UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-Q
QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS OF REGISTERED
MANAGEMENT INVESTMENT COMPANY
Investment Company Act file number 811-21129
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FLAHERTY & CRUMRINE/CLAYMORE PREFERRED SECURITIES INCOME FUND INCORPORATED
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(Exact name of registrant as specified in charter)
301 E. Colorado Boulevard, Suite 720
PASADENA, CA 91101
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(Address of principal executive offices) (Zip code)
Donald F. Crumrine
Flaherty & Crumrine Incorporated
301 E. Colorado Boulevard, Suite 720
PASADENA, CA 91101
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(Name and address of agent for service)
Registrant's telephone number, including area code: 626-795-7300
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Date of fiscal year end: NOVEMBER 30, 2007
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Date of reporting period: FEBRUARY 28, 2007
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Form N-Q is to be used by management investment companies, other than small
business investment companies registered on Form N-5 (ss.ss. 239.24 and 274.5 of
this chapter), to file reports with the Commission, not later than 60 days after
the close of the first and third fiscal quarters, pursuant to rule 30b1-5 under
the Investment Company Act of 1940 (17 CFR 270.30b1-5). The Commission may use
the information provided on Form N-Q in its regulatory, disclosure review,
inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-Q, and
the Commission will make this information public. A registrant is not required
to respond to the collection of information contained in Form N-Q unless the
Form displays a currently valid Office of Management and Budget ("OMB") control
number. Please direct comments concerning the accuracy of the information
collection burden estimate and any suggestions for reducing the burden to the
Secretary, Securities and Exchange Commission, 100 F Street, NE, Washington, DC
20549. The OMB has reviewed this collection of information under the clearance
requirements of 44 U.S.C. ss. 3507.
ITEM 1. SCHEDULE OF INVESTMENTS.
The Schedule(s) of Investments is attached herewith.
FLAHERTY & CRUMRINE/CLAYMORE PREFERRED SECURITIES INCOME FUND
To the Shareholders of the Flaherty & Crumrine/Claymore Preferred Securities
Income Fund ("FFC"):
During the Fund's first fiscal quarter ended February 28, 2007, the Fund
performed well in choppy, but ultimately little-changed, fixed-income markets by
earning a total return of 1.4% on its net asset value (NAV). These three months
saw the Fund continue its recent strong performance.
Interest rates were unchanged to slightly higher over the quarter, as the
Federal Reserve left the federal funds rate unchanged and long-term Treasury
rates rose only slightly. Corporate credit spreads also ended the quarter little
changed, while the Fund's interest-rate hedge had only a minimal impact. Both
the recent quarter and trailing twelve-month periods delivered what the Fund is
intended to produce - current income and stability of principal.
As you can see on the following pages detailing actual holdings in the
Fund's portfolio, the Fund invests in a relatively small number of industries,
including utilities and insurers, banks and other finance companies. In fact,
the Fund has an investment mandate to concentrate at least 25% of its assets in
each of the banking and utilities industries. In terms of the industries the
Fund's assets are in, its portfolio is no different than the overall preferred
securities market. Because of the preferred securities market's overall emphasis
in financial services, a portfolio of preferred securities, including the
Fund's, can be at risk if the U.S. economy goes into recession.
One important area of recent concern for the U.S. economy in general, and
U.S. credit markets in particular, is subprime mortgage lending, which has
experienced increasing default and delinquency rates in recent months. The
numbers here are large in an absolute sense, but they are small relative to a
$13 trillion U.S. economy and to the mortgage market as a whole. Because of
this, while we cannot entirely rule it out, we currently do not believe that
problems in subprime mortgages will push the economy into recession.
The Fund holds no positions in securities issued by mortgage brokers or
subprime specialty lenders. Nonetheless, many of the banks and insurance
companies in which we have invested do have some exposure to subprime mortgages
in their lending or investment portfolios. While we are examining these
companies very closely, the lack of detailed disclosure about subprime mortgages
makes it impossible for us to make definitive statements about the Fund's
potential exposure to the problem. However, given what we now know and can infer
about the companies in which we invest, we expect that EARNINGS (which flow to
the companies' common shareholders) will be reduced at some of the companies we
hold as a result of the problems in subprime lending. However, we currently do
not expect that they will suffer losses large enough to cut meaningfully into
CAPITAL (which support the debt and preferred securities owned by the Fund).
Although we cannot rule out the possibility - despite our best judgment to the
contrary - that some of the Fund's investments could be seriously affected, we
do not currently see any serious subprime credit problems in the holdings of the
Fund.
The Fund's website at WWW.FCCLAYMORE.COM has more information about Fund
performance and a more complete discussion of the state of the economy (in our
First Quarter Economic Update) and of subprime mortgages and their potential
impact on the economy and the Fund's portfolio (in the "FAQ" section). We
encourage you to explore the website for a wide range of additional information
about your Fund.
Sincerely,
/S/ DONALD F. CRUMRINE /S/ ROBERT M. ETTINGER
Donald F. Crumrine Robert M. Ettinger
Chairman of the Board President
April 20, 2007
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Flaherty & Crumrine/Claymore Preferred Securities Income Fund Incorporated
PORTFOLIO OVERVIEW
FEBRUARY 28, 2007 (UNAUDITED)
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FUND STATISTICS ON 02/28/07
----------------------------------------------------
Net Asset Value $ 23.44
Market Price $ 21.81
Discount 6.95%
Yield on Market Price 7.02%
Common Shares
Outstanding 42,601,719
INDUSTRY CATEGORIES % OF PORTFOLIO
-----------------------------------------------------
[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS
Other 3%
Banks 38%
Utilities 26%
Insurance 18%
Financial Services 8%
Energy 4%
REITs 3%
MOODY'S RATINGS % OF PORTFOLIO
---------------------------------------------
AAA 0.2%
AA 2.1%
A 27.1%
BBB 52.9%
BB 11.0%
Not Rated 5.2%
Below Investment Grade* 12.5%
* BELOW INVESTMENT GRADE BY BOTH MOODY'S AND
S&P.
TOP 10 HOLDINGS BY ISSUER % OF PORTFOLIO
---------------------------------------------------------
Wachovia Corp 4.8%
Capital One Financial 4.6%
Banco Santander 4.6%
Dominion Resources 3.6%
HBOS Plc 3.3%
Liberty Mutual Group 3.1%
ACE Ltd 2.8%
JPMorgan Chase 2.7%
Midamerican Energy 2.6%
FBOP Corporation 1.9%
% OF PORTFOLIO**
-----------------------------------------------------------------------------------------------------------------------
Holdings Generating Qualified Dividend Income (QDI) for Individuals 28%
Holdings Generating Income Eligible for the Corporate Dividend Received Deduction (DRD) 13%
-----------------------------------------------------------------------------------------------------------------------
** THIS DOES NOT REFLECT YEAR-END RESULTS OR ACTUAL TAX CATEGORIZATION OF FUND
DISTRIBUTIONS. THESE PERCENTAGES CAN, AND DO, CHANGE, PERHAPS
SIGNIFICANTLY, DEPENDING ON MARKET CONDITIONS. INVESTORS SHOULD CONSULT
THEIR TAX ADVISOR REGARDING THEIR PERSONAL SITUATION.
3
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Flaherty & Crumrine/Claymore Preferred Securities Income Fund Incorporated
PORTFOLIO OF INVESTMENTS
FEBRUARY 28, 2007 (UNAUDITED)
--------------------------------------------------------------------------
SHARES/$ PAR VALUE
------------- ---------
PREFERRED SECURITIES -- 84.6%
BANKING -- 37.8%
----------------------------------------------------------------------------------------------------------------------------
$ 19,000,000 Astoria Capital Trust I, 9.75% 11/01/29 Capital Security, Series B............... $ 21,862,616
Auction Pass-Through Trust, Cl. B:
65 Series 2006-5, Variable Rate Pfd., 144A****.................................... 2,132,000*
65 Series 2006-6, Variable Rate Pfd., 144A****.................................... 2,132,000*
40,000 BAC Capital Trust I, 7.00% Pfd. 12/15/31......................................... 1,018,752
10,400 BAC Capital Trust II, 7.00% Pfd. 02/01/32........................................ 262,276
$ 1,240,000 BankBoston Capital Trust I, 8.25% 12/15/26 Capital Security...................... 1,292,824
Banco Santander:
1,490,300 6.50% Pfd., 144A****........................................................... 38,002,650**(1)
1,253,300 6.80% Pfd., 144A****........................................................... 32,172,211**(1)
1,800 Bank of New York Capital IV, 6.875% Pfd., Series E............................... 45,338
77,900 Bank One Capital Trust VI, 7.20% Pfd............................................. 1,971,844
$ 8,800,000 Barclays Bank PLC, 6.278% Pfd.................................................... 8,854,560**(1)
210,000 Capital One Capital II, 7.50% Pfd. 06/15/66...................................... 5,571,573
$ 19,500,000 Capital One Capital III, 7.686% Pfd.............................................. 22,076,925
60,000 Citigroup Cap VII, 7.125% Pfd., 07/31/31......................................... 1,530,000
69,500 Citigroup Cap XV, 6.50% Pfd. 09/15/66............................................ 1,778,769
112,000 Citizens Funding Trust I, 7.50% Pfd. 09/15/66.................................... 2,919,000
105,000 Cobank, ACB, 7.00% Pfd., 144A****................................................ 5,552,610*
27,900 Comerica (Imperial) Capital Trust I, 7.60% Pfd. 07/01/50......................... 707,963
$ 800,000 CoreStates Capital Trust I, 8.00% 12/15/26 Capital Security, 144A****............ 831,496
$ 2,500,000 Dime Capital Trust I, 9.33% 05/06/27 Capital Security, Series A.................. 2,630,870
28,800 FBOP Corporation, Adj. Rate Pfd., 144A****....................................... 29,880,000*
$ 2,635,000 First Midwest Capital Trust I, 6.95% 12/01/33 Capital Security................... 2,841,824
First Republic Bank:
400,000 6.25% Pfd...................................................................... 10,362,520*
30,000 7.25% Pfd...................................................................... 766,875
6,000 First Republic Preferred Capital Corporation, 10.50% Pfd., 144A****.............. 6,647,640
110,200 Fleet Capital Trust VIII, 7.20% Pfd. 03/15/32.................................... 2,803,213
6 FT Real Estate Securities Company, 9.50% Pfd., 144A****.......................... 8,191,633
$ 37,550,000 GreenPoint Capital Trust I, 9.10% 06/01/27 Capital Security...................... 39,457,277
HBOS Capital Funding LP:
$ 30,725,000 6.85% Pfd...................................................................... 31,121,353(1)
$ 19,250,000 6.413% Pfd., 144A****.......................................................... 20,016,477**(1)
7,500 HSBC Series II, Variable Inverse Pfd., Pvt....................................... 8,542,500*
185,000 HSBC USA, Inc., 6.50% Pfd., Series H............................................. 5,035,478*
ING Groep NV:
36,000 7.05% Pfd...................................................................... 909,000**(1)
143,900 7.20% Pfd...................................................................... 3,660,456**(1)
4
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Flaherty & Crumrine/Claymore Preferred Securities Income Fund Incorporated
PORTFOLIO OF INVESTMENTS (CONTINUED)
FEBRUARY 28, 2007 (UNAUDITED)
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SHARES/$ PAR VALUE
------------- ---------
PREFERRED SECURITIES -- (CONTINUED)
BANKING -- (CONTINUED)
----------------------------------------------------------------------------------------------------------------------------
$ 15,343,000 JPMorgan Capital Trust I, 7.54% 01/15/27 Capital Security........................ $ 15,911,934
3,700 JPMorgan Chase Capital X, 7.00% Pfd. 02/15/32, Series J.......................... 92,731
$ 6,080,000 JPMorgan Chase Capital XVIII, 6.95% 08/17/36 Capital Security, Series R.......... 6,661,746
250,000 JPMorgan Chase Capital XIX, 6.63% Pfd. 09/29/36, Series S........................ 6,468,750
$ 10,000,000 JPMorgan Chase Capital XXII, 6.45% 02/02/37, Series V............................ 10,456,000
23,800 Keycorp Capital V, 5.875% Pfd., Series A......................................... 570,457
20,000 Keycorp Capital VIII, 7.00% Pfd. 06/15/66........................................ 527,500
517,000 Keycorp Capital IX, 6.75% Pfd. 12/15/66.......................................... 13,393,557
$ 2,000,000 Lloyds TSB Group PLC, 6.267% Pfd., 144A****...................................... 2,020,118**(1)
20 Marshall & Ilsley Investment II, 8.875% Pfd., 144A****........................... 2,046,483
85,285 National City Capital Trust II, 6.625% Pfd. 11/15/36............................. 2,161,446
$ 3,000,000 North Fork Capital Trust I, 8.70% 12/15/26 Capital Security...................... 3,128,133
265,000 PFGI Capital Corporation, 7.75% Pfd.............................................. 6,895,300
$ 6,500,000 RBS Capital Trust B, 6.80% Pfd................................................... 6,695,000**(1)
$ 7,200,000 Republic New York Capital I, 7.75% 11/15/26 Capital Security..................... 7,466,227(1)
$ 4,992,000 Republic New York Capital II, 7.53% 12/04/26 Capital Security.................... 5,182,255(1)
Roslyn Real Estate:
40 8.95% Pfd., Series C, 144A****................................................. 4,416,623
135 Adj. Rate Pfd., Series D, 144A****............................................. 13,626,563
63,700 Sovereign Bancorp, 7.30% Pfd., Series C.......................................... 1,773,650*
248,100 Sovereign Capital Trust V, 7.75% Pfd. 05/22/36................................... 6,621,169
$ 13,500,000 Sovereign Capital Trust VI, 7.908% 06/13/36 Capital Security..................... 15,396,304
$ 6,500,000 UBS Realty Corp, 6.091% 01/15/12, 144A****....................................... 6,620,919
$ 14,167,000 Union Planters Capital Trust, 8.20% 12/15/26 Capital Security.................... 14,721,227
60 Union Planters Preferred Funding, 7.75% Pfd., Series 144A****.................... 6,568,540
127,600 USB Capital VIII, 6.35% Pfd. 12/29/65............................................ 3,233,869
64,600 USB Capital X, 6.50% Pfd. 04/12/66............................................... 1,646,816
23,500 VNB Capital Trust I, 7.75% Pfd................................................... 591,906
650,000 Wachovia Capital Trust IV, 6.375% Pfd., 03/01/67................................. 16,425,500
2,010,800 Wachovia Preferred Funding, 7.25% Pfd., Series A................................. 56,491,013(2)
$ 10,050,000 Washington Mutual Preferred Funding, 6.534% Pfd., 144A****....................... 10,165,354
$ 8,000,000 Webster Capital Trust II, 10.00% 04/01/27 Capital Security....................... 8,458,744
100,000 Wells Fargo Capital Trust IV, 7.00% Pfd. 09/01/31................................ 2,509,380
------------------------------------------------------------------------------------------------------------------
582,527,737
---------------
FINANCIAL SERVICES -- 5.5%
----------------------------------------------------------------------------------------------------------------------------
202,500 Cabco Trust For Goldman Sachs Capital I, Adj. Rate Pfd. 02/15/34, Series GS...... 4,841,026
$ 4,000,000 CIT Group, Inc., 6.10% 03/15/67.................................................. 4,000,400
30,000 Corp-Backed Trust Certificates, 7.75% Pfd., Series CIT Group..................... 782,814
5
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Flaherty & Crumrine/Claymore Preferred Securities Income Fund Incorporated
PORTFOLIO OF INVESTMENTS (CONTINUED)
FEBRUARY 28, 2007 (UNAUDITED)
--------------------------------------------------------------------------
SHARES/$ PAR VALUE
------------- ---------
PREFERRED SECURITIES -- (CONTINUED)
FINANCIAL SERVICES -- (CONTINUED)
----------------------------------------------------------------------------------------------------------------------------
714,295 Countrywide Capital IV, 6.75% Pfd................................................ $ 17,924,376
26,305 Countrywide Capital V, 7.00% Pfd., 11/01/36...................................... 647,761
3,600 Goldman Sachs Group, Inc., STRIPES Custodial Receipts, Pvt....................... 4,154,400*
$ 7,000,000 Gulf Stream-Compass 2005 Composite Notes, 144A****............................... 7,023,239
80,000 HSBC Finance Corporation, 6.875% Pfd., 01/30/33.................................. 2,040,000
5,000 Lehman Capital Trust IV, 6.375% Pfd., Series L................................... 126,094
8,600 Lehman Capital Trust V, 6.00% Pfd., Series M..................................... 211,507
27,000 Merrill Lynch Cap Trust I, 6.45% Pfd., 12/15/66, Series K........................ 686,138
4,000 Merrill Lynch Series II STRIPES Custodial Receipts, Pvt.......................... 4,492,000*
114,867 Merrill Lynch Preferred Capital Trust IV, 7.12% Pfd.............................. 2,961,421
79,600 Morgan Stanley Capital Trust II, 7.25% Pfd....................................... 2,022,341
199,355 Morgan Stanley Capital Trust IV, 6.25% Pfd....................................... 4,996,335
9,000 Morgan Stanley Capital Trust V, 5.75% Pfd........................................ 216,000
389,500 Morgan Stanley Capital Trust VI, 6.60% Pfd....................................... 9,937,119
$ 10,000,000 RACERS(R) Series 2005 AMMC V Trust, 144A****..................................... 9,474,434
160,000 SLM Corporation, 6.97% Pfd., Series A............................................ 8,859,200*
------------------------------------------------------------------------------------------------------------------
85,396,605
---------------
INSURANCE -- 15.8%
----------------------------------------------------------------------------------------------------------------------------
1,669,980 ACE Ltd., 7.80% Pfd., Series C................................................... 43,022,860**(1)
$ 4,000,000 AMBAC Financial Group, Inc., 6.15% 02/15/37...................................... 3,970,400
$ 18,195,000 AON Capital Trust A, 8.205% 01/01/27 Capital Security............................ 21,426,941
Arch Capital Group Ltd.:
167,650 7.875% Pfd., Series B.......................................................... 4,390,334**(1)
21,800 8.00% Pfd...................................................................... 579,063**(1)
AXA SA:
$ 9,500,000 6.463% 12/14/18, 144A****...................................................... 9,457,316**(1)
$ 6,000,000 6.379% 12/14/36, 144A****...................................................... 5,993,772**(1)
Axis Capital Holdings:
451,300 7.25% Pfd., Series A........................................................... 11,776,132**(1)
137,305 7.50% Pfd., Series B........................................................... 14,606,506(1)
352,600 Berkley W.R. Capital Trust II, 6.75% Pfd. 07/26/45............................... 8,969,263
106,000 Corts-AON Capital, 8.205% Pfd.................................................... 2,944,818
37,000 Corts-UnumProvident Corporation, 8.50% Pfd....................................... 1,008,250
150,400 Endurance Specialty Holdings, 7.75% Pfd.......................................... 3,976,200**(1)
134,150 Everest Re Capital Trust II, 6.20% Pfd., Series B................................ 3,236,369(1)
$ 5,000,000 Glen Meadow Pass-Through, 6.505% 02/12/67, 144A****.............................. 5,146,000
$ 665,000 Great West Life & Annuity Insurance, 7.153% Pfd. 05/16/46, 144A****.............. 717,197
$ 20,500,000 Liberty Mutual Insurance, 7.80% 03/15/37, 144A****............................... 20,459,205
6
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Flaherty & Crumrine/Claymore Preferred Securities Income Fund Incorporated
PORTFOLIO OF INVESTMENTS (CONTINUED)
FEBRUARY 28, 2007 (UNAUDITED)
--------------------------------------------------------------------------
SHARES/$ PAR VALUE
------------- ---------
PREFERRED SECURITIES -- (CONTINUED)
INSURANCE -- (CONTINUED)
----------------------------------------------------------------------------------------------------------------------------
$ 10,000,000 Mangrove Bay Passthru Trust, 6.102% 07/15/33 Capital Security, 144A****.......... $ 9,892,670(1)
180,289 PartnerRe Ltd., 6.75% Pfd., Series C............................................. 4,603,013**(1)
$ 714,000 Provident Financing Trust I, 7.405% 03/15/38 Capital Security.................... 753,596
$ 9,000,000 Renaissancere Capital Trust, 8.54% 03/01/27 Capital Security, Series B........... 9,383,715(1)
Renaissancere Holdings Ltd.:
116,000 6.08% Pfd., Series C........................................................... 2,800,240**(1)
260,000 6.60% Pfd., Series D........................................................... 6,429,800**(1)
304,135 7.30% Pfd., Series B........................................................... 7,631,903**(1)
94,900 Saturns-AON 2003-3, 8.00% Pfd., Series AON Corp.................................. 2,449,606
56,000 Saturns-SAFC 2001-7, 8.25% Pfd., Series Safeco Corp.............................. 1,433,253
407,200 Scottish Re Group Ltd., 7.25% Pfd................................................ 8,355,744**(1)
36,600 Torchmark Capital Trust III, 7.10% Pfd........................................... 973,333
$ 7,425,000 USF&G Capital, 8.312% 07/01/46 Capital Security, 144A****........................ 9,397,822
$ 13,000,000 USF&G Capital I, 8.50% 12/15/45 Capital Security, 144A****....................... 16,789,500
5,000 XL Capital Ltd., 7.625% Pfd., Series B........................................... 128,594**(1)
------------------------------------------------------------------------------------------------------------------
242,703,415
---------------
UTILITIES -- 19.4%
----------------------------------------------------------------------------------------------------------------------------
$ 3,750,000 AGL Capital Trust, 8.17% 06/01/37 Capital Security............................... 3,914,070
Baltimore Gas & Electric Company:
10,000 6.70% Pfd., Series 1993........................................................ 1,048,438*
50,000 7.125% Pfd., Series 1993....................................................... 5,276,565*
820,359 Calenergy Capital Trust III, 6.50% Pfd. 09/01/27................................. 39,684,867
35,000 Central Maine Power, 5.25% Pfd., Pvt............................................. 3,172,750*
$ 2,600,000 COMED Financing II, 8.50% 01/15/27 Capital Security, Series B.................... 2,708,160
$ 17,645,000 COMED Financing III, 6.35% 03/15/33 Capital Security............................. 16,351,621
85,630 Dominion CNG Cap Trust I, 7.80% Pfd.............................................. 2,162,158
$ 25,175,000 Dominion Resources Capital Trust I, 7.83% 12/01/27 Capital Security............. 26,764,046
$ 12,250,000 Dominion Resources Capital Trust III, 8.40% 01/15/31 Capital Security............ 15,338,115
$ 11,000,000 Dominion Resources, Inc., 7.50%, Capital Security................................ 12,099,967
Entergy Arkansas, Inc.:
10,240 4.56% Pfd., Series 1965........................................................ 849,715*
625,000 6.45% Pfd...................................................................... 16,275,000*
85,000 Entergy Louisiana, Inc., 6.95% Pfd............................................... 8,754,150*
Florida Power Company:
49,750 4.40% Pfd...................................................................... 4,097,410*
21,585 4.60% Pfd...................................................................... 1,858,684*
146,000 FPC Capital I, 7.10% Pfd., Series A.............................................. 3,654,570
52,150 FPL Group Capital Trust I, 5.875% Pfd. 03/15/44.................................. 1,270,896
7
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Flaherty & Crumrine/Claymore Preferred Securities Income Fund Incorporated
PORTFOLIO OF INVESTMENTS (CONTINUED)
FEBRUARY 28, 2007 (UNAUDITED)
--------------------------------------------------------------------------
SHARES/$ PAR VALUE
------------- ---------
PREFERRED SECURITIES -- (CONTINUED)
UTILITIES -- (CONTINUED)
----------------------------------------------------------------------------------------------------------------------------
584,050 FPL Group Capital, Inc., 6.60% Pfd. 10/01/66, Series A........................... $ 15,112,294
12,442 Great Plains Energy, Inc., 4.20% Pfd............................................. 986,65*
5,000 Indiana Michigan Power, 4.56% Pfd................................................ 414,800*
119,805 Indianapolis Power & Light Company, 5.65% Pfd.................................... 11,489,300*
Interstate Power & Light Company:
110,000 7.10% Pfd., Series C........................................................... 3,042,193*
11,000 8.375% Pfd., Series B.......................................................... 348,563*
32,300 Laclede Capital Trust I, 7.70% Pfd............................................... 832,129
Pacific Enterprises:
4,550 $4.40 Pfd...................................................................... 384,111*
4,510 $4.50 Pfd...................................................................... 389,393*
23,085 $4.75 Pfd., Series 53.......................................................... 2,103,967*
2,500 PacifiCorp, $7.48 Sinking Fund Pfd............................................... 254,375*
$ 2,386,000 PECO Energy Capital Trust III, 7.38% 04/06/28 Capital Security, Series D......... 2,606,466
$ 27,000,000 PECO Energy Capital Trust IV, 5.75% 06/15/33 Capital Security.................... 25,056,000
9,495 Portland General Electric, 7.75% Sinking Fund Pfd................................ 962,318*
358,950 PSEG Funding Trust II, 8.75% Pfd................................................. 9,388,804
$ 8,200,000 Puget Sound Energy Capital Trust, 8.231% 06/01/27 Capital Security, Series B..... 8,564,900
200,000 San Diego Gas & Electric Company, $1.70 Pfd...................................... 5,225,000*
Southern California Edison:
115,750 6.00% Pfd...................................................................... 11,929,484*
16,900 6.125% Pfd..................................................................... 1,750,206*
7,800 Southern Company Capital Trust VI, 7.125% Pfd. 06/30/42.......................... 200,119
Southern Union Company:
$ 6,250,000 7.20% 11/01/66 Capital Security................................................ 6,298,950
228,700 7.55% Pfd...................................................................... 5,955,348*
50,000 Strats-Dominion-2005-6, Adjustable Rate Pfd., 06/15/35, Series D................. 1,188,500
$ 4,200,000 Union Electric Company, 7.69% 12/15/36 Capital Security, Series A................ 4,391,066
Virginia Electric & Power Company:
14,985 $4.12 Pfd...................................................................... 1,162,986*
21,684 $4.80 Pfd...................................................................... 1,960,667*
35,000 $6.98 Pfd...................................................................... 3,614,846*
189,000 Virginia Power Capital Trust, 7.375% Pfd. 07/30/42............................... 4,810,523
15,000 Wisconsin Power & Light Company, 6.20% Pfd....................................... 1,539,845*
Xcel Energy, Inc.:
7,110 $4.10 Pfd., Series C........................................................... 572,355*
10,210 $4.11 Pfd., Series D........................................................... 823,845*
------------------------------------------------------------------------------------------------------------------
298,641,186
---------------
8
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Flaherty & Crumrine/Claymore Preferred Securities Income Fund Incorporated
PORTFOLIO OF INVESTMENTS (CONTINUED)
FEBRUARY 28, 2007 (UNAUDITED)
--------------------------------------------------------------------------
SHARES/$ PAR VALUE
------------- ---------
PREFERRED SECURITIES -- (CONTINUED)
OIL AND GAS -- 2.1%
----------------------------------------------------------------------------------------------------------------------------
$ 12,500,000 Enterprise Products Partners, 8.375% Pfd......................................... $ 13,945,125
13,200 EOG Resources, Inc., 7.195% Pfd., Series B....................................... 14,152,116*
$ 3,650,000 KN Capital Trust III, 7.63% 04/15/28 Capital Security............................ 3,562,400
------------------------------------------------------------------------------------------------------------------
31,659,641
---------------
REAL ESTATE INVESTMENT TRUST (REIT) -- 3.0%
----------------------------------------------------------------------------------------------------------------------------
BRE Properties, Inc.:
72,200 6.75% Pfd., Series C........................................................... 1,820,797
224,000 8.08% Pfd., Series B........................................................... 5,733,011
45,000 Equity Office Property Trust, 7.75% Pfd., Series G............................... 1,129,221
51,000 Equity Residential Properties, 8.29% Pfd., Series K.............................. 3,082,440
4,980 Prologis Trust, 8.54% Pfd., Series C............................................. 307,671
PS Business Parks, Inc.:
160,000 7.20% Pfd., Series M........................................................... 4,105,008
203,400 7.60% Pfd., Series L........................................................... 5,339,250
60,000 7.95% Pfd., Series K........................................................... 1,603,128
Public Storage, Inc.:
186,070 6.45% Pfd., Series F........................................................... 4,628,491
52,000 6.63% Pfd., Series M........................................................... 1,293,500
63,400 6.75% Pfd., Series E........................................................... 1,608,775
30,000 6.85% Pfd., Series Y........................................................... 762,000
511,000 7.25% Pfd., Series K........................................................... 13,365,869
80,000 Realty Income Corp., 6.75% Pfd., Series E........................................ 2,012,504
------------------------------------------------------------------------------------------------------------------
46,791,665
---------------
MISCELLANEOUS INDUSTRIES -- 1.0%
----------------------------------------------------------------------------------------------------------------------------
2,245 Centaur Funding Corporation, 9.08% Pfd. 04/21/20, 144A****....................... 2,635,770
112,750 Ocean Spray Cranberries, Inc., 6.25% Pfd., 144A****.............................. 10,147,500*
$ 3,000,000 TCI Comm Financing III, 9.65% 03/31/27 Capital Security.......................... 3,150,741
------------------------------------------------------------------------------------------------------------------
15,934,011
---------------
TOTAL PREFERRED SECURITIES
(Cost $1,263,187,087).......................................................... 1,303,654,260
---------------
CORPORATE DEBT SECURITIES -- 14.7%
FINANCIAL SERVICES -- 2.4%
----------------------------------------------------------------------------------------------------------------------------
200,000 Ford Motor Credit Company, 7.375% 10/15/31....................................... 4,386,500
$ 25,000,000 General Motors Acceptance Corporation, 8.00% 11/01/31, Senior Bonds.............. 27,644,800
$ 4,824,312 Lehman Brothers, Guaranteed Note, Variable Rate, 12/16/16, 144A****.............. 4,439,332
------------------------------------------------------------------------------------------------------------------
36,470,632
---------------
9
--------------------------------------------------------------------------------
Flaherty & Crumrine/Claymore Preferred Securities Income Fund Incorporated
PORTFOLIO OF INVESTMENTS (CONTINUED)
FEBRUARY 28, 2007 (UNAUDITED)
--------------------------------------------------------------------------
SHARES/$ PAR VALUE
------------- ---------
CORPORATE DEBT SECURITIES -- (CONTINUED)
INSURANCE -- 2.5%
----------------------------------------------------------------------------------------------------------------------------
239,000 Delphi Financial, 8.00% 05/15/33, Senior Notes................................... $ 6,221,481
$ 4,000,000 Farmers Exchange Capital, 7.20% 07/15/48, 144A****............................... 4,240,316
$ 24,921,000 Liberty Mutual Insurance, 7.697% 10/15/97, 144A****.............................. 26,840,066
$ 1,000,000 UnumProvident Corporation, 7.25% 03/15/28, Senior Notes.......................... 1,089,411
------------------------------------------------------------------------------------------------------------------
38,391,274
---------------
UTILITIES -- 6.8%
----------------------------------------------------------------------------------------------------------------------------
Duke Capital Corporation:
$ 6,179,000 6.75% 02/15/32, Senior Notes................................................... 6,435,132
$ 4,000,000 8.00% 10/01/19, Senior Notes................................................... 4,611,200
$ 13,500,000 Duquesne Light Holdings, 6.25% 08/15/35.......................................... 12,387,208
$ 5,000,000 Entergy Gulf States, Inc., 6.20% 07/01/33, 1st Mortgage.......................... 4,929,660
Entergy Louisiana LLC:
$ 14,458,000 6.30% 09/01/35, 1st Mortgage................................................... 14,478,169
9,400 7.60% 04/01/32................................................................. 239,113
16,500 Entergy Mississippi, Inc., 7.25%, 1st Mortgage................................... 417,141
477,315 Georgia Power Company, 5.90% 04/15/33, Senior Notes.............................. 11,783,714
40,000 Northern States Power Company, 8.00%............................................. 1,040,000
Oncor Electric Delivery Company:
$ 2,000,000 7.00% 09/01/22................................................................. 2,194,362
$ 7,070,000 7.25% 01/15/33................................................................. 8,124,377
227,000 PPL Energy Supply LLC, 7.00% 07/15/46............................................ 5,965,855
$ 8,268,000 PSEG Power LLC, 8.625% 04/15/31.................................................. 10,801,811
Southern Union Company:
$ 5,300,000 7.60% 02/01/24, Senior Notes................................................... 5,712,785
$ 7,697,000 8.25% 11/15/29, Senior Notes................................................... 8,911,963
$ 6,020,000 Wisconsin Electric Power Company, 6.875% 12/01/95................................ 6,601,845
------------------------------------------------------------------------------------------------------------------
104,634,335
---------------
OIL AND GAS -- 1.7%
----------------------------------------------------------------------------------------------------------------------------
$ 10,350,000 KN Energy, Inc., 7.45% 03/01/98.................................................. 10,151,135
296,911 Nexen, Inc., 7.35% Subordinated Notes............................................ 7,636,195(1)
$ 8,500,000 Noble Energy, Inc., 7.25% 08/01/97............................................... 8,910,108
------------------------------------------------------------------------------------------------------------------
26,697,438
---------------
REAL ESTATE INVESTMENT TRUST (REIT) -- 0.2%
----------------------------------------------------------------------------------------------------------------------------
$ 3,500,000 Realty Income Corporation, 5.875% 03/15/35....................................... 3,424,655
------------------------------------------------------------------------------------------------------------------
3,424,655
---------------
10
--------------------------------------------------------------------------------
Flaherty & Crumrine/Claymore Preferred Securities Income Fund Incorporated
PORTFOLIO OF INVESTMENTS (CONTINUED)
FEBRUARY 28, 2007 (UNAUDITED)
--------------------------------------------------------------------------
SHARES/$ PAR VALUE
------------- ---------
CORPORATE DEBT SECURITIES -- (CONTINUED)
MISCELLANEOUS INDUSTRIES -- 1.1%
----------------------------------------------------------------------------------------------------------------------------
240,000 AT&T, Inc., 6.375% 02/15/56...................................................... $ 5,985,000
$ 390,000 BellSouth Telecommunication, 7.00% 12/01/95...................................... 409,427
80,000 Comcast Corp., 7.00% 09/15/55, Series B.......................................... 2,070,000
Corp-Backed Trust Certificates:
30,000 7.00% 11/15/28, Series FON..................................................... 757,500
100,000 6.05% 02/15/33, Series BA...................................................... 2,436,000
Pulte Homes, Inc.:
58,240 7.375% 06/01/46................................................................ 1,497,863(3)
$ 3,550,000 7.875% 06/15/32, Senior Notes.................................................. 4,065,396
------------------------------------------------------------------------------------------------------------------
17,221,186
---------------
TOTAL CORPORATE DEBT SECURITIES
(Cost $216,824,673)............................................................ 226,839,520
---------------
COMMON STOCKS -- 0.1%
BANKING -- 0.1%
----------------------------------------------------------------------------------------------------------------------------
57,700 New York Community Bancorp, Inc.................................................. 965,898*
------------------------------------------------------------------------------------------------------------------
965,898
---------------
TOTAL COMMON STOCKS
(Cost $948,414)................................................................ 965,898
---------------
OPTION CONTRACTS -- 0.1%
10,300 June Put Options on June U.S. Treasury Bond Futures, Expiring 05/25/07........... 939,250+
------------------------------------------------------------------------------------------------------------------
TOTAL OPTION CONTRACTS
(Cost $4,301,750).............................................................. 939,250
---------------
11
--------------------------------------------------------------------------------
Flaherty & Crumrine/Claymore Preferred Securities Income Fund Incorporated
PORTFOLIO OF INVESTMENTS (CONTINUED)
FEBRUARY 28, 2007 (UNAUDITED)
--------------------------------------------------------------------------
SHARES/$ PAR VALUE
------------- ---------
MONEY MARKET FUND -- 0.8%
11,521,519 BlackRock Provident Institutional, TempFund...................................... $ 11,521,519
------------------------------------------------------------------------------------------------------------------
TOTAL MONEY MARKET FUND
(Cost $11,521,519)............................................................. 11,521,519
---------------
SECURITIES LENDING COLLATERAL -- 0.0%
663,012 Institutional Money Market Trust................................................. 663,012
------------------------------------------------------------------------------------------------------------------
TOTAL SECURITIES LENDING COLLATERAL
(Cost $663,012)................................................................ 663,012
---------------
TOTAL INVESTMENTS (Cost $1,497,446,455***)........................................ 100.3% 1,544,583,459
OTHER ASSETS AND LIABILITIES (Net)................................................ (0.3%) (3,923,659)
--------- ---------------
TOTAL NET ASSETS AVAILABLE TO COMMON STOCK AND PREFERRED STOCK.................... 100.0%++ $ 1,540,659,800
--------- ---------------
AUCTION MARKET PREFERRED STOCK (AMPS) REDEMPTION VALUE......................................... (542,000,000)
---------------
TOTAL NET ASSETS AVAILABLE TO COMMON STOCK..................................................... $ 998,659,800
===============
-----------------------------
* Securities eligible for the Dividends Received Deduction and distributing
Qualified Dividend Income.
** Securities distributing Qualified Dividend Income only.
*** Aggregate cost of securities held.
**** Securities exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be resold in transactions exempt from
registration to qualified institutional buyers. These securities have
been determined to be liquid under the guidelines established by the
Board of Directors.
(1) Foreign Issuer.
(2) All or a portion of this security has been pledged as collateral for
written option positions.
(3) A portion of the security is on loan.
+ Non-income producing.
++ The percentage shown for each investment category is the total value of
that category as a percentage of net assets available to Common and
Preferred Stock.
ABBREVIATIONS:
PFD. -- Preferred Securities
PVT. -- Private Placement Securities
12
--------------------------------------------------------------------------------
Flaherty & Crumrine/Claymore Preferred Securities Income Fund Incorporated
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE TO COMMON STOCK(1)
FOR THE PERIOD FROM DECEMBER 1, 2006 THROUGH FEBRUARY 28, 2007 (UNAUDITED)
--------------------------------------------------------------------------
VALUE
--------
OPERATIONS:
Net investment income.................................................................... $ 22,916,263
Net realized gain/(loss) on investments sold during the period........................... 9,673,914
Change in net unrealized appreciation/depreciation of investments held
during the period ................................................................... (9,909,744)
Distributions to Auction Market Preferred Stock (AMPS) Shareholders from net
investment income, including changes in accumulated undeclared distributions......... (6,923,998)
-------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS .................................... 15,756,435
DISTRIBUTIONS:
Dividends paid from net investment income to Common Stock Shareholders (2)............... (16,295,158)
-------------------
TOTAL DISTRIBUTIONS TO COMMON STOCK SHAREHOLDERS ........................................ (16,295,158)
FUND SHARE TRANSACTIONS:
Increase from shares issued under the Dividend Reinvestment
and Cash Purchase Plan .............................................................. --
-------------------
NET INCREASE IN NET ASSETS AVAILABLE TO COMMON STOCK RESULTING
FROM FUND SHARE TRANSACTIONS ........................................................ --
NET INCREASE IN NET ASSETS AVAILABLE TO COMMON STOCK -------------------
FOR THE PERIOD..................................................................... $ (538,723)
===================
------------------------------------------------------------------------------------------------------------------------
NET ASSETS AVAILABLE TO COMMON STOCK:
Beginning of period...................................................................... $ 999,198,523
Net increase in net assets during the period............................................. (538,723)
-------------------
End of period............................................................................ $ 998,659,800
===================
--------------------------------------------------------
(1) These tables summarize the three months ended February 28, 2007 and should
be read in conjunction with the Fund's audited financial statements,
including footnotes, in its Annual Report dated November 30, 2006.
(2) May include income earned, but not paid out, in prior fiscal year.
13
--------------------------------------------------------------------------------
Flaherty & Crumrine/Claymore Preferred Securities Income Fund Incorporated
FINANCIAL HIGHLIGHTS(1)
FOR THE PERIOD FROM DECEMBER 1, 2006 THROUGH FEBRUARY 28, 2007 (UNAUDITED)
FOR A COMMON STOCK SHARE OUTSTANDING THROUGHOUT THE PERIOD.
-----------------------------------------------------------
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period.......................................................... $ 23.45
-------------
INVESTMENT OPERATIONS:
Net investment income ........................................................................ 0.54
Net realized and unrealized gain/(loss) on investments........................................ (0.01)
DISTRIBUTIONS TO AMPS* SHAREHOLDERS:
From net investment income ................................................................... (0.16)
From net realized capital gains............................................................... --
-------------
Total from investment operations ............................................................. 0.37
-------------
DISTRIBUTIONS TO COMMON STOCK SHAREHOLDERS:
From net investment income ................................................................... (0.38)
From net realized capital gains............................................................... --
-------------
Total distributions to Common Stock Shareholders ............................................. (0.38)
-------------
Net asset value, end of period................................................................ $ 23.44
=============
Market value, end of period................................................................... $ 21.81
=============
Common shares outstanding, end of period...................................................... 42,601,719
=============
RATIOS TO AVERAGE NET ASSETS AVAILABLE TO COMMON STOCK SHAREHOLDERS:
Net investment income+ ....................................................................... 6.46%**
Operating expenses............................................................................ 1.15%**
--------------------------------------------------------
SUPPLEMENTAL DATA:++
Portfolio turnover rate....................................................................... 16%***
Total net assets available to Common and Preferred Stock, end of period (in 000's)............ $ 1,540,660
Ratio of operating expenses to total average net assets
available to Common and Preferred Stock ................................................... 0.74%**
(1) These tables summarize the three months ended February 28, 2007 and should
be read in conjunction with the Fund's audited financial statements,
including footnotes, in its Annual Report dated November 30, 2006.
* Auction Market Preferred Stock.
** Annualized.
*** Not annualized.
+ The net investment income ratios reflect income net of operating expenses
and payments to AMPS* Shareholders.
++ Information presented under heading Supplemental Data includes AMPS*.
14
--------------------------------------------------------------------------------
Flaherty & Crumrine/Claymore Preferred Securities Income Fund Incorporated
FINANCIAL HIGHLIGHTS (CONTINUED)
PER SHARE OF COMMON STOCK (UNAUDITED)
-------------------------------------
TOTAL DIVIDEND
DIVIDENDS NET ASSET NYSE REINVESTMENT
PAID VALUE CLOSING PRICE PRICE(1)
---------- ---------- ------------- -------------
December 31, 2006............................... $0.1275 $23.15 $21.41 $21.54
January 31, 2007................................ 0.1275 23.13 21.75 21.87
February 28, 2007............................... 0.1275 23.44 21.81 21.96
--------------------
(1) Whenever the net asset value per share of the Fund's Common Stock is less
than or equal to the market price per share on the payment date, new shares
issued will be valued at the higher of net asset value or 95% of the then
current market price. Otherwise, the reinvestment shares of Common Stock
will be purchased in the open market.
15
--------------------------------------------------------------------------------
Flaherty & Crumrine/Claymore Preferred Securities Income Fund Incorporated
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
-----------------------------------------
1. AGGREGATE INFORMATION FOR FEDERAL INCOME TAX PURPOSES
At February 28, 2007 the aggregate cost of securities for federal income tax
purposes was $1,508,169,215, the aggregate gross unrealized appreciation for all
securities in which there is an excess of value over tax cost was $46,755,923
and the aggregate gross unrealized depreciation for all securities in which
there is an excess of tax cost over value was $10,341,678.
16
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DIRECTORS
Donald F. Crumrine, CFA
Chairman of the Board
David Gale
Morgan Gust
Karen H. Hogan
Robert F. Wulf, CFA
OFFICERS
Donald F. Crumrine, CFA
Chief Executive Officer
Robert M. Ettinger, CFA
President
R. Eric Chadwick, CFA
Chief Financial Officer,
Vice President and Treasurer
Chad C. Conwell
Chief Compliance Officer,
Vice President and Secretary
Bradford S. Stone
Vice President and
Assistant Treasurer
Nicholas Dalmaso
Vice President and Assistant Secretary
Laurie C. Lodolo
Assistant Compliance Officer,
Assistant Treasurer and
Assistant Secretary
INVESTMENT ADVISER
Flaherty & Crumrine Incorporated
e-mail: flaherty@pfdincome.com
SERVICING AGENT
Claymore Securities, Inc.
1-866-233-4001
QUESTIONS CONCERNING YOUR SHARES OF FLAHERTY &
CRUMRINE/CLAYMORE PREFERRED SECURITIES
INCOME FUND?
o If your shares are held in a Brokerage
Account, contact your Broker.
o If you have physical possession of your shares
in certificate form, contact the Fund's Transfer
Agent --
PFPC Inc. 1-800-331-1710
THIS REPORT IS SENT TO SHAREHOLDERS OF FLAHERTY & CRUMRINE/CLAYMORE PREFERRED
SECURITIES INCOME FUND INCORPORATED FOR THEIR INFORMATION. IT IS NOT A
PROSPECTUS, CIRCULAR OR REPRESENTATION INTENDED FOR USE IN THE PURCHASE OR SALE
OF SHARES OF THE FUND OR OF ANY SECURITIES MENTIONED IN THIS REPORT.
[GRAPHIC OMITTED]
LIGHTHOUSE ART
FLAHERTY & CRUMRINE/CLAYMORE
============================
PREFERRED SECURITIES
INCOME FUND
QUARTERLY
REPORT
FEBRUARY 28, 2007
www.fcclaymore.com
ITEM 2. CONTROLS AND PROCEDURES.
(a) The registrant's principal executive and principal financial officers,
or persons performing similar functions, have concluded that the
registrant's disclosure controls and procedures (as defined in Rule
30a-3(c) under the Investment Company Act of 1940, as amended (the
"1940 Act") (17 CFR 270.30a-3(c))) are effective, as of a date within
90 days of the filing date of the report that includes the disclosure
required by this paragraph, based on their evaluation of these controls
and procedures required by Rule 30a-3(b) under the 1940 Act (17 CFR
270.30a-3(b)) and Rules 13a-15(b) or 15d-15(b) under the Securities
Exchange Act of 1934, as amended (17 CFR 240.13a-15(b) or
240.15d-15(b)).
(b) There were no changes in the registrant's internal control over
financial reporting (as defined in Rule 30a-3(d) under the 1940 Act (17
CFR 270.30a-3(d)) that occurred during the registrant's last fiscal
quarter that have materially affected, or are reasonably likely to
materially affect, the registrant's internal control over financial
reporting.
ITEM 3. EXHIBITS.
Certifications pursuant to Rule 30a-2(a) under the 1940 Act and Section 302 of
the Sarbanes-Oxley Act of 2002 are attached hereto.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) FLAHERTY & CRUMRINE/CLAYMORE PREFERRED SECURITIES INCOME FUND
INCORPORATED
By (Signature and Title)* /S/ DONALD F. CRUMRINE
-------------------------------------------------------
Donald F. Crumrine, Director, Chairman of the Board and
Chief Executive Officer
(principal executive officer)
Date APRIL 23, 2007
----------------------------------------------------------------------------
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By (Signature and Title)* /S/ DONALD F. CRUMRINE
-------------------------------------------------------
Donald F. Crumrine, Director, Chairman of the Board and
Chief Executive Officer
(principal executive officer)
Date APRIL 23, 2007
----------------------------------------------------------------------------
By (Signature and Title)* /S/ R. ERIC CHADWICK
-------------------------------------------------------
R. Eric Chadwick, Chief Financial Officer, Treasurer and
Vice President
(principal financial officer)
Date APRIL 23, 2007
----------------------------------------------------------------------------
* Print the name and title of each signing officer under his or her signature.