DEF: Flaherty & Crumrine Funds Seek Shareholder Approval for Director Elections and New Advisory Agreements

Flaherty & Crumrine funds are holding annual meetings to elect directors and approve new investment advisory agreements due to an internal restructuring of the Adviser.

Summary

• 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 will hold Annual Meetings of Shareholders on April 16, 2025.
• Shareholders will vote on the election of directors and the approval of new investment advisory agreements with Flaherty & Crumrine Incorporated.
• The need for new advisory agreements arises from an internal restructuring of the Adviser, which could be viewed as a change of control.
• The terms of the new advisory agreements are identical to the current agreements, including advisory fees.
• The Board of Directors unanimously recommends voting FOR the proposals.

Sentiment

Score: 7

Explanation: The document is primarily procedural, focused on seeking shareholder approval for routine matters. The tone is neutral and professional, with a clear recommendation from the Board. The potential change of control introduces a slight element of uncertainty, but the overall sentiment is moderately positive.

Positives

• The proposed new advisory agreements are identical to the current agreements, ensuring continuity in terms and fees.
• The day-to-day management and investment strategies of the Funds will remain unchanged.
• The Board of Directors has unanimously recommended voting in favor of the proposals.
• The Board believes the nature and extent of the services provided by the Adviser are reasonable and appropriate, and the quality of the services is high.

Risks

• Failure to approve the new investment advisory agreements could create uncertainty regarding the Funds' management.
• The internal restructuring of the Adviser introduces a potential change of control, which could have unforeseen consequences.

Future Outlook

If approved by shareholders, the New Investment Advisory Agreements will become effective upon completion of the Transaction, with no expected changes to the Funds' investment objectives or strategies.

Management Comments

• The Board unanimously recommends that you vote FOR the proposals.
• 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 Funds entry into its respective new investment advisory agreement.

Industry Context

The document reflects standard corporate governance practices for registered investment companies, including seeking shareholder approval for significant matters like director elections and advisory agreements.

Comparison to Industry Standards

• The document does not provide enough information to make a detailed comparison to industry standards.
• However, the document does state 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.

Corporate Governance

Stakeholder Impact

• Shareholders are directly impacted by the proposals, as they involve the election of directors and the approval of the investment advisory agreement.
• The Funds' performance and management are indirectly affected by the outcome of the votes.

Next Steps

• Shareholders need to vote on the proposals before the Annual Meetings on April 16, 2025.
• If approved, the new investment advisory agreements will become effective upon completion of the Adviser's internal restructuring.

Key Dates