def14a
SCHEDULE 14A
PROXY STATEMENT
PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by Registrant þ
Filed by Party other than the Registrant
Check the appropriate box:
o Preliminary Proxy Statement
o Confidential for Use of the Commission Only as permitted by Rule 14a-6(e)(2)
þ Definitive Proxy Statement
o Definitive Additional Materials
o Soliciting Material Pursuant to Rule 14a-11c or Rule 14a-12
Flaherty & Crumrine Preferred Income Fund Incorporated
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
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No fee required |
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o |
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11 |
(1) |
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Title of each class of securities to which transaction applies:
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Aggregate number of securities to which transaction applies:
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Per unit price or other underlying value of transaction computed pursuant to Exchange Act
Rule 0-11. (Set forth the amount on which the filing fee is calculated and state how it was
determined):
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Proposed maximum aggregate value of transaction:
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Total fee paid:
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Fee paid previously with preliminary materials. |
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Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and
identify the filing for which the offsetting fee was paid previously. Identify the previous filing
by registration statement number, or the Form or Schedule and the date of its filing. |
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Amount previously paid:
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Form, Schedule or Registration Statement No.:
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FLAHERTY &
CRUMRINE PREFERRED INCOME FUND INCORPORATED (NYSE: PFD)
FLAHERTY & CRUMRINE PREFERRED INCOME OPPORTUNITY
FUND INCORPORATED (NYSE: PFO)
FLAHERTY & CRUMRINE/CLAYMORE PREFERRED SECURITIES
INCOME FUND INCORPORATED (NYSE: FFC)
FLAHERTY & CRUMRINE/CLAYMORE TOTAL RETURN
FUND INCORPORATED (NYSE: FLC)
301 E. Colorado
Boulevard, Suite 720
Pasadena, California 91101
NOTICE OF
ANNUAL MEETINGS OF SHAREHOLDERS
To Be Held on April 15, 2011
To the Shareholders:
Notice is hereby given that the Annual Meetings of Shareholders
of Flaherty & Crumrine Preferred Income
Fund Incorporated, Flaherty & Crumrine Preferred
Income Opportunity Fund Incorporated, Flaherty &
Crumrine/Claymore Preferred Securities Income
Fund Incorporated and Flaherty &
Crumrine/Claymore Total Return Fund Incorporated (each, a
Fund and collectively, the Funds), each
a Maryland corporation, will be held at the offices of
Flaherty & Crumrine Incorporated,
301 E. Colorado Boulevard, Suite 720, Pasadena,
California 91101 at 8:30 a.m. PT, on April 15,
2011, for the following purposes:
Each Fund:
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1.
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To elect Directors of each Fund (Proposal 1).
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2.
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To transact such other business as may properly come before the
Annual Meetings or any adjournments thereof.
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Your vote
is important!
The Board of Directors of each Fund has fixed the close of
business on January 21, 2011 as the record date for the
determination of shareholders of each Fund entitled to notice of
and to vote at the Annual Meetings and any adjournments or
postponements thereof.
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By Order of the Boards of Directors,
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February 25, 2011
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CHAD C. CONWELL
Secretary
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Important Notice Regarding the
Availability of Proxy Materials for the
Shareholder Meeting to Be Held on April 15,
2011.
The notice of Annual Meetings of Shareholders, joint proxy
statement and proxy cards for the Funds are available to you on
each Funds website - www.preferredincome.com for PFD
and PFO and www.fcclaymore.com for FFC and FLC. You are
encouraged to review all of the information contained in the
proxy materials before voting.
To obtain directions to attend the Annual Meetings and vote
in person, please call 1-626-795-7300.
SEPARATE PROXY CARDS ARE ENCLOSED FOR EACH FUND IN WHICH
YOU OWN SHARES. SHAREHOLDERS WHO DO NOT EXPECT TO ATTEND THE
ANNUAL MEETINGS ARE REQUESTED TO COMPLETE, SIGN AND DATE THE
ENCLOSED PROXY CARD(S). The proxy card(s) should be returned in
the enclosed envelope, which needs no postage if mailed in the
continental United States. Instructions for the proper execution
of proxies are set forth on the inside cover.
INSTRUCTIONS FOR
SIGNING PROXY CARDS
The following general rules for signing proxy cards may be of
assistance to you and may minimize the time and expense to the
Fund(s) involved in validating your vote if you fail to sign
your proxy card(s) properly.
1. Individual Accounts: Sign your
name exactly as it appears in the registration on the proxy
card(s).
2. Joint Accounts: Either party may
sign, but the name of the party signing should conform exactly
to a name shown in the registration.
3. All Other Accounts: The capacity
of the individual signing the proxy card should be indicated
unless it is reflected in the form registration. For example:
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Registration
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Valid Signature
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Corporate Accounts
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(1) ABC Corp.
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ABC Corp.
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(2) ABC Corp.
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John Doe, Treasurer
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(3) ABC Corp.
c/o John
Doe, Treasurer
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John Doe
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(4) ABC Corp. Profit Sharing Plan
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John Doe, Trustee
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Trust Accounts
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(1) ABC Trust
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Jane B. Doe, Trustee
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(2) Jane B. Doe, Trustee
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Jane B. Doe
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u/t/d
12/28/78
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Custodian or Estate Accounts
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(1) John B. Smith, Cust.,
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f/b/o
John B. Smith, Jr. UGMA
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John B. Smith
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(2) John B. Smith, Executor,
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Estate
of Jane Smith
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John B. Smith, Jr., Executor
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FLAHERTY &
CRUMRINE PREFERRED INCOME FUND INCORPORATED (NYSE: PFD)
FLAHERTY & CRUMRINE PREFERRED INCOME OPPORTUNITY
FUND INCORPORATED (NYSE: PFO)
FLAHERTY & CRUMRINE/CLAYMORE PREFERRED SECURITIES
INCOME FUND INCORPORATED (NYSE:FFC)
FLAHERTY & CRUMRINE/CLAYMORE TOTAL RETURN
FUND INCORPORATED (NYSE: FLC)
301 E. Colorado
Boulevard, Suite 720
Pasadena, California 91101
ANNUAL
MEETINGS OF SHAREHOLDERS
April 15,
2011
JOINT
PROXY STATEMENT
This document is a joint proxy statement (Joint Proxy
Statement) for Flaherty & Crumrine Preferred
Income Fund Incorporated (Preferred Income Fund
or PFD), Flaherty & Crumrine Preferred
Income Opportunity Fund Incorporated (Preferred
Income Opportunity Fund or PFO),
Flaherty & Crumrine/Claymore Preferred Securities
Income Fund Incorporated (Preferred Securities Income
Fund or FFC) and Flaherty &
Crumrine/Claymore Total Return Fund Incorporated
(Total Return Fund or FLC) (each a
Fund and collectively, the Funds). This
Joint Proxy Statement is furnished in connection with the
solicitation of proxies by each Funds Board of Directors
(each, a Board and collectively, the
Boards) for use at the Annual Meeting of
Shareholders of each Fund to be held on April 15, 2011, at
8:30 a.m. PT, at the offices of Flaherty &
Crumrine Incorporated, 301 E. Colorado Boulevard,
Suite 720, Pasadena, California 91101 and at any
adjournments or postponements thereof (each a
Meeting and collectively, the Meetings).
A Notice of Annual Meetings of Shareholders and proxy card for
each Fund of which you are a shareholder accompany this Joint
Proxy Statement. Proxy solicitations will be made, beginning on
or about February 25, 2011, primarily by mail, but proxy
solicitations may also be made by telephone, telefax or personal
interviews conducted by officers of each Fund,
Flaherty & Crumrine Incorporated
(Flaherty & Crumrine), the investment
adviser of each Fund, Guggenheim Funds Distributors, Inc., the
servicing agent of FFC and FLC, and BNY Mellon Investment
Servicing (US) Inc. (BNY Mellon), the transfer agent
and administrator of each Fund. Costs of proxy solicitation and
expenses incurred in connection with the preparation of this
Joint Proxy Statement and its enclosures will be shared
proportionally by the Funds. Each Fund also will reimburse
brokerage firms and others for their expenses in forwarding
solicitation material to the beneficial owners of its shares.
This Joint Proxy Statement and form of proxy are first being
sent to shareholders on or about February 25, 2011.
THE ANNUAL REPORT OF EACH FUND, INCLUDING AUDITED FINANCIAL
STATEMENTS FOR THE FISCAL YEAR ENDED NOVEMBER 30, 2010, IS
AVAILABLE UPON REQUEST, WITHOUT CHARGE, BY WRITING TO BNY MELLON
SHAREOWNER SERVICES, P.O. BOX 358035, PITTSBURGH, PENNSYLVANIA
15252-8035,
OR CALLING 1-866-351-7446. EACH FUNDS ANNUAL REPORT IS
ALSO AVAILABLE ON THE FUNDS WEBSITES -
WWW.PREFERREDINCOME.COM FOR PFD AND PFO AND WWW.FCCLAYMORE.COM
FOR FFC AND FLC - THE SECURITIES AND EXCHANGE
COMMISSIONS (SEC) WEBSITE (WWW.SEC.GOV) OR,
FOR FFC AND FLC ONLY, BY CALLING GUGGENHEIM FUNDS DISTRIBUTORS,
INC. AT 1-866-233-4001.
Important Notice Regarding the
Availability of Proxy Materials for the
Shareholder Meeting to Be Held on April 15, 2011.
The notice of Annual Meetings of Shareholders, joint proxy
statement and proxy cards for the Funds are available to you on
each Funds website - www.preferredincome.com for PFD
and PFO and www.fcclaymore.com for FFC and FLC. You are
encouraged to review all of the information contained in the
proxy materials before voting.
To obtain directions to attend the Annual Meetings and vote
in person, please call 1-626-795-7300.
SEPARATE PROXY CARDS ARE ENCLOSED FOR EACH FUND IN WHICH
YOU OWN SHARES. SHAREHOLDERS WHO DO NOT EXPECT TO ATTEND THE
ANNUAL MEETINGS ARE REQUESTED TO COMPLETE, SIGN AND DATE THE
ENCLOSED PROXY CARD(S). The proxy card(s) should be returned in
the enclosed envelope, which needs no postage if mailed in the
continental United States. Instructions for the proper execution
of proxies are set forth on the inside cover.
1
If the enclosed proxy card is properly executed and returned in
time to be voted at the relevant Meeting, the Shares (as defined
below) represented thereby will be voted in accordance with the
instructions marked thereon. Unless instructions to the contrary
are marked thereon, a proxy will be voted FOR the
election of the nominees for Director. Any shareholder who has
given a proxy has the right to revoke it at any time prior to
its exercise either by attending the relevant Meeting and voting
his or her Shares in person or by submitting a letter of
revocation or a later-dated proxy to the appropriate Fund
delivered at the above address prior to the date of the Meeting.
Under the Bylaws of each Fund, the presence in person or by
proxy of the holders of a majority of the outstanding Shares of
the Fund entitled to vote shall be necessary and sufficient to
constitute a quorum for the transaction of business (a
Quorum) at that Funds Meeting. In the event
that a Quorum is not present at a Meeting, or in the event that
a Quorum is present but sufficient votes to approve any of the
proposals are not received, the persons named as proxies may
propose one or more adjournments of the Meeting to permit
further solicitation of proxies. Any such adjournment will
require the affirmative vote of a majority of those Shares
represented at the Meeting in person or by proxy. If a Quorum is
present, the persons named as proxies will vote those proxies
which they are entitled to vote FOR a proposal in
favor of such an adjournment with respect to that proposal and
will vote those proxies required to be voted AGAINST
a proposal against any such adjournment with respect to that
proposal. A shareholder vote may be taken on a proposal in the
Joint Proxy Statement prior to any such adjournment if
sufficient votes have been received for approval of that
proposal.
Each Fund has one class of capital stock outstanding: common
stock, par value $0.01 per share (the Common Stock
or the Shares). Each Share is entitled to one vote
at the Meeting with respect to matters to be voted on, with pro
rata voting rights for any fractional Shares. On the record
date, January 21, 2011, the following number of Shares of
each Fund were issued and outstanding:
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Common Stock
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Name of Fund
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Outstanding
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Preferred Income Fund (PFD)
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10,767,784
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Preferred Income Opportunity Fund (PFO)
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12,003,099
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Preferred Securities Income Fund (FFC)
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42,866,396
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Total Return Fund (FLC)
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9,807,738
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To the knowledge of each Fund and its Board, the following
shareholder(s), or group as that term is defined in
Section 13(d) of the Securities Exchange Act of 1934, as
amended (the 1934 Act), is the beneficial owner
or owner of record of more than 5% of the relevant Funds
outstanding Shares as of January 21,
2011*:
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Name and Address of
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Amount and Nature
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Beneficial/Record Owner
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Title of Class
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of Ownership
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Percent of Class
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Cede & Co.**
Depository Trust Company
55 Water Street,
25th
Floor
New York, NY 10041
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Common Stock
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PFD 10,331,655 (record)
PFO 11,531,381 (record)
FFC 42,786,996 (record)
FLC 9,796,788 (record)
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95.95%
96.07%
99.81%
99.89%
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First Trust Portfolios
L.P.1
First Trust Advisors L.P.
The Charger Corporation
120 East Liberty Drive, Suite 400
Wheaton, IL 60187
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Common Stock
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FFC 2,384,528 (beneficial)
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5.60%
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2
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Name and Address of
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Amount and Nature
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Beneficial/Record Owner
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Title of Class
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of Ownership
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Percent of Class
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Claymore Securities Defined
Portfolios, Series 305, 352, 390, 434,
453, 494, 590, 592, 596, 601, 614,
621, 635, 644, 651, 652, 661, 664,
672, 683, 713; and Guggenheim Defined
Portfolios,
Series 7422
2455 Corporate West Drive
Lisle, IL 60532
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Common Stock
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FLC 672,476 (beneficial)
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6.86%
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Spectrum Asset Management, Inc.
2 High Ridge Park
Stamford, CT 06905
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Common Stock
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FFC 2,960,5003
(beneficial)
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6.93%
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*
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As of January 21, 2011, the
Directors and officers, as a group, owned less than 1% of the
Shares of each Fund.
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1
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Information obtained from a
Schedule 13G filed by First Trust Portfolios L.P.
(FT Portfolios) First Trust Advisors L.P.
(FT Advisors) and The Charger Corporation
(Charger) with the SEC reporting share ownership as
of December 31, 2010. Based on that filing, FT Portfolios,
FT Advisors and Charger have the shared power to vote or direct
the vote or dispose or direct the disposition of
2,384,528 Shares of Common Stock.
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Information obtained from a
Schedule 13G/A filed by Guggenheim Funds Distributors, Inc.
with the SEC reporting share ownership as of December 31,
2010. Based on that filing, Claymore Securities Defined
Portfolios and Guggenheim Defined Portfolios, Series 742
has the sole power to vote or direct the vote or dispose or
direct the disposition of 672,476 Shares of Common Stock.
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Information obtained from a
Schedule 13G filed by Spectrum Asset Management, Inc.
(Spectrum) with the SEC reporting share ownership as
of December 31, 2010. Based on that filing, Spectrum and
Principal Financial Group Inc. (Principal) have the
shared power to vote or direct the vote or dispose or direct the
disposition of 2,960,500 Shares of Common Stock.
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This Joint Proxy Statement is being used in order to reduce the
preparation, printing, handling and postage expenses that would
result from the use of a separate proxy statement for each Fund.
Shareholders of each Fund will vote as a single class.
Shareholders of each Fund will vote separately for each of PFD,
PFO, FFC and FLC on the proposal on which shareholders of that
Fund are entitled to vote. Separate proxy cards are enclosed for
each Fund in which a shareholder is a record owner of Shares.
Thus, if a proposal is approved by shareholders of one or more
Funds and not approved by shareholders of one or more other
Funds, the proposal will be implemented for the Fund or Funds
that approved the proposal and will not be implemented for any
Fund that did not approve the proposal. It is therefore
essential that shareholders complete, date and sign each
enclosed proxy card. Shareholders of each Fund are entitled
to vote on the proposal pertaining to that Fund.
PROPOSAL 1:
ELECTION OF DIRECTORS
At the Meetings, shareholders are being asked to consider the
election of Directors of each Fund. The Board of each Fund is
divided into three classes, each class having a term of three
years. Each year the term of office of one class expires and the
successor or successors elected to such class serve for a
three-year term and until their successors are duly elected and
qualified.
Nominees
for the Boards of Directors
Each nominee named below has consented to serve as a Director if
elected at the relevant Meeting. If a designated nominee
declines or otherwise becomes unavailable for election, however,
the proxy confers discretionary power on the persons named
therein to vote in favor of a substitute nominee or nominees.
Mr. Gale and Ms. Hogan, each a Class I Director
of PFD, have each been nominated for a three-year term to expire
at PFDs 2014 Annual Meeting of Shareholders and until
their successors are duly elected and qualified. Mr. Gust
and Ms. Hogan, each a Class III Director of PFO, have
each been nominated for a three-year term to expire
3
at PFOs 2014 Annual Meeting of Shareholders and until
their successors are duly elected and qualified. Mr. Gale,
a Class I Director of FFC and FLC, has been nominated for a
three-year term to expire at each Funds 2014 Annual
Meeting of Shareholders and until his successor is duly elected
and qualified. Shareholders of each Funds Common Stock are
entitled to elect the nominees for election to the Board of the
relevant Fund.
Information About Each Directors Experience,
Qualifications, Attributes or Skills
Directors of the Funds, together with information as to their
positions with the Funds, principal occupations and other board
memberships for the past five years, are shown below.
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Number of
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Funds in
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Other Public
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Current
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Fund
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Company Board
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Position(s)
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Term of Office and
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Principal Occupation
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Complex
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Memberships
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Held with
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Length of Time
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During Past Five
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Overseen by
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During Past 5
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Name, Address and Age
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Funds
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Served**
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Years
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Director*
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Years
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Non-Interested Directors:
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David Gale
Delta Dividend Group, Inc. 220 Montgomery Street
Suite 426
San Francisco, CA 94104 Age: 61
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Director
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Class I Director
PFD since 1997
PFO since 1997
FFC since inception
FLC since inception
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President of Delta Dividend Group, Inc. (investments)
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4
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Metromedia
International
Group, Inc.
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Morgan Gust 301 E. Colorado Boulevard
Suite 720
Pasadena, CA 91101
Age: 63
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Director and
Nominating and
Governance
Committee
Chairman
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Class III Director PFD since inception PFO since inception
Class II Director FFC since inception FLC since inception
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Owner and operator of various entities engaged in agriculture
and real estate; Former President of Giant Industries, Inc.
(petroleum refining and marketing) from March 2002 through June
2007
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4
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CoBiz Financial,
Inc. (financial
services)
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Karen H. Hogan 301 E. Colorado Boulevard
Suite 720
Pasadena, CA 91101
Age: 49
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Director
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Class I Director PFD since 2005
Class III Director PFO since 2005
Class II Director FFC since 2005 FLC since 2005
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Active Committee Member and Volunteer to several non-profit
organizations; from September 1985 to January 1997, Senior Vice
President of Preferred Stock Origination at Lehman Brothers and
Previously, Vice President of New Product Development
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4
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None
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Robert F. Wulf
P.O. Box 753
Neskowin, OR 97149
Age: 73
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Director and Audit Committee Chairman
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Class II Director PFD since inception PFO since inception
Class III Director FFC since inception FLC since inception
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Financial Consultant; Trustee, University of Oregon Foundation;
Trustee, San Francisco Theological Seminary
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4
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None
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4
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Number of
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Funds in
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Other Public
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Current
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Fund
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Company Board
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Position(s)
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Term of Office and
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Principal Occupation
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Complex
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Memberships
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Held with
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Length of Time
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During Past Five
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Overseen by
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During Past 5
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Name, Address and Age
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Funds
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Served**
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Years
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Director*
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Years
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Interested Director:
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Donald F.
Crumrine(1)
301 E. Colorado Boulevard Suite 720
Pasadena, CA 91101
Age: 63
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Director, Chairman of the Board and Chief Executive Officer
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Class II Director PFD since inception PFO since inception
Class III Director FFC since inception FLC since inception
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Chairman of the Board and Director of Flaherty & Crumrine
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4
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None
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*
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The Funds in the fund complex are:
Flaherty & Crumrine Preferred Income Fund
Incorporated, Flaherty & Crumrine Preferred Income
Opportunity Fund Incorporated, Flaherty &
Crumrine/Claymore Preferred Securities Income
Fund Incorporated and Flaherty &
Crumrine/Claymore Total Return Fund Incorporated.
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The Class I Directors of PFD,
and the Class I Director of FFC and FLC and the
Class III Directors of PFO will serve until each
Funds Annual Meeting of Shareholders in 2014 and until
their successors are duly elected and qualified. The
Class II Directors of PFO and the Class III Directors
of PFD, FFC and FLC will serve until each Funds 2013
Annual Meeting of Shareholders and until their successors are
duly elected and qualified. The Class I Director of PFO,
the Class II Directors of PFD, FFC and FLC will serve until
each Funds Annual Meeting of Shareholders in 2012 and
until their successors are duly elected and qualified.
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Interested person of
the Funds as defined in the Investment Company Act of 1940 (the
1940 Act). Mr. Crumrine is considered an
interested person because of his affiliation with
Flaherty & Crumrine.
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Each Director has been a Director of the Funds for at least five
years. Additional information about each Director follows
(supplementing the information provided in the table above) that
describes some of the specific experiences, qualifications,
attributes or skills that each Director possesses which the
Boards believe have prepared them to be effective Directors. The
Boards believe that Directors need to have the ability to
critically review, evaluate, question and discuss information
provided to them, and to interact effectively with Fund
management, service providers and counsel, in order to exercise
effective business judgment in the performance of their duties;
the Boards believe that their members satisfy this standard.
Experience relevant to having this ability may be achieved
through a Directors educational background; business,
professional training or practice (e.g., accounting or
law); public service or academic positions; experience from
service as a board member (including the Boards of the Funds) or
as an executive of investment funds, public companies or
significant private or
not-for-profit
entities or other organizations;
and/or other
life experiences. The charters for the Boards Nominating
and Governance Committees contain certain other factors
considered by the Committees in identifying and evaluating
potential Director nominees. To assist them in evaluating
matters under federal and state law, the Independent Directors
(defined below) are counseled by their own independent legal
counsel, who participates in Board meetings and interacts with
Flaherty & Crumrine, and also may benefit from
information provided by the Funds and Flaherty &
Crumrines counsel; both counsel to the Independent
Directors and counsel to the Funds and Flaherty &
Crumrine have significant experience advising funds and fund
directors. The Boards and their committees have the ability to
engage other experts as appropriate. The Boards evaluate their
performance on an annual basis.
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Donald F. Crumrine Mr. Crumrine has been
the Chairman of the Boards since each Funds inception.
Mr. Crumrine has over 35 years of experience managing
portfolios of preferred securities. He co-founded
Flaherty & Crumrine in 1983, after spending twelve
years at Scudder, Stevens & Clark, to focus on
managing preferred portfolios and associated hedges.
Mr. Crumrine is actively involved in the
day-to-day
management of all Flaherty & Crumrine client
portfolios, including those of the Funds, and directs client
service and marketing efforts at Flaherty & Crumrine.
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David Gale In addition to his tenure as a
Director of the Funds, Mr. Gale has been President and
Chief Executive Officer of Delta Dividend Group, Inc, a
San Francisco-based investment management firm, since 1992.
Prior to joining Delta Dividend Group, Inc., Mr. Gale was a
Principal with Morgan Stanley from
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5
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February 1983 to January 1990, and a Managing Director of Lehman
Brothers Holdings Inc. from January 1990 to January 1992.
Mr. Gale also served as a director of Metromedia
International Group, Inc., a telecommunications company from
2005 through August 30, 2008.
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Morgan Gust In addition to his tenure as a
Director of the Funds, Mr. Gust is the owner and operator
of various entities engaged in agriculture and real estate. From
1990 to 2007, Mr. Gust served in various capacities,
including President, Executive Vice President, General Counsel
and Corporate Secretary, of Giant Industries, Inc., a petroleum
refining and marketing company listed on the New York Stock
Exchange.
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Karen H. Hogan In addition to her tenure as a
Director of the Funds, Ms. Hogan has served as a board
member and committee member of charitable and non-profit
organizations. From September 1985 to January 1997,
Ms. Hogan served as Senior Vice President of Preferred
Stock Origination, and previously Vice President of New Product
Development, at Lehman Brothers Holdings Inc.
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Robert F. Wulf In addition to his tenure as a
Director of the Funds, Mr. Wulf has worked as a financial
consultant for over 26 years. Mr. Wulf also serves as
a board member of two non-profit organizations.
|
Board Composition and Leadership Structure
The 1940 Act requires that at least 40% of the Funds
Directors not be interested persons (as defined in
the 1940 Act) of the Funds, and therefore not affiliated with
Flaherty & Crumrine (Independent
Directors). To rely on certain exemptive rules under the
1940 Act, a majority of the Funds Directors must be
Independent Directors and, for certain important matters, such
as the approval of investment advisory agreements or
transactions with affiliates, the 1940 Act or the rules
thereunder require the approval of a majority of the Independent
Directors. Currently, four of the Funds five Directors are
Independent Directors. The Chairman of the Boards is an
interested person of the Funds. The four Independent Directors
interact directly with the Chairman and other senior management
of Flaherty & Crumrine at scheduled meetings and
between meetings as appropriate. Independent Directors have been
designated to chair the Audit Committee and the Nominating and
Corporate Governance Committee, and the Independent Directors
rotate the responsibility for chairing meetings of Independent
Directors. In addition, from time to time one or more
Independent Directors may be designated, formally or informally,
to take the lead in addressing with management or their
independent legal counsel matters or issues of concern to the
Boards. As a result, the Boards have determined that their
leadership structures, in which no individual Independent
Director has been designated to lead all the Independent
Directors, are appropriate in light of the Boards size and
the cooperative and dynamic working relationship among the
Independent Directors and the Independent Directors open
lines of communication with Fund management. The Boards have
determined that their leadership structures, in which the
Chairman of the Boards is an interested person of
the Funds and 80% of the Directors are Independent Directors,
are appropriate in light of the services that
Flaherty & Crumrine provides to the Funds and
potential conflicts of interest that could arise from these
relationships.
Boards Oversight Role in Management
The Boards role in management of the Funds is oversight.
As is the case with virtually all investment companies (as
distinguished from operating companies), service providers to
the Funds, primarily Flaherty & Crumrine, have
responsibility for the
day-to-day
management of the Funds, which includes responsibility for risk
management (including management of investment performance and
investment risk, valuation risk, issuer and counterparty credit
risk, compliance risk and operational risk). As part of its
oversight, the Boards, acting at their scheduled meetings, or
the Chairman, acting between Board meetings, regularly interacts
with and receives reports from senior personnel of service
providers, including the Funds and Flaherty &
Crumrines Chief Compliance Officer and portfolio
management personnel. The Boards Audit Committees (which
consist of all the Independent Director) meet during their
scheduled meetings, and between meetings the Audit Committee
chairs maintain contact, with the Funds independent
registered public accounting firm and the Funds Chief
Financial Officer. The Boards also receive periodic
presentations from senior personnel of Flaherty &
Crumrine regarding risk management generally, as well as
periodic presentations regarding specific operational,
compliance or investment areas, such as business continuity,
personal trading, valuation and credit. The Boards have adopted
policies and procedures designed to address certain risks to the
Funds. In addition, Flaherty & Crumrine and other
service providers to the Funds have adopted a variety of
policies, procedures and controls designed to address particular
risks to the Funds.
6
Different processes, procedures and controls are employed with
respect to different types of risks. However, it is not possible
to eliminate all of the risks applicable to the Funds. The
Boards also receive reports from counsel to the Funds and
Flaherty & Crumrine and the Independent
Directors own independent legal counsel regarding
regulatory, compliance and governance matters. The Boards
oversight role does not make the Boards guarantors of the
Funds investments or activities.
Beneficial
Ownership of Shares in Funds and Fund Complex for each
Director and Nominee for Election as Director
Set forth in the table below is the dollar range of equity
securities in each Fund and the aggregate dollar range of equity
securities in the Flaherty & Crumrine Fund Family
beneficially owned by each Director.
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Aggregate Dollar Range of Equity
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|
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Securities in All Registered Investment
|
|
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Dollar Range of Equity
|
|
Companies Overseen by Director in
|
Name of Director or Nominee
|
|
Securities Held in Fund*(1)
|
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Family of Investment Companies*(2)
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PFD
|
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PFO
|
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FFC
|
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FLC
|
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Total
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NON-INTERESTED DIRECTORS:
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|
|
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|
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David Gale
|
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D
|
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D
|
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D
|
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D
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E
|
|
|
|
|
|
|
|
|
|
|
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Morgan Gust
|
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D
|
|
C
|
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C
|
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C
|
|
E
|
|
|
|
|
|
|
|
|
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Karen H. Hogan
|
|
B
|
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B
|
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B
|
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B
|
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C
|
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|
|
|
|
|
|
|
|
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Robert F. Wulf
|
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C
|
|
B
|
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C
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C
|
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D
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|
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INTERESTED DIRECTOR:
|
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Donald F. Crumrine
|
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E(3)
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E(3)
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E(3)
|
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E(3)
|
|
E(3)
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*
|
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Key to Dollar Ranges
|
A.
|
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None
|
B.
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$1 - $10,000
|
C.
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$10,001 - $50,000
|
D.
|
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$50,001 - $100,000
|
E.
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over $100,000
|
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|
All shares were valued as of
January 21, 2011.
|
(1) |
|
This information has been furnished
by each Director as of January 21, 2011. Beneficial
Ownership is determined in accordance with
Rule 16a-1(a)(2)
under the 1934 Act.
|
(2) |
|
The Directors, Nominees and
executive officers of each Fund, as a group, own less than 1% of
each Fund.
|
(3) |
|
Includes shares of the Fund held by
Flaherty & Crumrine, of which the reporting person is
a shareholder and director.
|
Prior to January 26, 2010, each Director of each Fund who
is not a director, officer or employee of Flaherty &
Crumrine or any of its affiliates received from each Fund a fee
of $9,000 per annum plus $500 for each in-person meeting
attended, and $150 for each telephone meeting attended. In
addition, prior to February 1, 2010, the Audit Committee
Chairman received from each Fund an annual fee of $2,500. As of
January 26, 2010, each Director of each Fund who is not a
director, officer or employee of Flaherty & Crumrine
or any of its affiliates receives from each Fund a fee of $9,000
per annum plus $750 for each in-person meeting attended, and
$250 for each telephone meeting attended. In addition, as of
February 1, 2010, the Audit Committee Chairman receives
from each Fund an annual fee of $3,000. Each Director of each
Fund is reimbursed for travel and
out-of-pocket
expenses associated with attending Board and committee meetings.
During the fiscal year ended November 30, 2010, the Board
of Directors held seven meetings for PFD (three of which were
held by telephone conference call), seven meetings for PFO
(three of which were held by telephone conference call), six
meetings for FFC (two of which were held by telephone conference
call) and six meetings for FLC (two of which were held by
telephone conference call). Each Director of each Fund attended
at least 75% of the meetings of Directors and of any Committee
of which he or she is
7
a member. The aggregate remuneration paid to the Directors of
each Fund for the fiscal year ended November 30, 2010 is
set forth below:
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Board Meeting and
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Committee Meeting
|
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Travel and Out-of-Pocket
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Annual Director Fees
|
|
Fees
|
|
Expenses*
|
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PFD
|
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$36,000
|
|
$32,167
|
|
$2,716
|
PFO
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$36,000
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|
$32,167
|
|
$2,716
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FFC
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|
$36,000
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$31,567
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$2,716
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FLC
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$36,000
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$31,567
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$2,716
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|
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*
|
|
Includes reimbursement for travel
and
out-of-pocket
expenses for both interested and Independent
Directors.
|
Officers
of the Funds
The following table provides information concerning each of the
officers of the Funds.
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Term of Office and
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Principal Occupation
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Current Position(s)
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Length of Time
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During Past
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Name, Address and Age
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Held with Funds
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Served**
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Five Years
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Robert M. Ettinger 301 E. Colorado Boulevard
Suite 720
Pasadena, CA 91101
Age: 52
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President
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PFD since 2002 PFO since 2002
FFC since inception FLC since
inception
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President and Director of Flaherty & Crumrine
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R. Eric Chadwick 301 E. Colorado Boulevard
Suite 720
Pasadena, CA 91101
Age: 35
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|
Chief Financial
Officer, Vice
President and
Treasurer
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PFD since 2004 PFO since 2004
FFC since 2004 FLC since 2004
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|
Director of Flaherty & Crumrine since June 2006; Vice
President of Flaherty & Crumrine
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Chad C. Conwell 301 E. Colorado Boulevard
Suite 720
Pasadena, CA 91101
Age: 38
|
|
Chief Compliance
Officer, Vice
President and
Secretary
|
|
PFD since 2005 PFO since 2005
FFC since 2005 FLC since 2005
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Chief Compliance Officer and Vice President of Flaherty &
Crumrine since 2005
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Linda M. Puchalski 301 E. Colorado Boulevard
Suite 720
Pasadena, CA 91101
Age: 54
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Assistant Treasurer
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PFD since 2010 PFO since 2010
FFC since 2010 FLC since 2010
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Administrator of Flaherty & Crumrine Since July 2004
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Bradford S. Stone
47 Maple Street
Suite 403
Summit NJ 07901
Age: 51
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Vice President and Assistant
Treasurer
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PFD since 2003 PFO since 2003
FFC since 2003 FLC since
inception
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Director of Flaherty & Crumrine since June 2006; Vice
President of Flaherty & Crumrine
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Laurie C. Lodolo 301 E. Colorado Boulevard
Suite 720
Pasadena, CA 91101
Age: 47
|
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Assistant
Compliance Officer, Assistant Treasurer and Assistant Secretary
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|
PFD since 2004 PFO since 2004
FFC since 2004 FLC since 2004
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|
Assistant Compliance Officer and Secretary of Flaherty &
Crumrine
|
8
Audit
Committee Report
The role of each Funds Audit Committee is to assist the
Board of Directors in its oversight of: (i) the integrity
of each Funds financial statements and the independent
audit thereof; (ii) each Funds accounting and
financial reporting policies and practices, its internal
controls and, as appropriate, the internal controls of certain
service providers; (iii) each Funds compliance with
legal and regulatory requirements; and (iv) the independent
auditors qualifications, independence and performance.
Each Funds Audit Committee is also required to prepare an
audit committee report pursuant to the rules of the SEC for
inclusion in each Funds annual proxy statement. Each Audit
Committee operates pursuant to a charter (the Audit
Committee Charter or Charter) that was most
recently reviewed and approved by the Board of Directors of each
Fund on January 25, 2011 and which is available on PFD and
PFOs website at www.preferredincome.com and FFC and
FLCs website at www.fcclaymore.com. As set forth in the
Charter, management is responsible for the (i) preparation,
presentation and integrity of each Funds financial
statements, (ii) maintenance of appropriate accounting and
financial reporting principles and policies and
(iii) maintenance of internal controls and procedures
designed to assure compliance with accounting standards and
applicable laws and regulations. The Funds independent
registered public accounting firm, KPMG LLP (the
independent accountants or KPMG), is
responsible for planning and carrying out proper audits and
reviews of each Funds financial statements and expressing
an opinion as to their conformity with accounting principles
generally accepted in the United States of America.
In performing its oversight function, at a meeting held on
January 24, 2011, the Audit Committee reviewed and
discussed with management of each Fund and the independent
accountants, the audited financial statements of each Fund as of
and for the fiscal year ended November 30, 2010, and
discussed the audit of such financial statements with the
independent accountants.
In addition, the Audit Committee discussed with the independent
accountants the accounting principles applied by each Fund and
such other matters brought to the attention of the Audit
Committee by the independent accountants required by Statement
of Auditing Standards No. 61, as amended (AICPA,
Professional Standards, Vol. 1 AU Section 380), as
adopted by the Public Accounting Oversight Board in
Rule 3200T. The Audit Committee also received from the
independent accountants the written disclosures and statements
required by the SECs independence rules, delineating
relationships between the independent accountants and each Fund
and discussed the impact that any such relationships might have
on the objectivity and independence of the independent
accountants.
As set forth above, and as more fully set forth in each
Funds Audit Committee Charter, the Audit Committee has
significant duties and powers in its oversight role with respect
to the Funds financial reporting procedures, internal
control systems, and the independent audit process.
The members of the Audit Committee are not, and do not represent
themselves to be, professionally engaged in the practice of
auditing or accounting and are not employed by each Fund for
accounting, financial management or internal control. Moreover,
the Audit Committee relies on and makes no independent
verification of the facts presented to it or representations
made by management or the independent accountants. Accordingly,
the Audit Committees oversight does not provide an
independent basis to determine that management has maintained
appropriate accounting and financial reporting principles and
policies, or internal controls and procedures, designed to
assure compliance with accounting standards and applicable laws
and regulations. Furthermore, the Audit Committees
considerations and discussions referred to above do not provide
assurance that the audit of each Funds financial
statements has been carried out in accordance with generally
accepted accounting standards or that the financial statements
are presented in accordance with generally accepted accounting
principles.
Based on its consideration of the audited financial statements
and the discussions referred to above with management and the
independent accountants, and subject to the limitations on the
responsibilities and role of the Audit Committee set forth in
the Charter and those discussed above, the Audit Committee of
each Fund recommended to the Board of Directors of each Fund
that the audited financial statements be included in each
Funds Annual Report for the fiscal year ended
November 30, 2010.
9
This
report was submitted by the Audit Committee of each Funds
Board of Directors
David Gale
Morgan Gust
Karen H. Hogan
Robert F. Wulf (Chairman)
January 24, 2011
Each Audit Committee was established in accordance with
Section 3(a)(58)(A) of the 1934 Act. Each Audit
Committee met four times in connection with its Board of
Directors regularly scheduled meetings during the fiscal
year ended November 30, 2010. Each Audit Committee is
composed entirely of each Funds Independent (as such term
is defined by the New York Stock Exchange (NYSE)
listing standards applicable to closed-end funds, as may be
modified or supplemented (the NYSE Listing
Standards)) Directors, namely Ms. Hogan and
Messrs. Gale, Gust and Wulf.
Nominating
and Governance Committee
Each Board of Directors has a Nominating and Governance
Committee composed entirely of each Funds Independent (as
such term is defined by the NYSE Listing Standards) Directors,
namely Ms. Hogan and Messrs. Gale, Gust and Wulf. The
Nominating and Governance Committee of each Fund met twice
during the fiscal year ended November 30, 2010. The
Nominating and Governance Committee is responsible for
identifying individuals believed to be qualified to become Board
members; for recommending to the Board of Directors such
nominees to stand for election as directors at each Funds
annual meeting of shareholders and to fill any vacancies on the
Board; and for overseeing the Board of Directors
governance practices. Each Funds Nominating and Governance
Committee has a charter which is available on its website. PFD
and PFOs website address is www.preferredincome.com and
FFC and FLCs website address is www.fcclaymore.com.
Each Funds Nominating and Governance Committee believes
that it is in the best interest of the Fund and its shareholders
to obtain highly qualified candidates to serve as members of the
Board of Directors. The Nominating and Governance Committees
have not established a formal process for identifying candidates
where a vacancy exists on the Board. In nominating candidates,
the Nominating and Governance Committee shall take into
consideration such factors as it deems appropriate, including
educational background; business, professional training or
practice (e.g., accounting or law); public service or academic
positions; experience from service as a board member (including
the Boards of the Funds) or as an executive of investment funds,
public companies or significant private or
not-for-profit
entities or other organizations;
and/or other
life experiences. Each Funds Nominating and Governance
Committee may consider whether a potential nominees
professional experience, education, skills, and other individual
qualities and attributes, including gender, race or national
origin, would provide beneficial diversity of skills, experience
or perspective to the Boards membership and collective
attributes. Each Funds Nominating and Governance Committee
will consider director candidates recommended by shareholders
and submitted in accordance with applicable law and procedures
as described in this Joint Proxy Statement. (See
Submission of Shareholder Proposals below.)
Other
Board-Related Matters
Shareholders who wish to send communications to the Board should
send them to the address of their Fund(s) and to the attention
of the Board. All such communications will be directed to the
Boards attention.
The Funds do not have a formal policy regarding Board member
attendance at the Annual Meeting of Shareholders. However, all
of the Directors of each Fund attended the April 22, 2010
Annual Meetings of Shareholders. The Directors of PFD or PFO did
not attend the Funds Reconvened Annual Meeting of
Shareholders held on May 18, 2010.
Compensation
The following table sets forth certain information regarding the
compensation of each Funds Directors for the fiscal year
ended November 30, 2010. No executive officer or person
affiliated with a Fund received compensation
10
from a Fund during the fiscal year ended November 30, 2010
in excess of $120,000. Directors and executive officers of the
Funds do not receive pension or retirement benefits from the
Funds.
COMPENSATION
TABLE
|
|
|
|
|
Name of
|
|
Aggregate
|
|
Total Compensation from
|
Person and
|
|
Compensation
|
|
the Funds and Fund
|
Position
|
|
from each Fund
|
|
Complex Paid to Directors*
|
|
Donald F. Crumrine
|
|
$0
|
|
$0 (4)
|
Director, Chairman of the Board and Chief Executive Officer
|
|
|
|
|
|
David Gale
Director
|
|
$16,350 PFD
$16,350 PFO
$16,200 FFC
$16,200 FLC
|
|
$65,100 (4)
|
|
|
|
|
|
Morgan Gust
Director; Nominating and Governance Committee Chairman
|
|
$16,200 PFD
$16,200 PFO
$16,050 FFC
$16,050 FLC
|
|
$64,500 (4)
|
|
|
|
|
|
Karen H. Hogan
Director
|
|
$16,350 PFD
$16,350 PFO
$16,200 FFC
$16,200 FLC
|
|
$65,100 (4)
|
|
|
|
|
|
Robert F. Wulf
Director; Audit Committee Chairman
|
|
$19,266.67 PFD $19,266.67 PFO
$19,116.67 FFC $19,116.67 FLC
|
|
$76,767 (4)
|
|
|
|
*
|
|
Represents the total compensation
paid for the fiscal year ended November 30, 2010, to such
persons by the Funds and the other funds in the
Flaherty & Crumrine Fund Family, which are
considered part of the same fund complex because
they have a common adviser. The parenthetical number represents
the total number of investment company directorships held by the
Director or nominee in the fund complex as of November 30,
2010.
|
Required
Vote
The election of Mr. Gale and Ms. Hogan as Directors of
PFD will require the affirmative vote of a plurality of the
votes cast by the holders of the Shares of the Common Stock of
PFD at the Meeting in person or by proxy. The election of
Mr. Gust and Ms. Hogan as Directors of PFO will
require the affirmative vote of a plurality of the vote cast by
holders of the Shares of Common Stock of PFO at the Meeting in
person or by proxy. The election of Mr. Gale as a Director
of each of FFC and FLC will require the affirmative vote of a
plurality of the votes cast by holders of the Shares of Common
Stock of each such Fund at the Meeting in person or by proxy.
SUBMISSION
OF SHAREHOLDER PROPOSALS
All proposals by shareholders of each Fund that are intended to
be presented at each Funds next Annual Meeting of
Shareholders to be held in 2012 must be received by the relevant
Fund for consideration for inclusion in the relevant Funds
proxy statement relating to the meeting no later than
October 27, 2011, and must satisfy the requirements of
federal securities laws.
Each Funds Bylaws require shareholders wishing to nominate
Directors or make proposals to be voted on at the Funds
Annual Meeting to provide timely notice of the proposal in
writing. To be considered timely, any such notice must be
delivered to or mailed and received at the principal executive
offices of the Fund at the address set
11
forth on the first page of this proxy statement not later than
60 days prior to the date of the meeting; provided,
however, that if less than 70 days notice or prior
public disclosure of the date of the meeting is given or made to
shareholders, any such notice by a shareholder to be timely must
be so received not later than the close of business on the
10th day following the day on which notice of the date of
the annual meeting was given or such public disclosure was made.
Any such notice by a shareholder shall set forth the information
required by the Funds Bylaws with respect to each matter
the shareholder proposes to bring before the annual meeting.
ADDITIONAL
INFORMATION
Independent
Registered Public Accounting Firm
KPMG, Two Financial Center, 60 South Street, Boston,
Massachusetts 02111, has been selected to serve as each
Funds independent registered public accounting firm for
each Funds fiscal year ending November 30, 2011. KPMG
acted as the independent registered public accounting firm for
each Fund for the fiscal year ended November 30, 2010. The
Funds know of no direct financial or material indirect financial
interest of KPMG in the Funds. A representative of KPMG will not
be present at the Meetings, but will be available by telephone
to respond to appropriate questions and will have an opportunity
to make a statement, if asked.
Set forth in the table below are audit fees and non-audit
related fees billed to each Fund by KPMG for professional
services for the fiscal years ended November 30, 2009 and
2010, respectively.
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|
|
|
|
|
|
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|
|
Fiscal Year Ended
|
|
|
|
Audit-Related
|
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Fund
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November 30
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Audit Fees
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Fees
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Tax Fees*
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All Other Fees
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PFD
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2009
2010
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$44,000
$44,000
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$0
$0
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$8,100
$8,100
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$8,600**
$0
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PFO
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2009
2010
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$44,000
$44,000
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$0
$0
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$8,100
$8,100
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$8,600**
$0
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FFC
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2009
2010
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$46,400
$46,400
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$0
$0
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$8,100
$8,100
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$8,600**
$0
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FLC
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2009
2010
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$46,400
$46,400
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$0
$0
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$8,100
$8,100
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$8,600**
$0
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*
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Tax Fees are those fees
billed to each Fund by KPMG in connection with tax consulting
services, including primarily the review of each Funds
income tax returns.
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**
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All Other Fees are
those fees billed to each Fund by KPMG in connection with the
preparation of a quarterly
agreed-upon-procedures
report. These
Agreed-Upon-Procedures
(AUP) were required pursuant to each Funds
Articles Supplementary when the Fund had preferred stock
outstanding. Specifically, Moodys Investors Service and
Fitch, Inc. each required that such AUP be undertaken and a
report be provided in order to maintain their ratings on the
preferred stock. As of November 30, 2009, the Funds did not
have any issued or outstanding preferred stock, which was
redeemed during the course of each Funds 2009 fiscal year.
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Each Funds Audit Committee Charter requires that the Audit
Committee pre-approve all audit and non-audit services to be
provided by the independent accountants to the Fund, and all
non-audit services to be provided by the independent accountants
to the Funds investment adviser and any entity
controlling, controlled by or under common control with the
Funds investment adviser (affiliates) that
provide on-going services to each Fund, if the engagement
relates directly to the operations and financial reporting of
each Fund, or to establish detailed pre-approval policies and
procedures for such services in accordance with applicable laws.
All of the audit and non-audit services described above for
which KPMG billed each Fund fees for the fiscal years ended
November 30, 2009 and November 30, 2010 were
pre-approved by the Audit Committee.
For each Funds fiscal years ended November 30, 2009
and November 30, 2010, KPMG did not provide any non-audit
services (or bill any fees for such services) to the Funds
investment adviser or any affiliates.
12
Investment
Adviser, Administrator and Servicing Agent
Flaherty & Crumrine serves as the investment adviser
to each Fund, and its business address is
301 E. Colorado Boulevard, Suite 720, Pasadena,
California 91101. BNY Mellon acts as the administrator to each
Fund and is located at 4400 Computer Drive, Westborough,
Massachusetts 01581. Guggenheim Funds Distributors, Inc. acts as
the servicing agent to FFC and FLC and is located at 2455
Corporate West Drive, Lisle, Illinois 60532.
Compliance
with the Securities Exchange Act of 1934
Section 16(a) of the 1934 Act and Section 30(h)
of the 1940 Act require each Funds Directors and executive
officers, certain persons affiliated with Flaherty &
Crumrine and persons who beneficially own more than 10% of a
registered class of each Funds securities, to file reports
of ownership and changes of ownership with the SEC, the NYSE and
each Fund. Directors, officers and greater-than-10% shareholders
are required by SEC regulations to furnish each Fund with copies
of such forms they file. Based solely upon its review of the
copies of such forms received by it and written representations
from certain of such persons, each Fund believes that during
2010, all such filing requirements applicable to such persons
were met.
Broker
Non-Vote and Abstentions
A proxy which is properly executed and returned accompanied by
instructions to withhold authority to vote represents a broker
non-vote (i.e., shares held by brokers or nominees
as to which (i) instructions have not been received from
the beneficial owners or the persons entitled to vote and
(ii) the broker or nominee does not have discretionary
voting power on a particular matter). Proxies that reflect
abstentions or broker non-votes (collectively,
abstentions) will be counted as Shares that are
present and entitled to vote at the meeting for purposes of
determining the presence of a Quorum. With respect to
Proposal 1, abstentions do not constitute a vote
for or against the proposal and will be
disregarded in determining the votes cast on the
proposal.
OTHER
MATTERS TO COME BEFORE THE MEETING
Each Fund does not intend to present any other business at the
relevant Meeting, nor is any Fund aware that any shareholder
intends to do so. If, however, any other matters are properly
brought before the Meeting, the persons named in the
accompanying form of proxy will vote thereon in accordance with
their judgment.
VOTING
RESULTS
Each Fund will advise its shareholders of the voting results of
the matters voted upon at its Meeting in its next Semi-Annual
Report to Shareholders.
NOTICE TO
BANKS, BROKER/DEALERS AND VOTING TRUSTEES AND THEIR
NOMINEES
Please advise the Funds whether other persons are the beneficial
owners of Fund Shares for which proxies are being solicited
from you, and, if so, the number of copies of the joint proxy
statement and other soliciting material you wish to receive in
order to supply copies to the beneficial owners of
Fund Shares.
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY.
SHAREHOLDERS WHO DO NOT EXPECT TO ATTEND THE MEETINGS ARE
THEREFORE URGED TO COMPLETE, SIGN, DATE AND RETURN ALL PROXY
CARDS AS SOON AS POSSIBLE IN THE ENCLOSED POSTAGE-PAID
ENVELOPE.
13
Proxy FLAHERTY & CRUMRINE PREFERRED INCOME FUND INCORPORATED
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PROXY IN CONNECTION WITH THE ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON APRIL 15, 2011
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Important Notice Regarding the Availability of Proxy Materials for the Shareholder Meeting to be
held on April 15, 2011.
The notice of annual meetings of shareholders, joint proxy statement and proxy card for the Fund
are available on the Funds website at www.preferredincome.com.
PROXY SOLICITED BY BOARD OF DIRECTORS
The undersigned holder of shares of Common Stock of Flaherty & Crumrine Preferred Income Fund
Incorporated, a Maryland corporation (the Fund), hereby appoints Donald F. Crumrine, Robert M.
Ettinger and Chad C. Conwell, proxies for the undersigned, each with full powers of substitution
and revocation, to represent the undersigned and to vote on behalf of the undersigned all shares of
Common Stock which the undersigned is entitled to vote at the Annual Meeting of Shareholders of the
Fund to be held at the offices of Flaherty & Crumrine Incorporated, 301 East Colorado Boulevard,
Suite 720, Pasadena, California 91101 at 8:30 a.m. PT, on April 15, 2011, and any adjournments or
postponements thereof. The undersigned hereby acknowledges receipt of the Notice of Annual Meeting
and Proxy Statement and hereby instructs said proxies to vote said shares as indicated hereon. In
their discretion, the proxies are authorized to vote upon such other business as may properly come
before the Meeting. A majority of the proxies present and acting at the Meeting in person or by
substitute (or, if only one shall be so present, then that one) shall have and may exercise all of
the power and authority of said proxies hereunder. The undersigned hereby revokes any proxy
previously given.
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NOTE: Please sign this proxy exactly as your name(s) appear(s) on the books of the Fund. Joint
owners should each sign personally. Trustees and other fiduciaries should indicate the capacity in
which they sign, and where more than one name appears, a majority must sign. If a corporation, the
signature should be that of an authorized officer who should state his or her title. |
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Signature
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Date |
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Signature (Joint Owners)
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Date |
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Annual Meeting Proxy Card
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Election of Directors - The Board of Directors recommends a vote FOR the nominees listed.
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Please mark your votes as
indicated in this example n |
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1. Nominees:
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FOR
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WITHHOLD
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FOR
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WITHHOLD
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01 David Gale
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o
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o
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02 Karen H. Hogan
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o
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o |
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This proxy, if properly executed, will be voted in the manner directed by the undersigned
shareholder. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR THE ELECTION OF THE NOMINEES AS
DIRECTOR. |
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Non-Voting Items
Change of Address Please print new address below.
PLEASE SIGN ON REVERSE SIDE
PFD-CMN-PXC 1.01