FLC DEF 14A Report ended April 16, 2025
SCHEDULE 14A
PROXY STATEMENT
PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by Registrant ☒
Filed by Party other than the Registrant ☐
Check the appropriate box:
☐ Preliminary Proxy Statement
☐ Confidential for Use of the Commission Only as permitted by Rule 14a-6(e)(2)
☒ Definitive Proxy Statement
☐ Definitive Additional Materials
☐ Soliciting Material Pursuant to Rule 14a-11c or Rule 14a-12
Flaherty
Crumrine
Total Return Fund Incorporated
(Name of Registrant as Specified in Its Charter)
_______________________________________
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
☒ No fee required
☐ Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11
| (1) | Title of each class of securities to which transaction applies: |
| (2) | Aggregate number of securities to which transaction applies: |
| (3) | 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): |
| (4) | Proposed maximum aggregate value of transaction: |
| (5) | Total fee paid: |
☐ Fee paid previously with preliminary materials.
☐ Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
| (1) | Amount previously paid: |
| (2) | Form, Schedule or Registration Statement No.: |
| (3) | Filing Party: |
| (4) | Date Filed: |
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FLAHERTY CRUMRINE PREFERRED AND INCOME FUND INCORPORATED |
(NYSE: PFD) |
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FLAHERTY CRUMRINE PREFERRED AND INCOME OPPORTUNITY FUND INCORPORATED |
(NYSE: PFO) |
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FLAHERTY CRUMRINE PREFERRED AND INCOME SECURITIES FUND INCORPORATED |
(NYSE: FFC) |
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FLAHERTY CRUMRINE TOTAL RETURN FUND INCORPORATED |
(NYSE: FLC) |
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FLAHERTY CRUMRINE DYNAMIC PREFERRED AND INCOME FUND INCORPORATED |
(NYSE: DFP) |
301 E. Colorado Boulevard, Suite 800
Pasadena,
California 91101
NOTICE OF ANNUAL MEETINGS OF SHAREHOLDERS
To Be Held on April 16, 2025
To the Shareholders:
Notice is hereby given that the Annual Meetings of Shareholders (the “Annual Meetings”) of Flaherty Crumrine Preferred and Income Fund Incorporated, Flaherty Crumrine Preferred and Income Opportunity Fund Incorporated, Flaherty Crumrine Preferred and Income Securities Fund Incorporated, Flaherty Crumrine Total Return Fund Incorporated and Flaherty Crumrine Dynamic Preferred and Income Fund Incorporated (each, a “Fund” and collectively, the “Funds”), each a Maryland corporation, will be held on April 16, 2025, at 8:00 a.m. PDT, at the offices of Flaherty Crumrine Incorporated, 301 E. Colorado Boulevard, Suite 800, Pasadena, California 91101, for the following purposes:
Each Fund:
1. To elect Directors of each Fund (Proposal 1).
2. To approve a new investment advisory agreement with Flaherty Crumrine Incorporated for each Fund (Proposal 2).
3. To transact such other business as may properly come before the Annual Meetings or any adjournments or postponements thereof.
The Board of Directors of each Fund has fixed the close of business on January 16, 2025 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.
Your vote is important!
We appreciate your participation and prompt response in this matter and thank you for your continued support. If you have any questions regarding the issues to be voted on or need assistance in voting your shares, please contact Okapi Partners, our proxy solicitor, toll-free at (877) 279-2311. Representatives are available Monday through Friday from 9:00 a.m. to 9:00 p.m., Eastern time.
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By Order of the Boards of Directors, |
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March 17, 2025 |
Chad Conwell |
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Secretary |
2
Important Information to Help You Understand and Vote on the Proposals
Q: What is happening? Why did I get this package of materials?
A: An Annual Meetings of Shareholders of Flaherty Crumrine Preferred and Income Fund Incorporated, Flaherty Crumrine Preferred and Income Opportunity Fund Incorporated, Flaherty Crumrine Preferred and Income Securities Fund Incorporated, Flaherty Crumrine Total Return Fund Incorporated and Flaherty Crumrine Dynamic Preferred and Income Fund Incorporated (each, a “Fund” and collectively, the “Funds”), will be held on April 16, 2025, at 8:00 a.m. PDT. According to our records, you are a shareholder of record of one or more of the Funds as of January 16, 2025, the Record Date for this Meeting.
Q: Why am I being asked to vote on Director nominees?
A : 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 term of three years and until their successors are duly elected and qualify.
Q: Why am I being asked to vote on proposed new advisory agreements?
A: As more fully discussed in this proxy statement, the Adviser is undergoing an internal restructuring in which shares in the Adviser held by former principals are repurchased and reallocated to the current members of management. Because this restructuring could be viewed as a change of control of the Adviser, resulting in the assignment and automatic termination of the current investment advisory agreement for each Fund, shareholders are being asked to approve a new investment advisory agreement for each Fund.
Q: How do the proposed new Advisory Agreements differ from the current Advisory Agreements?
A: Except for date and the initial term, the terms of the new advisory agreements are identical to the terms of the current agreements, including having identical advisory fees . Additionally, the day-to-day management of Flaherty Crumrine and the investment objectives and strategies of the Funds will not change as a result of the internal restructuring of the Adviser or each Fund’s entry into its respective new investment advisory agreement.
Q: How does the Board of Directors recommend that I vote?
A: After careful consideration of the proposals, the Board unanimously recommends that you vote FOR the proposals.
Q: What will happen if there are not enough votes to hold the Meeting?
A: If we have not received sufficient votes to have a quorum at the Meeting or have not received enough votes to approve the proposals, we may adjourn the Meeting to a later date so we can continue to seek more votes.
Q: Who should I call for additional information about the Proxy Statement?
A: If you have any questions regarding the Proxy Statement or how to vote your shares, please call, Okapi Partners LLC, toll-free at (877) 279-2311.
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Important Notice Regarding the Availability of Proxy Materials for the Annual Meetings to be
The notice of Annual Meetings and Joint Proxy Statement are available to you at www.OkapiVote.com/Flaherty. Each Fund’s annual report, including audited financial statements for the fiscal year ended November 30, 2024, are available to you on the Funds’ website - www.preferredincome.com or upon request, without charge, by writing to Computershare Inc., P.O. Box 43132, Providence, RI 02940-9434, United States, or by calling 1-866-351-7446 (U.S. toll-free) or 1-201-680-6578 (International). 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. YOUR VOTE IS IMPORTANT REGARDLESS OF THE SIZE OF YOUR HOLDINGS IN THE FUND. WHETHER OR NOT YOU PLAN TO ATTEND THE RELEVANT ANNUAL MEETING(S), WE ASK THAT YOU PLEASE VOTE PROMPTLY. INSTRUCTIONS FOR THE PROPER VOTING AND/OR EXECUTION OF PROXIES ARE SET FORTH ON THE INSIDE COVER. SHAREHOLDERS MAY SUBMIT VOTING INSTRUCTIONS BY SIGNING AND DATING THE PROXY CARD OR VOTING INSTRUCTION FORM AND RETURNING IT IN THE ACCOMPANYING POSTAGE-PAID ENVELOPE. |
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INSTRUCTIONS FOR SIGNING PROXY CARDS
The following general rules for signing proxy cards may be of assistance to you and may minimize the time and expense to the Fund(s) involved in validating your vote if you fail to sign your proxy card(s) properly.
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 |
Valid Signature |
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Corporate Accounts |
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(1) |
ABC Corp. |
ABC Corp. |
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(2) |
ABC Corp. |
John Doe, Treasurer |
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(3) |
ABC Corp. c/o John Doe, Treasurer |
John Doe |
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(4) |
ABC Corp. Profit Sharing Plan |
John Doe, Trustee |
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Trust Accounts |
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(1) |
ABC Trust |
Jane B. Doe, Trustee |
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(2) |
Jane B. Doe, Trustee u/t/d 12/28/78 |
Jane B. Doe |
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Custodian or Estate Accounts |
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(1) |
John B. Smith, Cust., f/b/o John B. Smith, Jr. UGMA |
John B. Smith |
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(2) |
John B. Smith, Executor, Estate of Jane Smith |
John B. Smith, Executor |
5
ANNUAL MEETINGS OF SHAREHOLDERS
This document is a joint proxy statement (“Joint Proxy Statement”) for Flaherty Crumrine Preferred and Income Fund Incorporated (“Preferred and Income Fund” or “PFD”), Flaherty Crumrine Preferred and Income Opportunity Fund Incorporated (“Preferred and Income Opportunity Fund” or “PFO”), Flaherty Crumrine Preferred and Income Securities Fund Incorporated (“Preferred and Income Securities Fund” or “FFC”), Flaherty Crumrine Total Return Fund Incorporated (“Total Return Fund” or “FLC”) and Flaherty Crumrine Dynamic Preferred and Income Fund Incorporated (“Dynamic Preferred Income Fund” or “DFP”) (each, a “Fund” and collectively, the “Funds”). This Joint Proxy Statement is furnished in connection with the solicitation of proxies by each Fund’s Board of Directors (each, a “Board” and collectively, the “Boards”) to be voted at the Annual Meeting of Shareholders for each Fund to be held on April 16, 2025, at 8:00 a.m. PDT, at the offices of Flaherty Crumrine Incorporated, 301 E. Colorado Boulevard, Suite 800, Pasadena, California 91101 and at any adjournments or postponements thereof (each, an “Annual Meeting” and collectively, the
“Annual Meetings”).
This Joint Proxy Statement and the accompanying Notice of Annual Meetings and proxy card for each Fund in which you own shares were mailed on or about March 17, 2025 to shareholders of record as of the close of business on January 16, 2025. Proxy solicitations will be made, beginning on or about March 17, 2025, primarily by mail, but proxy solicitations may also be made by telephone, Internet, facsimile, e-mail, or personal interviews conducted by the Funds’ proxy solicitor, Okapi Partners LLC, or by officers of each Fund, Flaherty Crumrine Incorporated (“Flaherty Crumrine” or the “Adviser”), the investment adviser of each Fund, Computershare Trust Company, N.A. (“Computershare”), the transfer agent of each Fund, and The Bank of New York Mellon (“BNY”), the administrator of each Fund. With respect to FFC, FLC and DFP, proxy solicitations may also be made by Destra Capital Advisors LLC, the servicing agent for FFC, FLC
and DFP.
The Funds will evenly split the expenses incurred in connection with the preparation of this Joint Proxy Statement and hosting of the Annual Meetings. The Adviser will pay those additional expenses incurred in connection
with Proposal 2, including an estimated $200,000 in proxy solicitor fees
and expenses.
References to the websites above or herein do not incorporate their content into this Joint
Proxy Statement.
Important Notice Regarding the Availability of Proxy Materials for the Annual Meetings to be
The notice of Annual Meetings and Joint Proxy Statement are available to you at www.OkapiVote.com/Flaherty. Each Fund’s annual report, including audited financial statements for the fiscal year ended November 30, 2024, are available to you on the Funds’ website - www.preferredincome.com or upon request, without charge, by writing to Computershare Inc., P.O. Box 43132, Providence, RI 02940-9434, United States, or by calling 1-866-351-7446 (U.S. toll-free) or 1-201-680-6578 (International). Each Fund’s annual report is also available on the Securities and Exchange Commission’s (“SEC”) website (www.sec.gov) or, for FFC, FLC and DFP only, by calling Destra Capital Advisors LLC at 1-877-855-3434. 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. YOUR VOTE IS IMPORTANT REGARDLESS OF THE SIZE OF YOUR HOLDINGS IN THE FUND. WHETHER OR NOT YOU PLAN TO ATTEND THE RELEVANT ANNUAL MEETING(S), WE ASK THAT YOU PLEASE VOTE PROMPTLY. INSTRUCTIONS FOR THE PROPER VOTING AND/OR EXECUTION OF PROXIES ARE SET FORTH ON THE INSIDE COVER. SHAREHOLDERS MAY SUBMIT VOTING INSTRUCTIONS BY SIGNING AND DATING THE PROXY CARD OR VOTING INSTRUCTION FORM AND RETURNING IT IN THE ACCOMPANYING
POSTAGE-PAID ENVELOPE.
If the enclosed proxy card(s) are properly executed and returned in time to be voted at the relevant Annual Meeting(s), 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” Proposal 1 at the relevant Annual Meeting. 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 Annual Meeting and voting his or her Shares in person or by submitting a letter of revocation or a later-dated proxy card to the appropriate Fund at 301 E. Colorado Boulevard, Suite 800, Pasadena, California 91101 prior to the date of the
Annual Meetings.
April 16, 2025
JOINT PROXY STATEMENT
Held on April 16, 2025
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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 Fund’s Annual Meeting. In the event that a Quorum is not present at the relevant Annual Meeting, or in the event that a Quorum is present but sufficient votes to approve any of the proposals are not received, the Chair of the Annual Meeting may adjourn the meeting without assigning a specific date or from time to time to a date not more than 120 days after the original record date without notice other than announcement at the Annual Meeting. At such adjourned meeting at which a Quorum shall be present, any business may be transacted which might have been transacted at the relevant Annual Meeting as originally notified. A shareholder vote may be taken on a proposal in the Joint Proxy Statement relating to the applicable Annual Meeting prior to any such adjournment if sufficient votes have been received for approval of that proposal. Once a Quorum has been established at the relevant Annual Meeting, shareholders may continue to transact business, notwithstanding the withdrawal of shareholders and the loss of a Quorum.
Each Fund has one class of capital stock outstanding: common stock, par value $0.01 per share (the “Common Stock” or the “Shares”). Each Share is entitled to one vote at the relevant Annual Meeting with respect to matters to be voted on, with pro rata voting rights for any fractional Shares. On the record date, January 16, 2025, the following number of Shares of each Fund were issued and outstanding:
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Name of Fund |
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Shares
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Flaherty Crumrine Preferred and Income Fund Incorporated (PFD) |
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12,852,556 |
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Flaherty Crumrine Preferred and Income Opportunity Fund Incorporated (PFO) |
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13,077,326 |
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Flaherty Crumrine Preferred and Income Securities Fund Incorporated (FFC) |
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48,177,896 |
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Flaherty Crumrine Total Return Fund Incorporated (FLC) |
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10,456,821 |
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Flaherty Crumrine Dynamic Preferred and Income Fund Incorporated (DFP) |
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20,538,137 |
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 Fund’s outstanding Shares as of January 16, 2025*:
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Name and Address of
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Title of Class |
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Amount and Nature 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 – (record) PFO – (record) FFC – (record) FLC – (record) DFP – (record) |
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98.91% 98.15% 99.88% 99.89% 99.96% |
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Sit Investment Associates, Inc. Sit Fixed Income Advisors II, LLC c/o Sit Investment Associates, Inc. 80 South Eighth Street, Suite 3300 Minneapolis, MN 55402 |
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Common Stock |
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FLC – (beneficial) 1 |
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5.40% |
* As of January 16, 2025, the Directors and officers, as a group, owned less than 1% of the Shares of each Fund.
** A nominee partnership of The Depository Trust Company.
1 Information obtained from a Schedule 13G filed with the SEC on January 3, 2025 by Sit Investment Associates, Inc. (“SIA”) and Sit Fixed Income Advisors II, LLC (“SFI”), reporting share ownership as of May 31, 2024. Based on that filing, SIA and SFI have the shared power to vote or to direct the vote or to dispose or to direct the disposition of 559,576 Shares.
This Joint Proxy Statement is being used to reduce the preparation, printing, handling and postage expenses that would result from the use of a separate proxy statement for each Fund. At each Fund’s Annual Meeting, shareholders of the Fund will vote as a single class. Shareholders of each Fund will vote separately for each of PFD, PFO, FFC, FLC and DFP on the proposal(s) on which shareholders of that Fund are entitled to vote at the relevant Annual Meeting. A separate proxy card is enclosed for each Fund in which a shareholder owns Shares. Thus, if the proposal(s) at the relevant Annual Meeting is approved by shareholders of one or more Funds and not approved by shareholders of one or more other Funds, the proposal(s) will be implemented for the Fund or Funds that approved the proposal(s) and will not be implemented for any Fund that did not approve the proposal(s). 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(s) pertaining to that Fund. Shareholders do not have rights of appraisal with respect to any matter to be acted upon at each Fund’s Annual Meeting.
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PROPOSAL 1: ELECTION OF DIRECTORS
At the Annual 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 term of three years and until their successors are duly elected and qualify.
Nominees for the Boards of Directors
Each Nominee named below is currently a Director of each Fund and has consented to serve as a Director for the Fund(s) for which he/she is nominated if elected at the relevant Annual Meeting. If a designated Nominee declines or otherwise becomes unavailable for election, however, the proxy confers discretionary power on the persons named therein to vote in favor of a substitute nominee or nominees. Each Nominee has been nominated for a term of three years to expire at each Fund’s 2028 Annual Meeting of Shareholders and until his/her successor is duly elected and qualifies. Shareholders of each Fund’s Common Stock are entitled to elect the Nominees for election to the Board of the relevant Fund.
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Nominees for Election |
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PFD |
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R. Eric Chadwick and Nicholas Dalmaso |
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PFO |
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R. Eric Chadwick and Karen H. Hogan |
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FFC |
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R. Eric Chadwick and Karen H. Hogan |
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FLC |
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R. Eric Chadwick and Karen H. Hogan |
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DFP |
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R. Eric Chadwick and Nicholas Dalmaso |
Information About the Experience, Qualifications, Attributes and Skills of Each Director or Nominee
Directors or Nominees for election as Directors of the Funds, together with information as to their positions with the Funds, principal occupations, and other board memberships for the past five years, are shown below.
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Name, Address,
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Current
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Term of Office
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Number of Funds
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Other
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David Gale
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Lead Independent Director |
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Class I Director
PFO – since 1997 FFC – since inception FLC – since inception Class II Director DFP – since inception |
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President of Delta Dividend Group, Inc. (investments). |
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None |
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Nicholas Dalmaso
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Director and Nominating and Governance Committee Chair |
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Class II Director
FLC – since 2024 Class III Director PFD – since 2024 PFO – since 2024 DFP – since 2024 |
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General Counsel of EquityBee, Inc.; Founder and CEO of Sound Capital Holdings LLC, Sound Capital Distributors LLC (a registered broker/dealer) and Sound Capital Solutions LLC (a registered investment advisor); Founder and General Counsel of M1 Finance, Inc.
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Independent Trustee and Chair of the Destra Capital Investment Company Boards (3 funds); Lead Independent Trustee of the Milliman Variable Insurance Trust (2 funds) |
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Karen H. Hogan
Pasadena, CA 91101
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Director and
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Class I Director † DFP – since 2016 Class II Director † PFD – since 2016 PFO – since 2016 Class III Director † FFC – since 2016 FLC – since 2016 |
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Board Member, IKAR, a non-profit organization; Active Committee Member and Volunteer to several non-profit organizations. |
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5 |
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None |
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INTERESTED DIRECTOR AND OFFICER: |
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R. Eric Chadwick (1) 301 E. Colorado Boulevard Suite 800 Pasadena, CA 91101 Age: 50 |
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Director, Chairman of the Board, Chief Executive Officer and President |
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Class II Director PFO – since 2016 Class III Director PFD – since 2016 FFC – since 2016 FLC – since 2016 DFP – since 2016 |
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Portfolio Manager and President of Flaherty Crumrine. |
|
5 |
|
None |
||||||||||||||||||||||||||||||||||||||||||
|
Name of Director or Nominee |
|
Dollar Range of Equity
|
|
Aggregate Dollar Range of Equity
| ||||||||||||||||||||||||||||||||||||||||||||||||
|
NON-INTERESTED DIRECTOR/NOMINEES: |
||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
PFD |
PFO |
FFC |
FLC |
DFP |
|
TOTAL |
||||||||||||||||||||||||||||||||||||||||||||
|
David Gale |
|
D |
D |
D |
D |
C |
|
E |
||||||||||||||||||||||||||||||||||||||||||||
|
Nicholas Dalmaso |
|
A |
A |
A |
A |
A |
|
A |
||||||||||||||||||||||||||||||||||||||||||||
|
Karen H. Hogan |
|
C |
C |
C |
C |
C |
|
D |
||||||||||||||||||||||||||||||||||||||||||||
|
|
||||||||||||||||||||||||||||||||||||||||||||||||||||
|
INTERESTED DIRECTOR/NOMINEE: |
||||||||||||||||||||||||||||||||||||||||||||||||||||
|
R. Eric Chadwick |
|
C |
E |
E |
C |
E |
|
E |
||||||||||||||||||||||||||||||||||||||||||||
|
Name, Address,
|
|
Current Position(s)
|
|
Term of Office and
|
|
Principal
| ||||||||||||||||||||||||||||||||||||||||||||||
|
Chad Conwell 301 E. Colorado Boulevard Suite 800 Pasadena, CA 91101 Age: 52 |
|
Chief Compliance Officer, Vice President and Secretary |
|
PFD – since 2005 PFO – since 2005 FFC – since 2005 FLC – since 2005 DFP – since inception |
|
Executive Vice President, Chief Compliance Officer and Chief Legal Officer of Flaherty Crumrine. |
||||||||||||||||||||||||||||||||||||||||||||||
|
|
||||||||||||||||||||||||||||||||||||||||||||||||||||
|
Bradford S. Stone 47 Maple Street Suite 403 Summit, NJ 07901 Age: 65 |
|
Chief Financial Officer, Vice President and Treasurer |
|
PFD – since 2003 PFO – since 2003 FFC – since 2003 FLC – since inception DFP – since inception |
|
Portfolio Manager, Executive Vice President and Chief Financial Officer of Flaherty Crumrine. |
||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||||||
|
Roger Ko 301 E. Colorado Boulevard Suite 800 Pasadena, CA 91101 Age: 50 |
|
Assistant Treasurer |
|
PFD – since 2014 PFO – since 2014 FFC – since 2014 FLC – since 2014 DFP – since 2014 |
|
Vice President and Trader of Flaherty Crumrine. |
||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
Annual Directors Fees |
|
Board Meeting and
|
|
Travel and Out-of-Pocket
|
|
|
PFD |
|
$27,000 |
|
$25,500 |
|
$1,789.90 |
|
|
PFO |
|
$27,000 |
|
$25,500 |
|
$1,789.90 |
|
|
FFC |
|
$27,000 |
|
$25,500 |
|
$1,789.90 |
|
|
FLC |
|
$27,000 |
|
$25,500 |
|
$1,789.90 |
|
|
DFP |
|
$27,000 |
|
$25,500 |
|
$1,789.90 |
|
13
The table below sets forth additional information regarding the compensation of each Fund’s Directors for the fiscal year ended November 30, 2024. No executive officer or person affiliated with a Fund received compensation from a Fund during the fiscal year ended November 30, 2024 in excess of $60,000. Directors and executive officers of the Funds do not receive pension or retirement benefits from the Funds.
COMPENSATION TABLE
|
Name of Person and Position |
|
Aggregate Compensation
|
|
Total Compensation from the
|
|
R. Eric Chadwick Director, Chair of the Board, Chief Executive Officer and President |
|
$0 |
|
$0 (5) |
|
|
|
|
|
|
|
Nicholas Dalmaso** Director, Nominating Committee Chair |
|
$12,750 – PFD $12,750 – PFO $12,750 – FFC $12,750 – FLC $12,750 – DFP |
|
$63,750 (5) |
|
|
|
|
|
|
|
David Gale Lead Independent Director |
|
$16,500 – PFD $16,500 – PFO $16,500 – FFC $16,500 – FLC $16,500 – DFP |
|
$82,500 (5) |
|
|
|
|
|
|
|
Morgan Gust*** |
|
$3,750 – PFD $3,750 – PFO $3,750 – FFC $3,750 – FLC $3,750 – DFP |
|
$18,750 (5) |
|
|
|
|
|
|
|
Karen H. Hogan Director, Audit Committee Chair |
|
$19,500 – PFD $19,500 – PFO $19,500 – FFC $19,500 – FLC $19,500 – DFP |
|
$97,500 (5) |
14
Independent Registered Public Accounting Firm
KPMG, Two Financial Center, 60 South Street, Boston, Massachusetts 02111, has been selected to serve as each Fund’s independent accountants for each Fund’s fiscal year ending November 30, 2025. KPMG acted as the independent accountants for each Fund for the fiscal year ended November 30, 2024. 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 Annual Meetings, but will be available by telephone to respond to appropriate questions and will have an opportunity to make a statement.
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, 2023 and November 30, 2024, respectively.
|
Fund |
|
Fiscal Year
|
|
Audit Fees |
|
Audit-Related Fees |
|
Tax Fees* |
|
All Other Fees |
||||||||||||||||||||||||||||||||||||||||||
|
PFD |
|
2023 |
|
$
55,500
|
|
$0 |
|
$
10,350
|
|
$0 |
||||||||||||||||||||||||||||||||||||||||||
|
|
|
2024 |
|
$
57,200
|
|
$0 |
|
$
10,700
|
|
$0 |
||||||||||||||||||||||||||||||||||||||||||
|
PFO |
|
2023 |
|
$
55,500
|
|
$0 |
|
$
10,350
|
|
$0 |
||||||||||||||||||||||||||||||||||||||||||
|
|
|
2024 |
|
$
57,200
|
|
$0 |
|
$
10,700
|
|
$0 |
||||||||||||||||||||||||||||||||||||||||||
|
FFC |
|
2023 |
|
$
55,500
|
|
$0 |
|
$
10,350
|
|
$0 |
||||||||||||||||||||||||||||||||||||||||||
|
|
|
2024 |
|
$
57,200
|
|
$0 |
|
$
10,700
|
|
$0 |
||||||||||||||||||||||||||||||||||||||||||
|
FLC |
|
2023 |
|
$
55,500
|
|
$0 |
|
$
10,350
|
|
$0 |
||||||||||||||||||||||||||||||||||||||||||
|
|
|
2024 |
|
$
57,200
|
|
$0 |
|
$
10,700
|
|
$0 |
||||||||||||||||||||||||||||||||||||||||||
|
DFP |
|
2023 |
|
$
55,500
|
|
$0 |
|
$
10,350
|
|
$0 |
||||||||||||||||||||||||||||||||||||||||||
|
|
|
2024 |
|
$
57,200
|
|
$0 |
|
$
10,700
|
|
$0 |
||||||||||||||||||||||||||||||||||||||||||
|
Fund |
Description of Fee Paid to the Adviser |
|
PFD |
In consideration of the services rendered pursuant to the Agreement, the Fund will pay the Adviser a fee for the previous month computed monthly at the annual rate of 0.525 of 1.00% on the first $200 million of the Fund’s average weekly total managed assets, 0.45 of 1.00% on the next $300 million of the Fund’s average weekly total managed assets and 0.40 of 1.00% on the Fund’s average weekly total managed assets above $500 million. |
|
PFO |
In consideration of the services rendered pursuant to this Agreement, the Fund will pay the Adviser after the end of each calendar month a fee for the previous month computed monthly at the annual rate of 0.625 of 1.00% on the Fund’s average monthly total managed assets up to $100 million and 0.50 of 1.00% on the Fund’s average monthly total managed assets of $100 million or more. For purposes of calculating such fee, the Fund’s total managed assets means the total assets of the Fund (including any assets attributable to any Fund auction rate 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 the Fund preferred stock is not treated as a liability. |
|
DFP |
In consideration of the services rendered pursuant to the Agreement, the Fund will pay the Adviser a fee for the previous month computed monthly at the annual rate of 0.575 of 1.00% on the first $200 million of the Fund’s average daily total managed assets and 0.50 of 1.00% on the Fund’s average daily total managed assets above $200 million. For purposes of calculating such fee, the Fund’s Managed Assets means the Fund’s net assets, plus the principal amount of loans from financial institutions or debt securities issued by the Fund, the liquidation preference of preferred shares issued by the Fund, if any, and the proceeds of any reverse repurchase agreements entered into by the Fund. |
|
FLC |
In consideration of the services rendered pursuant to the Agreement, the Fund will pay the Adviser a fee for the previous month computed monthly at the annual rate of 0.575 of 1.00% on the first $200 million of the Fund’s average weekly total managed assets, 0.50 of 1.00% on the next $300 million of the Fund’s average weekly total managed assets and 0.45 of 1.00% on the Fund’s average weekly total managed assets above $500 million. |
|
FFC |
In consideration of the services rendered pursuant to this Agreement, the Fund will pay the Adviser after the end of each calendar month a fee for the previous month computed monthly at the annual rate of 0.625 of 1.00% on the Fund’s average monthly total managed assets up to $100 million and 0.50 of 1.00% on the Fund’s average monthly total managed assets of $100 million or more. For purposes of calculating such fee, the Fund’s total managed assets means the total assets of the Fund (including any assets attributable to any Fund auction rate 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 the Fund preferred stock is not treated as a liability. |
Reason for New Investment Advisory Agreements and Terms of the New Investment Advisory Agreements
The Adviser is undergoing an internal restructuring in which the remaining shares held by the Retired Shareholders are repurchased and reallocated to the Management Shareholders (previously defined as the Transaction). Because this restructuring could be viewed as a change of control of the Adviser, resulting in the assignment and automatic termination of the Current Investment Advisory Agreements for each Fund, shareholders are being asked to approve the New Investment Advisory Agreements.
The terms of each New Investment Advisory Agreement are identical to the terms of its respective Current Investment Advisory Agreement, including with respect to advisory fees, except that the initial term will begin upon the execution of the New Investment Advisory Agreement following completion of the Transaction.
Board Consideration of the Current and New Investment Advisory Agreements
At a Board meeting on January 22, 2025, the Board of each Fund approved the continuation of the Current Investment Advisory Agreements. On February 24, 2025, the Board of each Fund approved the New Investment Advisory Agreement for each Fund after considering the information provided in connection with the January meeting and representations from the Adviser that there were no material changes to that information and confirmation from the Adviser that there would be no changes in the level of services or fees associated with the New Investment Advisory Agreements. The following paragraphs summarize certain information and factors considered by the Board, including the Board members who are not “interested persons” (as defined in the 1940 Act, as amended) of the Fund, as well as their conclusions relative to such factors with respect to the Current and New Investment Advisory Agreements.
In considering whether to approve each Fund’s Current and New Investment Advisory Agreement, the Board members considered and discussed information and analysis provided, at the Board’s request, by the Adviser. The Board members also considered detailed information regarding performance and expenses of other investment companies thought to be generally comparable to
17
each Fund. In reaching their determinations relating to the Current and New Investment Advisory Agreements, the Board members considered these discussions and all other factors they believed relevant, including the factors discussed below and information obtained during their multi-year experience as directors of each Fund. In their deliberations, the Board members did not identify any particular information that was all-important or controlling, and Board members may have attributed different weights to the various factors. The Board members evaluated this information, and all other information available to them, for the Funds, and their determinations were made separately in respect of each Fund. In particular, the Board members focused on the following with respect to each Fund.
Nature, Extent and Quality of Services
The Board members reviewed in detail the nature and extent of services provided by the Adviser and the quality of those services over the past y ear and since inception. The Board members noted that these services included managing each Fund’s investment program, the additional services provided by the Adviser in connection with each Fund’s At-The-Market Program that commenced in 2021 and expired in 2024, as well as the continued provision of significant administrative services beyond what each Current Investment Advisory Agreement required and what each New Investment Advisory Agreement will require. The Board members noted that the Adviser also provided, generally at its expense: office facilities for use by the Funds; personnel responsible for supervising the performance of administrative, accounting and related services; and investment compliance monitoring. The Board members also considered the Adviser’s sound financial condition and the Adviser’s commitment to its business. The Board members evaluated the Adviser’s services based on their direct experience serving as Directors for many years, noting (i) the Adviser’s knowledge of the preferred securities market generally, (ii) the Adviser’s internal resources dedicated to identifying opportunities to add additional value and (iii) the Adviser’s culture of compliance. The Board members reviewed the personnel responsible for providing services to the Funds and observed that, based on their experience and interaction with the Adviser: (1) the Adviser’s personnel exhibited a high level of personal integrity, diligence and attention to detail in carrying out their responsibilities under the Agreement; (2) the Adviser was responsive to requests of the Board, and its personnel were available between Board meetings to answer questions from Board members; and (3) the Adviser had kept the Board apprised of developments relating to the Funds. The Board members also considered continued efforts undertaken by the Adviser to maintain an effective compliance program. The Board members concluded that the nature and extent of the services provided were reasonable and appropriate in relation to each Fund’s investment goals and strategies, the corporate and regulatory environment in which each Fund operates and the level of services provided by the Adviser, and that the quality of the Adviser’s service continues to be high.
Investment Performance
The Board members took note of the Adviser’s continued adherence to its investment discipline. The Board members were provided with information regarding each Fund’s total return on net asset value (“NAV”) performance in comparison to its peer funds for the 1-, 3-, 5-, and 10-year periods. This information showed that each Fund had performance equal or greater than the median fund in the peer group for the 10- year period. For the 1-year period, PFO, FFC, FLC and DFP had performance equal or greater than the median fund in the peer group, while PFD slightly underperformed the median fund in the peer group during that time. For the 3-year period, all the Funds performed below the median fund. For the 5-year period PFD, FFC, FLC and DFP had performance equal or greater than the median fund in the peer group, while PFO slightly underperformed the median fund in the peer group during that time. The Board members reviewed the Fund’s performance compared to relevant indices and funds thought to be generally comparable to the Fund and took note of differences between the Fund and certain funds in the comparison group. The Board members also reviewed in detail relative fees and expenses of the Fund and the funds in the comparison group, including comparative advisory fee, administration fee and total expense ratios, and noted that each Fund had below average advisory fees and below average combined advisory/administration fees, while each of FFC and DFP had a below average total expense ratio.
Profitability
The Board members considered the Adviser’s methodology for determining its profitability with respect to each Fund, and the Adviser’s profit margin on an after-tax basis attributable to managing the Fund based on two expense allocation methods discussed with the Board. The Board members also considered that the Adviser provided, for a lower fee, similar investment services to separate account clients and determined that the difference was justified in light of the additional services and costs associated with managing registered investment companies, such as the Funds. The Board members were advised by the Adviser that it did not realize material indirect benefits from its relationship with the Funds and did not obtain soft dollar credits from securities trading.
Economies of Scale
The Board members considered whether economies of scale could be realized because the Adviser advises other similar funds. The Board members acknowledged that, because the Adviser’s portfolio management is focused exclusively on preferred securities, certain economies of scale could be realized across all of the Adviser’s clients in terms of research and portfolio management and that these economies are shared by all of the Adviser’s clients both through the overall level of fees and through reinvestment in the Adviser’s
18
business with technology, added personnel and infrastructure. The Board members also noted that each Fund’s advisory fee schedule declines as assets increase beyond a certain level (commonly known as a “breakpoint”), and that breakpoints provide for a sharing with shareholders of benefits derived as a result of potential economies of scale.
In light of their discussions and considerations as described above, the Board members made the following determinations:
• the nature and extent of the services provided by the Adviser are reasonable and appropriate, and the quality of the services is high;
• each Fund’s overall performance over time has been satisfactory, given the Fund’s investment policies and strategies and the Adviser’s adherence to them;
• the fee paid to the Adviser was reasonable in light of (i) comparative performance and expense and advisory fee information considered over relevant time periods, (ii) the cost of the services provided and profits realized, and (iii) the benefits derived or to be derived by the Adviser from the relationship with each Fund; and
• as a closed-end Fund, there were limited opportunities to generate significant economies of scale by the Adviser as each Fund’s assets grew, however, the investment advisory fee was structured to provide for a sharing of the benefits of economies of scale with shareholders.
Based on these conclusions and other considerations, the Board members determined to approve the Current and New Investment Advisory Agreement for each Fund.
Information About the Adviser
The Adviser, which was organized in 1983, specializes in the management of portfolios of preferred securities, including related hedging activities, for institutional investors and had aggregate assets under management, as of January 31, 2025 (which include the total net assets of the Funds) of approximately $4.07 billion. The Adviser is registered as an investment adviser under the Investment Advisers Act of 1940, as amended. The Adviser is owned by R. Eric Chadwick, Bradford S. Stone, Chad C. Conwell, Donald F. Crumrine, Robert M. Ettinger, and Robert T. Flaherty, each of whose address for purposes of the Adviser is 301 E. Colorado Boulevard, Suite 800, Pasadena, California 91101.
For the most recently completed fiscal year ended November 30, 2024, the Funds did not pay any brokerage commissions to any broker affiliated with the Adviser. The Adviser has no affiliates that are engaged in brokerage.
The names of each Director and Principal Executive Officer of the Adviser are set forth below. The address of each Director and Principal Officer of the Adviser is 301 E. Colorado Boulevard, Suite 800, Pasadena, California 91101.
|
Name |
Position |
|
R. Eric Chadwick |
Director and President |
|
Bradford S. Stone |
Director, Executive Vice President and Chief Financial Officer |
|
Chad C. Conwell |
Director, Executive Vice President, Chief Legal Officer, and Chief Compliance Officer. |
19
Other Funds Advised by the Adviser and Fee Schedules
The following table lists certain information regarding funds for which the Adv iser provides investment advisory services. All of the information below is given as of the end of the last fiscal year of each fund:
|
Fund |
Total Managed Assets |
Description of Fee Paid to the Adviser |
|
PFD |
$251,182,137 |
In consideration of the services rendered pursuant to the Agreement, the Fund will pay the Adviser a fee for the previous month computed monthly at the annual rate of 0.525 of 1.00% on the first $200 million of the Fund’s average weekly total managed assets, 0.45 of 1.00% on the next $300 million of the Fund’s average weekly total managed assets and 0.40 of 1.00% on the Fund’s average weekly total managed assets above $500 million. |
|
PFO |
$213,536,645 |
In consideration of the services rendered pursuant to this Agreement, the Fund will pay the Adviser after the end of each calendar month a fee for the previous month computed monthly at the annual rate of 0.625 of 1.00% on the Fund’s average monthly total managed assets up to $100 million and 0.50 of 1.00% on the Fund’s average monthly total managed assets of $100 million or more. For purposes of calculating such fee, the Fund’s total managed assets means the total assets of the Fund (including any assets attributable to any Fund auction rate 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 the Fund preferred stock is not treated as a liability. |
|
DFP |
$735,524,469 |
In consideration of the services rendered pursuant to the Agreement, the Fund will pay the Adviser a fee for the previous month computed monthly at the annual rate of 0.575 of 1.00% on the first $200 million of the Fund’s average daily total managed assets and 0.50 of 1.00% on the Fund’s average daily total managed assets above $200 million. For purposes of calculating such fee, the Fund’s Managed Assets means the Fund’s net assets, plus the principal amount of loans from financial institutions or debt securities issued by the Fund, the liquidation preference of preferred shares issued by the Fund, if any, and the proceeds of any reverse repurchase agreements entered into by the Fund. |
|
FLC |
$312,683,592 |
In consideration of the services rendered pursuant to the Agreement, the Fund will pay the Adviser a fee for the previous month computed monthly at the annual rate of 0.575 of 1.00% on the first $200 million of the Fund’s average weekly total managed assets, 0.50 of 1.00% on the next $300 million of the Fund’s average weekly total managed assets and 0.45 of 1.00% on the Fund’s average weekly total managed assets above $500 million. |
|
FFC |
$1,336,039,824 |
In consideration of the services rendered pursuant to this Agreement, the Fund will pay the Adviser after the end of each calendar month a fee for the previous month computed monthly at the annual rate of 0.625 of 1.00% on the Fund’s average monthly total managed assets up to $100 million and 0.50 of 1.00% on the Fund’s average monthly total managed assets of $100 million or more. For purposes of calculating such fee, the Fund’s total managed assets means the total assets of the Fund (including any assets attributable to any Fund auction rate 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 the Fund preferred stock is not treated as a liability. |
|
Destra Flaherty Crumrine Preferred and Income Fund |
$252,243,460 |
In its capacity as investment advisor to the fund, DFC Preferred Advisors LLC (“DFC”) has agreed to pay from its own assets an annualized sub-advisory fee to the Adviser in an amount equal to one half of the net management fees collected by DFC, net of any waivers, reimbursement payments, supermarket fees and alliance fees waived, reimbursed or paid by DFC in respect of the Fund. DFC receives an annual management fee payable monthly, at an annual rate of 0.75% of the average daily net assets of the fund. |
20
Required Vote
To become effective for a Fund, the New Investment Advisory Agreement must be approved by the holders of a majority of the Fund’s outstanding voting securities. A “majority of the Fund’s outstanding voting securities” for this purpose means the lesser of (1) 67% or more of the Shares of common stock present at a meeting of shareholders if the holders of more than 50% of such Shares are present or represented by proxy at the meeting, or (2) more than 50% of the outstanding Shares of common stock.
The Board unanimously recommends that shareholders vote FOR the approval of the New Investment Advisory Agreements.
OTHER MATTERS TO COME BEFORE THE ANNUAL MEETINGS
Each Fund does not intend to present any other business at the relevant Annual Meeting, nor is any Fund aware that any shareholder intends to do so. If, however, any other matters are properly brought before the Annual Meetings, the persons named in the accompanying form of proxy will vote thereon in accordance with their judgment.
ADDITIONAL INFORMATION
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 800, Pasadena, California 91101. BNY acts as the administrator to each Fund and is located at 118 Flanders Road, Westborough, Massachusetts 01581. Destra Capital Advisors LLC acts as the servicing agent to FFC, FLC and DFP and is located at 443 N. Willson Ave., Bozeman, Montana 59715.
Submission of Shareholder Proposals - 2026 Annual Meetings
A stockholder proposal intended to be presented at a future meeting of shareholders of a Fund must be received at the office of such Fund at the address set forth on the first page of this Joint Proxy Statement, in accordance with the timing requirements set forth below. Timely submission of a proposal does not guarantee that such proposal will be included in a proxy statement.
All proposals by shareholders of each Fund that are intended to be presented at each Fund’s next Annual Meeting of Shareholders to be held in 2026 pursuant to Rule 14a-8 under the 1934 Act, must be received by the relevant Fund for consideration for inclusion in the relevant Fund’s proxy statement relating to the meeting no later than November 10, 2025, and must satisfy the requirements of federal securities laws.
Shareholders who do not wish to submit a proposal for inclusion in the Funds’ proxy statement and form of proxy for the 2026 Annual Meeting of Shareholders in accordance with Rule 14a-8 under the 1934 Act may submit a proposal for consideration at the 2026 Annual Meeting of Shareholders in accordance with the bylaws of each Fund. Each Fund’s bylaws require that advance notice be given to the Fund in the event a shareholder desires to nominate individuals for election to the Board of Directors or propose other business to be considered by the shareholders at an annual meeting. Notice of any such business or nomination for consideration at the 2026 Annual Meeting of Shareholders must be delivered to the Secretary of the Fund at the address set forth on the first page of this Joint Proxy Statement, comply with the requirements of the Fund’s bylaws, and assuming that the 2026 Annual Meeting of Shareholders is held within 30 days of April 16, 2026 (the first anniversary of the date of the preceding year’s annual meeting), must be received by the Fund no earlier than the 150th day nor later than 2:00 p.m., PDT, on the 120th day prior to the first anniversary of the date of the proxy statement for the 2025 Annual Meeting of Shareholders (March 17, 2026).
Each Fund’s bylaws require shareholders wishing to nominate Directors or make proposals to be voted on at the Fund’s annual meeting to provide timely advance notice of the proposal in writing. To be considered timely, any such advance notice must be in writing delivered to or mailed and received at the principal executive offices of the Fund at the address set forth on the first page of this Joint Proxy Statement not earlier than the 150th day nor later than 2:00 p.m., PDT, on the 120th day prior to the first anniversary of the date of the proxy statement for the preceding year’s annual meeting.
However, in the event that the date of the annual meeting is advanced by more than 30 days (held earlier than March 17, 2026) or delayed by more than 30 days (held later than May 16, 2026) from the first anniversary of the date of the preceding year’s annual meeting, notice by the shareholder to be timely must be so delivered not earlier than the 150th day prior to the date of such annual meeting and not later than 2:00 p.m., PDT, on the later of the 120th day prior to the date of such annual meeting, as originally convened, or the tenth day following the day on which public announcement of the date of such meeting is first made.
Any such notice by a shareholder shall set forth the information required by the Fund’s bylaws with respect to each matter the shareholder proposes to bring before the annual meeting.
21
“Householding”
Please note that only one annual or semi-annual report or Joint Proxy Statement may be delivered to two or more shareholders of a Fund who share an address, unless the Fund has received instructions to the contrary. To request a separate copy of an annual report or semi-annual report or this Joint Proxy Statement, or for instructions regarding how to request a separate copy of these documents or regarding how to request a single copy if multiple copies of these documents are received, shareholders should contact Computershare, P.O. Box 43132, Providence, RI 02940-9434, United States, or by calling 1-866-351-7446 (U.S. toll-free) or 1-201-680-6578 (International).
Voting Results
Each Fund will advise its shareholders of the voting results of the matters voted upon at its Annual Meeting in its next Semi-Annual Report to shareholders.
Broker Non-Votes and Abstentions
A proxy which is properly executed and returned accompanied by instructions to withhold authority to vote represents a broker “non-vote” (i.e., Shares held by brokers or nominees as to which (i) instructions have not been received from the beneficial owners or the persons entitled to vote and (ii) the broker or nominee does not have discretionary voting power on a particular matter). Proxies that withhold authority or broker non-votes (collectively, “abstentions”) will be counted as Shares that are present and entitled to vote at the relevant Annual Meeting for purposes of determining the presence of a Quorum.
With respect to Proposal 1 for the Annual Meetings, abstentions do not constitute a vote “for” the Nominees for Directors and will have no impact on the vote for the election of directors. With respect to Proposal 2, abstentions will have the same effect as a vote “against” Proposal 2.
NOTICE TO BANKS, BROKER/DEALERS AND VOTING TRUSTEES AND THEIR NOMINEES
Please advise the Funds whether other persons are the beneficial owners of 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 to supply copies to the beneficial owners of Shares.
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. SHAREHOLDERS WHO DO NOT EXPECT TO ATTEND THE RELEVANT ANNUAL MEETING(S) ARE THEREFORE URGED TO COMPLETE, SIGN, DATE AND RETURN ANY PROXY CARD OR VOTING INSTRUCTION FORM AS SOON AS POSSIBLE IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
22
APPENDIX A
FLAHERTY CRUMRINE
PREFERRED AND INCOME FUND INCORPORATED (the “Fund”)
INVESTMENT ADVISORY AGREEMENT
[*], 2025
Flaherty Crumrine Incorporated
Ladies
and Gentlemen:
Flaherty Crumrine Preferred and Income Fund In
corporated (the “Company”), a corporation organized under the laws of the State of Maryland, herewith confirms its agreement with Flaherty Crumrine Incorporated (the “Adviser”), a corporation organized under the laws of the State of California,
as follows:
1. Investment
Description; Appointment
The Company desires to employ its capital by investing and reinvesting in investments of the kind and in accordance with the limitations specified in its Articles of Incorporation, as the same may from time to time be amended, and in its Registration Statement as from time to time in effect, and in such manner and to such extent as may from time to time be approved by the Board of Directors of the Company. Copies of the Company’s Registration Statement and Articles of Incorporation, as amended, have been or will be submitted to the Adviser. The Company agrees to provide copies of all amendments to the Company’s Registration Statement and Articles of Incorporation to the Adviser on an on-going basis. The Company desires to employ and hereby appoints the Adviser to act as investment adviser to the Company. The Adviser accepts the appointment and agrees to furnish the services described herein for the compensation set
forth below.
2. Services as
Investment Adviser
Subject to the supervision and direction of the Board of Directors of the Company, the Adviser will (a) act in accordance with the Company’s Articles of Incorporation, the Investment Company Act of 1940, and the Investment Advisers Act of 1940, as the same may from time to time be amended, (b) manage the Company’s portfolio on a discretionary basis in accordance with its investment objective and policies as stated in the Company’s Registration Statement as from time to time in effect, (c) make investment decisions and exercise voting rights in respect of portfolio securities for the Company, (d) place purchase and sale orders on behalf of the Company and
(e) employ
professional portfolio managers and securities analysts to provide research services to the Company. The Adviser is authorized to retain the services of an economic consultant at the expense of the Fund to provide such services with respect to the Company as the parties to any agreement may agree upon. In providing these services, the Adviser will provide investment research and supervision of the Company’s evaluation and, if appropriate, sale and reinvestment of the Company’s assets. In addition, the Adviser will furnish the Company with whatever statistical information the Company may reasonably request with respect to the securities that the Company may hold or
contemplate purchasing.
3. Brokerage
In executing transactions for the Company and selecting brokers or dealers, the Adviser will use its best efforts to seek the best overall terms available. In assessing the best overall terms available for any Company transaction, the Adviser will consider all factors it deems relevant including, but not limited to, breadth of the market in the security, the price of the security, the financial condition and execution capability of the broker or dealer and the reasonableness of any commission for the specific transaction and on a continuing basis. In selecting brokers or dealers to execute any transaction and in evaluating the best overall terms available, the Adviser may consider the brokerage and research services (as those terms are defined in Section 28(e) of the Securities and Exchange Act of 1934) provided to the Company and/or other accounts over which the Adviser or an affiliate exercises
investment discretion.
4. Information Provided to
the Company
The Adviser will use its best efforts to keep the Company informed of developments materially affecting the Company, and will, on its own initiative, furnish the Company from time to time with whatever information the Adviser believes is appropriate for
this purpose.
301 E. Colorado Boulevard Suite 800
Pasadena,
California 91101
23
5. Standard of Care
The Adviser shall exercise its best judgment in rendering the services described in paragraphs 2, 3, and 4 above. The Adviser shall not be liable for any error of judgment or mistake of law or for any act or omission or any loss suffered by the Company in connection with the matters to which this Agreement relates, provided that nothing herein shall be deemed to protect or purport to protect the Adviser against any liability to the Company or its shareholders to which the Adviser would otherwise be subject by reason of willful misfeasance, bad faith or gross negligence on its part in the performance of its duties or from reckless disregard by it of its obligations and duties under this Agreement (“disabling conduct”). The Company will indemnify the Adviser against, and hold it harmless from, any and all losses, claims, damages, liabilities or expenses (including reasonable counsel fees and expenses), including any amounts paid in satisfaction of judgments, in compromise or as fines or penalties, not resulting from disabling conduct by the Adviser. Indemnification shall be made only following: (i) a final decision on the merits by a court or other body before whom the proceeding was brought that the Adviser was not liable by reason of disabling conduct or (ii) in the absence of such a decision, a reasonable determination, based upon a review of the facts, that the Adviser was not liable by reason of disabling conduct by (a) the vote of a majority of a quorum of directors of the Company who are neither “interested persons” of the Company nor parties to the proceeding (“disinterested non-party directors”) or (b) an independent legal counsel in a written opinion. The Adviser shall be entitled to advances from the Company for payment of the reasonable expenses incurred by it in connection with the matter as to which it is seeking indemnification in the manner and to the fullest extent permissible under the Maryland General Corporation law. The Adviser shall provide to the Company a written affirmation of its good faith belief that the standard of conduct necessary for indemnification by the Company has been met and a written undertaking to repay any such advance if it should ultimately be determined that the standard of conduct has not been met. In addition, at least one of the following additional conditions shall be met: (a) the Adviser shall provide a security in form and amount acceptable to the Company for its undertaking; (b) the Company is insured against losses arising by reason of the advance; or (c) a majority of a quorum of disinterested non-party directors, or independent legal counsel, in a written opinion, shall have determined, based on a review of facts readily available to the Company at the time the advance is proposed to be made, that there is reason to believe that the Adviser will ultimately be found to be entitled to indemnification.
6. Compensation
(a) In consideration of the services rendered pursuant to this Agreement, the Company will pay the Adviser after the end of each calendar month a fee for the previous month computed monthly at the annual rate of .625 of 1.00% on the Company’s average monthly total managed assets up to $100 million and .50 of 1.00% on the Company’s average monthly total managed assets of $100 million or more. For purposes of calculating such fee, the Company’s total managed assets means the total assets of the Company (including any assets attributable to any Company auction rate 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 the Company preferred stock is not treated as a liability.
(b) Upon any termination of the Agreement before the end of a month, the fee for such part of that month shall be prorated according to the proportion that such period bears to the full monthly period and shall be payable upon the da te of termination of this Agreement. For the purpose of determining fees payable to the Adviser, the value of the Company’s average monthly net assets shall be computed at the times and in the manner specified in the Company’s Registration Statement as from time to time in effect.
7. Expenses
The Adviser will bear all expenses in connection with the performance of its services under this Agreement, including compensation of and office space for its officers and employees connected with investment and economic research, trading and investment management and administration of the Company, as well as the fees of all directors of the Company who are affiliated with the Adviser or any of its affiliates; provided that the Company shall reimburse the Adviser for the travel and out-of- pocket expenses or an appropriate portion thereof of directors, officers and employees of the Adviser in connection with attendance at meetings of the Board of Directors of the Fund of any committee thereof. The Company will bear all other expenses to be incurred in its operation other than those that other parties have agreed to bear, including: organizational expenses; taxes, interest, brokerage costs and commissions and stock exchange fees; fees of directors of the Company who are not officers, directors or employees of the Adviser; Securities and Exchange Commission fees; state Blue Sky qualification fees; charges of the custodian, any subcustodians and transfer and dividend-paying agent; expenses in connection with the Company’s Dividend Reinvestment and Cash Purchase Plan; insurance premiums; outside auditing and legal expenses; costs of maintenance of the Company’s existence; costs attributable to investor services, including, without limitation, telephone and personnel expenses; costs of printing stock certificates; costs of shareholders’ reports and meetings of the shareholders of the Company and of the officers or Board of Directors of the Company; membership fees in trade associations; stock exchange listing fees and expenses; expenses in connection with auctions of shares of auction rate preferred stock proposed to be issued by the Company; litigation and other extraordinary or non- recurring expenses.
24
8. Services to Other Companies or Accounts
The Company understands that the Adviser now acts, will continue to act or may in the future act, as investment adviser to fiduciary and other managed accounts or as investment adviser to one or more other investment companies, and the Company has no objection to the Adviser so acting, provided that whenever the Company and one or more other accounts or investment companies advised by the Adviser have available funds for investment, investments suitable and appropriate for each will be allocated in accordance with procedures believed by the Adviser to be equitable to each entity. Similarly, opportunities to sell securities will be allocated in an equitable manner. The Company recognizes that in some cases this procedure may adversely affect the size of the position obtained for or disposed of by the Company. In addition, the Company understands that the persons employed by the Adviser to assist in the performance of the Adviser’s duties hereunder will not devote their full time to such service and nothing contained herein shall be deemed to limit or restrict the right of the Adviser or any affiliate of the Adviser to engage in and devote time and attention to other business or to render services or whatever kind or nature.
9. Term of Agreement
This Agreement shall become effective as of [*] and shall continue for an initial two-year term and shall continue thereafter so long as such continuance is specifically approved at least annually by (i) the Board of Directors of the Company or (ii) a vote of a “majority” (as defined in the Investment Company Act of 1940, as amended) of the Company’s outstanding voting securities, provided that in either event the continuance is also approved by a majority of the Board of Directors who are not “interested persons” (as defined in said Act) of any party to this Agreement, by vote cast in person at a meeting called for the purpose of voting on such approval. This Agreement is terminable, without penalty, on 60 days’ written notice, by the Board of Directors of the Company or by vote of holders of a majority of the Company’s shares, or upon 60 days’ written notice, by the Adviser. This Agreement will also terminate automatically in the event of its assignment (as defined in said 1940 Act).
10. Entire Agreement
This Agreement constitutes the entire agreement between the parties hereto.
11. Governing Law
This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of New York without giving effect to the conflicts of laws principles thereof.
If the foregoing accurately sets forth our agreement, kindly indicate your acceptance hereof by signing and returning the enclosed copy hereof.
Very truly yours.
FLAHERTY CRUMRINE PREFERRED AND INCOME FUND INCORPORATED
|
By: |
|
Accepted:
FLAHERTY CRUMRINE INCORPORATED
|
By: |
|
25
FLAHERTY CRUMRINE PREFERRED AND INCOME OPPORTUNITY FUND INCORPORATED (the “Fund”)
INVESTMENT ADVISORY AGREEMENT
[*], 2025
Flaherty Crumrine Incorporated
Ladies
and Gentlemen:
Flaherty Crumrine Preferred and Income Opportunity Fund Incorporated (the “Company”), a corporation organized under the laws of the State of Maryland, herewith confirms its agreement with Flaherty Crumrine Incorporated (the “Adviser”), a corporation organized under the laws of the State of California,
as follows:
1. Investment
Description; Appointment
The Company desires to employ its capital by investing and reinvesting in investments of the kind and in accordance with the limitations specified in its Articles of Incorporation, as the same may from time to time be amended, and in its Registration Statement as from time to time in effect, and in such manner and to such extent as may from time to time be approved by the Board of Directors of the Company. Copies of the Company’s Registration Statement and Articles of Incorporation, as amended, have been or will be submitted to the Adviser. The Company agrees to provide copies of all amendments to the Company’s Registration Statement and Articles of Incorporation to the Adviser on an on-going basis. The Company desires to employ and hereby appoints the Adviser to act as investment adviser to the Company. The Adviser accepts the appointment and agrees to furnish the services described herein for the compensation set
forth below.
2. Services as
Investment Adviser
Subject to the supervision and direction of the Board of Directors of the Company, the Adviser will (a) act in accordance with the Company’s Articles of Incorporation, the Investment Company Act of 1940, and the Investment Advisers Act of 1940, as the same may from time to time be amended, (b) manage the Company’s portfolio on a discretionary basis in accordance with its investment objective and policies as stated in the Company’s Registration Statement as from time to time in effect, (c) make investment decisions and exercise voting rights in respect of portfolio securities for the Company, (d) place purchase and sale orders on behalf of the Company and
(e) employ
professional portfolio managers and securities analysts to provide research services to the Company. The Adviser is authorized to retain the services of an economic consultant at the expense of the Fund to provide such services with respect to the Company as the parties to any agreement may agree upon. In providing these services, the Adviser will provide investment research and supervision of the Company’s evaluation and, if appropriate, sale and reinvestment of the Company’s assets. In addition, the Adviser will furnish the Company with whatever statistical information the
Company may reasonably request with respect to the securities that the Company may hold or
contemplate purchasing.
3. Brokerage
In executing transactions for the Company and selecting brokers or dealers, the Adviser will use its best efforts to seek the best overall terms available. In assessing the best overall terms available for any Company transaction, the Adviser will consider all factors it deems relevant including, but not limited to, breadth of the market in the security, the price of the security, the financial condition and execution capability of the broker or dealer and the reasonableness of any commission for the specific transaction and on a continuing basis. In selecting brokers or dealers to execute any transaction and in evaluating the best overall terms available, the Adviser may consider the brokerage and research services (as those terms are defined in Section 28(e) of the Securities and Exchange Act of 1934) provided to the Company and/or other accounts over which the Adviser or an affiliate exercises
investment discretion.
4. Information Provided to
the Company
The Adviser will use its best efforts to keep the Company informed of developments materially affecting the Company, and will, on its own initiative, furnish the Company from time to time with whatever information the Adviser believes is appropriate for
this purpose.
5. Standard
of Care
The Adviser shall exercise its best judgment in rendering the services described in paragraphs 2, 3, and 4 above. The Adviser shall not be liable for any error of judgment or mistake of law or for any act or omission or any loss suffered by the Company in connection with the matters to which this Agreement relates, provided that nothing herein shall be deemed to protect or purport to protect the Adviser against any liability to the Company or its shareholders to which the Adviser would otherwise be subject by reason of willful
misfeasance, bad
301 E. Colorado Boulevard, Suite 800
Pasadena,
California 91101
26
faith or gross negligence on its part in the performance of its duties or from reckless disregard by it of its obligations and duties under this Agreement (“disabling conduct”). The Company will indemnify the Adviser against, and hold it harmless from, any and all losses, claims, damages, liabilities or expenses (including reasonable counsel fees and expenses), including any amounts paid in satisfaction of judgments, in compromise or as fines or penalties, not resulting from disabling conduct by the Adviser. Indemnification shall be made only following: (i) a final decision on the merits by a court or other body before whom the proceeding was brought that the Adviser was not liable by reason of disabling conduct or (ii) in the absence of such a decision, a reasonable determination, based upon a review of the facts, that the Adviser was not liable by reason of disabling conduct by (a) the vote of a majority of a quorum of directors of the Company who are neither “interested persons” of the Company nor parties to the proceeding (“disinterested non-party directors”) or (b) an independent legal counsel in a written opinion. The Adviser shall be entitled to advances from the Company for payment of the reasonable expenses incurred by it in connection with the matter as to which it is seeking indemnification in the manner and to the fullest extent permissible under the Maryland General Corporation law. The Adviser shall provide to the Company a written affirmation of its good faith belief that the standard of conduct necessary for indemnification by the Company has been met and a written undertaking to repay any such advance if it should ultimately be determined that the standard of conduct has not been met. In addition, at least one of the following additional conditions shall be met: (a) the Adviser shall provide a security in form and amount acceptable to the Company for its undertaking; (b) the Company is insured against losses arising by reason of the advance; or (c) a majority of a quorum of disinterested non-party directors, or independent legal counsel, in a written opinion, shall have determined, based on a review of facts readily available to the Company at the time the advance is proposed to be made, that there is reason to believe that the Adviser will ultimately be found to be entitled to indemnification.
6. Compensation
(a) In consideration of the services rendered pursuant to this Agreement, the Company will pay the Adviser after the end of each calendar month a fee for the previous month computed monthly at the annual rate of .625 of 1.00% on the Company’s average monthly total managed assets up to $100 million and .50 of 1.00% on the Company’s average monthly total managed assets of $100 million or more. For purposes of calculating such fee, the Company’s total managed assets means the total assets of the Company (including any assets attributable to any Company auction rate 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 the Company preferred stock is not treated as a liability.
(b) Upon any termination of the Agreement before the end of a month, the fee for such part of that month shall be prorated according to the proportion that such period bears to the full monthly period and shall be payable upon the date of termination of this Agreement. For the purpose of determining fees payable to the Adviser, the value of the Company’s average monthly net assets shall be computed at the times and in the manner specified in the Company’s Registration Statement as from time to time in effect.
7. Expenses
The Adviser will bear all expenses in connection with the performance of its services under this Agreement, including compensation of an office space for its officers and employees connected with investment and economic research, trading and investment management and administration of the Company, as well as the fees of all directors of the Company who are affiliated with the Adviser or any of its affiliates; provided that the Company shall reimburse the Adviser for the travel and out-of- pocket expenses or an appropriate portion thereof of directors, officers and employees of the Adviser in connection with attendance at meetings of the Board of Directors of the Fund of any committee thereof. The Company will bear all other expenses to be incurred in its operation other than those that other parties have agreed to bear, including: organizational expenses; taxes, interest, brokerage costs and commissions and stock exchange fees; fees of directors of the Company who are not officers, directors or employees of the Adviser; Securities and Exchange Commission fees; state Blue Sky qualification fees; charges of the custodian, any subcustodians and transfer and dividend-paying agent; expenses in connection with the Company’s Dividend Reinvestment and Cash Purchase Plan; insurance premiums; outside auditing and legal expenses; costs of maintenance of the Company’s existence; costs attributable to investor services, including, without limitation, telephone and personnel expenses; costs of printing stock certificates; costs of shareholders’ reports and meetings of the shareholders of the Company and of the officers or Board of Directors of the Company; membership fees in trade associations; stock exchange listing fees and expenses; expenses in connection with auctions of shares of auction rate preferred stock proposed to be issued by the Company; litigation and other extraordinary or non- recurring expenses.
8. Services to Other Companies or Accounts
The Company understands that the Adviser now acts, will continue to act or may in the future act, as investment adviser to fiduciary and other managed accounts or as investment adviser to one or more other investment companies, and the Company has no objection to the Adviser so acting, provided that whenever the Company and one or more other accounts or investment companies advised by the Adviser have available funds for investment, investments suitable and appropriate for each will be allocated in accordance with procedures believed by the Adviser to be equitable to each entity. Similarly, opportunities to sell securities will be allocated in an equitable manner. The Company recognizes that in some cases this procedure may adversely affect the size of the position obtained for or disposed of
27
by the Company. In addition, the Company understands that the persons employed by the Adviser to assist in the performance of the Adviser’s duties hereunder will not devote their full time to such service and nothing contained herein shall be deemed to limit or restrict the right of the Adviser or any affiliate of the Adviser to engage in and devote time and attention to other business or to render services or whatever kind or nature.
9. Term of Agreement
This Agreement shall become effective on [*] and shall continue for an initial two-year term and shall continue thereafter so long as such continuance is specifically approved at least annually by (i) the Board of Directors of the Company or (ii) a vote of a “majority” (as defined in the Investment Company Act of 1940, as amended) of the Company’s outstanding voting securities, provided that in either event the continuance is also approved by a majority of the Board of Directors who are not “interested persons” (as defined in said Act) of any party to this Agreement, by vote cast in person at a meeting called for the purpose of voting on such approval. This Agreement is terminable, without penalty, on 60 days’ written notice, by the Board of Directors of the Company or by vote of holders of a majority of the Company’s shares, or upon 60 days’ written notice, by the Adviser. This Agreement will also terminate automatically in the event of its assignment (as defined in said 1940 Act).
10. Entire Agreement
This Agreement constitutes the entire agreement between the parties hereto.
11. Governing Law
This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of New York without giving effect to the conflicts of laws principles thereof.
If the foregoing accurately sets forth our agreement, kindly indicate your acceptance hereof by signing and returning the enclosed copy hereof.
Very truly yours.
FLAHERTY CRUMRINE PREFERRED AND INCOME OPPORTUNITY FUND INCORPORATED
|
By: |
|
Accepted:
FLAHERTY CRUMRINE INCORPORATED
|
By: |
|
28
FLAHERTY CRUMRINE
PREFERRED AND INCOME SECURITIES FUND INCORPORATED (the “Fund”)
INVESTMENT ADVISORY AGREEMENT
[*], 2025
Flaherty Crumrine Incorporated
Ladies
and Gentlemen:
Flaherty Crumrine Preferred and Income Securities Fund Incorporated (the “Company”), a corporation organized under the laws of the State of Maryland, herewith confirms its agreement with Flaherty Crumrine Incorporated (the “Adviser”), a corporation organized under the laws of the State of California,
as follows:
1. Investment
Description; Appointment
The Company desires to employ its capital by investing and reinvesting in investments of the kind and in accordance with the limitations specified in its Articles of Incorporation, as the same may from time to time be amended, and in its Registration Statement as from time to time in effect, and in such manner and to such extent as may from time to time be approved by the Board of Directors of the Company. Copies of the Company’s Registration Statement and Articles of Incorporation, as amended, have been or will be submitted to the Adviser. The Company agrees to provide copies of all amendments to the Company’s Registration Statement and Articles of Incorporation to the Adviser on an ongoing basis. The Company desires to employ and hereby appoints the Adviser to act as investment adviser to the Company. The Adviser accepts the appointment and agrees to furnish the services described herein for the compensation set
forth below.
2. Services as
Investment Adviser
Subject to the supervision and direction of the Board of Directors of the Company, the Adviser will (a) act in accordance with the Company’s Articles of Incorporation, the Investment Company Act of 1940 and the Investment Advisers Act of 1940, as the same may from time to time be amended, (b) manage the Company’s portfolio on a discretionary basis in accordance with its investment objective and policies as stated in the Company’s Registration Statement as from time to time in effect, (c) make investment decisions and exercise voting and related rights in respect of portfolio securities for the Company, (d) place purchase and sale orders on behalf of the Company and (e) employ professional portfolio managers and securities analysts to provide research services to the Company. In providing these services, the Adviser will provide investment research and supervision of the Company’s investments and conduct a continual program of investment, evaluation and, if appropriate, sale and reinvestment of the Company’s assets. In addition, the Adviser will furnish the Company with whatever statistical information the Company may reasonably request with respect to the securities that the Company may hold or
contemplate purchasing.
3. Brokerage
In executing transactions for the Company and selecting brokers or dealers, the Adviser will use its best efforts to seek the best overall terms available. In assessing the best overall terms available for any Company transaction, the Adviser will consider all factors it deems relevant including, but not limited to, breadth of the market in the security, the price of the security, the financial condition and execution capability of the broker or dealer and the reasonableness of any commission for the specific transaction and on a continuing basis. In selecting brokers or dealers to execute any transaction and in evaluating the best overall terms available, the Adviser may consider the brokerage and research services (as those terms are defined in Section 28(e) of the Securities Exchange Act of 1934) provided to the Company and/or other accounts over which the Adviser or an affiliate exercises
investment discretion.
4. Information Provided to
the Company
The Adviser will use its best efforts to keep the Company informed of developments materially affecting the Company, and will, on its own initiative, furnish the Company from time to time with whatever information the Adviser believes is appropriate for
this purpose.
5. Standard
of Care
The Adviser shall exercise its best judgment in rendering the services described in paragraphs 2, 3 and 4 above. The Adviser shall not be liable for any error of judgment or mistake of law or for any act or omission or any loss suffered by the Company in connection with the matters to which this Agreement relates, provided that nothing herein shall be deemed to protect or purport to protect the Adviser against any liability to the Company or its shareholders to which the Adviser would otherwise be subject by reason of willful
misfeasance, bad
301 E. Colorado Boulevard, Suite 800
Pasadena,
California 91101
29
faith or gross negligence on its part in the performance of its duties or from reckless disregard by it of its obligations and duties under this Agreement (“disabling conduct”). The Company will indemnify the Adviser against, and hold it harmless from, any and all losses, claims, damages, liabilities or expenses (including reasonable counsel fees and expenses), including any amounts paid in satisfaction of judgments, in compromise or as fines or penalties, not resulting from disabling conduct by the Adviser. Indemnification shall be made only following: (i) a final decision on the merits by a court or other body before whom the proceeding was brought that the Adviser was not liable by reason of disabling conduct or (ii) in the absence of such a decision, a reasonable determination, based upon a review of the facts, that the Adviser was not liable by reason of disabling conduct by (a) the vote of a majority of a quorum of directors of the Company who are neither “interested persons” of the Company nor parties to the proceeding (“disinterested non-party directors”) or (b) an independent legal counsel in a written opinion. The Adviser shall be entitled to advances from the Company for payment of the reasonable expenses incurred by it in connection with the matter as to which it is seeking indemnification in the manner and to the fullest extent permissible under the Maryland General Corporation law. The Adviser shall provide to the Company a written affirmation of its good faith belief that the standard of conduct necessary for indemnification by the Company has been met and a written undertaking to repay any such advance if it should ultimately be determined that the standard of conduct has not been met. In addition, at least one of the following additional conditions shall be met: (a) the Adviser shall provide a security in form and amount acceptable to the Company for its undertaking; (b) the Company is insured against losses arising by reason of the advance; or (c) a majority of a quorum of disinterested non-party directors, or independent legal counsel, in a written opinion, shall have determined, based on a review of facts readily available to the Company at the time the advance is proposed to be made, that there is reason to believe that the Adviser will ultimately be found to be entitled to indemnification.
6. Compensation
In consideration of the services rendered pursuant to this Agreement, the Company will pay the Adviser after the end of the calendar month during which the Closing Date (as defined below) occurs and after the end of each calendar month thereafter a fee for the previous month computed monthly at the annual rate of .525 of 1.00% on the first $200 million of the Company’s average weekly total managed assets, .45 of 1.00% on the next $300 million of the Company’s average weekly total managed assets and .40 of 1.00% on the Company’s average weekly total managed assets above $500 million. For purposes of calculating such fee, the Company’s total managed assets means the total assets of the Company (including any assets attributable to any Company auction rate 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 the Company auction rate preferred stock is not treated as a liability. The fee payable to the Adviser for the period from the date of the closing of the offering contemplated by the Company’s initial registration statement (the “Closing Date”) to the end of the first calendar month during which the Closing Date occurs shall be prorated according to the proportion that such period bears to the full monthly period.
Upon any termination of this Agreement before the end of a month, the fee for such part of that month shall be prorated according to the proportion that such period bears to the full monthly period and shall be payable upon the date of termination of this Agreement. For the purpose of determining fees payable to the Adviser, the value of the Company’s average monthly net assets shall be computed at the times and in the manner specified in the Company’s Registration Statement as from time to time in effect.
7. Expenses
The Adviser will bear all expenses in connection with the performance of its services under this Agreement, including compensation of and office space for its officers and employees connected with investment research, trading and investment advice to the Company, as well as the fees of all directors of the Company who are affiliated with the Adviser or any of its affiliates; provided that the Company shall reimburse the Adviser for the travel and out-of-pocket expenses or an appropriate portion thereof of directors, officers and employees of the Adviser in connection with attendance at meetings of the Board of Directors of the Fund or any committee thereof. The Company will bear all other expenses to be incurred in its operation other than those that other parties have agreed to bear, including: organizational expenses; taxes, interest, brokerage costs and commissions and stock exchange fees; fees of directors of the Company who are not officers, directors or employees of the Adviser; Securities and Exchange Commission fees; state Blue Sky qualification fees; charges of the custodian, any subcustodians and transfer and dividend-paying agent; expenses in connection with the Company’s Dividend Reinvestment and Cash Purchase Plan; insurance premiums; outside auditing and legal expenses; costs of maintenance of the Company’s existence; costs attributable to investor services, including, without limitation, fees to the Company’s shareholder servicing agent, telephone and personnel expenses; costs of printing stock certificates; costs of shareholders’ reports and meetings of the shareholders of the Company and of the officers or Board of Directors of the Company; membership fees in trade associations; stock exchange listing fees and expenses; expenses in connection with auctions of shares of auction rate preferred stock proposed to be issued by the Company; litigation and other extraordinary or non-recurring expenses.
8. Services to Other Companies or Accounts
The Company understands that the Adviser now acts, will continue to act or may in the future act, as investment adviser to fiduciary and other managed accounts or as investment adviser to one or more other investment companies, and the Company has no objection to the Adviser so acting, provided that whenever the Company and one or more other accounts or investment companies advised by the Adviser
30
have available funds for investment, investments suitable and appropriate for each will be allocated in accordance with procedures believed by the Adviser to be equitable to each entity. Similarly, opportunities to sell securities will be allocated in an equitable manner. The Company recognizes that in some cases this procedure may adversely affect the size of the position obtained for or disposed of by the Company. In addition, the Company understands that the persons employed by the Adviser to assist in the performance of the Adviser’s duties hereunder will not devote their full time to such service and nothing contained herein shall be deemed to limit or restrict the right of the Adviser or any affiliate of the Adviser to engage in and devote time and attention to other businesses or to render services of whatever kind or nature.
9. Term of Agreement
This Agreement shall become on [*] and shall continue for an initial two-year term and shall continue thereafter so long as such continuance is specifically approved at least annually by (i) the Board of Directors of the Company or (ii) a vote of a “majority” (as defined in the Investment Company Act of 1940, as amended) of the Company’s outstanding voting securities, provided that in either event the continuance is also approved by a majority of the Board of Directors who are not “interested persons” as defined in said Act) of any party to this Agreement, by vote cast in person at a meeting called for the purpose of voting on such approval. This Agreement is terminable, without penalty, on 60 days’ written notice, by the Board of Directors of the Company or by vote of holders of a majority of the Company’s shares, or upon 60 days’ written notice, by the Adviser. This Agreement will also terminate automatically in the event of its assignment (as defined in said Act).
10. Entire Agreement
This Agreement constitutes the entire agreement between the parties hereto.
11. Miscellaneo us
The Company recognizes that directors, officers and employees of the Adviser may from time to time serve as directors, trustees, officers and employees of corporations and business trusts (including other investment companies) and that such other corporations and trusts may include the name “FC” and “Flaherty Crumrine” as part of their names, and that the Adviser may enter into advisory or other agreements with such other corporations and trusts. If the Adviser ceases to act as the investment adviser of the Company, the Company agrees that, at the Adviser’s request, the Company’s license to use the words “FC” and “Flaherty Crumrine” will terminate and that the Company will take all necessary action to change the name of the Company to a name not including the words “FC” or “Flaherty Crumrine”.
12. Governing Law
This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of New York without giving effect to the conflicts of laws principles thereof. If the foregoing accurately sets forth our agreement, kindly indicate your acceptance hereof by signing and returning the enclosed copy hereof.
Very truly yours,
FLAHERTY CRUMRINE PREFERRED AND INCOME
SECURITIES
FUND INCORPORATED
|
By: |
|
Accepted:
FLAHERTY CRUMRINE INCORPORATED
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By: |
|
31
FLAHERTY CRUMRINE
TOTAL RETURN FUND INCORPORATED (the “Fund”)
INVESTMENT ADVISORY AGREEMENT
[*], 2025
Flaherty Crumrine Incorporated
Ladies
and Gentlemen:
Flaherty Crumrine Total Return Fund Incorporated (the “Company”), a corporation organized under the laws of the State of Maryland, herewith confirms its agreement with Flaherty Crumrine Incorporated (the “Adviser”), a corporation organized under the laws of the State of California,
as follows:
1. Investment
Description; Appointment
The Company desires to employ its capital by investing and reinvesting in investments of the kind and in accordance with the limitations specified in its Articles of Incorporation, as the same may from time to time be amended, and in its Registration Statement as from time to time in effect, and in such manner and to such extent as may from time to time be approved by the Board of Directors of the Company. Copies of the Company’s Registration Statement and Articles of Incorporation, as amended, have been or will be submitted to the Adviser. The Company agrees to provide copies of all amendments to the Company’s Registration Statement and Articles of Incorporation to the Adviser on an ongoing basis. The Company desires to employ and hereby appoints the Adviser to act as investment adviser to the Company. The Adviser accepts the appointment and agrees to furnish the services described herein for the compensation set
forth below.
2. Services as
Investment Adviser
Subject to the supervision and direction of the Board of Directors of the Company, the Adviser will (a) act in accordance with the Company’s Articles of Incorporation, the Investment Company Act of 1940 and the Investment Advisers Act of 1940, as the same may from time to time be amended, (b) manage the Company’s portfolio on a discretionary basis in accordance with its investment objective and policies as stated in the Company’s Registration Statement as from time to time in effect, (c) make investment decisions and exercise voting and related rights in respect of portfolio securities for the Company, (d) place purchase and sale orders on behalf of the Company and (e) employ professional portfolio managers and securities analysts to provide research services to the Company. In providing these services, the Adviser will provide investment research and supervision of the Company’s investments and conduct a continual program of investment, evaluation and, if appropriate, sale and reinvestment of the Company’s assets. In addition, the Adviser will furnish the Company with whatever statistical information the Company may reasonably request with respect to the securities that the Company may hold or
contemplate purchasing.
3. Brokerage
In executing transactions for the Company and selecting brokers or dealers, the Adviser will use its best efforts to seek the best overall terms available. In assessing the best overall terms available for any Company transaction, the Adviser will consider all factors it deems relevant including, but not limited to, breadth of the market in the security, the price of the security, the financial condition and execution capability of the broker or dealer and the reasonableness of any commission for the specific transaction and on a continuing basis. In selecting brokers or dealers to execute any transaction and in evaluating the best overall terms available, the Adviser may consider the brokerage and research services (as those terms are defined in Section 28(e) of the Securities Exchange Act of 1934) provided to the Company and/or other accounts over which the Adviser or an affiliate exercises
investment discretion.
4. Information Provided to
the Company
The Adviser will use its best efforts to keep the Company informed of developments materially affecting the Company, and will, on its own initiative, furnish the Company from time to time with whatever information the Adviser believes is appropriate for
this purpose.
5. Standard
of Care
The Adviser shall exercise its best judgment in rendering the services described in paragraphs 2, 3 and 4 above. The Adviser shall not be liable for any error of judgment or mistake of law or for any act or omission or any loss suffered by the Company in connection with the matters to which this Agreement relates, provided that nothing herein shall be deemed to protect or purport to protect the Adviser against any liability to the Company or its shareholders to which the Adviser would otherwise be subject by reason of willful
misfeasance, bad
301 E. Colorado Boulevard Suite 800
Pasadena,
California 91101
32
faith or gross negligence on its part in the performance of its duties or from reckless disregard by it of its obligations and duties under this Agreement (“disabling conduct”). The Company will indemnify the Adviser against, and hold it harmless from, any and all losses, claims, damages, liabilities or expenses (including reasonable counsel fees and expenses), including any amounts paid in satisfaction of judgments, in compromise or as fines or penalties, not resulting from disabling conduct by the Adviser. Indemnification shall be made only following: (i) a final decision on the merits by a court or other body before whom the proceeding was brought that the Adviser was not liable by reason of disabling conduct or (ii) in the absence of such a decision, a reasonable determination, based upon a review of the facts, that the Adviser was not liable by reason of disabling conduct by (a) the vote of a majority of a quorum of directors of the Company who are neither “interested persons” of the Company nor parties to the proceeding (“disinterested non-party directors”) or (b) an independent legal counsel in a written opinion. The Adviser shall be entitled to advances from the Company for payment of the reasonable expenses incurred by it in connection with the matter as to which it is seeking indemnification in the manner and to the fullest extent permissible under the Maryland General Corporation law. The Adviser shall provide to the Company a written affirmation of its good faith belief that the standard of conduct necessary for indemnification by the Company has been met and a written undertaking to repay any such advance if it should ultimately be determined that the standard of conduct has not been met. In addition, at least one of the following additional conditions shall be met: (a) the Adviser shall provide a security in form and amount acceptable to the Company for its undertaking; (b) the Company is insured against losses arising by reason of the advance; or (c) a majority of a quorum of disinterested non-party d irectors, or independent legal counsel, in a written opinion, shall have determined, based on a review of facts readily available to the Company at the time the advance is proposed to be made, that there is reason to believe that the Adviser will ultimately be found to be entitled to indemnification.
6. Compensation
In consideration of the services rendered pursuant to this Agreement, the Company will pay the Adviser after the end of the calendar month during which the Closing Date (as defined below) occurs and after the end of each calendar month thereafter a fee for the previous month computed monthly at the annual rate of 0.575 of 1.00% on the first $200 million of the Company’s average weekly total managed assets, 0.50 of 1.00% on the next $300 million of the Company’s average weekly total managed assets and 0.45 of 1.00% on the Company’s average weekly total managed assets above $500 million. For purposes of calculating such fee, the Company’s total managed assets means the total assets of the Company (including any assets attributable to any Company auction rate 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 the Company auction rate preferred stock is not treated as a liability. The fee payable to the Adviser for the period from the date of the closing of the offering contemplated by the Company’s initial registration statement (the “Closing Date”) to the end of the first calendar month during which the Closing Date occurs shall be prorated according to the proportion that such period bears to the full monthly period.
Upon any termination of this Agreement before the end of a month, the fee for such part of that month shall be prorated according to the proportion that such period bears to the full monthly period and shall be payable upon the date of termination of this Agreement. For the purpose of determining fees payable to the Adviser, the value of the Company’s average monthly net assets shall be computed at the times and in the manner specified in the Company’s Registration Statement as from time to time in effect.
7. Expenses
The Adviser will bear all expenses in connection with the performance of its services under this Agreement, including compensation of and office space for its officers and employees connected with investment research, trading and investment advice to the Company, as well as the fees of all directors of the Company who are affiliated with the Adviser or any of its affiliates; provided that the Company shall reimburse the Adviser for the travel and out-of-pocket expenses or an appropriate portion thereof of directors, officers and employees of the Adviser in connection with attendance at meetings of the Board of Directors of the Fund or any committee thereof. The Company will bear all other expenses to be incurred in its operation other than those that other parties have agreed to bear, including: organizational expenses; taxes, interest, brokerage costs and commissions and stock exchange fees; fees of directors of the Company who are not officers, directors or employees of the Adviser; Securities and Exchange Commission fees; state Blue Sky qualification fees; charges of the custodian, any subcustodians and transfer and dividend-paying agent; expenses in connection with the Company’s Dividend Reinvestment and Cash Purchase Plan; insurance premiums; outside auditing and legal expenses; costs of maintenance of the Company’s existence; costs attributable to investor services, including, without limitation, fees to the Company’s shareholder servicing agent, telephone and personnel expenses; costs of printing stock certificates; costs of shareholders’ reports and meetings of the shareholders of the Company and of the officers or Board of Directors of the Company; membership fees in trade associations; stock exchange listing fees and expenses; expenses in connection with auctions of shares of auction rate preferred stock proposed to be issued by the Company; litigation and other extraordinary or non-recurring expenses.
8. Services to Other Companies or Accounts
The Company understands that the Adviser now acts, will continue to act or may in the future act, as investment adviser to fiduciary and other managed accounts or as investment adviser to one or more other investment companies, and the Company has no objection to the Adviser so acting, provided that whenever the Company and one or more other accounts or investment companies advised by the Adviser
33
have available funds for investment, investments suitable and appropriate for each will be allocated in accordance with procedures believed by the Adviser to be equitable to each entity. Similarly, opportunities to sell securities will be allocated in an equitable manner. The Company recognizes that in some cases this procedure may adversely affect the size of the position obtained for or disposed of by the Company. In addition, the Company understands that the persons employed by the Adviser to assist in the performance of the Adviser’s duties hereunder will not devote their full time to such service and nothing contained herein shall be deemed to limit or restrict the right of the Adviser or any affiliate of the Adviser to engage in and devote time and attention to other businesses or to render services of whatever kind or nature.
9. Term of Agreement
This Agreement shall become on [*] and shall continue for an initial two-year term and shall continue thereafter so long as such continuance is specifically approved at least annually by (i) the Board of Directors of the Company or (ii) a vote of a “majority” (as defined in the Investment Company Act of 1940, as amended) of the Company’s outstanding voting securities, provided that in either event the continuance is also approved by a majority of the Board of Directors who are not “interested persons” as defined in said Act) of any party to this Agreement, by vote cast in person at a meeting called for the purpose of voting on such approval. This Agreement is terminable, without penalty, on 60 days’ written notice, by the Board of Directors of the Company or by vote of holders of a majority of the Company’s shares, or upon 60 days’ written notice, by the Adviser. This Agreement will also terminate automatically in the event of its assignment (as defined in said Act).
10. Entire Agreement
This Agreement constitutes the entire agreement between the parties hereto.
11. Miscellaneous
The Company recognizes that directors, officers and employees of the Adviser may from time to time serve as directors, trustees, officers and employees of corporations and business trusts (including other investment companies) and that such other corporations and trusts may include the name “FC” and “Flaherty Crumrine” as part of their names, and that the Adviser may enter into advisory or other agreements with such other corporations and trusts. If the Adviser ceases to act as the investment adviser of the Company, the Company agrees that, at the Adviser’s request, the Company’s license to use the words “FC” and “Flaherty Crumrine” will terminate and that the Company will take all necessary action to change the name of the Company to a name not including the words “FC” or “Flaherty Crumrine”.
12. Governing Law
This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of New York without giving effect to the conflicts of laws principles thereof. If the foregoing accurately sets forth our agreement, kindly indicate your acceptance hereof by signing and returning the enclosed copy hereof.
Very truly yours,
FLAHERTY CRUMRINE TOTAL RETURN FUND INCORPORATED
|
By: |
|
Accepted:
FLAHERTY CRUMRINE INCORPORATED
|
By: |
|
34
FLAHERTY CRUMRINE
DYN
AMIC PREFERRED AND INCOME FUND INCORPORATED (the “Fund”)
INVESTMENT ADVISORY AGREEMENT
[*], 2025
Flaherty Crumrine Incorporated
Ladies
and Gentlemen:
Flaherty Crumrine Dynamic Preferred and Income Fund Incorporated (the “Company”), a corporation organized under the laws of the State of Maryland, herewith confirms its agreement with Flaherty Crumrine Incorporated (the “Adviser”), a corporation organized under the laws of the State of California,
as follows:
1. Investment
Description; Appointment
The Company desires to employ its capital by investing and reinvesting in investments of the kind and in accordance with the limitations specified in its Articles of Incorporation, as the same may from time to time be amended, and in its Registration Statement as from time to time in effect, and in such manner and to such extent as may from time to time be approved by the Board of Directors of the Company. Copies of the Company’s Registration Statement and Articles of Incorporation, as amended, have been or will be submitted to the Adviser. The Company agrees to provide copies of all amendments to the Company’s Registration Statement and Articles of Incorporation to the Adviser on an ongoing basis. The Company desires to employ and hereby appoints the Adviser to act as investment adviser to the Company. The Adviser accepts the appointment and agrees to furnish the services described herein for the compensation set
forth below.
2. Services as
Investment Adviser
Subject to the supervision and direction of the Board of Directors of the Company, the Adviser will (a) act in accordance with the Company’s Articles of Incorporation, the Investment Company Act of 1940 (the “1940 Act”) and the Investment Advisers Act of 1940, as the same may from time to time be amended, (b) manage the Company’s portfolio on a discretionary basis in accordance with its investment objective and policies as stated in the Company’s Registration Statement as from time to time in effect, (c) make investment decisions and exercise voting and related rights in respect of portfolio securities for the Company, (d) place purchase and sale orders on behalf of the Company and (e) employ professional portfolio managers and securities analysts to provide research services to the Company. In providing these services, the Adviser will provide investment research and supervision of the Company’s investments and conduct a continual program of investment, evaluation and, if appropriate, sale and reinvestment of the Company’s assets. In addition, the Adviser will furnish the Company with whatever statistical information the Company may reasonably request with respect to the securities that the Company may hold or
contemplate purchasing.
The Adviser hereby undertakes and agrees to maintain for the Company, in the form and for the period required by Rule 31a-2 under the 1940 Act, all records relating to the Company’s investments that are required to be maintained by the Company pursuant to the 1940 Act (“Company’s Books and Records”). The Adviser further agrees to preserve for the periods prescribed by Rule 31a-2 under the 1940 Act any such records as are required to be maintained by the Adviser. The Adviser agrees that the Company’s Books and Records are the Company’s property and further agrees to surrender them promptly to the Company upon the request of the Company; provided, however, that the Adviser may retain copies of the Company’s Books and Records at its
own cost.
3. Brokerage
In executing transactions for the Company and selecting brokers or dealers, the Adviser will use its best efforts to seek the best overall terms available. In assessing the best overall terms available for any Company transaction, the Adviser will consider all factors it deems relevant including, but not limited to, breadth of the market in the security, the price of the security, the financial condition and execution capability of the broker or dealer and the reasonableness of any commission for the specific transaction and on a continuing basis. In selecting brokers or dealers to execute any transaction and in evaluating the best overall terms available, the Adviser may consider the brokerage and research services (as those terms are defined in Section 28(e) of the Securities Exchange Act of 1934) provided to the Company and/or other accounts over which the Adviser or an affiliate exercises
investment discretion.
301 E. Colorado Boulevard Suite 800
Pasadena,
California 91101
35
4. Information Provided to the Company
The Adviser will use its best efforts to keep the Company informed of developments materially affecting the Company, and will, on its own initiative, furnish the Company from time to time with whatever information the Adviser believes is appropriate for this purpose.
5. Standard of Care
The Adviser shall exercise its best judgment in rendering the services described in paragraphs 2, 3 and 4 above. The Adviser shall not be liable for any error of judgment or mistake of law or for any act or omission or any loss suffered by the Company in connection with the matters to which this Agreement relates, provided that nothing herein shall be deemed to protect or purport to protect the Adviser against any liability to the Company or its shareholders to which the Adviser would otherwise be subject by reason of willful misfeasance, bad faith or gross negligence on its part in the performance of its duties or from reckless disregard by it of its obligations and duties under this Agreement (“disabling conduct”). The Company will indemnify the Adviser against, and hold it harmless from, any and all losses, claims, damages, liabilities or expenses (including reasonable counsel fees and expenses), including any amounts paid in satisfaction of judgments, in compromise or as fines or penalties, not resulting from disabling conduct by the Adviser. Indemnification shall be made only following: (i) a final decision on the merits by a court or other body before whom the proceeding was brought that the Adviser was not liable by reason of disabling conduct or (ii) in the absence of such a decision, a reasonable determination, based upon a review of the facts, that the Adviser was not liable by reason of disabling conduct by (a) the vote of a majority of a quorum of directors of the Company who are neither “interested persons” of the Company nor parties to the proceeding (“disinterested non-party directors”) or (b) an independent legal counsel in a written opinion. The Adviser shall be entitled to advances from the Company for payment of the reasonable expenses incurred by it in connection with the matter as to which it is seeking indemnification in the manner and to the fullest extent permissible under the Maryland General Corporation law. The Adviser shall provide to the Company a written affirmation of its good faith belief that the standard of conduct necessary for indemnification by the Company has been met and a written undertaking to repay any such advance if it should ultimately be determined that the standard of conduct has not been met. In addition, at least one of the following additional conditions shall be met: (a) the Adviser shall provide a security in form and amount acceptable to the Company for its undertaking; (b) the Company is insured against losses arising by reason of the advance; or (c) a majority of a quorum of disinterested non-party directors, or independent legal counsel, in a written opinion, shall have determined, based on a review of facts readily available to the Company at the time the advance is proposed to be made, that there is reason to believe that the Adviser will ultimately be found to be entitled to indemnification.
6. Compensation
In consideration of the services rendered pursuant to this Agreement, the Company will pay the Adviser after the end of the calendar month during which the Closing Date (as defined below) occurs and after the end of each calendar month thereafter a fee for the previous month computed monthly at the annual rate of 0.575 of 1.00% on the first $200 million of the Company’s average daily Managed Assets, and 0.50 of 1.00% on the Company’s average daily Managed Assets above $200 million. For purposes of calculating such fee, the Company’s Managed Assets means the Company’s net assets, plus the principal amount of loans from financial institutions or debt securities issued by the Company, the liquidation preference of preferred shares issued by the Company, if any, and the proceeds of any reverse repurchase agreements entered into by the Company. The fee payable to the Adviser for the period from the date of the closing of the offering contemplated by the Company’s initial registration statement (the “Closing Date”) to the end of the first calendar month during which the Closing Date occurs shall be prorated according to the proportion that such period bears to the full monthly period.
Upon any termination of this Agreement before the end of a month, the fee for such part of that month shall be prorated according to the proportion that such period bears to the full monthly period and shall be payable upon the date of termination of this Agreement. For the purpose of determining fees payable to the Adviser, the value of the Company’s average daily Managed Assets shall be computed at the times and in the manner specified in the Company’s Registration Statement as from time to time in effect.
7. Expenses
The Adviser will bear all expenses in connection with the performance of its services under this Agreement, including compensation of and office space for its officers and employees connected with investment research, trading and investment advice to the Company, as well as the fees of all directors of the Company who are affiliated with the Adviser or any of its affiliates; provided that the Company shall reimburse the Adviser for the travel and out-of-pocket expenses or an appropriate portion thereof of directors, officers and employees of the Adviser in connection with attendance at meetings of the Board of Directors of the Company or any committee thereof. The Company will bear all other expenses to be incurred in its operation other than those that other parties have agreed to bear, including: organizational expenses; taxes, interest, brokerage costs and commissions and stock exchange fees; fees of directors of the Company who are not officers, directors or employees of the Adviser; Securities and Exchange Commission fees; state Blue Sky qualification fees; charges of the custodian, any subcustodians and transfer and dividend-paying agent; expenses in connection with the Company’s Dividend Reinvestment and Cash Purchase Plan; insurance premiums; outside auditing and legal expenses; costs of maintenance of the Company’s existence; costs attributable to investor services, including, without limitation, fees to the Company’s shareholder
36
servicing agent, telephone and personnel expenses; costs of printing stock certificates; costs of shareholders’ reports and meetings of the shareholders of the Company and of the officers or Board of Directors of the Company; membership fees in trade associations; stock exchange listing fees and expenses; expenses in connection with the offering and sale of any shares of common stock or preferred stock proposed to be issued by the Company, including in each case travel related expenses of service providers; litigation and other extraordinary or non-recurring expenses.
8. Services to Other Companies or Accounts
The Company understands that the Adviser now acts, will continue to act or may in the future act, as investment adviser to fiduciary and other managed accounts or as investment adviser to one or more other investment companies, and the Company has no objection to the Adviser so acting, provided that whenever the Company and one or more other accounts or investment companies advised by the Adviser have available funds for investment, investments suitable and appropriate for each will be allocated in accordance with procedures believed by the Adviser to be equitable to each entity. Similarly, opportunities to sell securities will be allocated in an equitable manner. The Company recognizes that in some cases this procedure may adversely affect the size of the position obtained for or disposed of by the Company. In addition, the Company understands that the persons employed by the Adviser to assist in the performance of the Adviser’s duties hereunder will not devote their full time to such service and nothing contained herein shall be deemed to limit or restrict the right of the Adviser or any affiliate of the Adviser to engage in and devote time and attention to other businesses or to render services of whatever kind or nature.
9. Term of Agreement
This Agreement shall become effective on [*] and shall continue for an initial two-year term and shall continue thereafter so long as such continuance is specifically approved at least annually by (i) the Board of Directors of the Company or (ii) a vote of a “majority” (as defined in the Investment Company Act of 1940, as amended) of the Company’s outstanding voting securities, provided that in either event the continuance is also approved by a majority of the Board of Directors who are not “interested persons” as defined in said Act) of any party to this Agreement, by vote cast in person at a meeting called for the purpose of voting on such approval. This Agreement is terminable, without penalty, on 60 days’ written notice, by the Board of Directors of the Company or by vote of holders of a majority of the Company’s shares, or upon 60 days’ written notice, by the Adviser. This Agreement will also terminate automatically in the event of its assignment (as defined in said Act).
10. Entire Agreement
This Agreement constitutes the entire agreement between the parties hereto.
11. Miscellaneous
The Company recognizes that directors, officers and employees of the Adviser may from time to time serve as directors, trustees, officers and employees of corporations and business trusts (including other investment companies) and that such other corporations and trusts may include the name “Flaherty Crumrine” as part of their names, and that the Adviser may enter into advisory or other agreements with such other corporations and trusts. If the Adviser ceases to act as the investment adviser of the Company, the Company agrees that, at the Adviser’s request, the Company’s license to use the words “Flaherty Crumrine” will terminate and that the Company will take all necessary action to change the name of the Company to a name not including the words “Flaherty Crumrine”.
12. Governing Law
This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of New York without giving effect to the conflicts of laws principles thereof. If the foregoing accurately sets forth our agreement, kindly indicate your acceptance hereof by signing and returning the enclosed copy hereof.
Very truly yours,
FLAHERTY CRUMRINE DYNAMIC PREFERRED AND INCOME FUND INCORPORATED
|
By: |
|
Accepted:
FLAHERTY CRUMRINE INCORPORATED
|
By: |
|
| PROXY | PROXY |
FLAHERTY
CRUMRINE TOTAL RETURN FUND INCORPORATED
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD APRIL 16, 2025
301 E. Colorado Boulevard, Suite 800, Pasadena, California 91101
THIS PROXY IS BEING SOLICITED BY THE BOARD OF DIRECTORS. The undersigned holder of shares of Common Stock of the Flaherty Crumrine Total Return Fund Incorporated, a Maryland corporation (the Fund), hereby appoints R. Eric Chadwick, Bradford S. Stone and Chad 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 in person at the offices of Flaherty Crumrine Incorporated, 301 East Colorado Boulevard, Suite 800, Pasadena, California 91101 at 8:00 a.m. PDT, on April 16, 2025, and any adjournments or postponements thereof (the Meeting).
The undersigned hereby acknowledges receipt of the Notice of Annual Meetings of Shareholders and Joint Proxy Statement and hereby instructs said proxies to vote said shares as indicated hereon. If no specification is made for a Proposal, the proxy will be voted FOR the Proposal. 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.
| CONTROL #: | |||
| SHARES: | |||
| Note : Please date and sign exactly as the name appears on this proxy card.When shares are held by joint owners/tenants, at least one holder should sign.When signing in a fiduciary capacity, such as executor, administrator, trustee, attorney, guardian etc., please so indicate.Corporate and partnership proxies should be signed by an authorized person. | |||
| Signature(s) (Title(s), if applicable) | |||
| Date | |||
PLEASE VOTE VIA THE INTERNET OR TELEPHONE OR MARK, SIGN, DATE AND RETURN THIS PROXY USING THE ENCLOSED ENVELOPE
CONTINUED ON THE REVERSE SIDE
EVERY
SHAREHOLDERS VOTE IS IMPORTANT!
VOTE THIS PROXY CARD TODAY!
| THERE ARE 3 EASY WAYS TO VOTE YOUR PROXY: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| 1. | By Phone: Call Okapi Partners toll-free at: (877) 279-2311 to vote with a live proxy services representative. Representatives are available to take your vote or to answer any questions Monday through Friday 9:00 AM to 8:00 PM (EST). | |||||||||||||||||||||||||||||||||||||||||||||||||||
| OR | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2. | By Internet: Refer to your proxy card for the control number and go to: www.OkapiVote.com/Flaherty2025 and follow the simple on-screen instructions. | |||||||||||||||||||||||||||||||||||||||||||||||||||
| OR | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| 3. | By Mail: Sign, Date, and Return this proxy card using the enclosed postage-paid envelope. | |||||||||||||||||||||||||||||||||||||||||||||||||||
|
If
possible, please utilize option 1 or 2 to ensure that your
vote is received and registered in time for the meeting on April 16, 2025 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE NOMINEES LISTED IN PROPOSAL 1 AND FOR PROPOSAL 2. |
INSTRUCTIONS: TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS SHOWN IN THIS EXAMPLE: ☒
| 1. Election of Directors | |||
| FOR | WITHHOLD | ||
| 1a.R. Eric Chadwick | ☐ | ☐ | |
| 1b.Karen H. Hogan | ☐ | ☐ |
| FOR | AGAINST | ABSTAIN | |
| 2 . To approve a new investment advisory agreement with Flaherty Crumrine Incorporated for the Fund. | ☐ | ☐ | ☐ |
| 3. To transact such other business as may properly come before the Annual Meetings or any adjournments or postponements thereof | |||
PLEASE REMEMBER TO VOTE ALL OF YOUR PROXY CARDS!
PLEASE FOLD ALONG THE PERFORATION, DETACH AND RETURN THE UPPER PORTION IN THE ENCLOSED ENVELOPE.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON APRIL 16, 2025
The Notice of Annual Meetings of Shareholders, Joint Proxy Statement and Proxy Card
are available at: WWW.OKAPIVOTE.COM/FLAHERTY