Chubb Group of Insurance Companies DECLARATIONS
FINANCIAL INSTITUTION INVESTMENT
15 Mountain View Road, Warren, New Jersey 07059 COMPANY ASSET PROTECTION
BOND
NAME OF ASSURED (including its Subsidiaries): Bond Number: 81906377
FLAHERTY & CRUMRINE/CLAYMORE TOTAL
RETURN FUND INCORPORATED FEDERAL INSURANCE COMPANY
301 E. COLORADO BLVD., STE 720 Incorporated under the laws of Indiana
PASADENA, CAL 91101 a stock insurance company herein called
the COMPANY
Capital Center, 251 North Illinois,
Suite 1100
Indianapolis, IN 46204-1927
ITEM 1. BOND PERIOD: from 12:01 a.m. on May 15, 2006
to 12:01 a.m. on May 15, 2007
ITEM 2. LIMITS OF LIABILITY--DEDUCTIBLE AMOUNTS:
If "Not Covered" is inserted below opposite any specified INSURING CLAUSE, such
INSURING CLAUSE and any other reference shall be deemed to be deleted. There
shall be no deductible applicable to any loss under INSURING CLAUSE 1. sustained
by any Investment Company.
DEDUCTIBLE
INSURING CLAUSE LIMIT OF LIABILITY AMOUNT
1. Employee $ 750,000 $ 25,000
2. On Premises $ 750,000 $ 25,000
3. In Transit $ 750,000 $ 25,000
4. Forgery or Alteration $ N/A $ N/A
5. Extended Forgery $ N/A $ N/A
6. Counterfeit Money $ N/A $ N/A
7. Threats to Person $ N/A $ N/A
8. Computer System $ N/A $ N/A
9. Voice Initiated Funds Transfer Instruction $ N/A $ N/A
10 Uncollectible Items of Deposit $ N/A $ N/A
11. Audit Expense $ 25,000 $ N/A
ITEM 3. THE LIABILITY OF THE COMPANY IS ALSO SUBJECT TO THE TERMS OF THE
FOLLOWING ENDORSEMENTS EXECUTED SIMULTANEOUSLY HEREWITH:
1) CA Premium Endorsement; 2) Deleting Valuation-Other Property Endorsement; 3)
Compliance With Applicable Trade Sanction Laws
IN WITNESS WHEREOF, THE COMPANY has caused this Bond to be signed by its
authorized officers, but it shall not be valid unless also signed by an
authorized representative of the Company.
Secretary
President
Countersigned by
Authorized Representative
Form 17-02-1320 (Ed. XX-XX) Page 2 of 2
ICAP Bond (5-98) - Federal
Form 17-02-1421 (Ed. 5-98) Page 1 of 1
The COMPANY, in consideration of payment of the required premium, and in
reliance on the APPLICATION and all other statements made and information
furnished to the COMPANY by the ASSURED, and subject to the DECLARATIONS made a
part of this Bond and to all other terms and conditions of this Bond, agrees to
pay the ASSURED for:
Insuring Clauses
Employee
1. Loss resulting directly from Larceny or Embezzlement committed by any
Employee, alone or in collusion with others.
On Premises
2. Loss of Property resulting directly from robbery, burglary, false
pretenses, common law or statutory larceny, misplacement, mysterious
unexplainable disappearance, damage, destruction or removal, from the
possession, custody or control of the ASSURED, while such Property is lodged or
deposited at premises located anywhere.
In Transit
3. Loss of Property resulting directly from common law or statutory larceny,
misplacement, mysterious unexplainable disappearance, damage or destruction,
while the Property is in transit anywhere:
a. in an armored motor vehicle, including loading and unloading thereof,
b. in the custody of a natural person acting as a messenger of the ASSURED,
or
c. in the custody of a Transportation Company and being transported in a
conveyance other than an armored motor vehicle provided, however, that covered
Property transported in such manner is limited to the following:
(1) written records,
(2) securities issued in registered form, which are not endorsed or are
restrictively endorsed, or
(3) negotiable instruments not payable to bearer, which are not endorsed or
are restrictively endorsed.
Coverage under this INSURING CLAUSE begins immediately on the receipt of such
Property by the natural person or Transportation Company and ends immediately on
delivery to the premises of the addressee or to any representative of the
addressee located anywhere.
Insuring Clauses
(continued)
Forgery Or Alteration
4. Loss resulting directly from:
a. Forgery on, or fraudulent material alteration of, any bills of exchange,
checks, drafts, acceptances, certificates of deposits, promissory notes, due
bills, money orders, orders upon public treasuries, letters of credit, other
written promises, orders or directions to pay sums certain in money, or receipts
for the withdrawal of Property, or
b. transferring, paying or delivering any funds or other Property, or
establishing any credit or giving any value in reliance on any written
instructions, advices or applications directed to the ASSURED authorizing or
acknowledging the transfer, payment, delivery or receipt of funds or other
Property, which instructions, advices or applications fraudulently purport to
bear the handwritten signature of any customer of the ASSURED, or shareholder or
subscriber to shares of an Investment Company, or of any financial institution
or Employee but which instructions, advices or applications either bear a
Forgery or have been fraudulently materially altered without the knowledge and
consent of such customer, shareholder, subscriber, financial institution or
Employee;
excluding, however, under this INSURING CLAUSE any loss covered under INSURING
CLAUSE 5. of this Bond, whether or not coverage for INSURING CLAUSE 5. is
provided for in the DECLARATIONS of this Bond.
For the purpose of this INSURING CLAUSE, a mechanically reproduced facsimile
signature is treated the same as a handwritten signature.
Extended Forgery
5. Loss resulting directly from the ASSURED having, in good faith, and in
the ordinary course of business, for its own account or the account of others in
any capacity:
a. acquired, accepted or received, accepted or received, sold or delivered,
or given value, extended credit or assumed liability, in reliance on any
original Securities, documents or other written instruments which prove to:
(1) bear a Forgery or a fraudulently material alteration,
(2) have been lost or stolen, or
(3) be Counterfeit, or
b. guaranteed in writing or witnessed any signatures on any transfer,
assignment, bill of sale, power of attorney, guarantee, endorsement or other
obligation upon or in connection with any Securities, documents or other written
instruments.
Actual physical possession, and continued actual physical possession if taken as
collateral, of such Securities, documents or other written instruments by an
Employee, Custodian, or a Federal or State chartered deposit institution of the
ASSURED is a condition precedent to the ASSURED having relied on such items.
Release or return of such collateral is an acknowledgment by the ASSURED that it
no longer relies on such collateral.
Insuring Clauses
Extended Forgery
(continued)
For the purpose of this INSURING CLAUSE, a mechanically reproduced facsimile
signature is treated the same as a handwritten signature.
Counterfeit Money
6. Loss resulting directly from the receipt by the ASSURED in good faith of
any Counterfeit money.
Threats To Person
7. Loss resulting directly from surrender of Property away from an office of
the ASSURED as a result of a threat communicated to the ASSURED to do bodily
harm to an Employee as defined in Section 1.e. (1), (2) and (5), a Relative or
invitee of such Employee, or a resident of the household of such Employee, who
is, or allegedly is, being held captive provided, however, that prior to the
surrender of such Property:
a. the Employee who receives the threat has made a reasonable effort to
notify an officer of the ASSURED who is not involved in such threat, and
b. the ASSURED has made a reasonable effort to notify the Federal Bureau of
Investigation and local law enforcement authorities concerning such threat.
It is agreed that for purposes of this INSURING CLAUSE, any Employee of
the ASSURED, as set forth in the preceding paragraph, shall be deemed to be an
ASSURED hereunder, but only with respect to the surrender of money, securities
and other tangible personal property in which such Employee has a legal or
equitable interest.
Computer System
8. Loss resulting directly from fraudulent:
a. entries of data into, or
b. changes of data elements or programs within, a Computer System, provided
the fraudulent entry or change causes:
(1) funds or other property to be transferred, paid or delivered,
(2) an account of the ASSURED or of its customer to be added, deleted,
debited or credited, or
(3) an unauthorized account or a fictitious account to be debited or
credited.
Insuring Clauses
(continued)
Voice Initiated Funds Transfer Instruction
9. Loss resulting directly from Voice Initiated Funds Transfer Instruction
directed to the ASSURED authorizing the transfer of dividends or redemption
proceeds of Investment Company shares from a Customer's account, provided such
Voice Initiated Funds Transfer Instruction was:
a. received at the ASSURED'S offices by those Employees of the ASSURED
specifically authorized to receive the Voice Initiated Funds Transfer
Instruction,
b. made by a person purporting to be a Customer, and
c. made by said person for the purpose of causing the ASSURED or Customer to
sustain a loss or making an improper personal financial gain for such person or
any other person.
In order for coverage to apply under this INSURING CLAUSE, all Voice
Initiated Funds Transfer Instructions must be received and processed in
accordance with the Designated Procedures outlined in the APPLICATION furnished
to the COMPANY.
Uncollectible Items of Deposit
10. Loss resulting directly from the ASSURED having credited an account of a
customer, shareholder or subscriber on the faith of any Items of Deposit which
prove to be uncollectible, provided that the crediting of such account causes:
a. redemptions or withdrawals to be permitted,
b. shares to be issued, or
c. dividends to be paid,
from an account of an Investment Company.
In order for coverage to apply under this INSURING CLAUSE, the ASSURED
must hold Items of Deposit for the minimum number of days stated in the
APPLICATION before permitting any redemptions or withdrawals, issuing any shares
or paying any dividends with respect to such Items of Deposit.
Items of Deposit shall not be deemed uncollectible until the ASSURED'S
standard collection procedures have failed.
Audit Expense
11. Expense incurred by the ASSURED for that part of the cost of audits or
examinations required by any governmental regulatory authority or
self-regulatory organization to be conducted by such authority, organization or
their appointee by reason of the discovery of loss sustained by the ASSURED and
covered by this Bond.
General Agreements
Additional Companies Included As Assured
A. If more than one corporation, or Investment Company, or any combination
of them is included as the ASSURED herein:
(1) The total liability of the COMPANY under this Bond for loss or losses
sustained by any one or more or all of them shall not exceed the limit for which
the COMPANY would be liable under this Bond if all such loss were sustained by
any one of them.
(2) Only the first named ASSURED shall be deemed to be the sole agent of the
others for all purposes under this Bond, including but not limited to the giving
or receiving of any notice or proof required to be given and for the purpose of
effecting or accepting any amendments to or termination of this Bond. The
COMPANY shall furnish each Investment Company with a copy of the Bond and with
any amendment thereto, together with a copy of each formal filing of claim by
any other named ASSURED and notification of the terms of the settlement of each
such claim prior to the execution of such settlement.
(3) The COMPANY shall not be responsible for the proper application of any
payment made hereunder to the first named ASSURED.
(4) Knowledge possessed or discovery made by any partner, director, trustee,
officer or supervisory employee of any ASSURED shall constitute knowledge or
discovery by all the ASSUREDS for the purposes of this Bond.
(5) If the first named ASSURED ceases for any reason to be covered under this
Bond, then the ASSURED next named on the APPLICATION shall thereafter be
considered as the first named ASSURED for the purposes of this Bond.
Representation Made By Assured
B. The ASSURED represents that all information it has furnished in the
APPLICATION for this Bond or otherwise is complete, true and correct. Such
APPLICATION and other information constitute part of this Bond.
The ASSURED must promptly notify the COMPANY of any change in any fact
or circumstance which materially affects the risk assumed by the COMPANY under
this Bond.
Any intentional misrepresentation, omission, concealment or incorrect
statement of a material fact, in the APPLICATION or otherwise, shall be grounds
for recision of this Bond.
General Agreements
(continued)
Additional Offices Or Employees - Consolidation, Merger Or Purchase Or
Acquisition Of Assets Or Liabilities - Notice To Company
C. If the ASSURED, other than an Investment Company, while this Bond is in
force, merges or consolidates with, or purchases or acquires assets or
liabilities of another institution, the ASSURED shall not have the coverage
afforded under this Bond for loss which has:
(1) occurred or will occur on premises, or
(2) been caused or will be caused by an employee, or
(3) arisen or will arise out of the assets or liabilities, of such
institution, unless the ASSURED:
a. gives the COMPANY written notice of the proposed consolidation, merger or
purchase or acquisition of assets or liabilities prior to the proposed effective
date of such action, and
b. obtains the written consent of the COMPANY to extend some or all of the
coverage provided by this Bond to such additional exposure, and
c. on obtaining such consent, pays to the COMPANY an additional
premium.
Change Of Control -
Notice To Company
D. When the ASSURED learns of a change in control (other than in an
Investment Company), as set forth in Section 2(a) (9) of the Investment Company
Act of 1940, the ASSURED shall within sixty (60) days give written notice to the
COMPANY setting forth:
(1) the names of the transferors and transferees (or the names of the
beneficial owners if the voting securities are registered in another name),
(2) the total number of voting securities owned by the transferors and the
transferees (or the beneficial owners), both immediately before and after the
transfer, and
(3) the total number of outstanding voting securities.
Failure to give the required notice shall result in termination of
coverage for any loss involving a transferee, to be effective on the date of
such change in control.
Court Costs And
Attorneys' Fees
E. The COMPANY will indemnify the ASSURED for court costs and reasonable
attorneys' fees incurred and paid by the ASSURED in defense, whether or not
successful, whether or not fully litigated on the merits and whether or not
settled, of any claim, suit or legal proceeding with respect to which the
ASSURED would be entitled to recovery under this Bond. However, with respect to
INSURING CLAUSE 1., this Section shall only apply in the event that:
(1) an Employee admits to being guilty of Larceny or Embezzlement,
(2) an Employee is adjudicated to be guilty of Larceny or Embezzlement, or
General Agreements
Court Costs And
Attorneys' Fees
(continued)
(3) in the absence of 1 or 2 above, an arbitration panel agrees, after a
review of an agreed statement of facts between the COMPANY and the ASSURED, that
an Employee would be found guilty of Larceny or Embezzlement if such Employee
were prosecuted.
The ASSURED shall promptly give notice to the COMPANY of any such suit
or legal proceeding and at the request of the COMPANY shall furnish copies of
all pleadings and pertinent papers to the COMPANY. The COMPANY may, at its sole
option, elect to conduct the defense of all or part of such legal proceeding.
The defense by the COMPANY shall be in the name of the ASSURED through attorneys
selected by the COMPANY. The ASSURED shall provide all reasonable information
and assistance as required by the COMPANY for such defense.
If the COMPANY declines to defend the ASSURED, no settlement without
the prior written consent of the COMPANY nor judgment against the ASSURED shall
determine the existence, extent or amount of coverage under this Bond.
If the amount demanded in any such suit or legal proceeding is within
the DEDUCTIBLE AMOUNT, if any, the COMPANY shall have no liability for court
costs and attorney's fees incurred in defending all or part of such suit or
legal proceeding.
If the amount demanded in any such suit or legal proceeding is in
excess of the LIMIT OF LIABILITY stated in ITEM 2. of the DECLARATIONS for the
applicable INSURING CLAUSE, the COMPANY'S liability for court costs and
attorney's fees incurred in defending all or part of such suit or legal
proceedings is limited to the proportion of such court costs and attorney's fees
incurred that the LIMIT OF LIABILITY stated in ITEM 2. of the DECLARATIONS for
the applicable INSURING CLAUSE bears to the total of the amount demanded in such
suit or legal proceeding.
If the amount demanded is any such suit or legal proceeding is in
excess of the DEDUCTIBLE AMOUNT, if any, but within the LIMIT OF LIABILITY
stated in ITEM 2. of the DECLARATIONS for the applicable INSURING CLAUSE, the
COMPANY'S liability for court costs and attorney's fees incurred in defending
all or part of such suit or legal proceedings shall be limited to the proportion
of such court costs or attorney's fees that the amount demanded that would be
payable under this Bond after application of the DEDUCTIBLE AMOUNT, bears to the
total amount demanded.
Amounts paid by the COMPANY for court costs and attorneys' fees shall
be in addition to the LIMIT OF LIABILITY stated in ITEM 2. of the DECLARATIONS.
Conditions And Limitations
Definitions
1. As used in this Bond:
a. Computer System means a computer and all input, output, processing,
storage, off-line media libraries, and communication facilities which are
connected to the computer and which are under the control and supervision of the
operating system(s) or application(s) software used by the ASSURED.
b. Counterfeit means an imitation of an actual valid original which is
intended to deceive and be taken as the original.
c. Custodian means the institution designated by an Investment Company to
maintain possession and control of its assets.
d. Customer means an individual, corporate, partnership, trust customer,
shareholder or subscriber of an Investment Company which has a written agreement
with the ASSURED for Voice Initiated Funds Transfer Instruction.
e. Employee means:
(1) an officer of the ASSURED,
(2) a natural person while in the regular service of the ASSURED at any of
the ASSURED'S premises and compensated directly by the ASSURED through its
payroll system and subject to the United States Internal Revenue Service Form
W-2 or equivalent income reporting plans of other countries, and whom the
ASSURED has the right to control and direct both as to the result to be
accomplished and details and means by which such result is accomplished in the
performance of such service,
(3) a guest student pursuing studies or performing duties in any of the
ASSURED'S premises,
(4) an attorney retained by the ASSURED and an employee of such attorney
while either is performing legal services for the ASSURED, (
5) a natural person provided by an employment contractor to perform employee
duties for the ASSURED under the ASSURED'S supervision at any of the ASSURED'S
premises,
(6) an employee of an institution merged or consolidated with the ASSURED
prior to the effective date of this Bond,
(7) a director or trustee of the ASSURED, but only while performing acts
within the scope of the customary and usual duties of any officer or other
employee of the ASSURED or while acting as a member of any committee duly
elected or appointed to examine or audit or have custody of or access to
Property of the ASSURED, or
Conditions And Limitations
Definitions
(continued)
(8) each natural person, partnership or corporation authorized by written
agreement with the ASSURED to perform services as electronic data processor of
checks or other accounting records related to such checks but only while such
person, partnership or corporation is actually performing such services and not:
a. creating, preparing, modifying or maintaining the ASSURED'S computer
software or programs, or
b. acting as transfer agent or in any other agency capacity in issuing
checks, drafts or securities for the ASSURED,
(9) any partner, officer or employee of an investment advisor, an underwriter
(distributor), a transfer agent or shareholder accounting recordkeeper, or an
administrator, for an Investment Company while performing acts coming within the
scope of the customary and usual duties of an officer or employee of an
Investment Company or acting as a member of any committee duly elected or
appointed to examine, audit or have custody of or access to Property of an
Investment Company.
The term Employee shall not include any partner, officer or employee of
a transfer agent, shareholder accounting recordkeeper or administrator:
a. which is not an "affiliated person" (as defined in Section 2(a) of the
Investment Company Act of 1940) of an Investment Company or of the investment
advisor or underwriter (distributor) of such Investment Company, or
b. which is a "bank" (as defined in Section 2(a) of the Investment Company
Act of 1940).
This Bond does not afford coverage in favor of the employers of persons
as set forth in e. (4), (5) and (8) above, and upon payment to the ASSURED by
the COMPANY resulting directly from Larceny or Embezzlement committed by any of
the partners, officers or employees of such employers, whether acting alone or
in collusion with others, an assignment of such of the ASSURED'S rights and
causes of action as it may have against such employers by reason of such acts so
committed shall, to the extent of such payment, be given by the ASSURED to the
COMPANY, and the ASSURED shall execute all papers necessary to secure to the
COMPANY the rights provided for herein.
Each employer of persons as set forth in e.(4), (5) and (8) above and
the partners, officers and other employees of such employers shall collectively
be deemed to be one person for all the purposes of this Bond; excepting,
however, the fifth paragraph of Section 13.
Independent contractors not specified in e.(4), (5) or (8) above,
intermediaries, agents, brokers or other representatives of the same general
character shall not be considered Employees.
Conditions And Limitations
Definitions
(continued)
f. Forgery means the signing of the name of another natural person with the
intent to deceive but does not mean a signature which consists in whole or in
part of one's own name, with or without authority, in any capacity for any
purpose.
g. Investment Company means any investment company registered under the
Investment Company Act of 1940 and listed under the NAME OF ASSURED on the
DECLARATIONS.
h. Items of Deposit means one or more checks or drafts drawn upon a
financial institution in the United States of America.
i. Larceny or Embezzlement means larceny or embezzlement as defined in
Section 37 of the Investment Company Act of 1940.
j. Property means money, revenue and other stamps; securities; including any
note, stock, treasury stock, bond, debenture, evidence of indebtedness,
certificate of deposit, certificate of interest or participation in any
profit-sharing agreement, collateral trust certificate, preorganization
certificate or subscription, transferable share, investment contract, voting
trust certificate, certificate of deposit for a security, fractional undivided
interest in oil, gas, or other mineral rights, any interest or instruments
commonly known as a security under the Investment Company Act of 1940, any other
certificate of interest or participation in, temporary or interim certificate
for, receipt for, guarantee of, or warrant or right to subscribe to or purchase
any of the foregoing; bills of exchange; acceptances; checks; withdrawal orders;
money orders; travelers' letters of credit; bills of lading; abstracts of title;
insurance policies, deeds, mortgages on real estate and/or upon chattels and
interests therein; assignments of such policies, deeds or mortgages; other
valuable papers, including books of accounts and other records used by the
ASSURED in the conduct of its business (but excluding all electronic data
processing records); and, all other instruments similar to or in the nature of
the foregoing in which the ASSURED acquired an interest at the time of the
ASSURED'S consolidation or merger with, or purchase of the principal assets of,
a predecessor or which are held by the ASSURED for any purpose or in any
capacity and whether so held gratuitously or not and whether or not the ASSURED
is liable therefor.
k. Relative means the spouse of an Employee or partner of the ASSURED and
any unmarried child supported wholly by, or living in the home of, such Employee
or partner and being related to them by blood, marriage or legal guardianship.
l. Securities, documents or other written instruments means original
(including original counterparts) negotiable or non-negotiable instruments, or
assignments thereof, which in and of themselves represent an equitable interest,
ownership, or debt and which are in the ordinary course of business transferable
by delivery of such instruments with any necessary endorsements or assignments.
Conditions And Limitations
Definitions
(continued)
m. Subsidiary means any organization that, at the inception date of this
Bond, is named in the APPLICATION or is created during the BOND PERIOD and of
which more than fifty percent (50%) of the outstanding securities or voting
rights representing the present right to vote for election of directors is owned
or controlled by the ASSURED either directly or through one or more of its
subsidiaries.
n. Transportation Company means any organization which provides its own or
its leased vehicles for transportation or which provides freight forwarding or
air express services.
o. Voice Initiated Election means any election concerning dividend options
available to Investment Company shareholders or subscribers which is requested
by voice over the telephone.
p. Voice Initiated Redemption means any redemption of shares issued by an
Investment Company which is requested by voice over the telephone.
q. Voice Initiated Funds Transfer Instruction means any Voice Initiated
Redemption or Voice Initiated Election.
For the purposes of these definitions, the singular includes the plural and the
plural includes the singular, unless otherwise indicated.
General Exclusions - Applicable to All Insuring Clauses
2. This bond does not directly or indirectly cover:
a. loss not reported to the COMPANY in writing within sixty (60) days after
termination of this Bond as an entirety;
b. loss due to riot or civil commotion outside the United States of America
and Canada, or any loss due to military, naval or usurped power, war or
insurrection. This Section 2.b., however, shall not apply to loss which occurs
in transit in the circumstances recited in INSURING CLAUSE 3., provided that
when such transit was initiated there was no knowledge on the part of any person
acting for the ASSURED of such riot, civil commotion, military, naval or usurped
power, war or insurrection;
c. loss resulting from the effects of nuclear fission or fusion or
radioactivity;
d. loss of potential income including, but not limited to, interest and
dividends not realized by the ASSURED or by any customer of the ASSURED;
e. damages of any type for which the ASSURED is legally liable, except
compensatory damages, but not multiples thereof, arising from a loss covered
under this Bond;
f. costs, fees and expenses incurred by the ASSURED in establishing the
existence of or amount of loss under this Bond, except to the extent covered
under INSURING CLAUSE 11.;
g. loss resulting from indirect or consequential loss of any nature;
Conditions And Limitations
General Exclusions - Applicable to All Insuring Clauses
(continued)
h. loss resulting from dishonest acts by any member of the Board of
Directors or Board of Trustees of the ASSURED who is not an Employee, acting
alone or in collusion with others;
i. loss, or that part of any loss, resulting solely from any violation by
the ASSURED or by any Employee:
(1) of any law regulating:
a. the issuance, purchase or sale of securities,
b. securities transactions on security or commodity exchanges or the over
the counter market,
c. investment companies,
d. investment advisors, or
(2) of any rule or regulation made pursuant to any such law; or
j. loss of confidential information, material or data;
k. loss resulting from voice requests or instructions received over the
telephone, provided however, this Section 2.k. shall not apply to INSURING
CLAUSE 7. or 9.
Specific Exclusions - Applicable To All Insuring Clauses Except Insuring Clause
1.
3. This Bond does not directly or indirectly cover:
a. loss caused by an Employee, provided, however, this Section 3.a. shall
not apply to loss covered under INSURING CLAUSE 2. or 3. which results directly
from misplacement, mysterious unexplainable disappearance, or damage or
destruction of Property;
b. loss through the surrender of property away from premises of the ASSURED
as a result of a threat:
(1) to do bodily harm to any natural person, except loss of Property in
transit in the custody of any person acting as messenger of the ASSURED,
provided that when such transit was initiated there was no knowledge by the
ASSURED of any such threat, and provided further that this Section 3.b. shall
not apply to INSURING CLAUSE 7., or
(2) to do damage to the premises or Property of the ASSURED;
c. loss resulting from payments made or withdrawals from any account
involving erroneous credits to such account;
d. loss involving Items of Deposit which are not finally paid for any reason
provided however, that this Section 3.d. shall not apply to INSURING CLAUSE 10.;
e. loss of property while in the mail;
Conditions And Limitations
Specific Exclusions - Applicable To All Insuring Clauses Except Insuring Clause
1.
(continued)
f. loss resulting from the failure for any reason of a financial or
depository institution, its receiver or other liquidator to pay or deliver funds
or other Property to the ASSURED provided further that this Section 3.f. shall
not apply to loss of Property resulting directly from robbery, burglary,
misplacement, mysterious unexplainable disappearance, damage, destruction or
removal from the possession, custody or control of the ASSURED.
g. loss of Property while in the custody of a Transportation Company,
provided however, that this Section 3.g. shall not apply to INSURING CLAUSE 3.;
h. loss resulting from entries or changes made by a natural person with
authorized access to a Computer System who acts in good faith on instructions,
unless such instructions are given to that person by a software contractor or
its partner, officer, or employee authorized by the ASSURED to design, develop,
prepare, supply, service, write or implement programs for the ASSURED's Computer
System; or
i. loss resulting directly or indirectly from the input of data into a
Computer System terminal, either on the premises of the customer of the ASSURED
or under the control of such a customer, by a customer or other person who had
authorized access to the customer's authentication mechanism.
Specific Exclusions - Applicable To All Insuring Clauses Except Insuring Clauses
1., 4., And 5.
4. This bond does not directly or indirectly cover:
a. loss resulting from the complete or partial non-payment of or default on
any loan whether such loan was procured in good faith or through trick,
artifice, fraud or false pretenses; provided, however, this Section 4.a. shall
not apply to INSURING CLAUSE 8.;
b. loss resulting from forgery or any alteration;
c. loss involving a counterfeit provided, however, this Section 4.c. shall
not apply to INSURING CLAUSE 5. or 6.
Limit Of Liability/Non-Reduction And Non-Accumulation Of Liability
5. At all times prior to termination of this Bond, this Bond shall continue
in force for the limit stated in the applicable sections of ITEM 2. of the
DECLARATIONS, notwithstanding any previous loss for which the COMPANY may have
paid or be liable to pay under this Bond provided, however, that the liability
of the COMPANY under this Bond with respect to all loss resulting from:
a. any one act of burglary, robbery or hold-up, or attempt thereat, in which
no Employee is concerned or implicated, or
b. any one unintentional or negligent act on the part of any one person
resulting in damage to or destruction or misplacement of Property, or
c. all acts, other than those specified in a. above, of any one person,
or
Conditions And Limitations
Limit Of Liability/Non-Reduction And Non-Accumulation Of Liability
(continued)
d. any one casualty or event other than those specified in a., b., or c.
above,
shall be deemed to be one loss and shall be limited to the applicable LIMIT OF
LIABILITY stated in ITEM 2. of the DECLARATIONS of this Bond irrespective of the
total amount of such loss or losses and shall not be cumulative in amounts from
year to year or from period to period.
All acts, as specified in c. above, of any one person which
i. directly or indirectly aid in any way wrongful acts of any other person
or persons, or
ii. permit the continuation of wrongful acts of any other person or persons
whether such acts are committed with or without the knowledge of the
wrongful acts of the person so aided, and whether such acts are committed with
or without the intent to aid such other person, shall be deemed to be one loss
with the wrongful acts of all persons so aided.
Discovery
6. This Bond applies only to loss first discovered by an officer of the
ASSURED during the BOND PERIOD. Discovery occurs at the earlier of an officer of
the ASSURED being aware of:
a. facts which may subsequently result in a loss of a type covered by this
Bond, or
b. an actual or potential claim in which it is alleged that the ASSURED is
liable to a third party,
regardless of when the act or acts causing or contributing to such loss
occurred, even though the amount of loss does not exceed the applicable
DEDUCTIBLE AMOUNT, or the exact amount or details of loss may not then be known.
Notice To Company -
Proof - Legal Proceedings Against Company
7. a. The ASSURED shall give the COMPANY notice thereof at the
earliest practicable moment, not to exceed sixty (60) days after discovery of
loss, in an amount that is in excess of 50% of the applicable DEDUCTIBLE AMOUNT,
as stated in ITEM 2. of the DECLARATIONS.
b. The ASSURED shall furnish to the COMPANY proof of loss, duly sworn to, \
with full particulars within six (6) months after such discovery.
c. Securities listed in a proof of loss shall be identified by certificate
or bond numbers, if issued with them.
d. Legal proceedings for the recovery of any loss under this Bond shall not
be brought prior to the expiration of sixty (60) days after the proof of loss is
filed with the COMPANY or after the expiration of twenty-four (24) months from
the discovery of such loss.
e. This Bond affords coverage only in favor of the ASSURED. No claim, suit,
action or legal proceedings shall be brought under this Bond by anyone other
than the ASSURED.
Conditions And Limitations
Notice To Company -
Proof - Legal Proceedings Against Company
(continued)
f. Proof of loss involving Voice Initiated Funds Transfer Instruction shall
include electronic recordings of such instructions.
Deductible Amount
8. The COMPANY shall not be liable under any INSURING CLAUSES of this Bond
on account of loss unless the amount of such loss, after deducting the net
amount of all reimbursement and/or recovery obtained or made by the ASSURED,
other than from any Bond or policy of insurance issued by an insurance company
and covering such loss, or by the COMPANY on account thereof prior to payment by
the COMPANY of such loss, shall exceed the DEDUCTIBLE AMOUNT set forth in ITEM
3. of the DECLARATIONS, and then for such excess only, but in no event for more
than the applicable LIMITS OF LIABILITY stated in ITEM 2. of the DECLARATIONS.
There shall be no deductible applicable to any loss under INSURING CLAUSE
1. sustained by any Investment Company.
Valuation
9. BOOKS OF ACCOUNT OR OTHER RECORDS
The value of any loss of Property consisting of books of account or other
records used by the ASSURED in the conduct of its business shall be the amount
paid by the ASSURED for blank books, blank pages, or other materials which
replace the lost books of account or other records, plus the cost of labor paid
by the ASSURED for the actual transcription or copying of data to reproduce such
books of account or other records.
The value of any loss of Property other than books of account or other
records used by the ASSURED in the conduct of its business, for which a claim is
made shall be determined by the average market value of such Property on the
business day immediately preceding discovery of such loss provided, however,
that the value of any Property replaced by the ASSURED with the consent of the
COMPANY and prior to the settlement of any claim for such Property shall be the
actual market value at the time of replacement.
In the case of a loss of interim certificates, warrants, rights or
other securities, the production of which is necessary to the exercise of
subscription, conversion, redemption or deposit privileges, the value of them
shall be the market value of such privileges immediately preceding their
expiration if said loss is not discovered until after their expiration. If no
market price is quoted for such Property or for such privileges, the value shall
be fixed by agreement between the parties.
OTHER PROPERTY
The value of any loss of Property, other than as stated above, shall be
the actual cash value or the cost of repairing or replacing such Property with
Property of like quality and value, whichever is less.
Conditions And Limitations
(continued)
Securities Settlement
10. In the event of a loss of securities covered under this Bond, the COMPANY
may, at its sole discretion, purchase replacement securities, tender the value
of the securities in money, or issue its indemnity to effect replacement
securities.
The indemnity required from the ASSURED under the terms of this Section
against all loss, cost or expense arising from the replacement of securities by
the COMPANY'S indemnity shall be:
a. for securities having a value less than or equal to the applicable
DEDUCTIBLE AMOUNT - one hundred (100%) percent;
b. for securities having a value in excess of the DEDUCTIBLE AMOUNT but
within the applicable LIMIT OF LIABILITY - the percentage that the DEDUCTIBLE
AMOUNT bears to the value of the securities;
c. for securities having a value greater than the applicable LIMIT OF
LIABILITY - the percentage that the DEDUCTIBLE AMOUNT and portion in excess of
the applicable LIMIT OF LIABILITY bears to the value of the securities.
The value referred to in Section 10.a., b., and c. is the value in
accordance with Section 9, VALUATION, regardless of the value of such securities
at the time the loss under the COMPANY'S indemnity is sustained.
The COMPANY is not required to issue its indemnity for any portion of a
loss of securities which is not covered by this Bond; however, the COMPANY may
do so as a courtesy to the ASSURED and at its sole discretion.
The ASSURED shall pay the proportion of the Company's premium charge
for the Company's indemnity as set forth in Section 10.a., b., and c. No portion
of the LIMIT OF LIABILITY shall be used as payment of premium for any indemnity
purchased by the ASSURED to obtain replacement securities.
Subrogation - Assignment - Recovery
11. In the event of a payment under this Bond, the COMPANY shall be
subrogated to all of the ASSURED'S rights of recovery against any person or
entity to the extent of such payment. On request, the ASSURED shall deliver to
the COMPANY an assignment of the ASSURED'S rights, title and interest and causes
of action against any person or entity to the extent of such payment.
Recoveries, whether effected by the COMPANY or by the ASSURED, shall be
applied net of the expense of such recovery in the following order:
a. first, to the satisfaction of the ASSURED'S loss which would otherwise
have been paid but for the fact that it is in excess of the applicable LIMIT OF
LIABILITY,
b. second, to the COMPANY in satisfaction of amounts paid in settlement of
the ASSURED'S claim,
c. third, to the ASSURED in satisfaction of the applicable DEDUCTIBLE
AMOUNT, and
Conditions And Limitations
Subrogation - Assignment - Recovery
(continued)
d. fourth, to the ASSURED in satisfaction of any loss suffered by the
ASSURED which was not covered under this Bond.
Recovery from reinsurance or indemnity of the COMPANY shall not be
deemed a recovery under this section.
Cooperation Of Assured
12. At the COMPANY'S request and at reasonable times and places designated by
the COMPANY, the ASSURED shall:
a. submit to examination by the COMPANY and subscribe to the same under
oath,
b. produce for the COMPANY'S examination all pertinent records, and
c. cooperate with the COMPANY in all matters pertaining to the loss.
The ASSURED shall execute all papers and render assistance to secure to
the COMPANY the rights and causes of action provided for under this Bond. The
ASSURED shall do nothing after loss to prejudice such rights or causes of
action.
Termination
13. If the Bond is for a sole ASSURED, it shall not be terminated unless
written notice shall have been given by the acting party to the affected party
and to the Securities and Exchange Commission, Washington, D.C., not less than
sixty (60) days prior to the effective date of such termination.
If the Bond is for a joint ASSURED, it shall not be terminated unless
written notice shall have been given by the acting party to the affected party,
and by the COMPANY to all ASSURED Investment Companies and to the Securities and
Exchange Commission, Washington, D.C., not less than sixty (60) days prior to
the effective date of such termination.
This Bond will terminate as to any one ASSURED, other than an Investment
Company:
a. immediately on the taking over of such ASSURED by a receiver or other
liquidator or by State or Federal officials, or
b. immediately on the filing of a petition under any State or Federal
statute relative to bankruptcy or reorganization of the ASSURED, or assignment
for the benefit of creditors of the ASSURED, or
c. immediately upon such ASSURED ceasing to exist, whether through merger
into another entity, disposition of all of its assets or otherwise.
The COMPANY shall refund the unearned premium computed at short rates
in accordance with the standard short rate cancellation tables if terminated by
the ASSURED or pro rata if terminated for any other reason.
Conditions And Limitations
Termination
(continued)
If any partner, director, trustee, or officer or supervisory employee of
an ASSURED not acting in collusion with an Employee learns of any dishonest act
committed by such Employee at any time, whether in the employment of the ASSURED
or otherwise, whether or not such act is of the type covered under this Bond,
and whether against the ASSURED or any other person or entity, the ASSURED:
a. shall immediately remove such Employee from a position that would enable
such Employee to cause the ASSURED to suffer a loss covered by this Bond; and
b. within forty-eight (48) hours of learning that an Employee has committed
any dishonest act, shall notify the COMPANY, of such action and provide full
particulars of such dishonest act.
The COMPANY may terminate coverage as respects any Employee sixty (60)
days after written notice is received by each ASSURED Investment Company and the
Securities and Exchange Commission, Washington, D.C. of its desire to terminate
this Bond as to such Employee.
Other Insurance
14. Coverage under this Bond shall apply only as excess over any valid and
collectible insurance, indemnity or suretyship obtained by or on behalf of:
a. the ASSURED,
b. a Transportation Company, or
c. another entity on whose premises the loss occurred or which employed the
person causing the loss or engaged the messenger conveying the Property
involved.
Conformity
15. If any limitation within this Bond is prohibited by any law controlling
this Bond's construction, such limitation shall be deemed to be amended so as to
equal the minimum period of limitation provided by such law.
Change or Modification
16. This Bond or any instrument amending or affecting this Bond may not be
changed or modified orally. No change in or modification of this Bond shall be
effective except when made by written endorsement to this Bond signed by an
authorized representative of the COMPANY.
If this Bond is for a sole ASSURED, no change or modification which
would adversely affect the rights of the ASSURED shall be effective prior to
sixty (60) days after written notice has been furnished to the Securities and
Exchange Commission, Washington, D.C., by the acting party.
Conditions And Limitations
Change or Modification
(continued)
If this Bond is for a joint ASSURED, no charge or modification which
would adversely affect the rights of the ASSURED shall be effective prior to
sixty (60) days after written notice has been furnished to all insured
Investment Companies and to the Securities and Exchange Commission, Washington,
D.C., by the COMPANY.
ICAP Bond (5-98)
Form 17-02-1421 (Ed. 5-98) Page 2 of 19
ICAP Bond (5-98)
Form 17-02-1421 (Ed. 5-98) Page 19 of 19
ICAP Bond (5-98)
Form 17-02-1421 (Ed. 5-98) Page 1 of 19
FEDERAL INSURANCE COMPANY
Endorsement No: 1
Bond Number: 81906377
NAME OF ASSURED: FLAHERTY & CRUMRINE/CLAYMORE TOTAL
RETURN FUND INCORPORATED
PREMIUM ENDORSEMENT
It is agreed that:
1. The premium for this Bond for the period May 15, 2006 to May 15, 2007
is:
Premium: Two Thousand Four Hundred Forty-Eight Dollars ($2448)
2. It is further agreed that this premium is subject to change during this
period if amendments are made to this Bond at the request of the ASSURED.
This Endorsement applies to loss discovered after 12:01 a.m. on May 15, 2006.
ALL OTHER TERMS AND CONDITIONS OF THIS BOND REMAIN UNCHANGED.
Date: July 5, 2006
By
Authorized Representative
ICAP Bond
Form 17-02-0735 (Rev. 1-97)
FEDERAL INSURANCE COMPANY
Endorsement No.: 2
Bond Number: 81906377
NAME OF ASSURED: FLAHERTY & CRUMRINE/CLAYMORE TOTAL
RETURN FUND INCORPORATED
--------------------------------------------------------------------------------
DELETING VALUATION-OTHER PROPERTY ENDORSEMENT
It is agreed that this Bond is amended by deleting in its entirety the paragraph
titled Other Property in Section 9., Valuation.
This Endorsement applies to loss discovered after 12:01 a.m. on May 15, 2006.
ALL OTHER TERMS AND CONDITIONS OF THIS BOND REMAIN UNCHANGED.
Date: July 5, 2006
By
Authorized Representative
ICAP Bond
Form 17-02-2437 (Ed. 1-01)
Effective date of
this endorsement: May 15, 2006 FEDERAL INSURANCE COMPANY
Endorsement No.: 3
To be attached to and form a part of Bond
Number: 81906377
Issued to: FLAHERTY & CRUMRINE/CLAYMORE TOTAL
RETURN FUND INCORPORATED
--------------------------------------------------------------------------------
COMPLIANCE WITH APPLICABLE TRADE SANCTION LAWS RIDER
It is agreed that this insurance does not apply to the extent that trade or
economic sanctions or other laws or regulations prohibit the coverage provided
by this insurance.
ALL OTHER TERMS AND CONDITIONS OF THIS BOND REMAIN UNCHANGED.
Date: July 5, 2006
By
Authorized Representative
Form 14-02-9228 (Ed. 4/2004)
IMPORTANT POLICYHOLDER INFORMATION
Inquiries concerning your policy should be directed to your insurance agent. The
name, address and telephone number of your agent, if one is involved, is shown
on the policy and/or in the material accompanying the policy.
If you require additional information you may contact the California Insurance
Department at either the following address or phone number:
California Insurance Department
300 South Spring Street
Los Angeles, CA 90012
1-800-927-HELP
Form 14-02-1495 (Ed. 1/94)
IMPORTANT NOTICE
The premium shown on this policy or premium statement may be subject to
adjustment in accordance with the provisions of California law recently adopted
by ballot initiative. You will be informed about any adjustment as soon as the
requirements of the law and their effect on your premium can be determined.
Form 99-10-0267 (Ed. 2/98)
Chubb & Son, div. of Federal Insurance Company
as manager of the member insurers of the
Chubb Group of Insurance Companies
POLICYHOLDER
DISCLOSURE NOTICE OF
TERRORISM INSURANCE COVERAGE
(for policies with no terrorism exclusion or sublimit)
You are hereby notified that, under the Terrorism Risk Insurance Act of 2002
(the "Act") effective November 26, 2002, this policy makes available to you
insurance for losses arising out of certain acts of international terrorism.
Terrorism is defined as any act certified by the Secretary of the Treasury, in
concurrence with the Secretary of State and the Attorney General of the United
States, to be an act of terrorism; to be a violent act or an act that is
dangerous to human life, property or infrastructure; to have resulted in damage
within the United States, or outside the United States in the case of an air
carrier or vessel or the premises of a United States Mission; and to have been
committed by an individual or individuals acting on behalf of any foreign person
or foreign interest, as part of an effort to coerce the civilian population of
the United States or to influence the policy or affect the conduct of the United
States Government by coercion.
You should know that the insurance provided by your policy for losses caused by
acts of terrorism is partially reimbursed by the United States under the formula
set forth in the Act. Under this formula, the United States pays 90% of covered
terrorism losses that exceed the statutorily established deductible to be paid
by the insurance company providing the coverage. The portion of your policy's
annual premium that is attributable to insurance for such acts of terrorism is:
$ -0-.
If you have any questions about this notice, please contact your agent or
broker.
Form 10-02-1281 (Ed. 1/2003)
THE FOLLOWING RESOLUTIONS WERE ADOPTED AT THE APRIL 21, 2006 MEETING OF THE
BOARD OF DIRECTORS OF FLAHERTY & CRUMRINE/CLAYMORE TOTAL RETURN FUND
INCORPORATED:
RESOLVED: That the renewal of the fidelity bond
coverage for the period from May 15, 2006 to
May 15, 2007, which provides coverage in the
aggregate amount of $750,000, is hereby
approved; and further
RESOLVED: That it is the finding of the Directors
at this Meeting that the fidelity bond
(the "Bond") in the amount of $750,000
covering officers and employees of the Fund,
in accordance with the requirements of Rule
17g-1 under the Investment Company Act of
1940, as amended (the "1940 Act"), is
reasonable in form and amount, after having
given due consideration to, among other
things, the value of the aggregate assets of
the Fund to which any person covered under
the Bond may have access, the custody and
safekeeping of the assets of the Fund's
portfolio, and the nature of the securities
in the Fund's portfolio; and further
RESOLVED: That the premium in the amount of $2,448
paid by the Fund under the Bond is hereby
authorized; and further
RESOLVED: That the appropriate officers of the Fund
are hereby authorized and directed to take
such other action as may from time to time
be necessary or appropriate in order to
conform to the provisions of the 1940 Act
and the rules and regulations under that
Act; and further
RESOLVED: That the Secretary or Assistant Secretary of
the Fund shall make such filings concerning
the Bond with the Securities and Exchange
Commission and give such notices as required
under paragraph (g) of Rule 17g-1
promulgated by the Securities and Exchange
Commission under the 1940 Act.