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 (each, a Fund and collectively, the Funds) will hold Annual Meetings of Shareholders on April 16, 2025.
• Shareholders will vote on the election of directors for each fund.
• Shareholders will also vote to approve a new investment advisory agreement with Flaherty & Crumrine Incorporated for each fund.
• 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, except for the date and initial term.
• The Board of Directors unanimously recommends voting FOR both proposals.

Sentiment

Score: 7

Explanation: The document is primarily procedural, focused on seeking shareholder approval for routine matters. The Board's unanimous recommendation suggests a positive outlook, but the document lacks strong positive or negative indicators.

Positives

• The proposed new advisory agreements have identical terms to the current agreements, ensuring continuity in management and fees.
• The Board of Directors unanimously recommends voting for the proposals, indicating their confidence in the restructuring and new agreements.
• The day-to-day management and investment strategies of the Funds will remain unchanged.

Risks

• If the new investment advisory agreements are not approved, the Funds' relationship with their investment adviser could be disrupted.
• Failure to achieve a quorum at the Annual Meetings could delay the approval of the proposals.

Future Outlook

If approved by shareholders, the New Investment Advisory Agreements will become effective upon completion of the Transaction.

Management Comments

• 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.
• The Board unanimously recommends that you vote FOR the proposals.
• The Board members concluded that the nature and extent of the services provided were reasonable and appropriate in relation to each Funds 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 Advisers service continues to be high.

Industry Context

Closed-end funds frequently undergo reviews and renewals of their advisory agreements, and internal restructurings of investment advisers can trigger the need for shareholder approval of new agreements to ensure continuity and compliance with regulatory requirements.

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.

Stakeholder Impact

• Shareholders will be impacted by the outcome of the vote on the new advisory agreements, as it affects the management and fees of the Funds.
• The internal restructuring of the Adviser is not expected to change the day-to-day management or investment strategies of the Funds.

Next Steps

• Shareholders need to vote on the proposals before the Annual Meetings on April 16, 2025.
• The Funds will proceed with the internal restructuring of the Adviser upon shareholder approval of the new advisory agreements.

Key Dates