Components of FLCs
Total Return on NAV
for the Fiscal Year Ended November 30, 2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months*
|
|
|
One Year
|
|
Total Return on Unleveraged Securities Portfolio
(including principal change and income)
|
|
|
|
9.7
|
%
|
|
|
20.3
|
%
|
Return from Interest Rate Hedging Strategy
|
|
|
|
N/A
|
|
|
|
N/A
|
|
Impact of Leverage (including leverage expense)
|
|
|
|
4.8
|
%
|
|
|
10.7
|
%
|
Expenses (excluding leverage expense)
|
|
|
|
-0.7
|
%
|
|
|
-1.4
|
%
|
* Actual, not annualized.
|
|
|
Total Return on NAV
|
|
|
|
13.8
|
%
|
|
|
29.6
|
%
|
For comparison, the following table displays returns over the same time periods on three indices compiled by Bank of
America Merrill Lynch, reflecting various segments of the preferred market. Because the index returns exclude all expenses and the impact of leverage, they compare most directly to the top line in the Funds performance table above (Total
Return on Unleveraged Securities Portfolio).
Total Returns of Bank of America Merrill Lynch Preferred Securities
Indices*
for Periods Ended November 30, 2012
|
|
|
|
|
|
|
|
|
|
|
Six Months
|
|
|
One Year
|
|
BofA Merrill Lynch 8% Capped DRD Preferred Stock Index
SM
|
|
|
5.7
|
%
|
|
|
12.5
|
%
|
BofA Merrill Lynch 8% Capped Hybrid Preferred Securities Index
SM
|
|
|
4.7
|
%
|
|
|
12.4
|
%
|
BofA Merrill Lynch 8% Capped Corporate U.S. Capital Securities Index
SM
|
|
|
10.1
|
%
|
|
|
19.4
|
%
|
|
*
|
The Bank of America Merrill Lynch 8% Capped DRD Preferred Stock Index
SM
(P8D0)
includes investment grade preferred securities issued by both corporations and government agencies that qualify for the corporate dividend received deduction with issuer concentration capped at a maximum of 8%. The Bank of America Merrill Lynch 8%
Capped Hybrid Preferred Securities Index
SM
(P8HO) includes taxable, fixed-rate, U.S. dollar-denominated investment-grade, preferred securities listed on a U.S. exchange with
issuer concentration capped at 8%. The Bank of America Merrill Lynch 8% Capped Corporate U.S. Capital Securities Index
SM
(C8CT) includes investment grade fixed rate or
fixed-to-floating rate $1,000 par securities that receive some degree of equity credit from the rating agencies or their regulators with issuer concentration capped at a maximum of 8%. All index returns include interest and dividend income, and,
unlike the Funds returns, are unmanaged and do not reflect any expenses.
|
Over the past six-month and one-year
time periods, the Funds (unleveraged) securities portfolio has either beaten or modestly underperformed each of the three indices shown above.
During fiscal 2012, the Funds total return on NAV significantly exceeded the returns on the indices, aided by the Funds use of leverage. While leverage can reduce returns during periods of adverse
market conditions, during the recent fiscal year the Funds use of leverage enhanced both income distributed by the Fund and its total return over the period.
3
Total Return on Market Price of Fund Shares
While our focus is primarily on managing the Funds investment portfolio, our shareholders actual return is comprised of the Funds
monthly dividend payments
plus
changes in its
market price
. During the twelve month period ending November 30, 2012, total return on market price of Fund shares was +22.4%.
Historically, the preferred securities market has experienced price volatility consistent with those of fixed income securities. However, since
mid-2007 it has become clear that preferred security valuations, including both Fund NAV and market price of its shares, can move dramatically when there is volatility in stock prices. The chart below contrasts the relative stability of the
Funds earlier period with the more recent decline and recovery in both its NAV and market price, during and following the Great Recession.
The decline and recovery in their valuations over this period was not unique to preferred securities.
Virtually all fixed-income asset classes, excluding U.S. Treasury securities, experienced some volatility during this period. However, both the market price and NAV of the Fund have recovered sufficiently that long-term shareholders have experienced
returns consistent with those received prior to 2007.
In a more perfect world, the market price of Fund shares and its NAV, as shown in
the above chart, would track more closely. If so, the resulting premium or discount of the Fund, calculated as the difference between these two inputs and expressed as a percentage, would remain relatively close to zero. However, as can be seen from
the chart on page 5, over the life of the Fund this often has not been the case, and since 2010 the market price of Fund shares has typically traded at a premium to NAV. The Fund began fiscal 2012 with its market price at a modest premium to NAV. By
the end of fiscal 2012 this premium had contracted moderately, and, as a result, the total return earned on market price, while still impressive, trailed the total return on NAV shown in the table on page 3.
4
Although divergence between NAV and market price of a closed-end fund is generally driven by
supply/demand imbalances affecting its market price, we can only speculate about why the relationship between the Funds market price and NAV hasnt been closer over time.
Based on a closing price of $20.14 on December 31
st
, the current annualized yield on market price of Fund shares (assuming its new current
monthly distribution of $0.136 does not change) is 8.10%.
Monthly Distributions to Fund Shareholders
The Fund makes monthly distributions of income to shareholders consistent with its primary objective of providing high current income. The Fund
earns its income both by investing its shareholder capital in income-producing securities, such as preferred securities, and employing leverage by borrowing additional money to invest in more income-producing securities.
This use of leverage is important in the Funds strategy for producing high current income. Over time, the cost of leverage tends to be lower
than the yield on the Funds portfolio. The difference between what the Fund earns on its investments and pays on the borrowed money increases income available to common shareholders.
A lot of good things happened in 2012 that added to the success of this strategy and resulted in extra income being available for common
shareholders at year end. For calendar year 2012, total distributions to shareholders (including the special distribution in December) were 4.9% higher than the sum of ordinary monthly distributions during the year. Although interest rates across
the entire yield curve have declined in recent years, the Fund has held securities with coupons above current market levels. Income the Fund was earning continued to benefit from those higher-coupon securities. At the same time, the Funds cost
of leverage continued to move lower (1.09% as of this writing), as it is tied to the level of 3-Month LIBOR. We have also had an opportunity over the past couple of years to adjust the terms of the leverage to be more favorable in both cost and
flexibility.
5
We have written over the past year about the impact of changes in the regulatory environment (e.g.,
Dodd-Frank, Basel III), sustained low levels of interest rates, and the transition in the preferred securities market to more traditional preferred stock (versus trust preferred securities). The Fund has already completed much of the reinvestment
related to Dodd-Frank redemptions of bank trust preferreds, with only about 3.5% of the portfolio remaining in bank trust preferreds that are still subject to early redemption. We do expect issuers to continue to refinance higher-coupon securities,
even beyond bank trust preferreds, given the low absolute level of interest rates.
In determining the new monthly dividend announced in
December, we have looked out over the next year and anticipated necessary reinvestment. We expect that leverage costs will remain low, given our outlook for the economy and guidance from the Federal Reserve. As such, we hope that current monthly
dividends can be sustained through the fiscal year, consistent with our belief that shareholders are better served by stable monthly distributions than by distributions that change from month-to-month. As we have cautioned before, however, it is
important not to confuse stable dividend with constant dividend. When it comes to distributions, there is no such thing as forever.
The two primary factors that could alter this course are greater-than-expected declines in top-line portfolio income, and increases in the cost of leverage from these historically-low levels. Both are probably
inevitable, but we believe they are not likely to happen at exactly the same time and, in both cases, the pace should be gradual. We also believe preferred securities offer attractive total returns currently and that the Fund will continue to offer
a competitive distribution rate.
Preferred Market Conditions
Conditions in the market for preferred securities
1
are very positive. In our view the market is healthier than any time in recent memory. Slow economic growth in the U.S.,
uncertainty about the fiscal cliff, and the ongoing debt problems in Europe, have steered more investors to preferred securities. The sector offers some of the highest yields in the fixed income universe, and recently prices have been much less
volatile than for common stocks.
Two important trends,
refinancing of high cost issues
and
par redemptions of bank trust
preferred securities
continue to impact the market. These have been in motion for several years and we have discussed them often in the past.
Briefly, by
refinancing
, issuers take advantage of the current low interest-rate environment to redeem outstanding preferred securities, replacing them with less expensive new issues. Of course, for
investors the impact is a decline in investment income.
The pace of
par redemptions of bank trust preferred securities
is winding
down. Made possible by provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act, these redemptions have resulted in a meaningful reduction in the size of the market.
In 2012, we saw $68 billion of preferred securities redeemed
2
by issuers (this does not include purchases made by issuers in the open market, a harder number to calculate). Of this amount,
$44 billion or 64% is attributable to regulatory change. The balance ($24 billion or 36%) were calls made to remove higher coupon issues and may or may not have been replaced.
1
|
For our purposes, the market is defined to include deeply subordinated debt and preferred stock denominated in US dollars.
|
2
|
A portion of these were announced in 2012 to be redeemed in 2013.
|
6
Investors eagerly bought most new issues throughout the year. A total of $57 billion from 127 issuers
was added to the market in 2012. The numbers breakdown as follows:
|
|
|
|
|
Bank
|
|
|
31%
|
|
Insurance
|
|
|
22%
|
|
REIT
|
|
|
20%
|
|
Finance
|
|
|
14%
|
|
Miscellaneous
|
|
|
5%
|
|
Utility
|
|
|
5%
|
|
Communications
|
|
|
2%
|
|
Energy
|
|
|
1%
|
|
|
|
|
|
|
Retail
|
|
|
71%
|
|
Institutional
|
|
|
29%
|
|
|
|
Domestic
|
|
|
85%
|
|
Foreign
|
|
|
15%
|
|
|
|
QDI Eligible
|
|
|
45%
|
|
Fully Taxable
|
|
|
55%
|
|
A vibrant market for new issues
helps overall market liquidity, a key barometer of market health. The number of market participants, including market makers and end-users, appears to be growing. We expect the level of activity in preferred markets to remain strong in 2013 to the
benefit of almost everyone in the space.
Preferreds Performance in Periods of Market Stress
After taking a shellacking during the financial crisis, preferred securities have posted stellar returns over the past three years, pushing yields
on most new issues down to a 5-6% range. What should investors expect going forward?
Investors need to remember that preferred
securities have characteristics of both equity and debt securities. In times of economic or financial stress, preferreds equity-like characteristics come to the fore. Issuers can deferor for noncumulative issues, skipdividends. In
addition, prices of preferred securities can drop sharply, reflecting higher probability of issuer default or regulatory seizure during a period of stress. Regulatory changes have made preferred securities more explicitly loss-absorbing and
equity-like. In short, investors should expect that in the future preferred securities will absorb losses if and when issuing companies come under significant financial strain. At the same time, preferred securities pay fixed- or floating-rate
dividends that do not increase as an issuers earnings or capital rise (although they improve prospects that an issuer will make full and timely payment of those dividends). This means that, when held to redemption, investors earn, at most, the
dividend yield on that security, plus or minus the difference between the purchase and redemption price of the issue; upside is limited. Of course, active management of preferred securities can add (or subtract) return over time, but when the market
is trading near par value, as it is now, dividend yield is the primary driver of prospective returns.
Applying those notions to
preferred securities in todays market, we anticipate dividend plus a bit returns over the next year or two. The U.S. economy is growing moderately, inflation is low, and monetary policy is accommodative; interest rates are likely
to remain low. Credit quality continues to improve; problem loans are falling, housing is recovering, and household balance sheets are improving. Europe is making tentative progress toward resolving its sovereign debt crisis. Banking regulation is
driving higher common equity capital and lower risk. Add it up, and we foresee low risk of a sharp, widespread drop in preferred securities prices. Meanwhile, preferred securities yields remain attractive relative to other fixed-income
alternatives, and there is reason for their prices to move modestly higher. We do not anticipate a repeat of recent double-digit returns, simply because starting yields are lower and the market is no longer trading at a discount to par.
7
In a low-return world, investors should welcome the yields offered by preferred securities today. But
investors need to understand the downside risks presented by preferreds equity-like features, even if those risks appear remote for now.
Changes to Fund Industry Concentration Policy
On April 19
, 2012 Fund shareholders
approved a change in Fund concentration policy so that under normal market conditions it will invest at least 25% of its total assets in the financial sector. Formerly, under normal conditions the Fund invested at least 25% of its total assets in
the utilities industry and at least 25% of its total assets in the banking industry. The change was recommended because utility issues now comprise a much smaller part of the preferred universe, and financials a much larger part, than when the Fund
was formed.
The new concentration policy requires the Fund to invest, under normal market conditions, at least 25% of its total assets
in the financial sector, which for this purpose is comprised of the banking, thrifts & mortgage finance, diversified financial services, finance, consumer finance, capital markets, asset management & custody, investment
banking & brokerage, insurance, insurance brokers and real estate investment trust (REIT) industries. From time to time, the Fund may have 25% or more of its total assets invested in any one of these industries.
The Fund now has flexibility to go above or below 25% in any one type of company in the financial sector as long as at least 25% of its total assets
is invested in the financial sector in aggregate. For example, the Fund could have more than 25% of its total assets in insurance companies, while at other times it could have that portion invested in banks. At all times, though, the Fund would have
at least 25% of its total assets invested in the financial sector.
Status of the Funds Hedging Strategy
The Fund suspended its interest rate hedging program as the financial crisis intensified in the autumn of 2008. There were three principal reasons
why the Fund stopped hedging the long-term interest-rate risk of its portfolio. First, the relationship between preferred securities prices and Fund hedging instruments (Treasury bond futures, interest rate swaps, or options on both) broke
down during the financial crisis, and hedging lost its effectiveness. Second, the cost of hedging rose dramatically, as the yield curve steepened, volatility increased, and options prices rose. Finally, preferred securities became exceptionally
cheaper and were likely to offer attractive returns to shareholders even if long-term Treasury yields increased. We believed hedging simply would not work under these market conditions.
Today, the correlation between preferred securities and our hedge instruments has improved, but it remains both weaker and significantly less stable
than historic norms. We will continue to evaluate market conditions and the composition of the Funds portfolio, and we may reinstate the hedge if we judge that conditions warrant it.
Federal Tax Advantages of 2012 Calendar Year Distributions
In 2012, the Fund passed on a
portion of its income to individuals in the form of qualified dividend income, or QDI. Under federal law for 2012, QDI was taxed at a minimum of 0% and a maximum 15% rate instead of an individuals ordinary income tax rate.
In calendar year 2012, approximately 41.5% of distributions made by the Fund was eligible for QDI treatment. For an individual in the 28% marginal
tax bracket, this means that the Funds total distributions will only be taxed at a blended 22.6% rate versus the 28% rate which would apply to distributions by a fund
8
containing traditional corporate bonds. This tax advantage means that, all other things being equal, such an individual who held 100 shares of Common Stock of the Fund for the calendar year would
have had to receive approximately $179.56 in distributions from a fully-taxable bond fund to net the same after-tax amount as the $167.05 distributions paid by the Fund.
For detailed information about tax treatment of particular distributions received from the Fund, please see the Form 1099 you receive from either the Fund or your broker.
Corporate shareholders also receive a federal tax benefit from the 16% distributions that were eligible for the inter-corporate dividends received
deduction, or DRD.
It is important to remember that composition of the portfolio and income distributions can change from one year to
the next, and that the QDI or DRD portions of 2013s distributions may not be the same (or even similar) to 2012. In addition, the maximum QDI tax rate is increasing in 2013 from 15% to 20% for certain high-income individuals.
9
Flaherty & Crumrine/Claymore Total Return Fund Incorporated
PORTFOLIO OVERVIEW
November 30, 2012 (Unaudited)
|
|
|
|
|
Fund Statistics
|
|
|
|
|
|
Net Asset Value
|
|
$
|
20.19
|
|
|
|
Market Price
|
|
$
|
20.24
|
|
|
|
Premium
|
|
|
0.25
|
%
|
|
|
Yield on Market Price
|
|
|
8.27
|
%
|
|
|
Common Stock Shares Outstanding
|
|
|
9,875,198
|
|
|
|
|
|
|
Moodys Ratings
|
|
% of Net Assets
|
|
|
|
A
|
|
|
1.4%
|
|
|
|
BBB
|
|
|
60.4%
|
|
|
|
BB
|
|
|
29.8%
|
|
|
|
Below BB
|
|
|
3.8%
|
|
|
|
Not Rated*
|
|
|
3.0%
|
|
|
|
Below Investment Grade**
|
|
|
22.8%
|
|
*
|
Does not include net other assets and liabilities of 1.6%
|
**
|
Below investment grade by all of Moodys, S&P, and Fitch.
|
|
|
|
Industry Categories
|
|
% of Net Assets
|
|
|
|
|
|
Top 10 Holdings by Issuer
|
|
% of Net Assets
|
|
|
|
Liberty Mutual Group
|
|
|
5.3%
|
|
|
|
MetLife
|
|
|
4.1%
|
|
|
|
Banco Santander, S.A.
|
|
|
4.0%
|
|
|
|
Goldman Sachs Group
|
|
|
3.9%
|
|
|
|
HSBC PLC
|
|
|
3.6%
|
|
|
|
Barclays Bank PLC
|
|
|
3.1%
|
|
|
|
Unum Group
|
|
|
2.8%
|
|
|
|
Georgia Power
|
|
|
2.7%
|
|
|
|
Enbridge Energy Partners
|
|
|
2.7%
|
|
|
|
XL Group PLC
|
|
|
2.5%
|
|
|
|
|
|
|
% of Net Assets***
|
|
|
|
Holdings Generating Qualified Dividend Income (QDI) for Individuals
|
|
|
39%
|
|
|
|
Holdings Generating Income Eligible for the Corporate Dividends Received Deduction (DRD)
|
|
|
23%
|
|
***
|
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. See accompanying notes to financial statements for the tax characterization of 2012 distributions.
|
|
Net Assets includes assets attributable to the use of leverage.
|
10
Flaherty & Crumrine/Claymore Total Return Fund Incorporated
PORTFOLIO OF INVESTMENTS
November 30, 2012
|
|
|
|
|
|
|
|
|
|
|
Shares/$ Par
|
|
|
|
|
Value
|
|
|
|
|
Preferred Securities 85.4%
|
|
|
|
|
|
|
|
|
|
|
Banking 31.6%
|
|
|
|
|
|
|
|
|
|
|
Astoria Financial:
|
|
|
|
|
|
|
$
|
4,850,000
|
|
|
Astoria Capital Trust I, 9.75% 11/01/29, Series B
|
|
$
|
5,044,849
|
(1)(2)
|
|
|
|
|
|
|
Banco Bilbao Vizcaya Argentaria, S.A.:
|
|
|
|
|
|
|
$
|
2,050,000
|
|
|
BBVA International Preferred, 5.919%
|
|
|
1,558,000
|
**
(1)(2)(3)
|
|
|
|
|
|
|
Banco Santander, S.A.:
|
|
|
|
|
|
|
|
439,755
|
|
|
Banco Santander, 10.50% Pfd., Series 10
|
|
|
12,093,263
|
**
(1)(3)
|
|
|
|
|
|
|
Bank of America:
|
|
|
|
|
|
|
|
108,000
|
|
|
Bank of America Corporation, 8.625% Pfd.
|
|
|
2,760,750
|
*
|
|
|
|
25,000
|
|
|
Countrywide Capital V, 7.00% Pfd. 11/01/36
|
|
|
628,908
|
|
|
|
|
|
|
|
Barclays Bank PLC:
|
|
|
|
|
|
|
$
|
3,600,000
|
|
|
Barclays Bank PLC, 6.278%
|
|
|
3,311,402
|
**
(1)(3)
|
|
|
|
81,750
|
|
|
Barclays Bank PLC, 7.10% Pfd.
|
|
|
2,050,290
|
**
(3)
|
|
|
|
8,800
|
|
|
Barclays Bank PLC, 7.75% Pfd., Series 4
|
|
|
221,760
|
**
(3)
|
|
|
|
150,000
|
|
|
Barclays Bank PLC, 8.125% Pfd., Series 5
|
|
|
3,835,500
|
**
(1)(3)
|
|
|
|
|
|
|
BB&T Corp:
|
|
|
|
|
|
|
|
20,500
|
|
|
BB&T Corporation, 5.625% Pfd., Series E
|
|
|
521,725
|
*
(1)
|
|
|
|
|
|
|
BNP Paribas:
|
|
|
|
|
|
|
$
|
3,775,000
|
|
|
BNP Paribas, 7.195%, 144A****
|
|
|
3,770,281
|
**
(1)(2)(3)
|
|
|
|
|
|
|
Capital One Financial:
|
|
|
|
|
|
|
$
|
5,000
|
|
|
Capital One Capital III, 7.686% 08/15/36
|
|
|
5,043
|
(1)(2)
|
|
|
$
|
500,000
|
|
|
Capital One Capital V, 10.25% 08/15/39
|
|
|
505,000
|
(1)
|
|
|
$
|
393,000
|
|
|
Capital One Capital VI, 8.875% 05/15/40
|
|
|
397,127
|
(1)(2)
|
|
|
|
|
|
|
Citigroup:
|
|
|
|
|
|
|
|
20,000
|
|
|
Citigroup Capital VII, 7.125% Pfd. 07/31/31
|
|
|
506,876
|
|
|
|
|
83,300
|
|
|
Citigroup Capital XIII, 7.875% Pfd. 10/30/40
|
|
|
2,337,606
|
(1)
|
|
|
|
|
|
|
CoBank ACB:
|
|
|
|
|
|
|
|
25,000
|
|
|
CoBank ACB, 6.25% Pfd., 144A****
|
|
|
2,553,125
|
*
|
|
|
|
|
|
|
Colonial BancGroup:
|
|
|
|
|
|
|
$
|
10,000,000
|
|
|
Colonial BancGroup, 7.114%, 144A****
|
|
|
15,000
|
(4)(5)
|
|
|
|
|
|
|
FBOP Corp:
|
|
|
|
|
|
|
|
7,000
|
|
|
FBOP Corporation, Adj. Rate Pfd., 144A****
|
|
|
3,500
|
*
(4)(5)
|
|
|
|
|
|
|
Fifth Third Bancorp:
|
|
|
|
|
|
|
$
|
2,150,000
|
|
|
Fifth Third Capital Trust IV, 6.50% 04/15/37
|
|
|
2,163,438
|
(1)(2)
|
|
|
|
|
|
|
First Horizon:
|
|
|
|
|
|
|
|
875
|
|
|
First Tennessee Bank, Adj. Rate Pfd., 3.75%
(6)
, 144A****
|
|
|
632,188
|
*
|
|
|
|
3
|
|
|
FT Real Estate Securities Company, 9.50% Pfd., 144A****
|
|
|
3,301,875
|
|
|
|
|
|
|
|
First Niagara Financial Group:
|
|
|
|
|
|
|
|
140,750
|
|
|
First Niagara Financial Group, Inc., 8.625% Pfd.
|
|
|
4,174,124
|
*
(1)
|
|
|
The accompanying
notes are an integral part of the financial statements.
11
Flaherty & Crumrine/Claymore Total Return Fund Incorporated
PORTFOLIO OF INVESTMENTS (Continued)
November 30,
2012
|
|
|
|
|
|
|
|
|
|
|
Shares/$ Par
|
|
|
|
|
Value
|
|
|
|
|
Preferred Securities (Continued)
|
|
|
|
|
|
|
|
|
|
|
Banking (Continued)
|
|
|
|
|
|
|
|
|
|
|
Goldman Sachs Group:
|
|
|
|
|
|
|
$
|
4,451,000
|
|
|
Goldman Sachs, Capital I, 6.345% 02/15/34
|
|
$
|
4,598,065
|
(1)(2)
|
|
|
|
|
|
|
HSBC PLC:
|
|
|
|
|
|
|
$
|
2,000,000
|
|
|
HSBC Capital Funding LP, 10.176%, 144A****
|
|
|
2,740,000
|
(1)(3)
|
|
|
|
172,000
|
|
|
HSBC Holdings PLC, 8.00% Pfd., Series 2
|
|
|
4,771,710
|
**
(1)(3)
|
|
|
$
|
200,000
|
|
|
HSBC USA Capital Trust I, 7.808% 12/15/26, 144A****
|
|
|
203,750
|
|
|
|
$
|
275,000
|
|
|
HSBC USA Capital Trust II, 8.38% 05/15/27, 144A****
|
|
|
277,883
|
(1)
|
|
|
|
19,109
|
|
|
HSBC USA, Inc., 6.50% Pfd., Series H
|
|
|
486,683
|
*
(1)
|
|
|
|
|
|
|
ING Groep NV:
|
|
|
|
|
|
|
|
50,000
|
|
|
ING Groep NV, 7.05% Pfd.
|
|
|
1,252,075
|
**
(3)
|
|
|
|
31,425
|
|
|
ING Groep NV, 7.20% Pfd.
|
|
|
788,846
|
**
(3)
|
|
|
|
30,000
|
|
|
ING Groep NV, 7.375% Pfd.
|
|
|
758,400
|
**
(3)
|
|
|
|
9,078
|
|
|
ING Groep NV, 8.50% Pfd.
|
|
|
233,849
|
**
(3)
|
|
|
|
|
|
|
JPMorgan Chase:
|
|
|
|
|
|
|
|
13,800
|
|
|
JPMorgan Chase & Company, 5.50% Pfd.
|
|
|
344,310
|
*
|
|
|
$
|
5,880,000
|
|
|
JPMorgan Chase & Company, 7.90%, Series 1
|
|
|
6,666,385
|
*
(1)
|
|
|
|
|
|
|
KeyCorp:
|
|
|
|
|
|
|
|
1,250
|
|
|
KeyCorp, 7.75% Pfd., Series A
|
|
|
155,313
|
*
|
|
|
|
|
|
|
Lloyds Banking Group PLC:
|
|
|
|
|
|
|
$
|
1,000,000
|
|
|
Lloyds Banking Group PLC, 6.657%, 144A****
|
|
|
847,500
|
**
(3)
|
|
|
|
|
|
|
Morgan Stanley:
|
|
|
|
|
|
|
|
11,250
|
|
|
Morgan Stanley Capital Trust VI, 6.60% Pfd. 02/01/46
|
|
|
283,008
|
|
|
|
|
7,500
|
|
|
Morgan Stanley Capital Trust VII, 6.60% Pfd.
|
|
|
188,250
|
|
|
|
|
|
|
|
PNC Financial Services:
|
|
|
|
|
|
|
|
17,600
|
|
|
PNC Financial Services, 6.125% Pfd., Series P
|
|
|
484,378
|
*
|
|
|
|
39,995
|
|
|
PNC Financial Services, 9.875% Pfd., Series L
|
|
|
1,024,732
|
*
(1)
|
|
|
$
|
1,000,000
|
|
|
PNC Preferred Funding Trust III, 8.70%, 144A****
|
|
|
1,012,456
|
(1)(2)
|
|
|
|
|
|
|
Sovereign Bancorp:
|
|
|
|
|
|
|
|
3,000
|
|
|
Sovereign REIT, 12.00% Pfd., Series A, 144A****
|
|
|
3,614,070
|
|
|
|
|
|
|
|
Wells Fargo:
|
|
|
|
|
|
|
$
|
600,000
|
|
|
First Union Capital II, 7.95% 11/15/29
|
|
|
713,713
|
(1)
|
|
|
|
3,015
|
|
|
Wells Fargo & Company, 7.50% Pfd., Series L
|
|
|
3,728,048
|
*
(1)
|
|
|
|
80,000
|
|
|
Wells Fargo & Company, 8.00% Pfd., Series J
|
|
|
2,377,720
|
*
|
|
|
|
|
|
|
Zions Bancorporation:
|
|
|
|
|
|
|
|
125,000
|
|
|
Zions Bancorporation, 7.90% Pfd., Series F
|
|
|
3,588,750
|
*
|
|
|
|
45,000
|
|
|
Zions Bancorporation, 9.50% Pfd., Series C
|
|
|
1,172,245
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
94,703,769
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying
notes are an integral part of the financial statements.
12
Flaherty & Crumrine/Claymore Total Return Fund Incorporated
PORTFOLIO OF INVESTMENTS
(Continued)
November 30, 2012
|
|
|
|
|
|
|
|
|
|
|
Shares/$ Par
|
|
|
|
|
Value
|
|
|
|
|
Preferred Securities (Continued)
|
|
|
|
|
|
|
|
|
|
|
Financial Services 2.4%
|
|
|
|
|
|
|
|
|
|
|
Ameriprise Financial:
|
|
|
|
|
|
|
$
|
250,000
|
|
|
Ameriprise Financial, Inc., 7.518% 06/01/66
|
|
$
|
276,875
|
|
|
|
|
|
|
|
Credit Suisse Group:
|
|
|
|
|
|
|
$
|
2,180,000
|
|
|
Claudius, Ltd. - Credit Suisse AG, 7.875%, Series B, 144A****
|
|
|
2,340,775
|
(3)
|
|
|
|
|
|
|
Gulf Stream-Compass CLO:
|
|
|
|
|
|
|
$
|
3,000,000
|
|
|
Gulf Stream-Compass CLO 2005 Composite Notes, 144A****
|
|
|
2,151,930
|
(4)(5)
|
|
|
|
|
|
|
HSBC PLC:
|
|
|
|
|
|
|
|
94,897
|
|
|
HSBC Finance Corporation, 6.36% Pfd., Series B
|
|
|
2,369,464
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,139,044
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Insurance 23.7%
|
|
|
|
|
|
|
|
|
|
|
Ace Ltd.:
|
|
|
|
|
|
|
$
|
1,550,000
|
|
|
Ace Capital Trust II, 9.70% 04/01/30
|
|
|
2,212,625
|
(1)(2)(3)
|
|
|
|
|
|
|
Aon Corporation:
|
|
|
|
|
|
|
$
|
1,875,000
|
|
|
AON Corp, 8.205% 01/01/27
|
|
|
2,382,786
|
|
|
|
|
|
|
|
Arch Capital Group:
|
|
|
|
|
|
|
|
26,512
|
|
|
Arch Capital Group, Ltd., 6.75% Pfd., Series C
|
|
|
703,403
|
**
(1)(3)
|
|
|
|
|
|
|
AXA SA:
|
|
|
|
|
|
|
$
|
1,316,000
|
|
|
AXA SA, 6.379%, 144A****
|
|
|
1,246,910
|
**
(1)(2)(3)
|
|
|
|
|
|
|
Axis Capital:
|
|
|
|
|
|
|
|
271,100
|
|
|
Axis Capital Holdings, 6.875% Pfd., Series C
|
|
|
7,374,327
|
**
(1)(2)(3)
|
|
|
|
|
|
|
Delphi Financial:
|
|
|
|
|
|
|
|
160,000
|
|
|
Delphi Financial Group, 7.376% Pfd. 05/15/37
|
|
|
4,000,000
|
(1)(2)
|
|
|
|
|
|
|
Endurance Specialty Holdings:
|
|
|
|
|
|
|
|
20,000
|
|
|
Endurance Specialty Holdings, 7.50% Pfd.
|
|
|
532,500
|
**
(3)
|
|
|
|
|
|
|
Everest Re Group:
|
|
|
|
|
|
|
$
|
6,314,000
|
|
|
Everest Re Holdings, 6.60% 05/15/37
|
|
|
6,437,123
|
(1)(2)
|
|
|
|
|
|
|
Liberty Mutual Group:
|
|
|
|
|
|
|
$
|
8,300,000
|
|
|
Liberty Mutual Group, 10.75% 06/15/58, 144A****
|
|
|
12,408,500
|
(1)
|
|
|
|
|
|
|
Lincoln National Corp:
|
|
|
|
|
|
|
$
|
260,000
|
|
|
Lincoln National Corporation, 7.00% 05/17/66
|
|
|
263,900
|
|
|
|
|
|
|
|
MetLife:
|
|
|
|
|
|
|
$
|
888,000
|
|
|
MetLife Capital Trust IV, 7.875% 12/15/37, 144A****
|
|
|
1,092,240
|
(1)
|
|
|
$
|
5,335,000
|
|
|
MetLife Capital Trust X, 9.25% 04/08/38, 144A****
|
|
|
7,388,975
|
|
|
|
$
|
2,555,000
|
|
|
MetLife, Inc., 10.75% 08/01/39
|
|
|
3,925,119
|
(1)(2)
|
|
|
|
|
|
|
PartnerRe Ltd.:
|
|
|
|
|
|
|
|
31,000
|
|
|
PartnerRe Ltd., 7.250% Pfd., Series E
|
|
|
831,730
|
**
(3)
|
|
|
The accompanying
notes are an integral part of the financial statements.
13
Flaherty & Crumrine/Claymore Total Return Fund Incorporated
PORTFOLIO OF INVESTMENTS (Continued)
November 30,
2012
|
|
|
|
|
|
|
|
|
|
|
Shares/$ Par
|
|
|
|
|
Value
|
|
|
|
|
Preferred Securities (Continued)
|
|
|
|
|
|
|
|
|
|
|
Insurance (Continued)
|
|
|
|
|
|
|
|
|
|
|
Principal Financial:
|
|
|
|
|
|
|
|
10,500
|
|
|
Principal Financial Group, 5.563% Pfd., Series A
|
|
$
|
1,035,235
|
*
|
|
|
|
75,000
|
|
|
Principal Financial Group, 6.518% Pfd., Series B
|
|
|
2,008,598
|
*
(1)
|
|
|
|
|
|
|
Prudential Financial:
|
|
|
|
|
|
|
$
|
1,500,000
|
|
|
Prudential Financial Inc., 5.625% 06/15/43
|
|
|
1,511,250
|
(1)
|
|
|
|
|
|
|
QBE Capital
Funding
(1)
:
|
|
|
|
|
|
|
$
|
1,400,000
|
|
|
QBE Capital Funding III Ltd., 7.25% 05/24/41, 144A****
|
|
|
1,445,189
|
(1)(3)
|
|
|
|
|
|
|
Renaissancere Holdings:
|
|
|
|
|
|
|
|
15,000
|
|
|
Renaissancere Holdings Ltd, 6.60% Pfd.
|
|
|
377,100
|
**
(3)
|
|
|
|
|
|
|
StanCorp Financial Group:
|
|
|
|
|
|
|
$
|
2,365,000
|
|
|
StanCorp Financial Group, 6.90% 06/01/67
|
|
|
2,353,175
|
(1)
|
|
|
|
|
|
|
The Travelers Companies:
|
|
|
|
|
|
|
$
|
3,184,800
|
|
|
USF&G Capital, 8.312% 07/01/46, 144A****
|
|
|
4,068,990
|
(1)(2)
|
|
|
|
|
|
|
XL Group PLC:
|
|
|
|
|
|
|
$
|
8,250,000
|
|
|
XL Capital Ltd., 6.50%, Series E
|
|
|
7,515,750
|
(1)(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
71,115,425
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Utilities 19.7%
|
|
|
|
|
|
|
|
|
|
|
Alabama Power:
|
|
|
|
|
|
|
|
6,050
|
|
|
Alabama Power Company, 6.45% Pfd.
|
|
|
174,694
|
*
(1)
|
|
|
|
|
|
|
Baltimore Gas & Electric:
|
|
|
|
|
|
|
|
33,700
|
|
|
Baltimore Gas & Electric Company, 6.70% Pfd., Series 1993
|
|
|
3,441,613
|
*
(1)
|
|
|
|
|
|
|
Commonwealth Edison:
|
|
|
|
|
|
|
$
|
3,160,000
|
|
|
COMED Financing III, 6.35% 03/15/33
|
|
|
3,349,600
|
(1)(2)
|
|
|
|
|
|
|
Constellation Energy:
|
|
|
|
|
|
|
|
20,170
|
|
|
Constellation Energy Group, 8.625% Pfd. 06/15/63, Series A
|
|
|
532,488
|
(1)
|
|
|
|
|
|
|
Dominion Resources:
|
|
|
|
|
|
|
$
|
2,500,000
|
|
|
Dominion Resources Capital Trust I, 7.83% 12/01/27
|
|
|
2,527,318
|
(1)(2)
|
|
|
$
|
3,500,000
|
|
|
Dominion Resources, Inc., 7.50% 06/30/66
|
|
|
3,888,066
|
(1)(2)
|
|
|
|
|
|
|
Entergy Arkansas:
|
|
|
|
|
|
|
|
83,000
|
|
|
Entergy Arkansas, Inc., 6.45% Pfd.
|
|
|
2,100,938
|
*
(1)
|
|
|
|
|
|
|
Entergy Louisiana:
|
|
|
|
|
|
|
|
59,850
|
|
|
Entergy Louisiana, Inc., 6.95% Pfd.
|
|
|
5,999,963
|
*
(1)
|
|
|
|
|
|
|
Georgia Power:
|
|
|
|
|
|
|
|
70,791
|
|
|
Georgia Power Company, 6.50% Pfd., Series 2007A
|
|
|
8,034,779
|
*
(1)
|
|
|
|
|
|
|
Indianapolis Power & Light:
|
|
|
|
|
|
|
|
17,800
|
|
|
Indianapolis Power & Light Company, 5.65% Pfd.
|
|
|
1,787,788
|
*
(1)
|
|
|
|
|
|
|
Interstate Power & Light:
|
|
|
|
|
|
|
|
94,721
|
|
|
Interstate Power & Light Company, 8.375% Pfd., Series B
|
|
|
2,459,791
|
*
(1)
|
|
|
The accompanying
notes are an integral part of the financial statements.
14
Flaherty & Crumrine/Claymore Total Return Fund Incorporated
PORTFOLIO OF INVESTMENTS
(Continued)
November 30, 2012
|
|
|
|
|
|
|
|
|
|
|
Shares/$ Par
|
|
|
|
|
Value
|
|
|
|
|
Preferred Securities (Continued)
|
|
|
|
|
|
|
|
|
|
|
Utilities (Continued)
|
|
|
|
|
|
|
|
|
|
|
Nextera Energy:
|
|
|
|
|
|
|
$
|
4,197,000
|
|
|
FPL Group Capital, Inc., 6.65% 06/15/67
|
|
$
|
4,518,293
|
(1)(2)
|
|
|
$
|
1,975,000
|
|
|
FPL Group Capital, Inc., 7.30% 09/01/67, Series D
|
|
|
2,194,563
|
(1)(2)
|
|
|
|
|
|
|
PECO Energy:
|
|
|
|
|
|
|
$
|
3,600,000
|
|
|
PECO Energy Capital Trust IV, 5.75% 06/15/33
|
|
|
3,610,786
|
(1)(2)
|
|
|
|
|
|
|
PPL Corp:
|
|
|
|
|
|
|
$
|
3,700,000
|
|
|
PPL Capital Funding, 6.70% 03/30/67, Series A
|
|
|
3,917,153
|
(1)
|
|
|
|
|
|
|
Puget Energy:
|
|
|
|
|
|
|
$
|
5,175,000
|
|
|
Puget Sound Energy, Inc., 6.974% 06/01/67
|
|
|
5,491,353
|
(1)(2)
|
|
|
|
|
|
|
Southern California Edison:
|
|
|
|
|
|
|
|
46,460
|
|
|
Southern California Edison, 6.50% Pfd., Series D
|
|
|
4,898,626
|
*
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
58,927,812
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Energy 4.8%
|
|
|
|
|
|
|
|
|
|
|
Enbridge Energy Partners:
|
|
|
|
|
|
|
$
|
7,050,000
|
|
|
Enbridge Energy Partners LP, 8.05% 10/01/37
|
|
|
7,974,558
|
(1)(2)
|
|
|
|
|
|
|
Enterprise Products Partners:
|
|
|
|
|
|
|
$
|
5,550,000
|
|
|
Enterprise Products Partners, 8.375% 08/01/66, Series A
|
|
|
6,290,381
|
(1)(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14,264,939
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real Estate Investment Trust (REIT) 1.0%
|
|
|
|
|
|
|
|
|
|
|
CommonWealth REIT:
|
|
|
|
|
|
|
|
7,500
|
|
|
CommonWealth REIT, 7.25% Pfd.
|
|
|
186,544
|
|
|
|
|
|
|
|
Duke Realty Corp:
|
|
|
|
|
|
|
|
35,000
|
|
|
Duke Realty Corp, 6.60% Pfd.
|
|
|
880,688
|
|
|
|
|
|
|
|
Kimco Realty Corp:
|
|
|
|
|
|
|
|
70,000
|
|
|
Kimco Realty Corporation., 5.625% Pfd.
|
|
|
1,723,750
|
|
|
|
|
|
|
|
PS Business Parks:
|
|
|
|
|
|
|
|
10,000
|
|
|
PS Business Parks, Inc., 6.875% Pfd., Series R
|
|
|
270,800
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,061,782
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Miscellaneous Industries 2.2%
|
|
|
|
|
|
|
|
|
|
|
Ocean Spray Cranberries:
|
|
|
|
|
|
|
|
37,400
|
|
|
Ocean Spray Cranberries, Inc., 6.25% Pfd., 144A****
|
|
|
3,412,750
|
*
|
|
|
|
|
|
|
Stanley Black & Decker:
|
|
|
|
|
|
|
|
25,012
|
|
|
Stanley Black & Decker, Inc., 5.75% Pfd. 07/25/52
|
|
|
660,474
|
(1)
|
|
|
The accompanying
notes are an integral part of the financial statements.
15
Flaherty & Crumrine/Claymore Total Return Fund Incorporated
PORTFOLIO OF INVESTMENTS (Continued)
November 30,
2012
|
|
|
|
|
|
|
|
|
|
|
Shares/$ Par
|
|
|
|
|
Value
|
|
|
|
|
Preferred Securities (Continued)
|
|
|
|
|
|
|
|
|
|
|
Miscellaneous Industries (Continued)
|
|
|
|
|
|
|
|
|
|
|
Textron, Inc.:
|
|
|
|
|
|
|
$
|
2,850,000
|
|
|
Textron Financial Corporation, 6.00% 02/15/67, 144A****
|
|
$
|
2,508,416
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,581,640
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Preferred Securities
(Cost $248,188,444)
|
|
|
255,794,411
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate Debt Securities 12.9%
|
|
|
|
|
|
|
|
|
|
|
Banking 5.7%
|
|
|
|
|
|
|
|
|
|
|
First Niagara Financial Group:
|
|
|
|
|
|
|
$
|
300,000
|
|
|
First Niagara Financial Group, Inc., 7.25% 12/15/21, Sub Notes
|
|
|
358,655
|
|
|
|
|
|
|
|
Goldman Sachs Group:
|
|
|
|
|
|
|
$
|
6,338,900
|
|
|
Goldman Sachs Group, 6.75% 10/01/37, Sub Notes
|
|
|
7,075,854
|
(1)(2)
|
|
|
|
|
|
|
Morgan Stanley:
|
|
|
|
|
|
|
$
|
4,335,000
|
|
|
Morgan Stanley, 6.375% 07/24/42
|
|
|
5,096,568
|
(1)
|
|
|
|
|
|
|
Regions Financial:
|
|
|
|
|
|
|
$
|
3,741,000
|
|
|
Regions Financial Corporation, 7.375% 12/10/37, Sub Notes
|
|
|
4,082,366
|
|
|
|
|
|
|
|
Texas Capital Bank:
|
|
|
|
|
|
|
|
20,600
|
|
|
Texas Capital Bancshares Inc., 6.50% 9/21/42
|
|
|
521,644
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
17,135,087
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial Services 0.5%
|
|
|
|
|
|
|
|
|
|
|
Affiliated Managers Group:
|
|
|
|
|
|
|
|
27,895
|
|
|
Affiliated Managers Group, Inc., 6.375% 08/15/42
|
|
|
714,433
|
|
|
|
|
|
|
|
Lehman Brothers:
|
|
|
|
|
|
|
$
|
4,726,012
|
|
|
Lehman Brothers, Guaranteed Note, Variable Rate, 5.843% 12/16/16, 144A****
|
|
|
527,896
|
(4)(5)
|
|
|
|
|
|
|
Raymond James Financial:
|
|
|
|
|
|
|
|
3,264
|
|
|
Raymond James Financial, 6.90% 03/15/42
|
|
|
90,372
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,332,701
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Insurance 4.0%
|
|
|
|
|
|
|
|
|
|
|
Liberty Mutual Group:
|
|
|
|
|
|
|
$
|
3,400,000
|
|
|
Liberty Mutual Insurance, 7.697% 10/15/97, 144A****
|
|
|
3,572,720
|
(1)(2)
|
|
|
|
|
|
|
Unum Group:
|
|
|
|
|
|
|
$
|
7,000,000
|
|
|
UnumProvident Corporation, 7.25% 03/15/28
|
|
|
8,395,954
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,968,674
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying
notes are an integral part of the financial statements.
16
Flaherty & Crumrine/Claymore Total Return Fund Incorporated
PORTFOLIO OF INVESTMENTS
(Continued)
November 30, 2012
|
|
|
|
|
|
|
|
|
|
|
Shares/$ Par
|
|
|
|
|
Value
|
|
|
|
|
Corporate Debt Securities (Continued)
|
|
|
|
|
|
|
|
|
|
|
Utilities 0.7%
|
|
|
|
|
|
|
|
|
|
|
Energy Transfer Equity:
|
|
|
|
|
|
|
$
|
1,600,000
|
|
|
Southern Union Company, 8.25% 11/15/29
|
|
$
|
2,046,675
|
(1)(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,046,675
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Energy 1.0%
|
|
|
|
|
|
|
|
|
|
|
Nexen, Inc.:
|
|
|
|
|
|
|
|
120,475
|
|
|
Nexen, Inc., 7.35% 11/01/43
|
|
|
3,079,642
|
(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,079,642
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Miscellaneous Industries 1.0%
|
|
|
|
|
|
|
|
|
|
|
Pulte Group Inc.:
|
|
|
|
|
|
|
|
25,844
|
|
|
Pulte Homes, Inc., 7.375% 06/01/46
|
|
|
648,232
|
|
|
|
$
|
2,160,000
|
|
|
Pulte Homes, Inc., 7.875% 06/15/32
|
|
|
2,322,000
|
(1)(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,970,232
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Corporate Debt Securities
(Cost $34,551,151)
|
|
|
38,533,011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock 0.3%
|
|
|
|
|
|
|
|
|
|
|
Banking 0.2%
|
|
|
|
|
|
|
|
|
|
|
CIT Group:
|
|
|
|
|
|
|
|
13,500
|
|
|
CIT Group, Inc.
|
|
|
500,175
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
500,175
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Utilities 0.1%
|
|
|
|
|
|
|
|
|
|
|
Exelon Corp:
|
|
|
|
|
|
|
|
11,750
|
|
|
Exelon Corporation
|
|
|
355,085
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
355,085
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Common Stock
(Cost $3,031,124)
|
|
|
855,260
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Investments
(Cost $285,770,719***)
|
|
|
98.6%
|
|
|
|
295,182,682
|
|
|
|
|
Other Assets And Liabilities
(Net)
|
|
|
1.4%
|
|
|
|
4,271,062
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Managed Assets
|
|
|
100.0%
|
|
|
$
|
299,453,744
|
|
|
|
|
|
|
|
|
|
|
|
|
Loan Principal Balance
|
|
|
|
(100,100,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Total Net Assets Available To Common Stock
|
|
|
$
|
199,353,744
|
|
|
|
|
|
|
|
|
|
|
The accompanying
notes are an integral part of the financial statements.
17
Flaherty & Crumrine/Claymore Total Return Fund Incorporated
PORTFOLIO OF INVESTMENTS (Continued)
November 30,
2012
*
|
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. At November 30, 2012, these securities amounted to $61,136,919 or 20.4% of total managed assets.
|
(1)
|
All or a portion of this security is pledged as collateral for the Funds loan. The total value of such securities was $178,334,295 at November 30,
2012.
|
(2)
|
All or a portion of this security has been rehypothecated. The total value of such securities was $86,519,975 at November 30, 2012.
|
(5)
|
Valued at fair value as determined in good faith by or under the direction of the Board of Directors as of November 30, 2012.
|
(6)
|
Represents the rate in effect as of the reporting date.
|
|
The issuer has filed for bankruptcy protection. As a result, the Fund may not be able to recover the principal invested and also does not expect to receive income on this
security going forward.
|
|
The percentage shown for each investment category is the total value of that category as a percentage of total managed assets.
|
|
|
|
|
|
|
|
ABBREVIATIONS:
|
CLO
|
|
|
|
Collaterized Loan Obligation
|
Pfd.
|
|
|
|
Preferred Securities
|
REIT
|
|
|
|
Real Estate Investment Trust
|
The accompanying notes are an integral
part of the financial statements.
18
Flaherty & Crumrine/Claymore Total Return Fund Incorporated
STATEMENT OF ASSETS AND LIABILITIES
November 30, 2012
|
|
|
|
|
|
|
|
|
ASSETS:
|
|
|
|
|
|
|
|
|
Investments, at value (Cost $285,770,719)
|
|
|
|
|
|
$
|
295,182,682
|
|
Cash
|
|
|
|
|
|
|
1,173,276
|
|
Receivable for investments sold
|
|
|
|
|
|
|
9,988,903
|
|
Dividends and interest receivable
|
|
|
|
|
|
|
4,041,814
|
|
Prepaid expenses
|
|
|
|
|
|
|
42,787
|
|
|
|
|
|
|
|
|
|
|
Total Assets
|
|
|
|
|
|
|
310,429,462
|
|
|
|
|
LIABILITIES:
|
|
|
|
|
|
|
|
|
Loan Payable
|
|
$
|
100,100,000
|
|
|
|
|
|
Payable for investments purchased
|
|
|
10,610,387
|
|
|
|
|
|
Dividends payable to Common Stock Shareholders
|
|
|
76,152
|
|
|
|
|
|
Investment advisory fees payable
|
|
|
135,031
|
|
|
|
|
|
Administration, Transfer Agent and Custodian fees payable
|
|
|
34,109
|
|
|
|
|
|
Servicing agent fees payable
|
|
|
12,201
|
|
|
|
|
|
Professional fees payable
|
|
|
69,137
|
|
|
|
|
|
Directors fees payable
|
|
|
834
|
|
|
|
|
|
Accrued expenses and other payables
|
|
|
37,867
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities
|
|
|
|
|
|
|
111,075,718
|
|
|
|
|
|
|
|
|
|
|
NET ASSETS AVAILABLE TO COMMON STOCK
|
|
|
|
|
|
$
|
199,353,744
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET ASSETS AVAILABLE TO COMMON STOCK
consist of:
|
|
|
|
|
|
|
|
|
Undistributed net investment income
|
|
|
|
|
|
$
|
777,596
|
|
Accumulated net realized loss on investments sold
|
|
|
|
|
|
|
(43,153,890
|
)
|
Unrealized appreciation of investments
|
|
|
|
|
|
|
9,411,963
|
|
Par value of Common Stock
|
|
|
|
|
|
|
98,752
|
|
Paid-in capital in excess of par value of Common Stock
|
|
|
|
|
|
|
232,219,323
|
|
|
|
|
|
|
|
|
|
|
Total Net Assets Available to Common Stock
|
|
|
|
|
|
$
|
199,353,744
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET ASSET VALUE PER SHARE OF COMMON STOCK:
|
|
|
|
|
|
|
|
|
Common Stock (9,875,198 shares outstanding)
|
|
|
|
|
|
$
|
20.19
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral
part of the financial statements.
19
Flaherty & Crumrine/Claymore Total Return Fund Incorporated
STATEMENT OF OPERATIONS
For the Year Ended
November 30, 2012
|
|
|
|
|
|
|
|
|
INVESTMENT INCOME:
|
|
|
|
|
|
|
|
|
Dividends
|
|
|
|
|
|
$
|
8,514,738
|
|
Interest
|
|
|
|
|
|
|
11,872,240
|
|
Rehypothecation Income
|
|
|
|
|
|
|
44,962
|
|
|
|
|
|
|
|
|
|
|
Total Investment Income
|
|
|
|
|
|
|
20,431,940
|
|
|
|
|
EXPENSES:
|
|
|
|
|
|
|
|
|
Investment advisory fees
|
|
$
|
1,545,697
|
|
|
|
|
|
Servicing agent fees
|
|
|
129,088
|
|
|
|
|
|
Administrators fees
|
|
|
237,346
|
|
|
|
|
|
Professional fees
|
|
|
96,270
|
|
|
|
|
|
Insurance expenses
|
|
|
105,435
|
|
|
|
|
|
Transfer Agent fees
|
|
|
60,597
|
|
|
|
|
|
Directors fees
|
|
|
70,396
|
|
|
|
|
|
Custodian fees
|
|
|
29,389
|
|
|
|
|
|
Compliance fees
|
|
|
37,908
|
|
|
|
|
|
Interest expenses
|
|
|
1,155,055
|
|
|
|
|
|
Other
|
|
|
158,595
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Expenses
|
|
|
|
|
|
|
3,625,776
|
|
|
|
|
|
|
|
|
|
|
NET INVESTMENT INCOME
|
|
|
|
|
|
|
16,806,164
|
|
|
|
|
|
|
|
|
|
|
|
|
|
REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS
|
|
|
|
|
|
|
|
|
Net realized gain on investments sold during the year
|
|
|
|
|
|
|
1,486,256
|
|
Change in net unrealized appreciation/depreciation of investments
|
|
|
|
|
|
|
29,560,821
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS
|
|
|
|
|
|
|
31,047,077
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INCREASE IN NET ASSETS TO COMMON STOCK
RESULTING FROM OPERATIONS
|
|
|
|
|
|
$
|
47,853,241
|
|
|
|
|
|
|
|
|
|
|
|
For Federal income tax purposes, a significant portion of this amount may not qualify for the inter-corporate dividends received deduction (DRD) or as qualified
dividend income (QDI) for individuals.
|
The accompanying notes are an integral part of the financial statements.
20
Flaherty & Crumrine/Claymore Total Return Fund Incorporated
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE TO COMMON STOCK
|
|
|
|
|
|
|
|
|
|
|
Year Ended
November 30, 2012
|
|
|
Year Ended
November 30, 2011
|
|
OPERATIONS:
|
|
|
|
|
|
|
|
|
Net investment income
|
|
$
|
16,806,164
|
|
|
$
|
16,553,166
|
|
Net realized gain/(loss) on investments sold during the year
|
|
|
1,486,256
|
|
|
|
9,773,993
|
|
Change in net unrealized appreciation/depreciation of investments
|
|
|
29,560,821
|
|
|
|
(13,894,743
|
)
|
|
|
|
|
|
|
|
|
|
Net increase in net assets resulting from operations
|
|
|
47,853,241
|
|
|
|
12,432,416
|
|
|
|
|
DISTRIBUTIONS:
|
|
|
|
|
|
|
|
|
Dividends paid from net investment income to Common Stock Shareholders
(1)
|
|
|
(17,038,837
|
)
|
|
|
(16,473,273
|
)
|
|
|
|
|
|
|
|
|
|
Total Distributions to Common Stock Shareholders
|
|
|
(17,038,837
|
)
|
|
|
(16,473,273
|
)
|
|
|
|
FUND SHARE TRANSACTIONS:
|
|
|
|
|
|
|
|
|
Increase from shares issued under the Dividend Reinvestment and Cash Purchase Plan
|
|
|
811,373
|
|
|
|
500,665
|
|
|
|
|
|
|
|
|
|
|
Net increase in net assets available to Common Stock resulting from Fund share transactions
|
|
|
811,373
|
|
|
|
500,665
|
|
|
|
|
NET INCREASE/(DECREASE) IN NET ASSETS AVAILABLE TO
|
|
|
|
|
|
|
|
|
COMMON STOCK FOR THE YEAR
|
|
$
|
31,625,777
|
|
|
$
|
(3,540,192
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET ASSETS AVAILABLE TO COMMON STOCK:
|
|
|
|
|
|
|
|
|
Beginning of year
|
|
$
|
167,727,967
|
|
|
$
|
171,268,159
|
|
Net increase/(decrease) in net assets during the year
|
|
|
31,625,777
|
|
|
|
(3,540,192
|
)
|
|
|
|
|
|
|
|
|
|
End of year (including undistributed net investment income of $777,596 and $858,565, respectively)
|
|
$
|
199,353,744
|
|
|
$
|
167,727,967
|
|
|
|
|
|
|
|
|
|
|
(1)
|
May include income earned, but not paid out, in prior fiscal year.
|
The accompanying notes are an integral part of the financial statements.
21
Flaherty & Crumrine/Claymore Total Return Fund Incorporated
STATEMENT OF CASH FLOWS
For the Year Ended
November 30, 2012
|
|
|
|
|
|
|
INCREASE/(DECREASE) IN CASH
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
|
Net increase in net assets resulting from operations
|
|
|
|
$
|
47,853,241
|
|
|
|
|
|
|
|
|
ADJUSTMENTS TO RECONCILE NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS TO NET CASH PROVIDED BY IN OPERATING ACTIVITIES:
|
|
|
|
|
Purchase of investment securities
|
|
|
|
|
(124,863,971
|
)
|
Proceeds from disposition of investment securities
|
|
|
|
|
116,485,972
|
|
Sale of short-term investment securities, net
|
|
|
|
|
491,623
|
|
Cash received from litigation claim
|
|
|
|
|
57,401
|
|
Cash received from bankruptcy settlement
|
|
|
|
|
385,728
|
|
Increase in receivable for investments sold
|
|
|
|
|
(8,871,676
|
)
|
Decrease in dividends and interest receivable
|
|
|
|
|
150,619
|
|
Net amortization/(accretion) of premium/(discount)
|
|
|
|
|
(24,550
|
)
|
Increase in payable for investments purchased
|
|
|
|
|
8,261,901
|
|
Increase in payables to related parties
|
|
|
|
|
15,780
|
|
Decrease in accrued expenses and other liabilities
|
|
|
|
|
(15,756
|
)
|
Change in net unrealized appreciation/depreciation on securities
|
|
|
|
|
(29,560,821
|
)
|
Net realized gain from investments sold
|
|
|
|
|
(1,486,256
|
)
|
|
|
|
|
|
|
|
Net cash provided in operating activities
|
|
|
|
|
8,879,235
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
|
Proceeds from loan
|
|
|
|
|
8,500,000
|
|
Dividends paid (net of reinvestment of dividends and change in
dividends payable) to common stock shareholders from net
investment
income
|
|
|
|
|
(16,205,959
|
)
|
|
|
|
|
|
|
|
Net cash used in financing activities
|
|
|
|
|
(7,705,959
|
)
|
|
|
|
|
|
|
|
Net increase/(decrease) in cash
|
|
|
|
|
1,173,276
|
|
|
|
|
CASH:
|
|
|
|
|
|
|
Beginning of the year
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
End of the year
|
|
|
|
$
|
1,173,276
|
|
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
|
|
|
|
|
|
|
Interest paid during the year
|
|
|
|
$
|
1,154,866
|
|
Reinvestments of dividends
|
|
|
|
|
811,373
|
|
Increase of dividends payable to common stock shareholders
|
|
|
|
|
21,505
|
|
The accompanying notes are an integral
part of the financial statements.
22
Flaherty & Crumrine/Claymore Total Return Fund Incorporated
FINANCIAL HIGHLIGHTS
For a Common Stock share outstanding throughout each year.
Contained below is per share operating performance
data, total investment returns, ratios to average net assets and other supplemental data. This information has been derived from information provided in the financial statements and market price data for the Funds shares.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended November 30,
|
|
|
|
2012
|
|
|
2011
|
|
|
2010
|
|
|
2009
|
|
|
2008
|
|
PER SHARE OPERATING PERFORMANCE:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net asset value, beginning of year
|
|
$
|
17.06
|
|
|
$
|
17.47
|
|
|
$
|
14.38
|
|
|
$
|
9.00
|
|
|
$
|
19.71
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INVESTMENT OPERATIONS:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investment income
|
|
|
1.71
|
|
|
|
1.69
|
|
|
|
1.60
|
|
|
|
1.43
|
|
|
|
1.91
|
|
Net realized and unrealized gain/(loss) on investments
|
|
|
3.15
|
|
|
|
(0.42
|
)
|
|
|
2.97
|
|
|
|
5.33
|
|
|
|
(10.62
|
)
|
DISTRIBUTIONS TO AMPS* SHAREHOLDERS:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
From net investment income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(0.06
|
)
|
|
|
(0.44
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total from investment operations
|
|
|
4.86
|
|
|
|
1.27
|
|
|
|
4.57
|
|
|
|
6.70
|
|
|
|
(9.15
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DISTRIBUTIONS TO COMMON STOCK SHAREHOLDERS:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
From net investment income.
|
|
|
(1.73
|
)
|
|
|
(1.68
|
)
|
|
|
(1.48
|
)
|
|
|
(1.32
|
)
|
|
|
(1.53
|
)
|
From return of capital
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(0.03
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total distributions to Common Stock Shareholders
|
|
|
(1.73
|
)
|
|
|
(1.68
|
)
|
|
|
(1.48
|
)
|
|
|
(1.32
|
)
|
|
|
(1.56
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net asset value, end of year
|
|
$
|
20.19
|
|
|
$
|
17.06
|
|
|
$
|
17.47
|
|
|
$
|
14.38
|
|
|
$
|
9.00
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Market value, end of year
|
|
$
|
20.24
|
|
|
$
|
18.10
|
|
|
$
|
17.84
|
|
|
$
|
13.10
|
|
|
$
|
7.28
|
|
Total investment return based on net asset value**
|
|
|
29.59
|
%
|
|
|
7.26
|
%
|
|
|
33.05
|
%
|
|
|
83.69
|
%
|
|
|
(48.17
|
%)
|
Total investment return based on market value**
|
|
|
22.44
|
%
|
|
|
11.44
|
%
|
|
|
49.14
|
%
|
|
|
106.87
|
%
|
|
|
(51.39
|
%)
|
RATIOS TO AVERAGE NET ASSETS AVAILABLE
TO COMMON STOCK SHAREHOLDERS:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total net assets, end of year (in 000s)
|
|
$
|
199,354
|
|
|
$
|
167,728
|
|
|
$
|
171,268
|
|
|
$
|
140,589
|
|
|
$
|
88,002
|
|
Operating expenses including interest expense
(1)
|
|
|
1.99
|
%
|
|
|
1.98
|
%
|
|
|
2.08
|
%
|
|
|
2.92
|
%
|
|
|
2.67
|
%
|
Operating expenses excluding interest expense
|
|
|
1.36
|
%
|
|
|
1.36
|
%
|
|
|
1.36
|
%
|
|
|
1.70
|
%
|
|
|
1.91
|
%
|
Net investment income
|
|
|
9.24
|
%
|
|
|
9.45
|
%
|
|
|
9.85
|
%
|
|
|
13.34
|
%
|
|
|
|
|
Net investment income, including payments to AMPS Shareholders
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12.76
|
%
|
|
|
9.37
|
%
|
SUPPLEMENTAL DATA:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Portfolio turnover rate
|
|
|
42
|
%
|
|
|
23
|
%
|
|
|
33
|
%
|
|
|
37
|
%
|
|
|
46
|
%
|
Total managed assets, end of year (in 000s)
|
|
$
|
299,454
|
|
|
$
|
259,328
|
|
|
$
|
252,568
|
|
|
$
|
209,489
|
|
|
$
|
157,002
|
|
Ratio of operating expenses including interest expense
(1)(2)
to
total managed assets
|
|
|
1.32
|
%
|
|
|
1.31
|
%
|
|
|
1.39
|
%
|
|
|
1.83
|
%
|
|
|
1.54
|
%
|
Ratio of operating expenses excluding interest expense
(2)
to
total managed assets
|
|
|
0.90
|
%
|
|
|
0.90
|
%
|
|
|
0.91
|
%
|
|
|
1.07
|
%
|
|
|
1.10
|
%
|
*
|
Auction Market Preferred Stock.
|
**
|
Assumes reinvestment of distributions at the price obtained by the Funds Dividend Reinvestment and Cash Purchase Plan.
|
|
The net investment income ratios reflect income net of operating expenses, including interest expense.
|
|
Information presented under heading Supplemental Data includes AMPS and loan principal balance.
|
(2)
|
Does not include distributions to AMPS Shareholders.
|
The accompanying notes are an integral part of the financial statements.
23
Flaherty & Crumrine/Claymore Total Return Fund Incorporated
FINANCIAL HIGHLIGHTS (Continued)
Per share of Common
Stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
Dividends
Paid
|
|
|
Net Asset
Value
|
|
|
NYSE
Closing Price
|
|
|
Dividend
Reinvestment
Price
(1)
|
|
December 30, 2011 Special
|
|
$
|
0.0550
|
|
|
$
|
17.34
|
|
|
$
|
18.70
|
|
|
$
|
17.77
|
|
December 30, 2011
|
|
|
0.1395
|
|
|
|
17.34
|
|
|
|
18.70
|
|
|
|
17.77
|
|
January 31, 2012
|
|
|
0.1395
|
|
|
|
18.03
|
|
|
|
19.20
|
|
|
|
18.24
|
|
February 29, 2012
|
|
|
0.1395
|
|
|
|
18.45
|
|
|
|
19.43
|
|
|
|
18.46
|
|
March 30, 2012.
|
|
|
0.1395
|
|
|
|
18.47
|
|
|
|
19.01
|
|
|
|
18.47
|
|
April 30, 2012
|
|
|
0.1395
|
|
|
|
18.60
|
|
|
|
19.00
|
|
|
|
18.60
|
|
May 31, 2012
|
|
|
0.1395
|
|
|
|
18.51
|
|
|
|
19.03
|
|
|
|
18.51
|
|
June 29, 2012
|
|
|
0.1395
|
|
|
|
18.68
|
|
|
|
19.43
|
|
|
|
18.68
|
|
July 31, 2012
|
|
|
0.1395
|
|
|
|
19.22
|
|
|
|
20.51
|
|
|
|
19.48
|
|
August 31, 2012
|
|
|
0.1395
|
|
|
|
19.48
|
|
|
|
21.27
|
|
|
|
20.21
|
|
September 28, 2012
|
|
|
0.1395
|
|
|
|
19.84
|
|
|
|
20.78
|
|
|
|
19.84
|
|
October 31, 2012
|
|
|
0.1395
|
|
|
|
20.26
|
|
|
|
20.59
|
|
|
|
20.26
|
|
November 30, 2012
|
|
|
0.1395
|
|
|
|
20.19
|
|
|
|
20.24
|
|
|
|
20.19
|
|
(1)
|
Whenever the net asset value per share of the Funds Common Stock is less than or equal to the market price per share on the reinvestment date, new shares
issued will be valued at the higher of net asset value or 95% of the then current market price. Otherwise, the reinvestment shares of Common Stock will be purchased in the open market.
|
The accompanying notes are an integral part of the financial statements.
24
Flaherty & Crumrine/Claymore Total Return Fund Incorporated
FINANCIAL HIGHLIGHTS
(Continued)
Senior Securities
|
|
|
|
|
|
|
|
|
|
|
Date
|
|
Total AMPS* Shares
Outstanding (1)
|
|
Asset
Coverage
Per
AMPS
Share (2)
|
|
Involuntary
Liquidation
Preference
Per AMPS
Share (3)
|
|
Total Debt
Outstanding
End of Period
(000s) (4)
|
|
Asset
Coverage Per
$1,000 of
Debt (5)
|
|
|
|
|
|
|
11/30/12
|
|
|
|
N/A
|
|
N/A
|
|
$100,100
|
|
$2,992
|
|
|
|
|
|
|
11/30/11
|
|
|
|
N/A
|
|
N/A
|
|
91,600
|
|
2,831
|
|
|
|
|
|
|
11/30/10
|
|
|
|
N/A
|
|
N/A
|
|
81,300
|
|
3,107
|
|
|
|
|
|
|
11/30/09
|
|
|
|
N/A
|
|
N/A
|
|
68,900
|
|
3,040
|
|
|
|
|
|
|
11/30/08
|
|
1,580
|
|
$80,704
|
|
$25,000
|
|
N/A
|
|
N/A
|
(2)
|
Calculated by subtracting the Funds total liabilities (excluding the AMPS) from the Funds total assets and dividing that amount by the number of AMPS
shares outstanding.
|
(3)
|
Excludes accumulated undeclared dividends.
|
(5)
|
Calculated by subtracting the Funds total liabilities (excluding the loan) from the Funds total assets and dividing that amount by the loan
outstanding in 000s.
|
*
|
Auction Market Preferred Stock.
|
The accompanying
notes are an integral part of the financial statements.
25
Flaherty & Crumrine/Claymore Total Return Fund Incorporated
NOTES TO FINANCIAL STATEMENTS
Flaherty &
Crumrine/Claymore Total Return Fund Incorporated (the Fund) was incorporated as a Maryland corporation on July 18, 2003, and commenced operations on August 29, 2003 as a diversified, closed-end management investment company
under the Investment Company Act of 1940, as amended (the 1940 Act). The Funds primary investment objective is to provide its common shareholders with high current income. The Funds secondary investment objective is capital
appreciation.
2.
|
Significant Accounting Policies
|
The
following is a summary of significant accounting policies consistently followed by the Fund in the preparation of its financial statements. The preparation of the financial statements is in conformity with U.S. generally accepted accounting
principles (US GAAP) and requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities in the financial statements and the reported amounts of increases and decreases in net assets from
operations during the reporting period. Actual results could differ from those estimates.
Portfolio valuation:
The net asset
value of the Funds Common Stock is determined by the Funds Administrator no less frequently than on the last business day of each week and month in accordance with the policies and procedures approved by the Board of Directors of the
Fund. It is determined by dividing the value of the Funds net assets available to Common Stock by the number of shares of Common Stock outstanding. The value of the Funds net assets available to Common Stock is deemed to equal the value
of the Funds total assets less (i) the Funds liabilities and (ii) the aggregate liquidation value of any outstanding preferred stock.
The Funds preferred and debt securities are valued on the basis of current market quotations provided by independent pricing services or dealers approved by the Board of Directors of the Fund. Each quotation
is based on the mean of the bid and asked prices of a security. In determining the value of a particular preferred or debt security, a pricing service or dealer may use information with respect to transactions in such investments, quotations, market
transactions in comparable investments, various relationships observed in the market between investments, and/or calculated yield measures based on valuation technology commonly employed in the market for such investments. Common stocks that are
traded on stock exchanges are valued at the last sale price or official close price on the exchange, as of the close of business on the day the securities are being valued or, lacking any sales, at the last available mean price. Futures contracts
and option contracts on futures contracts are valued on the basis of the settlement price for such contracts on the primary exchange on which they trade. Investments in over-the-counter derivative instruments, such as interest rate swaps and options
thereon (swaptions), are valued using prices supplied by a pricing service, or if such prices are unavailable, prices provided by a single broker or dealer that is not the counterparty or, if no such prices are available, at a price at
which the counterparty to the contract would repurchase the instrument or terminate the contract. Investments for which market quotations are not readily available or for which management determines that the prices are not reflective of current
market conditions are valued at fair value as determined in good faith by or under the direction of the Board of Directors of the Fund, including reference to valuations of other securities which are comparable in quality, maturity and type.
26
Flaherty & Crumrine/Claymore Total Return Fund Incorporated
NOTES TO FINANCIAL STATEMENTS
(Continued)
Investments in money market instruments and all debt and preferred securities which mature in 60
days or less are valued at amortized cost. Investments in money market funds are valued at the net asset value of such funds.
Fair
Value Measurements:
The Fund has performed an analysis of all existing investments and derivative instruments to determine the significance and character of all inputs to their fair value determination. The levels of fair value inputs used to
measure the Funds investments are characterized into a fair value hierarchy. Where inputs for an asset or liability fall into more than one level in the fair value hierarchy, the investment is classified in its entirety based on the lowest
level input that is significant to that investments valuation. The three levels of the fair value hierarchy 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 Funds 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. Transfers in and out of levels are recognized at market value at the end of the period. A summary of the inputs used to value the Funds investments as of November 30,
2012 is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
Value at
November 30, 2012
|
|
|
Level 1
Quoted
Price
|
|
|
Level 2
Significant
Observable
Inputs
|
|
|
Level 3
Significant
Unobservable
Inputs
|
|
Preferred Securities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Banking
|
|
$
|
94,703,769
|
|
|
$
|
69,721,958
|
|
|
$
|
24,963,311
|
|
|
$
|
18,500
|
|
Financial Services
|
|
|
7,139,044
|
|
|
|
2,369,464
|
|
|
|
2,617,650
|
|
|
|
2,151,930
|
|
Insurance
|
|
|
71,115,425
|
|
|
|
45,933,392
|
|
|
|
25,182,033
|
|
|
|
|
|
Utilities
|
|
|
58,927,812
|
|
|
|
17,510,354
|
|
|
|
41,417,458
|
|
|
|
|
|
Energy
|
|
|
14,264,939
|
|
|
|
14,264,939
|
|
|
|
|
|
|
|
|
|
Real Estate Investment Trust (REIT)
|
|
|
3,061,782
|
|
|
|
3,061,782
|
|
|
|
|
|
|
|
|
|
Miscellaneous Industries
|
|
|
6,581,640
|
|
|
|
660,474
|
|
|
|
5,921,166
|
|
|
|
|
|
Corporate Debt Securities
|
|
|
38,533,011
|
|
|
|
17,226,745
|
|
|
|
20,778,370
|
|
|
|
527,896
|
|
Common Stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Banking
|
|
|
500,175
|
|
|
|
500,175
|
|
|
|
|
|
|
|
|
|
Utilities
|
|
|
355,085
|
|
|
|
355,085
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Investments
|
|
$
|
295,182,682
|
|
|
$
|
171,604,368
|
|
|
$
|
120,879,988
|
|
|
$
|
2,698,326
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
During the reporting period, there were no transfers into Level 1 from Level 2. During the reporting period,
securities with an aggregate market value of $6,046,675 were transferred into Level 2 from Level 1. The securities were transferred because of a reduction in the amount of observable market data, resulting
27
Flaherty & Crumrine/Claymore Total Return Fund Incorporated
NOTES TO FINANCIAL STATEMENTS (Continued)
from: a decrease in market activity for the securities, reduced availability of quoted prices for the securities, or de-listing of securities from a national securities exchange that resulted in
a material decrease in activity.
The fair values of the Funds investments are generally based on market information and quotes
received from brokers or independent pricing servicesapproved by the Board and unaffiliated with the Adviser. To assess the continuing appropriateness of security valuations, management, in consultation with the Adviser, regularly compares
current prices to prior prices, prices across comparable securities, actual sale prices for securities in the Funds portfolio, and market information obtained by the Adviser as a function of being an active participant in the markets.
Securities with quotes that are based on actual trades or actionable bids and offers with a sufficient level of activity on or near the
measurement date are classified as Level 1. Securities that are priced using quotes derived from implied values, indicative bids and offers, or a limited number of actual tradesor the same information for securities that are similar in many
respects to those being valuedare classified as Level 2. If market information is not available for securities being valued, or materially-comparable securities, then those securities are classified as Level 3. In considering market
information, management evaluates changes in liquidity, willingness of a broker to execute at the quoted price, the depth and consistency of prices from pricing services, and the existence of observable trades in the market.
The following is a reconciliation of Level 3 investments for which significant unobservable inputs were used to determine fair value:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred Securities
|
|
|
|
|
|
|
Total Investments
|
|
|
Banking
|
|
|
Financial
Services
|
|
|
Corporate Debt
Securities
|
|
Balance as of 11/30/11
|
|
$
|
3,354,693
|
|
|
$
|
303,500
|
|
|
$
|
2,151,360
|
|
|
$
|
899,833
|
|
Accrued discounts/premiums
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Realized gain/(loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in unrealized appreciation/(depreciation)
|
|
|
(656,367
|
)
|
|
|
(285,000
|
)
|
|
|
570
|
|
|
|
(371,937
|
)
|
Purchases
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Transfers in
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Transfers out
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of 11/30/12
|
|
$
|
2,698,326
|
|
|
$
|
18,500
|
|
|
$
|
2,151,930
|
|
|
$
|
527,896
|
|
For the year ended November 30, 2012, total change in unrealized gain/(loss) on Level 3 securities still held
at period-end and included in the change in net assets was $(656,367). Total unrealized gain/(loss) for all securities (including Level 1 and Level 2) can be found on the accompanying Statement of Operations.
28
Flaherty & Crumrine/Claymore Total Return Fund Incorporated
NOTES TO FINANCIAL STATEMENTS
(Continued)
The following table summarizes the valuation techniques used and unobservable inputs developed to
determine the fair value of Level 3 investments:
|
|
|
|
|
|
|
|
|
|
|
Category
|
|
Fair Value
at 11/30/12
|
|
|
Valuation Technique
|
|
Unobservable Input
|
|
Input Range (Wgt Avg)
|
Preferred Securities
|
|
|
|
|
|
|
|
|
|
|
Banking
|
|
$
|
15,000
|
|
|
Bankruptcy recovery
|
|
Credit/Structure-specific
recovery
|
|
0.00% - 0.50% (0.15%)
|
|
|
|
3,500
|
|
|
Bankruptcy recovery
|
|
Credit/Structure-specific
recovery
|
|
0.00% - 0.50% (0.05%)
|
|
|
|
|
|
Financial Services
|
|
|
2,151,930
|
|
|
Trust Liquidation Value
|
|
Discount
|
|
20% - 30% (20%)
|
|
|
|
|
|
Corporate Debt
Securities
|
|
|
527,896
|
|
|
Bankruptcy recovery
|
|
Credit/Structure-specific
recovery
|
|
10% - 20% (11%)
|
|
|
|
|
|
|
|
|
|
|
|
The significant unobservable inputs used in the fair value measurement technique for bankruptcy recovery are based
on recovery analysis that is specific to the security being valued, including the level of subordination and structural features of the security, and the current status of any bankruptcy or liquidation proceedings. Observable market trades in
bankruptcy claims are utilized by management, when available, to assess the appropriateness of valuations, although the frequency of trading depends on the specific credit and seniority of the claim. Expected recoveries in bankruptcy by security
type and industry do not tend to deviate much from historical recovery rates, which are very low (sometimes zero) for preferred securities and more moderate for senior debt. Significant changes in these inputs would result in a significantly higher
or lower fair value measurement.
Investments in the category Preferred SecuritiesFinancial
Services are subordinated interests in trusts whose assets consist mostly of secured 1
st
or 2
nd
lien senior bank loans with
floating-rate (adjustable) coupons. The Funds investments are subordinated claims on the income and net assets of each trust, respectively. The principal amounts of trust assets and liabilities are reported by the trustee on a monthly basis.
Management utilizes third-party bank loan index data, market spread data, and broker bid indications to assess the market value of the investments in the trust relative to the aggregate principal amount as reported and the potential market value of
the subordinated interests. The significant unobservable input used in the fair value technique is a discount to principal value determined by the Adviser based on its experience trading in markets for these and similar assets. Significant increases
or decreases in this input would result in a significantly higher or lower fair value measurement.
Securities transactions and
investment income:
Securities transactions are recorded as of the trade date. Realized gains and losses from securities sold are recorded on the specific identified cost basis. Dividend income is recorded on ex-dividend dates. Interest income is
recorded on the accrual basis. The Fund also amortizes premiums and accretes discounts on fixed income securities using the effective yield method.
Options:
Purchases of options are recorded as an investment, the value of which is marked-to-market at each valuation date. When the Fund enters into a closing sale transaction, the Fund will record a gain
or loss depending on the difference between the purchase and sale price.
29
Flaherty & Crumrine/Claymore Total Return Fund Incorporated
NOTES TO FINANCIAL STATEMENTS (Continued)
When the Fund writes an option, an amount equal to the premium received by the Fund is recorded as
a liability, the value of which is marked-to-market at each valuation date. When a written option expires, the Fund realizes a gain equal to the amount of the premium originally received. When the Fund enters into a closing purchase transaction, the
Fund realizes a gain (or loss if the cost of the closing purchase transaction exceeds the premium received when the option was written) without regard to any unrealized gain or loss on the underlying security, and the liability related to such
option is eliminated. When a call option is exercised, the Fund realizes a gain or loss from the sale of the underlying security and the proceeds from such sale are increased by the amount of the premium originally received. When a put option is
exercised, the amount of the premium originally received will reduce the cost of the security which the Fund purchased upon exercise.
Repurchase agreements:
The Fund may engage in repurchase agreement transactions. The Funds investment adviser reviews and approves the
eligibility of the banks and dealers with which the Fund may enter into repurchase agreement transactions. The value of the collateral underlying such transactions is at least equal at all times to the total amount of the repurchase obligations,
including interest. The Fund maintains possession of the collateral through its custodian and, in the event of counterparty default, the Fund has the right to use the collateral to offset losses incurred. There is the possibility of loss to the Fund
in the event the Fund is delayed or prevented from exercising its rights to dispose of the collateral securities.
Federal income
taxes:
The Fund intends to continue to qualify as a regulated investment company by complying with the requirements under subchapter M of the Internal Revenue Code of 1986, as amended, applicable to regulated investment companies and intends to
distribute substantially all of its taxable net investment income to its shareholders. Therefore, no federal income tax provision is required.
Management has analyzed the Funds tax positions taken on federal income tax returns for all open tax years (November 30, 2012, 2011, 2010 and 2009), and has concluded that no provision for federal income tax
is required in the Funds financial statements. The Funds major tax jurisdictions are federal and California. The Funds federal and state income and federal excise tax returns for tax years for which the applicable statutes of
limitations have not expired are subject to examination by the Internal Revenue Service and state departments of revenue.
Dividends
and distributions to shareholders:
The Fund expects to declare dividends on a monthly basis to shareholders of Common Stock (Shareholders). Distributions to Shareholders are recorded on the ex-dividend date. Any net realized
short-term capital gains will be distributed to Shareholders at least annually. Any net realized long-term capital gains may be distributed to Shareholders at least annually or may be retained by the Fund as determined by the Funds Board of
Directors. Capital gains retained by the Fund are subject to tax at the capital gains corporate tax rate. Subject to the Fund qualifying as a regulated investment company, any taxes paid by the Fund on such net realized long-term capital gains may
be used by the Funds Shareholders as a credit against their own tax liabilities. The Fund may pay distributions in excess of the Funds net investment company taxable income and this excess would be a tax-free return of capital
distributed from the Funds assets.
Income and capital gain distributions are determined and characterized in accordance with
income tax regulations which may differ from US GAAP. These differences are primarily due to (1) differing treatments of income and gains on various investment securities held by the Fund, including timing differences, (2) the
30
Flaherty & Crumrine/Claymore Total Return Fund Incorporated
NOTES TO FINANCIAL STATEMENTS
(Continued)
attribution of expenses against certain components of taxable investment income, and (3) federal regulations requiring proportionate allocation of income and gains to all classes of
shareholders.
Distributions from net realized gains for book purposes may include short-term capital gains, which are included as
ordinary income for tax purposes and may exclude amortization of premium and discount on certain fixed income securities, which are not reflected in ordinary income for tax purposes. The tax character of distributions paid during 2012 and 2011 were
as follows:
|
|
|
|
|
|
|
|
|
|
|
Distributions paid in fiscal year 2012
|
|
Distributions paid in fiscal year 2011
|
|
|
Ordinary
Income
|
|
Long-Term
Capital Gains
|
|
Ordinary
Income
|
|
Long-Term
Capital Gains
|
|
|
|
|
|
Common Stock
|
|
$17,038,837
|
|
$0
|
|
$16,473,273
|
|
$0
|
As of November 30, 2012, the components of distributable earnings (i.e., ordinary income and capital gain/loss)
available to Shareholders, on a tax basis, were as follows:
|
|
|
|
|
|
|
Capital (Loss)
Carryforward
|
|
Undistributed
Ordinary Income
|
|
Undistributed
Long-Term Gain
|
|
Net Unrealized
Appreciation/(Depreciation)
|
|
|
|
|
$(38,254,209)
|
|
$1,096,034
|
|
$0
|
|
$4,493,451
|
The composition of the Funds accumulated realized capital losses are indicated below. These losses may be
carried forward and offset against future capital gains through the dates listed below.
|
|
|
|
|
|
|
|
|
2016
|
|
2017
|
|
No Expiration
Short Term*
|
|
No Expiration
Long Term*
|
|
Total
|
|
|
|
|
|
$19,081,765
|
|
$19,172,444
|
|
$0
|
|
$0
|
|
$38,254,209
|
*
|
Under the Regulated Investment Company Modernization Act of 2010 (Modernization Act), the Fund will be permitted to carry forward capital losses incurred in taxable
years beginning after December 22, 2010 indefinitely. However, any losses incurred during those future taxable years must be utilized prior to the losses incurred in pre-enactment taxable years. As a result, pre-enactment capital loss
carryforwards may be more likely to expire unused. Additionally, post-enactment capital losses that are carried forward will retain their character as either short-term or long-term capital losses rather than being considered all short-term under
previous law.
|
During the year ended November 30, 2012, the Fund utilized $6,160,912 of capital losses expiring in
2016.
Reclassification of accounts:
During the year ended November 30, 2012, reclassifications were made in the Funds
capital accounts to report these balances on a tax basis, excluding temporary differences, as of November 30, 2012. Additional adjustments may be required in subsequent reporting periods. These reclassifications have no impact on the net asset
value of the Fund. The calculation of net investment income per share in the financial highlights excludes these adjustments. Below are the reclassifications:
|
|
|
|
|
Paid-in
Capital
|
|
Undistributed
Net Investment Income
|
|
Accumulated Net Realized
Gain on Investments
|
|
|
|
$(112,545)
|
|
$151,704
|
|
$(39,159)
|
Excise tax:
The Internal Revenue Code of 1986, as amended, imposes a 4% nondeductible excise tax on the Fund
to the extent the Fund does not distribute by the end of any calendar year at least (1) 98% of
31
Flaherty & Crumrine/Claymore Total Return Fund Incorporated
NOTES TO FINANCIAL STATEMENTS (Continued)
the sum of its net investment income for that year and 98.2% of its capital gains (both long-term and short-term) for its fiscal year and (2) certain undistributed amounts from previous
years. The Fund is subject to a payment of an estimated $3,143 of federal excise taxes attributed to calendar year 2012. The Fund paid $25,576 of federal excise taxes attributable to calendar year 2011 in March 2012.
3.
|
Derivative Instruments
|
The Fund intends to
use derivatives primarily to economically hedge against risks in the portfolio, namely interest rate risk and credit risk. Historically the Fund has used options on treasury futures contracts for the purpose of economically hedging against a
significant increase in long-term interest rates. When the strategy has been employed, the Fund would purchase put options on treasury futures contracts that would increase in value if long-term interest rates increased significantly, offsetting
some of the related decline in portfolio asset values. The Fund has also purchased and written call options on treasury futures contracts to supplement the put option strategy and also to reduce the overall cost of the interest rate hedge (by
earning premiums from the net sale of call options).
The Fund has the authority to use other derivatives for hedging or to increase
expected return, but has not employed any of these derivatives to-date and does not anticipate broad use of these derivatives in the near future (although this may change without advance notice). Other approved derivatives strategies include: buying
and selling credit default swaps, interest rate swaps and options thereon (swaptions), and options on securities. Accounting policies for specific derivatives, including the location of these items in the financial statements, are included in Note 2
as appropriate. No assurance can be given that such use of derivatives will achieve their desired purposes or, in the case of hedging, will result in an overall reduction of risk to the Fund.
The Fund did not use any derivatives during the fiscal years ended November 30, 2012 and November 30, 2011.
Options on Financial Futures Contracts:
When the interest rate hedging strategy is employed, the Fund intends to use options on financial
futures contracts in much the same way as described above. The risk associated with purchasing options, and therefore the maximum loss the Fund would incur, is limited to the purchase price originally paid. The risk in writing a call option is that
the Fund may forego the opportunity for profit if the market price of the underlying security increases and the option is exercised. The risk in writing a put option is that the Fund may incur a loss if the market price of the underlying security
decreases and the option is exercised.
4.
|
Investment Advisory Fee, Servicing Agent Fee, Administration Fee, Transfer Agent Fee, Custodian Fee, Directors Fees and Chief Compliance Officer Fee
|
Flaherty & Crumrine Incorporated (the Adviser) serves as the Funds investment adviser. The
Fund pays the Adviser a monthly fee at an annual rate of 0.575% of the first $200 million of the Funds average weekly total managed assets, 0.50% of the next $300 million of the Funds average weekly total managed assets, and 0.45% of the
Funds average weekly total managed assets above $500 million.
32
Flaherty & Crumrine/Claymore Total Return Fund Incorporated
NOTES TO FINANCIAL STATEMENTS
(Continued)
For purposes of calculating the fees payable to the Adviser, Servicing Agent, Administrator and
Custodian, the Funds average weekly total managed assets means the total assets of the Fund (including any assets attributable to any Fund auction market preferred stock that may be outstanding or otherwise attributable to the use of leverage)
minus the sum of accrued liabilities (other than debt, if any, representing financial leverage). For purposes of determining total managed assets, the liquidation preference of any outstanding preferred shares issued by the Fund is not treated as a
liability.
Guggenheim Funds Distributors, LLC (the Servicing Agent) serves as the Funds shareholder servicing agent.
As compensation for its services, the Fund pays the Servicing Agent a fee computed and paid monthly at the annual rate of 0.025% of the first $200 million of the Funds average weekly total managed assets, 0.10% of the next $300 million of the
Funds average weekly total managed assets and 0.15% of the Funds average weekly total managed assets above $500 million.
BNY
Mellon Investment Servicing (US) Inc. (BNY Mellon) serves as the Funds administrator (the Administrator). As Administrator, BNY Mellon calculates the net asset value of the Funds shares attributable to Common
Stock and generally assists in all aspects of the Funds administration and operation. As compensation for BNY Mellons services as Administrator, the Fund pays BNY Mellon a monthly fee at an annual rate of 0.10% of the first $200 million
of the Funds average weekly total managed assets, 0.04% of the next $300 million of the Funds average weekly total managed assets, 0.03% of the next $500 million of the Funds average weekly total managed assets and 0.02% of the
Funds average weekly total managed assets above $1 billion.
BNY Mellon also serves as the Funds Common Stock dividend-paying
agent and registrar (the Transfer Agent). As compensation for BNY Mellons services as Transfer Agent, the Fund pays BNY Mellon a fee at an annual rate of 0.02% of the first $150 million of the Funds average weekly net assets
attributable to Common Stock, 0.0075% of the next $350 million of the Funds average weekly net assets attributable to Common Stock, and 0.0025% of the Funds average weekly net assets attributable to Common Stock above $500 million, plus
certain out-of-pocket expenses. For purposes of calculating such fee, the Funds average weekly net assets attributable to the Common Stock are deemed to be the average weekly value of the Funds total assets minus the sum of the
Funds liabilities. For this calculation, the Funds liabilities are deemed to include the aggregate liquidation preference of any outstanding preferred shares and the loan principal balance.
The Bank of New York Mellon (the Custodian) serves as the Funds Custodian. As compensation for the Custodians services as
custodian, the Fund pays the Custodian a monthly fee at the annual rate of 0.01% of the first $200 million of the Funds average weekly total managed assets, 0.008% of the next $300 million of the Funds average weekly total managed
assets, 0.006% of the next $500 million of the Funds average weekly total managed assets, and 0.005% of the Funds average weekly total managed assets above $1 billion.
The Fund currently pays each Director who is not a director, officer or employee of the Adviser a fee of $9,000 per annum, plus $750 for each
in-person meeting of the Board of Directors or Audit Committee, $500 for each in-person meeting of the Nominating Committee, and $250 for each telephone meeting. The Audit
33
Flaherty & Crumrine/Claymore Total Return Fund Incorporated
NOTES TO FINANCIAL STATEMENTS (Continued)
Committee Chairman receives an additional annual fee of $3,000. The Fund also reimburses all Directors for travel and out-of-pocket expenses incurred in connection with such meetings.
The Fund currently pays the Adviser a fee of $37,500 per annum for Chief Compliance Officer services and reimburses out-of-pocket expenses incurred
in connection with providing services in this role.
5.
|
Purchases and Sales of Securities
|
For the
year ended November 30, 2012, the cost of purchases and proceeds from sales of securities, excluding short-term investments, aggregated $124,863,971 and $116,485,972, respectively.
At November 30, 2012, the aggregate cost of securities for federal income tax purposes was $290,689,231, the aggregate gross unrealized
appreciation for all securities in which there is an excess of value over tax cost was $28,387,854 and the aggregate gross unrealized depreciation for all securities in which there is an excess of tax cost over value was $23,894,403.
At November 30, 2012,
240,000,000 shares of $0.01 par value Common Stock were authorized.
Common Stock transactions were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended
11/30/12
|
|
|
Year Ended
11/30/11
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
Shares issued under the Dividend Reinvestment and Cash Purchase Plan
|
|
|
43,141
|
|
|
$
|
811,373
|
|
|
|
27,939
|
|
|
$
|
500,665
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Funds Articles of
Incorporation authorize the issuance of up to 10,000,000 shares of $0.01 par value preferred stock. The Fund does not currently have any issued and outstanding shares of preferred stock.
8.
|
Committed Financing Agreement
|
The Fund has
entered into a committed financing agreement (Financing Agreement) that allows the Fund to borrow on a secured basis, which the Fund uses in the normal course of business as financial leverage. Such leveraging tends to magnify both the
risks and opportunities to Shareholders. The Financing Agreement has been amended from time to time to allow for changes in the committed amount. As of November 30, 2012, the committed amount, and amount borrowed, under the Financing Agreement
was $100.1 million.
Effective August 23, 2011, the lender charges an annualized rate of 0.65% on the undrawn (committed)
balance, and three-month LIBOR (reset quarterly) plus 0.75% on the drawn (borrowed) balance. From January 1, 2011 to August 22, 2011, the lender charged an annualized rate of 0.80% on the undrawn balance and three-month LIBOR (reset
quarterly) plus 0.95% on the drawn balance. Prior to January 1,
34
Flaherty & Crumrine/Claymore Total Return Fund Incorporated
NOTES TO FINANCIAL STATEMENTS
(Continued)
2011, the lender charged an annualized rate of 1.00% on the undrawn balance and three-month LIBOR (reset quarterly) plus 1.10% on the drawn balance. For the year ended November 30, 2012, the
daily weighted average annualized interest rate on the drawn balance was 1.21% and the average daily loan balance was $93,693,169. LIBOR rates may vary in a manner unrelated to the income received on the Funds assets, which could have either a
beneficial or detrimental impact on net investment income and gains available to Shareholders.
The Fund is required to meet certain
asset coverage requirements under the Financing Agreement and under the 1940 Act. In accordance with the asset coverage requirements, at least two-thirds of the Funds assets are expected to be pledged as collateral assuming the full committed
amount is drawn. Securities pledged as collateral are identified in the portfolio of investments. If the Fund fails to meet these requirements, or maintain other financial covenants required under the Financing Agreement, the Fund may be required to
repay immediately, in part or in full, the amount borrowed under the Financing Agreement. Additionally, failure to meet the foregoing requirements or covenants could restrict the Funds ability to pay dividends to Shareholders and could
necessitate sales of portfolio securities at inopportune times. The Financing Agreement has no stated maturity, but may be terminated by either party without cause with six months advance notice.
Under the terms of the Financing Agreement, the lender has the ability to borrow a portion of the securities pledged as collateral against the loan
(Rehypothecated Securities), subject to certain limits. The Fund receives a fee from the lender in connection with any Rehypothecated Securities. The Fund may recall any Rehypothecated Security at any time and the lender is required to
return the security in a timely fashion. In the event the lender does not return the security, the Fund will have the right to, among other things, apply and set off an amount equal to 100% of the then-current fair market value of such
Rehypothecated Securities against any loan amounts owed to the lender under the Financing Agreement. Rehypothecated Securities are marked-to-market daily and adjusted as necessary so the value of all Rehypothecated Securities does not exceed 100% of
the loan amount under the Financing Agreement. The Fund will continue to earn and receive all dividends, interest, and other distributions on Rehypothecated Securities. Rehypothecated Securities are identified in the Portfolio of Investments listing
and fees earned from rehypothecation are included in the Statement of Operations.
9.
|
Portfolio Investments, Concentration and Investment Quality
|
The Fund invests primarily in a diversified portfolio of preferred and debt securities. This includes fully taxable preferred securities and traditional preferred stocks eligible for the inter-corporate dividends
received deduction (DRD). Under normal market conditions, at least 50% of the Funds total assets will be invested in preferred securities. Also, under normal market conditions, the Fund invests at least 25% of its total assets in
the financials sector, which for this purpose is comprised of the bank, thrifts & mortgage finance, diversified financial services, finance, consumer finance, capital markets, asset management & custody, investment
banking & brokerage, insurance, insurance brokers, and real estate investment trusts (REIT) industries. From time to time, the Fund may have 25% or more of its total assets invested in any one of these industries. The Funds portfolio
may therefore be subject to greater risk and market fluctuation than a portfolio of securities representing a broader range of investment alternatives.
35
Flaherty & Crumrine/Claymore Total Return Fund Incorporated
NOTES TO FINANCIAL STATEMENTS (Continued)
The Fund may invest up to 20% of its assets at the time of purchase in securities rated below
investment grade by all of Moodys, S&P and Fitch, provided that (a) such securities are rated at least Ba3 by Moodys, BB- by S&P, or BB- by Fitch or (b) such securities are issued by
an issuer having an outstanding class of senior debt rated investment grade by any one of Moodys, S&P, or Fitch at the time of purchase. Thus, the Fund may invest in securities rated below Ba3 by Moodys, BB-
by S&P and BB- by Fitch if the issuer has investment grade senior debt outstanding. In addition, the Fund may invest in unrated securities that the Funds investment adviser deems to be comparable in quality to rated issues in
which the Fund is authorized to invest.
The Fund may invest up to 15% of its total assets in common stocks, which total includes those
convertible securities that trade in close relationship to the underlying common stock of an issuer. Certain of its investments in hybrid, i.e., fully taxable, preferred securities will be considered debt securities to the extent that, in the
opinion of the Adviser, such investments are deemed to be debt-like in key characteristics. Typically, a security will not be considered debt-like (a) if an issuer can defer payment of income for eighteen months or more without triggering an
event of default and (b) if such issue is a junior and fully subordinated liability of an issuer or its ultimate guarantor.
In
addition to foreign money market securities, the Fund may invest up to 30% of its total assets in the securities of companies organized or having their principal place of business outside the United States. All foreign securities held by the Fund
will be denominated in U.S. dollars.
The Fund may employ certain investment techniques in accordance with its fundamental investment
policies. These may include the use of when-issued and delayed delivery transactions. Securities purchased or sold on a when-issued or delayed delivery basis may be settled within 45 days after the date of the transaction. The Fund may also enter
into transactions, in accordance with its investment policies, involving short sales of securities and purchases of securities on margin. Such transactions may expose the Fund to credit and market valuation risk greater than that associated with
regular trade settlement procedures.
Management has evaluated
the impact of all subsequent events on the Fund through the date the financial statements were issued, and has determined that there were no subsequent events requiring recognition or disclosure in the financial statements.
36
REPORT TO INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Shareholders and Board of Directors of
Flaherty &
Crumrine/Claymore Total Return Fund Incorporated
We have audited the accompanying statement of assets and liabilities, including the
portfolio of investments, of Flaherty & Crumrine/Claymore Total Return Fund Incorporated, as of November 30, 2012, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the years in
the two-year period then ended, the statement of cash flows for the year then ended, and the financial highlights for each of the years in the five-year period then ended. These financial statements and financial highlights are the responsibility of
the Funds management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included
confirmation of securities owned as of November 30, 2012, by correspondence with the custodian, and brokers, or by other appropriate auditing procedures. An audit also includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Flaherty & Crumrine/Claymore Total Return Fund
Incorporated as of November 30, 2012, the results of its operations, the changes in its net assets, its cash flows, and the financial highlights for the periods specified in the first paragraph above, in conformity with U.S. generally accepted
accounting principles.
Boston, Massachusetts
January
23, 2013
37
Flaherty & Crumrine/Claymore Total Return Fund Incorporated
ADDITIONAL INFORMATION (Unaudited)
Dividend Reinvestment and Cash Purchase Plan
Under the Funds Dividend Reinvestment and Cash Purchase Plan (the Plan), a shareholder whose Common Stock is registered in his or
her own name will have all distributions reinvested automatically by BNY Mellon as agent under the Plan, unless the shareholder elects to receive cash. Registered shareholders may elect to receive cash by contacting BNY Mellon at the number provided
below. If shares are registered in the name of a broker-dealer or other nominee (that is, in street name) and the broker or nominee participates in the Plan, distributions may be reinvested by the broker or nominee in additional shares
under the Plan, unless the shareholder elects to receive distributions in cash. Shareholders may elect to receive cash by contacting their broker or nominee. A shareholder who holds Common Stock registered in the name of a broker or other nominee
may not be able to transfer the Common Stock to another broker or nominee and continue to participate in the Plan. Investors who own Common Stock registered in street name should consult their broker or nominee for details regarding reinvestment.
The number of shares of Common Stock distributed to participants in the Plan in lieu of a cash dividend is determined in the following
manner. Whenever the market price per share of the Funds Common Stock is equal to or exceeds the net asset value per share on the valuation date, participants in the Plan will be issued new shares valued at the higher of net asset value or 95%
of the then current market value. Otherwise, BNY Mellon will buy shares of the Funds Common Stock in the open market, on the New York Stock Exchange (NYSE) or elsewhere, on or shortly after the payment date of the dividend or
distribution and continuing until the ex-dividend date of the Funds next distribution to holders of the Common Stock or until it has expended for such purchases all of the cash that would otherwise be payable to the participants. The number of
purchased shares that will then be credited to the participants accounts will be based on the average per share purchase price of the shares so purchased, including brokerage commissions. If BNY Mellon commences purchases in the open market
and the then current market price of the shares (plus any estimated brokerage commissions) subsequently exceeds their net asset value most recently determined before the completion of the purchases, BNY Mellon will attempt to terminate purchases in
the open market and cause the Fund to issue the remaining dividend or distribution in shares. In this case, the number of shares received by the participant will be based on the weighted average of prices paid for shares purchased in the open market
and the price at which the Fund issues the remaining shares. These remaining shares will be issued by the Fund at the higher of net asset value or 95% of the then current market value.
Plan participants are not subject to any charge for reinvesting dividends or capital gains distributions. Each Plan participant will, however, bear
a proportionate share of brokerage commissions incurred with respect to BNY Mellons open market purchases in connection with the reinvestment of dividends or capital gains distributions. For the year ended November 30, 2012, there were no
brokerage commissions incurred.
The automatic reinvestment of dividends and capital gains distributions will not relieve Plan
participants of any income tax that may be payable on the dividends or capital gains distributions. A participant in the Plan will be treated for Federal income tax purposes as having received, on the dividend payment date, a dividend or
distribution in an amount equal to the cash that the participant could have received instead of shares.
38
Flaherty & Crumrine/Claymore Total Return Fund Incorporated
ADDITIONAL INFORMATION (Unaudited)
(Continued)
In addition to acquiring shares of Common Stock through the reinvestment of cash dividends and
distributions, a shareholder may invest any further amounts from $100 to $3,000 semi-annually at the then current market price in shares purchased through the Plan. Such semi-annual investments are subject to any brokerage commission charges
incurred by BNY Mellon under the Plan.
A shareholder whose Common Stock is registered in his or her own name may terminate participation
in the Plan at any time by notifying BNY Mellon in writing, by completing the form on the back of the Plan account statement and forwarding it to BNY Mellon, or by calling BNY Mellon directly. A termination will be effective immediately if notice is
received by BNY Mellon not less than 10 days before any dividend or distribution record date. Otherwise, the termination will be effective, and only with respect to any subsequent dividends or distributions, on the first day after the dividend or
distribution has been credited to the participants account in additional shares of the Fund. Upon termination and according to a participants instructions, BNY Mellon will either (a) issue certificates for the whole shares credited
to the shareholders Plan account and a check representing any fractional shares or (b) sell the shares in the market. Shareholders who hold Common Stock registered in the name of a broker or other nominee should consult their broker or
nominee to terminate participation.
The Plan is described in more detail in the Funds Plan brochure. Information concerning the
Plan may be obtained from BNY Mellon at 1-866-351-7446.
Additional Compensation Agreement
The Adviser has agreed to compensate Merrill Lynch from its own resources at an annualized rate of 0.15% of the Funds total managed assets for
certain services, including after-market support services designed to maintain the visibility of the Fund.
Proxy Voting Policies and Proxy Voting
Record on Form N-PX
The Fund files Form N-PX with its complete proxy voting record for the 12 months ended June 30th no later than
August 31st of each year. The Fund filed its latest Form N-PX with the Securities and Exchange Commission (SEC) on July 25, 2012. This filing as well as the Funds proxy voting policies and procedures are available
(i) without charge, upon request, by calling the Funds transfer agent at 1-866-351-7446 and (ii) on the SECs website at
www.sec.gov
. In addition, the Funds proxy voting policies and procedures are available on the
Funds website at
www.fcclaymore.com
.
Portfolio Schedule on Form N-Q
The Fund files a complete schedule of portfolio holdings with the SEC for the first and third fiscal quarters on Form N-Q, the latest of which was
filed for the quarter ended August 31, 2012. The Funds Form N-Q is available on the SECs website at
www.sec.gov
or may be viewed and obtained from the SECs Public Reference Room in Washington D.C. Information on the
operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330.
39
Flaherty & Crumrine/Claymore Total Return Fund Incorporated
ADDITIONAL INFORMATION (Unaudited) (Continued)
Portfolio Management Team
In managing the day-to-day operations of the Fund, the Adviser relies on the expertise of its team of money management professionals, consisting of Messrs. Crumrine, Ettinger, Stone and Chadwick. The professional
backgrounds of each member of the management team are included in the Information about Fund Directors and Officers section of this report.
Supplementary Tax Information
Distributions
to Common Stock Shareholders are characterized as follows for purposes of Federal income taxes (as a percentage of total distributions). Individual Shareholders will receive a Form 1099-DIV in 2013 with information about the tax character of
distributions they received in calendar year 2012.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Individual Shareholder
|
|
|
Corporate Shareholder
|
|
|
|
QDI
|
|
|
Ordinary
Income
|
|
|
DRD
|
|
|
Ordinary
Income
|
|
Fiscal Year 2012
|
|
|
41.42
|
%
|
|
|
58.58
|
%
|
|
|
15.94
|
%
|
|
|
84.06
|
%
|
Calendar Year 2012
|
|
|
41.49
|
%
|
|
|
58.51
|
%
|
|
|
16.04
|
%
|
|
|
83.96
|
%
|
40
Flaherty & Crumrine/Claymore Total Return Fund Incorporated
ADDITIONAL INFORMATION
(Unaudited) (Continued)
Information about Fund Directors and Officers
The business and affairs of the Fund are managed under the direction of the Funds Board of Directors. Information pertaining to the Directors
and officers of the Fund is set forth below.
|
|
|
|
|
|
|
|
|
|
|
Name, Address,
and Age
|
|
Current
Position(s)
Held with Fund
|
|
Term of Office
and Length of
Time Served*
|
|
Principal
Occupation(s)
During Past
Five Years
|
|
Number of Funds
in Fund Complex
Overseen
by Director**
|
|
Other
Public Companies
Board
Memberships
During Past Five Years
|
NON-INTERESTED DIRECTORS:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David Gale
Delta Dividend Group, Inc. 220 Montgomery Street Suite 426
San Francisco, CA 94104 Age: 63
|
|
Director
|
|
Class I Director since
August 2003
|
|
President of Delta
Dividend Group, Inc.
(investments)
|
|
4
|
|
Metromedia
International Group,
Inc. and Emmis
Communications
|
|
|
|
|
|
|
Morgan Gust
301 E. Colorado Boulevard Suite 720
Pasadena, CA 91101
Age: 65
|
|
Director
and
Nominating
and
Governance Committee Chairman
|
|
Class II Director since
August 2003
|
|
Owner and operator of
various entities engaged
in agriculture and real
estate
|
|
4
|
|
CoBiz Financial, Inc. (financial services)
|
|
|
|
|
|
|
Karen H. Hogan
301 E. Colorado Boulevard Suite 720
Pasadena, CA 91101
Age: 51
|
|
Director
|
|
Class II Director since
July 2005
|
|
Board Member, IKAR, a non-profit organization; Active Member, Committee Member and Volunteer to several non-profit organizations.
|
|
4
|
|
None
|
*
|
The Funds Board of Directors 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. The three year term for each class expires as follows:
|
Class I Director
three year term expires at the Funds 2014 Annual Meeting of Shareholders; director may continue in office until his successor is duly elected and qualified.
Class II Directors
three year term expires at the Funds 2015 Annual Meeting of Shareholders; directors may
continue in office until their successors are duly elected and qualified.
Class III Directors
three year
term expires at the Funds 2013 Annual Meeting of Shareholders; directors may continue in office until their successors are duly elected and qualified.
**
|
Each Director also serves as a Director for Flaherty & Crumrine Preferred Income Fund, Flaherty & Crumrine Preferred Income Opportunity Fund, and
Flaherty & Crumrine/Claymore Preferred Securities Income Fund.
|
41
Flaherty & Crumrine/Claymore Total Return Fund Incorporated
ADDITIONAL INFORMATION (Unaudited) (Continued)
|
|
|
|
|
|
|
|
|
|
|
Name, Address,
and Age
|
|
Current
Position(s)
Held with Fund
|
|
Term of Office
and Length of
Time Served*
|
|
Principal
Occupation(s)
During Past
Five Years
|
|
Number of Funds
in Fund Complex
Overseen
by Director**
|
|
Other
Public Company
Board
Memberships
During Past Five Years
|
NON-INTERESTED DIRECTORS:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert F. Wulf
1000 SW Vista Ave, Apt 314
Portland, OR 97205
Age: 75
|
|
Director
and Audit
Committee
Chairman
|
|
Class III Director since
August 2003
|
|
Financial Consultant; Trustee, University of Oregon Foundation; Trustee, San Francisco Theological Seminary
|
|
4
|
|
None
|
|
|
|
|
|
|
INTERESTED
DIRECTOR:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Donald F. Crumrine
301 E. Colorado Boulevard Suite 720
Pasadena, CA 91101
Age: 65
|
|
Director, Chairman of
the Board and
Chief
Executive
Officer
|
|
Class III Director since
August 2003
|
|
Chairman of the Board and Director of Flaherty & Crumrine Incorporated
|
|
4
|
|
None
|
*
|
The Funds Board of Directors 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. The three year term for each class expires as follows:
|
Class I Director
three year term expires at the Funds 2014 Annual Meeting of Shareholders; director may continue in office until his successor is duly elected and qualified.
Class II Directors
three year term expires at the Funds 2015 Annual Meeting of Shareholders; directors may
continue in office until their successors are duly elected and qualified.
Class III Directors
three year
term expires at the Funds 2013 Annual Meeting of Shareholders; directors may continue in office until their successors are duly elected and qualified.
**
|
Each Director also serves as a Director for Flaherty & Crumrine Preferred Income Fund; Flaherty & Crumrine Preferred Income Opportunity Fund, and
Flaherty & Crumrine/Claymore Preferred Securities Income Fund.
|
|
Interested person of the Fund as defined in the 1940 Act. Mr. Crumrine is considered an interested person because of his affiliation with
Flaherty & Crumrine Incorporated, which acts as the Funds investment adviser.
|
42
Flaherty & Crumrine/Claymore Total Return Fund Incorporated
ADDITIONAL INFORMATION
(Unaudited) (Continued)
|
|
|
|
|
|
|
Name, Address,
and Age
|
|
Current
Position(s)
Held with Fund
|
|
Term of Office
and Length of
Time Served
|
|
Principal
Occupation(s)
During Past
Five Years
|
|
|
|
|
OFFICERS:
|
|
|
|
|
|
|
|
|
|
|
Robert M. Ettinger
301 E. Colorado Boulevard Suite 720
Pasadena, CA 91101
Age: 54
|
|
President
|
|
Since
August 2003
|
|
President and Director of Flaherty &
Crumrine Incorporated
|
|
|
|
|
R. Eric Chadwick
301 E. Colorado Boulevard Suite 720
Pasadena, CA 91101
Age: 37
|
|
Chief Financial
Officer, Vice
President and
Treasurer
|
|
Since
July 2004
|
|
Vice President and Director of
Flaherty & Crumrine Incorporated
|
|
|
|
|
Chad C. Conwell
301 E. Colorado Boulevard Suite 720
Pasadena, CA 91101
Age: 40
|
|
Chief Compliance
Officer, Vice
President and
Secretary
|
|
Since
July 2005
|
|
Chief Compliance Officer & Vice
President of Flaherty & Crumrine
Incorporated; Director of Flaherty &
Crumrine Incorporated since
January 2011
|
|
|
|
|
Bradford S. Stone
47 Maple Street
Suite 403
Summit, NJ 07901
Age: 53
|
|
Vice President and
Assistant
Treasurer
|
|
Since
August 2003
|
|
Vice President and Director of
Flaherty &
Crumrine Incorporated
|
|
|
|
|
Laurie C. Lodolo
301 E. Colorado Boulevard Suite 720
Pasadena, CA 91101
Age: 49
|
|
Assistant
Compliance
Officer, Assistant
Treasurer and
Assistant Secretary
|
|
Since
July 2004
|
|
Assistant Compliance Officer and
Secretary of Flaherty & Crumrine
Incorporated
|
|
|
|
|
Linda M. Puchalski
301 E. Colorado Boulevard Suite 720
Pasadena, CA 91101
Age: 56
|
|
Assistant
Treasurer
|
|
Since
August 2010
|
|
Administrator of Flaherty & Crumrine
Incorporated
|
43
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
Linda M. Puchalski
Assistant Treasurer
Investment Adviser
Flaherty & Crumrine Incorporated
e-mail:
flaherty@pfdincome.com
Servicing Agent
Guggenheim Funds Distributors, LLC 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 Funds Transfer Agent
|
BNY Mellon Investment Servicing
P.O. Box 358035
Pittsburgh, PA 15252-8035
1-866-351-7446
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.
Annual
Report
November 30, 2012
www.fcclaymore.com