Flaherty & Crumrine/Claymore Preferred Securities Income Fund and Flaherty & Crumrine/Claymore Total Return Fund Announce Reduc
07 March 2006 - 8:29AM
Business Wire
The Boards of Directors of the Flaherty & Crumrine/Claymore
Preferred Securities Income Fund (NYSE: FFC) and Flaherty &
Crumrine/Claymore Total Return Fund (NYSE: FLC) have adopted new
regular monthly dividend amounts. The changes will be effective
with the dividends to be paid on March 31, 2006 and will remain in
effect until further notice. The new regular monthly dividend for
FFC will be $0.1275 per share, which equates to an annual dividend
of $1.53 per share. The new regular monthly dividend for FLC will
be $0.1275 per share, which equates to an annual dividend of $1.53
per share. Donald F. Crumrine, Chairman of the Board of the Funds,
said "The dividend reductions reflect the continuing changes in the
relationship between the levels of short-term and long-term
interest rates. The Funds are not immune to this changing
relationship and other factors that continue to cause many
leveraged, income oriented, closed-end funds to further reduce
their monthly dividends. For more than 20 months, short-term rates
have steadily risen while long-term rates have remained basically
stable, resulting in a relatively 'flat' yield curve. Typically,
rising short-term rates are accompanied by rising long-term rates,
which increase the value of the hedging instruments each Fund holds
and allow that Fund to reinvest the hedge gains in more
income-producing securities, at least partially offsetting the
rising cost of leveraging the Fund with auction market preferred
stock. The recent higher short-term rates have increased the cost
of the Funds' leverage, and without any accompanying higher
long-term rates, these costs have not been offset by the Funds'
hedging strategies. As a result, there is less distributable income
available to the common shareholders."
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