITIES -- 26.4%
 33,700 Baltimore Gas & Electric Company, 6.70% Pfd., Series 1993 ... 3,325,179*
 365,000 Calenergy Capital Trust III, 6.50% Pfd. 09/01/27 ............ 16,366,600(1)
$ 2,375,000 COMED Financing III, 6.35% 03/15/33 ......................... 1,930,637
 115,000 Constellation Energy Group, Inc., 8.625% Pfd. 06/15/63,
 Series A ................................................. 2,884,200(1)
$ 4,500,000 Dominion Resources Capital Trust I, 7.83% 12/01/27 .......... 4,506,709(1)
$ 2,250,000 Dominion Resources, Inc., 7.50% ............................. 2,041,425(1)
 145,000 Entergy Arkansas, Inc., 6.45% Pfd. .......................... 3,581,500*
 50,000 Entergy Louisiana, Inc., 6.95% Pfd. ......................... 4,981,000*
 91,200 FPC Capital I, 7.10% Pfd., Series A ......................... 2,137,500(1)
 FPL Group Capital, Inc.:
$ 750,000 6.35% 10/01/66 ........................................... 636,085(1)
$ 350,000 6.65% 06/15/67 ........................................... 299,996(1)
$ 1,000,000 7.30% 09/01/67, Series D ................................. 920,366(1)
 2,500 Georgia Power Company, 6.50% Pfd., Series 07-A .............. 247,850*(1)
 30,445 Indianapolis Power & Light Company, 5.65% Pfd. .............. 2,632,275*
 Interstate Power & Light Company:
 85,100 7.10% Pfd., Series C ..................................... 2,124,947*(1)
 38,600 8.375% Pfd., Series B .................................... 1,043,744*(1)
$ 5,000,000 PECO Energy Capital Trust IV, 5.75% 06/15/33 ................ 4,047,000(1)
$ 4,250,000 Puget Sound Energy, Inc., 6.974% 06/01/67 ................... 3,563,625
 15,000 Southern California Edison, 6.00% Pfd., Series C ............ 1,374,000*(1)

Flaherty & Crumrine/Claymore Total Return Fund Incorporated

PORTFOLIO OF INVESTMENTS (CONTINUED)

AUGUST 31, 2008 (UNAUDITED)

SHARES/$ PAR VALUE
------------ ------------
PREFERRED SECURITIES -- (CONTINUED)
 UTILITIES -- (CONTINUED)
$ 1,500,000 Southern Union Company, 7.20% 11/01/66 ...................... $ 1,198,050
 5,000 Union Electric Company, $7.64 Pfd. .......................... 488,300*
 5,000 Virginia Electric & Power Company, $6.98 Pfd. .............. 495,500*(1)
$ 4,500,000 Wisconsin Energy Corporation, 6.25% 05/15/67 ................ 3,730,635(1)
 85,137 Wisconsin Power & Light Company, 6.50% Pfd. ................. 2,112,462*(1)
 ------------
 66,669,585
 ------------
 ENERGY -- 3.1%
$ 4,900,000 Enbridge Energy Partners LP, 8.05% 10/01/37 ................. 4,367,659
$ 4,000,000 Enterprise Products Partners, 7.034% 01/15/68 ............... 3,474,812
 ------------
 7,842,471
 ------------
 REAL ESTATE INVESTMENT TRUST (REIT) -- 3.2%
 125,000 Duke Realty Corporation, 8.375% Pfd., Series O .............. 2,955,000(1)
 PS Business Parks, Inc.:
 45,400 6.70% Pfd., Series P ..................................... 845,575
 5,700 6.875% Pfd., Series I .................................... 108,300(1)
 4,500 7.00% Pfd., Series H ..................................... 88,031(1)
 58,120 7.20% Pfd., Series M ..................................... 1,167,852(1)
 26,938 7.375% Pfd., Series O .................................... 542,127(1)
 57,900 7.60% Pfd., Series L ..................................... 1,190,569(1)
 Public Storage, Inc.:
 22,100 6.75% Pfd., Series E ..................................... 463,410(1)
 30,000 6.85% Pfd., Series Y ..................................... 630,600
 ------------
 7,991,464
 ------------
 MISCELLANEOUS INDUSTRIES -- 2.0%
 1,395 Centaur Funding Corporation, 9.08% Pfd. 04/21/20, 144A**** .. 1,351,727
 40,000 Ocean Spray Cranberries, Inc., 6.25% Pfd., 144A**** ......... 3,610,800*
 ------------
 4,962,527
 ------------
 TOTAL PREFERRED SECURITIES
 (Cost $277,910,830) ...................................... 223,765,300
 ------------

Flaherty & Crumrine/Claymore Total Return Fund Incorporated

PORTFOLIO OF INVESTMENTS (CONTINUED)

AUGUST 31, 2008 (UNAUDITED)

SHARES/$ PAR VALUE
------------ ------------
CORPORATE DEBT SECURITIES -- 9.1%
 BANKING -- 0.1%
 15,600 Colonial Bancgroup, Inc., 8.875% Pfd. 03/15/38 .............. $ 285,792
 ------------
 285,792
 ------------
 FINANCIAL SERVICES -- 1.4%
$ 4,726,012 Lehman Brothers, Guaranteed Note, Variable Rate,
 12/16/16, 144A**** ....................................... 3,575,228
 ------------
 3,575,228
 ------------
 INSURANCE -- 5.0%
 15,000 AAG Holding Company, Inc., 7.25% Pfd. ....................... 304,500(1)
$ 7,577,000 Liberty Mutual Insurance, 7.697% 10/15/97, 144A**** ......... 5,967,645(1)
$ 7,000,000 UnumProvident Corporation, 7.25% 03/15/28, Senior Notes ..... 6,313,300(1)
 ------------
 12,585,445
 ------------
 ENERGY -- 1.5%
$ 4,000,000 Noble Energy, Inc., 7.25% 08/01/97 .......................... 3,758,788(1)
 ------------
 3,758,788
 ------------
 MISCELLANEOUS INDUSTRIES -- 1.1%
 16,500 Corp-Backed Trust Certificates, 7.00% 11/15/28,
 Series Sprint ............................................ 277,365(1)
 9,625 Ford Motor Company, 7.50% 06/10/43, Senior Notes ............ 114,177
 Pulte Homes, Inc.:
 25,844 7.375% 06/01/46 .......................................... 493,460
$ 2,160,000 7.875% 06/15/32 .......................................... 1,853,712
 ------------
 2,738,714
 ------------
 TOTAL CORPORATE DEBT SECURITIES
 (Cost $27,527,701) ....................................... 22,943,967
 ------------
OPTION CONTRACTS -- 0.2%
 263 December Put Options on December U.S. Treasury Bond
 Futures, Expiring 11/21/08 ............................... 410,938+
 ------------
 TOTAL OPTION CONTRACTS
 (Cost $459,219) .......................................... 410,938
 ------------

Flaherty & Crumrine/Claymore Total Return Fund Incorporated

PORTFOLIO OF INVESTMENTS (CONTINUED)

AUGUST 31, 2008 (UNAUDITED)

SHARES/$ PAR VALUE
------------ ------------
MONEY MARKET FUND -- 1.0%
 2,551,540 BlackRock Provident Institutional, TempFund ................. $ 2,551,540
 ------------
 TOTAL MONEY MARKET FUND
 (Cost $2,551,540) ........................................ 2,551,540
 ------------
TOTAL INVESTMENTS (Cost $308,449,290***) ................................... 98.9% 249,671,745
OTHER ASSETS AND LIABILITIES (Net) ......................................... 1.1% 2,874,786
 ----- ------------
TOTAL NET INVESTMENTS ...................................................... 100.0%++ $252,546,531
 ----- ------------
LOAN PRINCIPAL BALANCE ..................................................... (68,000,000)
 ------------
AUCTION MARKET PREFERRED STOCK (AMPS) REDEMPTION VALUE ..................... (39,500,000)
 ------------
TOTAL NET ASSETS AVAILABLE TO COMMON STOCK ................................. $145,046,531
 ============

* Securities eligible for the Dividends Received Deduction and distributing Qualified Dividend Income.

** Securities distributing Qualified Dividend Income only.

*** Aggregate cost of securities held.

**** Securities exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration to qualified institutional buyers. These securities have been determined to be liquid under the guidelines established by the Board of Directors.

(1) All or a portion of this security is pledged as collateral for the Fund's loan. The total value of such securities was $156,337,129 at August 31, 2008.

(2) Foreign Issuer.

+ Non-income producing.

++ The percentage shown for each investment category is the total value of that category as a percentage of total net investments.

ABBREVIATIONS:

PFD. -- Preferred Securities

PVT. -- Private Placement Securities

Flaherty & Crumrine/Claymore Total Return Fund Incorporated
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE TO COMMON STOCK(1)
FOR THE PERIOD FROM DECEMBER 1, 2007 THROUGH AUGUST 31, 2008 (UNAUDITED)

 VALUE
 ------------
OPERATIONS:
 Net investment income ............................................................... $ 14,706,468
 Net realized gain/(loss) on investments sold during the period ...................... (10,007,108)
 Change in net unrealized appreciation/depreciation of investments ................... (37,027,800)
 Distributions to AMPS* Shareholders from net investment income, including changes in
 accumulated undeclared distributions ............................................. (3,796,470)
 ------------
 NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS ................................ (36,124,910)

DISTRIBUTIONS:
 Dividends paid from net investment income to Common Stock Shareholders(2) ........... (11,565,402)
 ------------
 TOTAL DISTRIBUTIONS TO COMMON STOCK SHAREHOLDERS .................................... (11,565,402)

FUND SHARE TRANSACTIONS:
 Increase from shares issued under the Dividend Reinvestment
 and Cash Purchase Plan ........................................................... --
 ------------
 NET INCREASE IN NET ASSETS AVAILABLE TO COMMON STOCK
 RESULTING FROM FUND SHARE TRANSACTIONS ........................................... --
 ------------
NET DECREASE IN NET ASSETS AVAILABLE TO COMMON STOCK FOR THE PERIOD .................... $(47,690,312)
 ============
NET ASSETS AVAILABLE TO COMMON STOCK:
 Beginning of period ................................................................. $192,736,843
 Net decrease in net assets during the period ........................................ (47,690,312)
 ------------
 End of period ....................................................................... $145,046,531
 ============

(1) These tables summarize the nine months ended August 31, 2008 and should be read in conjunction with the Fund's audited financial statements, including footnotes, in its Annual Report dated November 30, 2007.

(2) May include income earned, but not paid out, in prior fiscal year.

Flaherty & Crumrine/Claymore Total Return Fund Incorporated
FINANCIAL HIGHLIGHTS(1)
FOR THE PERIOD FROM DECEMBER 1, 2007 THROUGH AUGUST 31, 2008 (UNAUDITED) FOR A COMMON STOCK SHARE OUTSTANDING THROUGHOUT THE PERIOD.

PER SHARE OPERATING PERFORMANCE:
 Net asset value, beginning of period ................................................ $ 19.71
 ------------
INVESTMENT OPERATIONS:
 Net investment income ............................................................... 1.50
 Net realized and unrealized gain/(loss) on investments .............................. (4.80)

DISTRIBUTIONS TO AMPS* SHAREHOLDERS:
 From net investment income .......................................................... (0.39
 ------------
 Total from investment operations .................................................... (3.69)
 ------------
DISTRIBUTIONS TO COMMON STOCK SHAREHOLDERS:
 From net investment income .......................................................... (1.18)
 ------------
 Total distributions to Common Stock Shareholders .................................... (1.18)
 ------------
 Net asset value, end of period ...................................................... $ 14.84
 ============
 Market value, end of period ......................................................... $ 13.15
 ============
 Common Stock shares outstanding, end of period ...................................... 9,776,333
 ============
RATIOS TO AVERAGE NET ASSETS AVAILABLE TO COMMON STOCK SHAREHOLDERS:
 Net investment income+ .............................................................. 8.57%**
 Operating expenses(2) ............................................................... 2.38%**

SUPPLEMENTAL DATA:++
 Portfolio turnover rate ............................................................. 39%***
 Total net investments, end of period (in 000's) ..................................... $ 252,547
 Ratio of operating expenses(2) to total net investments ............................. 1.37%**

(1) These tables summarize the nine months ended August 31, 2008 and should be read in conjunction with the Fund's audited financial statements, including footnotes, in its Annual Report dated November 30, 2007.

(2) Includes interest expense.

* Auction Market Preferred Stock.

** Annualized.

*** Not annualized.

+ The net investment income ratios reflect income net of operating expenses, including interest expense, and payments to AMPS Shareholders.

++ Information presented under heading Supplemental Data includes AMPS and loan principal balance.

Flaherty & Crumrine/Claymore Total Return Fund Incorporated
FINANCIAL HIGHLIGHTS (CONTINUED)
PER SHARE OF COMMON STOCK (UNAUDITED)

 TOTAL DIVIDEND
 DIVIDENDS NET ASSET NYSE REINVESTMENT
 PAID VALUE CLOSING PRICE PRICE(1)
 --------- --------- ------------- ------------
December 31, 2007 ......... $0.1300 $18.98 $16.88 $16.96
January 31, 2008 .......... 0.1300 19.35 17.97 18.09
February 29, 2008 ......... 0.1300 18.92 17.50 17.52
March 31, 2008 ............ 0.1300 17.21 15.69 15.84
April 30, 2008 ............ 0.1300 17.47 15.94 16.10
May 31, 2008 .............. 0.1300 17.12 15.99 15.88
June 30, 2008 ............. 0.1300 16.10 14.98 14.59
July 31, 2008 ............. 0.1365 14.94 13.24 13.27
August 31, 2008 ........... 0.1365 14.84 13.15 13.28

Flaherty & Crumrine/Claymore Total Return Fund Incorporated

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

1. AGGREGATE INFORMATION FOR FEDERAL INCOME TAX PURPOSES

At August 31, 2008 the aggregate cost of securities for federal income tax purposes was $309,296,824, the aggregate gross unrealized appreciation for all securities in which there is an excess of value over tax cost was $2,230,921 and the aggregate gross unrealized depreciation for all securities in which there is an excess of tax cost over value was $61,856,000.

2. ADDITIONAL ACCOUNTING STANDARDS

STATEMENT OF FINANCIAL ACCOUNTING STANDARDS NO. 157 "FAIR VALUE

MEASUREMENTS" ("SFAS 157")

In September 2006, the Financial Accounting Standards Board issued SFAS 157 effective for fiscal years beginning after November 15, 2007. This standard clarifies the definition of fair value for financial reporting, establishes a framework for measuring fair value and requires additional disclosures about the use of fair value measurements. The Fund has adopted SFAS 157 as of December 1, 2007. The three levels of the fair value hierarchy under SFAS 157 are described below:

- Level 1 - quoted prices in active markets for identical securities

- Level 2 - other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.)

- Level 3 - significant unobservable inputs (including the Fund's own assumptions in determining the fair value of investments)

The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. A summary of the inputs used to value the Fund's net assets as of August 31, 2008 is as follows:

 OTHER FINANCIAL
 INSTRUMENTS
 INVESTMENTS (UNREALIZED
 IN SECURITIES APPRECIATION/
VALUATION INPUTS (MARKET VALUE) DEPRECIATION)*
---------------- -------------- ---------------
Level 1 - Quoted Prices - Investments .............. $ 59,224,235 $--
Level 2 - Other Significant Observable Inputs ...... 184,669,202 --
Level 3 - Significant Unobservable Inputs .......... 5,778,308 --
 ------------ ---
TOTAL .............................................. $249,671,745 $--

* Other financial instruments are derivative instruments not reflected in the Schedule of Investments, such as futures, forwards and swaps which are valued at the unrealized appreciation/depreciation on the investment. As of August 31, 2008 the Fund does not have any other financial instruments.

Flaherty & Crumrine/Claymore Total Return Fund Incorporated

NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)

Following is a reconciliation of Level 3 investments for which significant unobservable inputs were used to determine fair value:

 OTHER FINANCIAL
 INSTRUMENTS
 INVESTMENTS (UNREALIZED
 IN SECURITIES APPRECIATION/
 (MARKET VALUE) DEPRECIATION)
 -------------- ---------------
BALANCE AS OF 11/30/07 ............................. $ 6,945,554 $--
Accrued discounts/premiums ......................... -- --
Realized gain/(loss) ............................... -- --
Change in unrealized appreciation/(depreciation) ... (1,167,246) --
Net purchases/(sales) .............................. -- --
Transfers in and/or out of Level 3 ................. -- --
 ----------- ---
BALANCE AS OF 8/31/08 .............................. $ 5,778,308 $--

3. SUBSEQUENT EVENTS

On September 15, 2008, Lehman Brothers Holdings Inc. filed for bankruptcy. As a result, the Fund may not be able to recover the principal invested in securities issued by this entity, and also does not expect to receive income payments on these securities going forward. The value of securities issued by this entity, which were held by the Fund, has been adversely impacted and may decline further. The decline since August 31, 2008 is not reflected in this report.

Subsequent to the reporting period, the market values of certain investments of the Fund have declined significantly and may decline further as a result of the ongoing financial crisis. The market value of the Fund's investments is reflected in the weekly net asset values reported by the Fund.

The Funds are subject to several different asset coverage requirements that arise from the use of leverage by the Fund. The decline in asset values has resulted in the Fund not meeting these asset coverage requirements at various points in time since the end of the fiscal quarter. According to these requirements, the Fund may not declare, set aside, or pay a common stock dividend unless the asset coverage requirements are met. As a result, the Fund delayed the payment of the September common stock dividend until October 6, 2008 when the asset coverage requirements could be met. To meet the requirements and pay the delayed dividend and future dividends, the Fund has been selling assets to raise cash, and has applied much of the proceeds to the reduction of leverage or invested in higher quality short-term securities in anticipation of future reductions in leverage. As of October 16, 2008, the outstanding leverage balance consisted of $39.5 million in auction market preferred stock and $39.5 million in borrowings under the committed financing agreement, a reduction in total leverage balance of $28.5 million since the end of the 3rd fiscal quarter and a reduction of $49.5 million since the end of the 2nd fiscal quarter. The Fund may be adversely impacted by the reduction in leverage. Updated information on the status of these requirements may be found on the Fund website at www.fcclaymore.com.

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(FLAHERTY & CRUMRINE/CLAYMORE LOGO)

TOTAL RETURN FUND

Quarterly Report

August 31, 2008

www.fcclaymore.com

DIRECTORS
Donald F. Crumrine, CFA
Chairman of the Board
David Gale
Morgan Gust
Karen H. Hogan
Robert F. Wulf, CFA

OFFICERS
Donald F. Crumrine, CFA
Chief Executive Officer
Robert M. Ettinger, CFA
President
R. Eric Chadwick, CFA
Chief Financial Officer,
Vice President and Treasurer
Chad C. Conwell
Chief Compliance Officer,
Vice President and Secretary
Bradford S. Stone
Vice President and
Assistant Treasurer
Laurie C. Lodolo
Assistant Compliance Officer,
Assistant Treasurer and
Assistant Secretary

INVESTMENT ADVISER
Flaherty & Crumrine Incorporated
e-mail: flaherty@pfdincome.com

SERVICING AGENT
Claymore Securities, Inc.
1-866-233-4001

QUESTIONS CONCERNING YOUR SHARES OF FLAHERTY & CRUMRINE/CLAYMORE TOTAL RETURN FUND?

- If your shares are held in a Brokerage Account, contact your Broker.

- If you have physical possession of your shares in certificate form, contact the Fund's Transfer Agent --

PNC Global Investment Servicing (U.S.) Inc. 1-800-331-1710

THIS REPORT IS SENT TO SHAREHOLDERS OF FLAHERTY & CRUMRINE/CLAYMORE TOTAL RETURN FUND INCORPORATED FOR THEIR INFORMATION. IT IS NOT A PROSPECTUS, CIRCULAR OR REPRESENTATION INTENDED FOR USE IN THE PURCHASE OR SALE OF SHARES OF THE FUND OR OF ANY SECURITIES MENTIONED IN THIS REPORT.

ITEM 2. CONTROLS AND PROCEDURES.

(a) The registrant's principal executive and principal financial officers, or persons performing similar functions, have concluded that the registrant's disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940, as amended (the "1940 Act") (17 CFR 270.30a-3(c))) are effective, as of a date within 90 days of the filing date of the report that includes the disclosure required by this paragraph, based on their evaluation of these controls and procedures required by Rule 30a-3(b) under the 1940 Act (17 CFR 270.30a-3(b)) and Rules 13a-15(b) or 15d-15(b) under the Securities Exchange Act of 1934, as amended (17 CFR 240.13a-15(b) or 240.15d-15(b)).

(b) There were no changes in the registrant's internal control over financial reporting (as defined in Rule 30a-3(d) under the 1940 Act (17 CFR 270.30a-3(d)) that occurred during the registrant's last fiscal quarter that have materially affected, or are reasonably likely to materially affect, the registrant's internal control over financial reporting.

ITEM 3. EXHIBITS.

Certifications pursuant to Rule 30a-2(a) under the 1940 Act and Section 302 of the Sarbanes-Oxley Act of 2002 are attached hereto.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

(Registrant) FLAHERTY & CRUMRINE/CLAYMORE TOTAL RETURN FUND INCORPORATED

By (Signature and Title)* /S/ DONALD F. CRUMRINE
 -------------------------------------------------------
 Donald F. Crumrine, Director, Chairman of the
 Board and Chief Executive Officer
 (principal executive officer)

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

By (Signature and Title)* /S/ DONALD F. CRUMRINE
 -------------------------------------------------------
 Donald F. Crumrine, Director, Chairman of the
 Board and Chief Executive Officer
 (principal executive officer)

By (Signature and Title)* /S/ R. ERIC CHADWICK
 -------------------------------------------------------
 R. Eric Chadwick, Chief Financial Officer,
 Treasurer and Vice President
 (principal financial officer)

* Print the name and title of each signing officer under his or her signature.

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