UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM N-CSR

              CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
                              INVESTMENT COMPANIES

                  Investment Company Act file number 811-21129

   Flaherty & Crumrine/Claymore Preferred Securities Income Fund Incorporated
               (Exact name of registrant as specified in charter)

                      301 E. Colorado Boulevard, Suite 720
                               Pasadena, CA 91101
               (Address of principal executive offices) (Zip code)

                               Donald F. Crumrine
                        Flaherty & Crumrine Incorporated
                      301 E. Colorado Boulevard, Suite 720
                               Pasadena, CA 91101
                     (Name and address of agent for service)

        registrant's telephone number, including area code: 626-795-7300

                      Date of fiscal year end: November 30

                   Date of reporting period: November 30, 2010

Form N-CSR is to be used by management investment companies to file reports with
the Commission not later than 10 days after the transmission to stockholders of
any report that is required to be transmitted to stockholders under Rule 30e-1
under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may
use the information provided on Form N-CSR in its regulatory, disclosure review,
inspection, and policymaking roles.

A registrant is required to disclose the information specified by Form N-CSR,
and the Commission will make this information public. A registrant is not
required to respond to the collection of information contained in Form N-CSR
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 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. Section 3507.


ITEM 1. REPORTS TO STOCKHOLDERS.

The Report to Shareholders is attached herewith.


FLAHERTY & CRUMRINE/CLAYMORE PREFERRED SECURITIES INCOME FUND

To the Shareholders of Flaherty & Crumrine/Claymore Preferred Securities Income
Fund:

     We begin with good news about distributions on your shares of FFC--the Fund
finished fiscal 2010 with a bit of extra income, so shareholders of record on
December 23, 2010 received an additional $0.04 per share. In addition, the
regular monthly distribution was increased to $0.13 from $0.125 per share
beginning with the December dividend(1).

     During the Fund's final fiscal quarter, the portfolio once again turned in
solid performance. For the three-month period ending November 30, 2010, the
Fund's return on net asset value was +5.5%. Over the entire fiscal year, the
return on NAV was +34.2%. The table below presents these and other performance
measures of interest to investors.

                         TOTAL RETURN ON NET ASSET VALUE
                       FOR PERIODS ENDED NOVEMBER 30, 2010



                                                                                AVERAGE
                                                   ACTUAL RETURNS         ANNUALIZED RETURNS
                                               ----------------------   -----------------------
                                                THREE    SIX      ONE   THREE   FIVE    LIFE OF
                                               MONTHS   MONTHS   YEAR   YEARS   YEARS   FUND(1)
                                               ------   ------   ----   -----   -----   -------
                                                                      
Flaherty & Crumrine/Claymore
Preferred Securities Income Fund ...........     5.5%    18.7%   34.2%   7.1%    4.0%     5.4%
Barclays Capital U.S. Aggregate Index(2) ...    -0.1%     3.9%    6.0%   6.4%    6.2%     5.3%
S&P 500 Index(3) ...........................    13.1%     9.5%    9.9%  -5.2%    1.0%     6.2%


----------
(1)  Since inception on January 29, 2003.

(2)  The Barclays Capital U.S. Aggregate Index represents securities that are
     SEC-registered, taxable, and dollar denominated. The index covers the U.S.
     investment grade fixed rate bond market, with index components for
     government and corporate securities, mortgage pass-through securities, and
     asset-backed securities. It is generally considered to be representative of
     the domestic, investment-grade, fixed-rate, taxable bond market. Unless
     otherwise noted, index returns reflect the reinvestment of dividends and
     capital gains, if any, but do not reflect fees, brokerage commissions or
     other expenses of investing. This index was formerly known as the Lehman
     Brothers U.S. Aggregate Index.

(3)  The S&P 500 is a capitalization-weighted index of 500 common stocks. The
     index is designed to measure performance of the broad domestic economy
     through changes in the aggregate market value of 500 stocks representing
     all major industries.

     The Fund's strong performance during the quarter was accomplished despite a
weak market for US Treasury bonds and continued uncertainty about changes in
regulation of the banking industry.

     Conditions in the market for preferred securities are still positive.
Demand is broad based and steady, while most participants expect the size of the
market to decline (at least over the near-term). The market has also been
boosted by steady improvement in the financial strength of many issuers, as
corporate profitability has steadily improved.

----------
(1)  A more in-depth discussion of the dividend and other important topics can
     be found in the section which follows our letter.



     SHORT-TERM interest rates remain near zero as economic activity remains
positive but stubbornly slow. Unemployment rates are high, and the impact of
fiscal and monetary actions has been more muted than desired. We anticipate
short-term interest rates (and hence the cost of the Fund's leverage) will
remain low over the near-term; however, eventually they will go up. Our view is
detailed in the Quarterly Economic Outlook available on the Fund's website.

     Yields on LONG-TERM U.S. Treasury bonds increased almost 60 basis points
during the period; prices fell roughly 10%. Clearly, concerns about a pick-up in
economic activity, inflation, or both, have become more widespread. In the past,
a move of this magnitude typically caused some corresponding drop in the prices
of preferred securities. Obviously, the recent period was not typical--most
preferred prices actually went up in the face of falling bond prices. The
correlation between prices of preferred securities and treasury bonds used to be
reliably high, but this has not been the case for much of the past three years
(a major reason the Fund suspended its hedging strategy in autumn 2008).

     As discussed previously, the financial crisis brought to light a need to
rethink the role of capital in the banking industry. Regulators and policy
makers are debating the amount and composition of capital necessary to prevent a
repeat of the crisis. Preferred securities play a very important part in the
debate. This is a complex matter and there are a lot of chefs in the kitchen; it
will likely take many more months before the process is complete. However, some
change is certain and we are managing the portfolio to reflect things we know
and some we anticipate. We remain optimistic the ultimate outcome will be
beneficial over the long term.

     As always, we encourage you to visit www.fcclaymore.com to read our
Quarterly Economic Update as well as a more detailed discussion of factors
affecting the wonderful world of preferred securities.

Sincerely,


/s/ Donald F. Crumrine                  /s/ Robert M. Ettinger

Donald F. Crumrine                      Robert M. Ettinger
Chairman                                President

January 10, 2011


                                        2



                                DISCUSSION TOPICS

THE FUND'S PORTFOLIO RESULTS AND COMPONENTS OF TOTAL RETURN ON NAV

     The table below reflects the performance of each investment technique
available for use by the Fund to achieve its objective, namely: (a) investing in
a portfolio of securities; (b) hedging that portfolio of securities against
significant increases in long-term interest rates (see the following discussion
on the status of the Fund's interest rate hedging strategy); and (c) utilizing
leverage to enhance returns to shareholders. Next, we compute the impact of the
Fund's operating expenses. All of the parts are summed to determine total return
on NAV.

                     COMPONENTS OF FFC'S TOTAL RETURN ON NAV
                   FOR THE FISCAL YEAR ENDED NOVEMBER 30, 2010



                                                   SIX MONTHS*  ONE YEAR
                                                   ----------   --------
                                                          
Total Return on Unleveraged Securities
   Portfolio (including principal and income) ..     +12.9%      +23.4%
Return from Interest Rate Hedging Strategy .....       N/A         N/A
Impact of Leverage (including leverage
   expense) ....................................      +6.3%      +11.8%
Expenses (excluding leverage expense) ..........      -0.5%       -1.0%
                                                     -----       -----
   TOTAL RETURN ON NAV .........................     +18.7%      +34.2%


*    Actual, not annualized.

     The following table displays returns for the various segments of the
preferred securities market as measured by BofA Merrill preferred indices, over
both the past six months and the Fund's fiscal year ended November 30th. During
these periods, the preferred market continued the price recovery that began in
early 2009, but at a somewhat slower pace. As can be seen by comparing the total
return on the Fund's securities portfolio (the first row of the above table) to
the index results below, the Fund's portfolio outperformed all segments of the
preferred market over its fiscal year ending November 30th, even excluding the
impact of leverage. During the past six months, the Fund's (unleveraged)
securities portfolio outperformed all segments of the preferred market except
adjustable rate preferred securities, which constitute only about 2.5% of the
entire preferred market and just 1.1% of the Fund's portfolio.

  TOTAL RETURNS OF BANK OF AMERICA MERRILL LYNCH PREFERRED SECURITIES INDICES*
                     FOR THE PERIODS ENDED NOVEMBER 30, 2010



                                                                              SIX MONTHS*   ONE YEAR
                                                                              -----------   --------
                                                                                      
BofA Merrill Lynch 8% Capped DRD Preferred Stock Index(SM) ................       +8.2%      +16.9%
BofA Merrill Lynch 8% Capped Hybrid Preferred Securities Index(SM) ........      +10.8%      +18.8%
BofA Merrill Lynch 8% Capped Corporate U.S. Capital Securities Index(SM) ..      +10.8%      +19.7%
BofA Merrill Lynch Adjustable Preferred Stock, 7% Constrained Index(SM) ...      +13.5%      +16.3%


*    The Bank of America Merrill Lynch 8% Capped DRD Preferred Stock Index(SM)
     includes investment grade preferred securities issued by both corporations
     and government agencies that qualify for the corporate dividends received
     deduction with issuer concentration capped at a maximum of 8%. The Bank of
     America Merrill Lynch 8% Capped Hybrid Preferred Securities Index(SM)
     includes taxable, fixed-rate, U.S. dollar-denominated investment-grade,
     preferred securities listed on a U.S. exchange with issuer concentration
     capped at 8%. The Bank of America Merrill Lynch 8% Capped Corporate U.S.
     Capital Securities Index(SM) includes investment grade fixed rate or
     fixed-to-floating rate $1,000 par securities that receive some degree of
     equity credit from the rating agencies or their regulators with issuer
     concentration capped at a maximum of 8%. The Bank of America Merrill Lynch
     Adjustable Preferred Stock, 7% Constrained Index(SM) includes adjustable
     rate preferred securities issued by U.S. corporations and government
     agencies with issuer concentration capped at a maximum of 7%. All index
     returns include interest and dividend income, and, unlike the Fund's
     returns, are unmanaged and do not reflect any expenses.


                                        3



     As shown in the first table, the Fund's performance demonstrates how
leverage again benefited common stock shareholders over the past year -
increasing current income and magnifying the positive returns over the Fund's
fiscal 2010. Although leverage can adversely impact Fund results in unfavorable
market environments, during the recent fiscal year leverage assisted the Fund's
NAV in significantly outperforming returns available in the preferred securities
market, as measured by the various BofA Merrill preferred indices.

TOTAL RETURN ON MARKET PRICE OF FUND SHARES

     While our focus is primarily on managing the Fund's investment portfolio,
an investor's actual return is comprised of monthly dividend payments plus
changes in the Fund's MARKET PRICE. During the twelve months ending November 30,
2010, the total return on market price of Fund shares was +46.3%.

       FLAHERTY & CRUMRINE/CLAYMORE PREFERRED SECURITIES INCOME FUND (FFC)
           PREMIUM/DISCOUNT OF MARKET PRICE TO NAV THROUGH 12/31/2010

                               (PERFORMANCE GRAPH)


        
1/31/03     0.0516
2/7/03      0.0516
2/14/03     0.0535
2/21/03     0.0512
2/28/03     0.0447
3/7/03      0.0417
3/14/03     0.0463
3/21/03     0.0523
3/28/03       0.05
4/4/03      0.0545
4/11/03     0.0517
4/18/03     0.0409
4/25/03     0.0285
5/2/03      0.0264
5/9/03      0.0101
5/16/03    -0.0158
5/23/03    -0.0427
5/30/03    -0.0232
6/6/03     -0.0245
6/13/03    -0.0412
6/20/03    -0.0136
6/27/03    -0.0051
7/4/03      0.0027
7/11/03     0.0012
7/18/03     0.0016
7/25/03     -0.002
8/1/03      -0.004
8/8/03      0.0073
8/15/03     -0.004
8/22/03     -0.004
8/29/03    -0.0028
9/5/03      -0.002
9/12/03    -0.0079
9/19/03    -0.0207
9/26/03    -0.0228
10/3/03    -0.0109
10/10/03    0.0047
10/17/03    0.0117
10/24/03    0.0121
10/31/03    0.0105
11/7/03     0.0431
11/14/03    0.0226
11/21/03      0.01
11/28/03    0.0357
12/5/03     0.0254
12/12/03    0.0712
12/19/03    0.0623
12/26/03    0.0678
1/2/04      0.0732
1/9/04       0.053
1/16/04     0.0514
1/23/04     0.0512
1/30/04     0.0463
2/6/04       0.058
2/13/04     0.0564
2/20/04     0.0611
2/27/04      0.057
3/5/04      0.0499
3/12/04     0.0541
3/19/04     0.0636
3/26/04      0.084
4/2/04      0.0756
4/9/04      0.0547
4/16/04     0.0385
4/23/04    -0.0037
4/30/04    -0.0016
5/7/04     -0.0084
5/14/04     0.0241
5/21/04     0.0038
5/28/04     0.0204
6/4/04      0.0167
6/11/04     0.0209
6/18/04     0.0155
6/25/04      0.003
7/2/04      0.0143
7/9/04      0.0189
7/16/04     0.0245
7/23/04     0.0189
7/30/04     0.0339
8/6/04      0.0333
8/13/04      0.036
8/20/04     0.0366
8/27/04     0.0456
9/3/04      0.0465
9/10/04     0.0432
9/17/04     0.0346
9/24/04     0.0252
10/1/04     0.0415
10/8/04     0.0494
10/15/04    0.0517
10/22/04    0.0472
10/29/04    0.0607
11/5/04      0.044
11/12/04    0.0562
11/19/04    0.0642
11/26/04    0.0632
12/3/04     0.0379
12/10/04    0.0322
12/17/04    0.0322
12/24/04    0.0553
12/31/04    0.0691
1/7/05      0.0632
1/14/05     0.0426
1/21/05     0.0422
1/28/05      0.036
2/4/05      0.0524
2/11/05     0.0343
2/18/05     0.0344
2/25/05     0.0363
3/4/05      0.0347
3/11/05      0.002
3/18/05    -0.0413
3/25/05    -0.0514
4/1/05     -0.0742
4/8/05      -0.089
4/15/05    -0.0775
4/22/05     -0.061
4/29/05    -0.0475
5/6/05     -0.0283
5/13/05     -0.058
5/20/05    -0.0523
5/27/05    -0.0455
6/3/05     -0.0371
6/10/05    -0.0238
6/17/05    -0.0272
6/24/05    -0.0343
7/1/05     -0.0344
7/8/05     -0.0155
7/15/05    -0.0285
7/22/05    -0.0206
7/29/05     0.0008
8/5/05     -0.0156
8/12/05    -0.0076
8/19/05    -0.0181
8/26/05     -0.019
9/2/05     -0.0122
9/9/05     -0.0008
9/16/05    -0.0132
9/23/05    -0.0272
9/30/05    -0.0703
10/7/05    -0.0808
10/14/05   -0.0984
10/21/05   -0.0776
10/28/05   -0.0815
11/4/05    -0.0861
11/11/05   -0.0861
11/18/05   -0.1203
11/25/05   -0.1106
12/2/05    -0.1113
12/9/05    -0.1325
12/16/05   -0.1641
12/23/05   -0.1467
12/30/05   -0.1543
1/6/06     -0.0989
1/13/06    -0.0965
1/20/06     -0.076
1/27/06    -0.0751
2/3/06      -0.083
2/10/06     -0.068
2/17/06      -0.06
2/24/06    -0.0687
3/3/06     -0.0751
3/10/06    -0.1315
3/17/06    -0.1183
3/24/06    -0.1078
3/31/06    -0.1258
4/7/06     -0.1264
4/14/06    -0.1499
4/21/06    -0.1301
4/28/06    -0.1155
5/5/06     -0.1271
5/12/06    -0.1249
5/19/06    -0.1309
5/26/06    -0.1219
6/2/06     -0.1114
6/9/06     -0.1187
6/16/06    -0.1109
6/23/06    -0.1091
6/30/06    -0.1144
7/7/06     -0.1288
7/14/06    -0.1201
7/21/06    -0.1218
7/28/06    -0.1032
8/4/06      -0.104
8/11/06    -0.0886
8/18/06    -0.0874
8/25/06    -0.0899
9/1/06     -0.0821
9/8/06     -0.0943
9/15/06    -0.0897
9/22/06    -0.1064
9/29/06    -0.0966
10/6/06    -0.0912
10/13/06   -0.0814
10/20/06   -0.0707
10/27/06   -0.0735
11/3/06    -0.0926
11/10/06   -0.0848
11/17/06   -0.0734
11/24/06   -0.0705
12/1/06    -0.0652
12/8/06    -0.0587
12/15/06   -0.0528
12/22/06   -0.0621
12/29/06   -0.0752
1/5/07      -0.067
1/12/07    -0.0574
1/19/07     -0.065
1/26/07    -0.0561
2/2/07       -0.06
2/9/07     -0.0561
2/16/07     -0.072
2/23/07    -0.0656
3/2/07     -0.0639
3/9/07     -0.0617
3/16/07     -0.063
3/23/07    -0.0291
3/30/07    -0.0283
4/5/07     -0.0192
4/13/07    -0.0376
4/20/07    -0.0414
4/27/07     -0.031
5/4/07     -0.0434
5/11/07    -0.0443
5/18/07    -0.0315
5/25/07    -0.0571
6/1/07     -0.0426
6/8/07     -0.0655
6/15/07    -0.0645
6/22/07    -0.0969
6/29/07    -0.0794
7/6/07     -0.0757
7/13/07    -0.0761
7/20/07    -0.0986
7/27/07    -0.0922
8/3/07     -0.1027
8/10/07     -0.105
8/17/07    -0.1382
8/24/07    -0.1163
8/31/07    -0.1092
9/7/07     -0.1101
9/14/07    -0.0877
9/21/07    -0.1074
9/28/07    -0.1316
10/5/07    -0.1218
10/12/07   -0.1342
10/19/07    -0.146
10/26/07   -0.1282
11/2/07    -0.1437
11/9/07    -0.1489
11/16/07   -0.1519
11/23/07   -0.1545
11/30/07   -0.1094
12/7/07    -0.1016
12/14/07   -0.1227
12/21/07   -0.1264
12/28/07   -0.1264
1/4/08     -0.1153
1/11/08    -0.0829
1/18/08    -0.0825
1/25/08     -0.064
2/1/08     -0.0702
2/8/08     -0.0571
2/15/08     -0.088
2/22/08    -0.1033
2/29/08    -0.1182
3/7/08     -0.0861
3/14/08    -0.0959
3/20/08    -0.1049
3/28/08    -0.1105
4/4/08     -0.1136
4/11/08    -0.1201
4/18/08    -0.0992
4/25/08    -0.0768
5/2/08     -0.0875
5/9/08     -0.0885
5/16/08    -0.0789
5/23/08    -0.0803
5/30/08     -0.058
6/6/08      -0.081
6/13/08    -0.0592
6/20/08    -0.0982
6/27/08    -0.1055
6/30/08    -0.1104
7/3/08     -0.1216
7/11/08    -0.0772
7/18/08    -0.0657
7/25/08    -0.0972
8/1/08     -0.0924
8/8/08     -0.0727
8/15/08    -0.0407
8/22/08    -0.0542
8/29/08    -0.0536
9/5/08     -0.0615
9/12/08    -0.0402
9/19/08    -0.0754
9/26/08    -0.1489
10/3/08    -0.2849
10/10/08   -0.5006
10/17/08    -0.266
10/24/08   -0.2854
10/31/08   -0.0507
11/7/08    -0.1466
11/14/08   -0.1872
11/21/08   -0.3668
11/28/08   -0.1067
12/5/08    -0.2609
12/12/08   -0.2348
12/19/08   -0.1463
12/26/08   -0.1385
12/31/08   -0.1243
1/2/09     -0.0582
1/9/09     -0.1059
1/16/09    -0.0816
1/23/09    -0.0137
1/30/09     0.0062
2/6/09     -0.0216
2/13/09     0.0063
2/20/09     -0.102
2/27/09    -0.0656
3/6/09     -0.2072
3/13/09     -0.106
3/20/09    -0.1546
3/27/09    -0.0835
3/31/09    -0.1074
4/3/09     -0.0455
4/9/09     -0.0453
4/17/09     -0.019
4/24/09    -0.0564
5/1/09     -0.0404
5/8/09     -0.0683
5/15/09    -0.0631
5/22/09    -0.0766
5/29/09    -0.0812
6/5/09       0.002
6/12/09    -0.0211
6/19/09    -0.0154
6/26/09    -0.0029
6/30/09     0.0019
7/2/09      0.0047
7/10/09    -0.0121
7/17/09     0.0702
7/24/09     0.0444
7/31/09    -0.0401
8/7/09     -0.0034
8/14/09    -0.0082
8/21/09      0.016
8/28/09    -0.0415
8/31/09    -0.0322
9/4/09       -0.03
9/11/09    -0.0163
9/18/09     0.0087
9/25/09    -0.0272
9/30/09     0.0015
10/2/09    -0.0077
10/9/09          0
10/16/09   -0.0259
10/23/09   -0.0317
10/30/09   -0.0706
11/6/09    -0.0497
11/13/09   -0.0457
11/20/09   -0.0585
11/27/09   -0.0448
11/30/09   -0.0546
12/4/09     -0.041
12/11/09    -0.017
12/18/09   -0.0072
12/24/09    0.0233
12/31/09   -0.0014
1/8/10      0.0007
1/15/10    -0.0014
1/22/10    -0.0021
1/29/10    -0.0124
2/5/10     -0.0007
2/12/10     0.0327
2/19/10     0.0105
2/26/10     0.0255
3/5/10      0.0329
3/12/10     0.0195
3/19/10      0.036
3/26/10     0.0493
3/31/10     0.0106
4/1/10      0.0178
4/9/10       0.002
4/16/10    -0.0347
4/23/10    -0.0109
4/30/10     0.0148
5/7/10     -0.0457
5/14/10      0.008
5/21/10    -0.0082
5/28/10     0.0298
6/4/10      0.0144
6/11/10     0.0555
6/18/10     0.0665
6/25/10     0.0564
6/30/10     0.0625
7/2/10      0.0265
7/9/10      0.0385
7/16/10     0.0239
7/23/10     0.0548
7/30/10     0.0618
8/6/10      0.0731
8/13/10     0.0453
8/20/10     0.0544
8/27/10      0.045
8/31/10     0.0404
9/3/10      0.0454
9/10/10     0.0552
9/17/10      0.049
9/24/10     0.0285
9/30/10     0.0369
10/8/10      0.039
10/15/10    0.0374
10/22/10    0.0227
10/29/10    0.0205
11/5/10     0.0337
11/12/10    0.0006
11/19/10    0.0134
11/26/10    0.0226
11/30/10    0.0312
12/3/10     0.0117
12/10/10   -0.0381
12/17/10    0.0117
12/23/10    0.0006
12/31/10    -0.008


     In a perfect world, the market price of Fund shares would closely track the
Fund's net asset value. As can be seen from the graph above, this often is not
the case. For most of the past year the market price has been above the NAV (in
market parlance, "trading at a premium"). Because the Fund began fiscal 2010
with its market price below NAV ("trading at a discount") and ended the fiscal
year above, the total return earned on market price exceeded the total return on
NAV.

     Based on a closing price of $16.21 on December 31st, the current annualized
yield on the market price of the Fund's shares (assuming the current monthly
distribution of $0.13 does not change) is 9.62%. In our opinion, this
distribution rate measures up favorably with most comparable investment
opportunities.


                                        4



PREFERRED MARKET CONDITIONS

     By most measures, preferred market trading conditions are back to
pre-crisis levels. Trading volumes and bid/offer spreads, though never robust
compared to other major market segments, have returned to more customary levels.
In our opinion, preferred securities remain attractively valued relative to
other fixed income securities; plus, we are still finding opportunities to add
value through credit research and security selection.

     Credit conditions continue to improve. The economy is growing fast enough
for profits to rebound nicely, but not fast enough to generate much demand for
new capital spending by corporations. Households are paying down debt, driving
investors who had previously purchased mortgage and credit card debt into other
asset classes. Corporations are showing strong cash flow, improved interest
coverage, and growing liquidity. Loan quality is improving, with delinquencies
and charge-offs falling in almost all loan categories--though commercial real
estate remains an important exception. Overall, credit default rates continue to
trend lower. The result is good demand for preferred securities, little new
issuance, and tighter spreads. We think these factors will continue to benefit
the markets for some time to come.

     Trading activity in the "retail" segment of the market(2) has been boosted
by the rapid growth of exchange traded funds. ETF's that invest primarily in
preferred securities are "rules based" in that there is limited discretion about
how a fund is managed--the objective is to closely track a specific index. We
sometimes scratch our heads as to the appeal of these funds, but they do provide
a healthy dose of liquidity, and they have attracted a lot of new investors to
the preferred market.

     In the aftermath of the financial crisis, new legislation (much of which
has yet to be implemented) has resulted in wide ranging changes to the banking
industry. Since preferred securities issued by banks comprise over sixty percent
of the overall market, we watch this legislation with great interest. In the
topic which follows, we discuss the most relevant regulatory changes; here,
we'll focus on market impact.

     One thing we know for sure--certain types of preferred securities will
eventually become obsolete. It is now clear that regulatory changes will
diminish the benefits of some securities to the banks that issued them, and as a
result, it is widely assumed many preferred securities will be retired at the
earliest practical opportunity. The prospects of issuer redemptions have
provided a boost to the market.

     Of course, this wouldn't be the preferred market without a fair share of
hazards. In some cases, buried deep in the documentation of a security, there is
language which permits the issuer to exercise an early redemption, at par, if
certain events occur. Without such a provision, the issuer would either have to
pay a premium to call the issue, or may not be permitted to call it at all until
some future date. Such events, which seemed remote just a couple years ago, have
in fact occurred in response to changes in financial regulation.

     Market participants appear to have adjusted expectations about early
redemption of NON-BANK preferred securities as well, though for different
reasons. Recall that companies choose to issue preferred securities in part
because it can improve the ratings on its debt, which in turn can reduce the
all-in cost of its capital (since preferred is ranked "junior" to debt, the debt
is viewed to be more secure). The major rating agencies have become less
inclined to look favorably on certain types of preferred securities, hence
non-bank issuers may also be inclined to retire certain preferred issues sooner
than expected. The redemption terms of these non-bank issues haven't changed,
but the market now perceives the likelihood of issuer redemption to be higher
and as a result, prices adjust to reflect the perception.

----------
(2)  In general, rules for ETF's that invest primarily in preferred securities
     require the funds to invest only in securities listed on a national stock
     exchange; such issues comprise roughly half of the preferred market.


                                        5



     While it has become clear that certain types of preferred securities are
destined to become a footnote in financial textbooks, a viable replacement has
yet to emerge. A lot of smart people are hard at work to build a better
preferred, and we're optimistic they will succeed (though it may take a few
iterations). You can bet we will be involved!

     All of this leads to one unavoidable conclusion: DURING THE NEXT FEW YEARS,
MARKET PARTICIPANTS, INCLUDING THE FUND, WILL NEED TO FIND REPLACEMENTS FOR A
SIGNIFICANT NUMBER OF HIGH YIELDING SECURITIES. At this juncture, of course, we
cannot tell how the Fund will weather this reinvestment risk.

UPDATE ON REGULATORY AND CAPITAL REFORM FOR BANKS

     As we discussed in detail in the Fund's semiannual report from May 2010,
banks face significant new regulation and stiffer capital requirements. We will
quickly summarize the key features of bank regulatory reform from the Dodd-Frank
bill and bank capital requirements from the Basel Committee on Bank Supervision
- both from the perspective of preferred investors.

     The Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank)
makes significant changes to banks' operations and capital requirements. Most
importantly for preferred investors, it eliminates trust preferred securities
(TruPS) from Tier 1 capital for most banks the Funds would invest in. (Tier 1
capital is one of the primary measures of capital for a financial company; it
includes common equity, retained earnings, qualifying preferred capital, and
regulatory assets). The new rules phase in starting from 2013 through 2015. This
change in regulatory treatment for TruPS makes it likely that most, though not
all, TruPS will be called between 2013 and 2016, as banks replace those
instruments with qualifying forms of Tier 1 capital. As of this writing,
roughly 24% of the Fund's portfolio is invested in trust preferred securities
issued by U.S. banks.

     Along with changes made by lawmakers in the U.S., the Basel Committee on
Banking Supervision in recent months has released its Basel III framework on
bank capital. (This committee sets international banking standards that are
subsequently adopted by national regulators, including the U.S.). These new
rules will sharply increase the amount of common equity capital held by banks,
while leaving an important role for preferred securities.

     Currently, banks must hold at least 2.5% of risk-weighted assets (RWA) in
the form of common equity. (The U.S. minimum is 4% common equity, and most banks
carry substantially more than the minimum.) When Basel III is fully phased in,
minimum common equity will rise to 4.5% of RWA. Coupled with some additionally
required "capital buffers," we suspect that U.S. banks typically will hold 8-10%
common equity and at least 10-12% Tier 1 capital, two to four percentage points
higher than before the financial crisis. That's a lot more common equity
providing credit support to preferred securities, which will comprise much of
the difference between total Tier 1 and Tier 1 common equity.

     Another likely, but still undecided, feature of the Basel III rules is a
provision to impose "loss absorbency" on any non-common Tier 1 capital
instruments. The theory is that all Tier 1 capital should be able to absorb
losses on both a "gone concern" basis (i.e., in bankruptcy or receivership) AND
on a "going-concern" basis. Historically, preferred securities have provided
substantial loss absorbency upon failure of a firm, since all preferred claims
are subordinate to claims of depositors and senior creditors. However,
preferreds are - strictly by their contractual terms - only moderately loss
absorbing on a going concern basis, because the issuer can defer dividend
payments but not eliminate the preferred liability outright in times of strain.
The Basel Committee wants to give regulators the ability to either convert
preferreds to common stock or write off the preferred liability if they believe
the bank is no longer viable.


                                        6



     We have written a lengthy comment letter to the Basel Committee on loss
absorbency. Interested readers will find it on the Fund's website or at the
Basel Committee website at http://www.bis.org/publ/bcbs174/fac.pdf. Suffice to
say that we think the proposed loss absorption provision for bank preferreds is
unnecessary in the United States, and perhaps elsewhere. Nonetheless, if
regulators insist on it, we think a properly designed mechanism to convert
preferred into common stock would be acceptable to preferred investors, while a
write-off mechanism would not. We await the Committee's decision on this
sometime in 2011.

     Overall, the new regulatory framework being imposed on banks by Dodd-Frank
and Basel III will force banks to hold more capital or take less risk, or both.
With respect to bank capital, regulators are requiring substantially more common
equity capital than before, while retaining a meaningful role for preferred
securities. These developments are broadly supportive for bank preferreds,
though they do increase regulatory risk. As the new rules get implemented over
the next several years, there will be numerous changes and opportunities
awaiting preferred investors.

THE FUND'S LEVERAGE

     Leverage is an important part of the Fund's strategy to produce high
current income. Over time, the cost of leverage is typically lower than the
yield on the Fund's portfolio. The difference between what the Fund earns on its
investments and pays on the money it borrows increases the income available to
common shareholders. Over the past fiscal year, the Fund has paid an average
interest rate of 1.443% on its borrowed money. Given the much higher current
yields generated by the Fund's portfolio, this use of leverage had a meaningful
positive impact on the Fund's dividends to common shareholders.

     In addition to economic considerations, there is a set of rules that govern
leverage (most importantly, the terms and conditions of the Fund's leverage
agreement with its lender, and all relevant securities laws). We take all of
these factors into consideration as we manage the leverage AND the assets of the
Fund.

     There are two useful measures of how much leverage the Fund has in place.
The first is simply the total dollar amount of leverage. The other measure is
the ratio of the Fund's assets financed by that leverage (in other words, the
amount of leverage divided by total assets). The chart below presents both
measures of leverage over the past three years.

                              FFC LEVERAGE HISTORY

                               (PERFORMANCE GRAPH)



    FFC      LEVERAGE
   DATE       PERCENT
----------   --------
          
12/28/2007     40.9%
 1/25/2008     40.2%
 2/29/2008     40.6%
 3/28/2008     43.1%
 4/25/2008     43.1%
 5/30/2008     43.0%
 6/27/2008     44.8%
 7/25/2008     44.8%
 8/29/2008     44.8%
 10/3/2008     47.3%
10/31/2008     44.1%
11/28/2008     44.2%
12/26/2008     43.8%
 1/30/2009     44.8%
 2/27/2009     44.7%
 3/27/2009     42.9%
 4/24/2009     40.5%
 5/29/2009     35.0%
 6/26/2009     33.7%
 6/30/2009     33.6%
 7/2/2009      33.4%
 7/10/2009     33.1%
 7/17/2009     33.2%
 7/24/2009     32.9%
 7/31/2009     32.3%
 8/7/2009      30.7%
 8/14/2009     30.3%
 8/21/2009     30.9%
 8/28/2009     30.5%
 8/31/2009     30.4%
 9/4/2009      33.3%
 9/11/2009     33.1%
 9/18/2009     33.3%
 9/25/2009     33.4%
 9/30/2009     33.3%
 10/2/2009     33.2%
 10/9/2009     33.2%
10/16/2009     32.9%
10/23/2009     33.4%
10/30/2009     33.3%
 11/6/2009     33.3%
11/13/2009     33.2%
11/20/2009     33.2%
11/27/2009     33.1%
11/30/2009     33.1%
 12/4/2009     33.1%
12/11/2009     32.9%
12/18/2009     32.5%
12/24/2009     32.6%
12/31/2009     32.1%
 1/8/2010      31.7%
 1/15/2010     31.2%
 1/22/2010     31.5%
 1/29/2010     31.3%
 2/5/2010      33.3%
 2/12/2010     33.6%
 2/16/2010     33.6%
 2/19/2010     33.6%
 2/26/2010     33.3%
 3/5/2010      33.2%
 3/12/2010     32.9%
 3/19/2010     33.3%
 3/26/2010     33.4%
 3/31/2010     33.2%
 4/1/2010      33.1%
 4/16/2010     33.6%
 4/23/2010     33.4%
 4/30/2010     33.4%
 5/7/2010      34.3%
 5/14/2010     34.1%
 5/21/2010     34.8%
 5/28/2010     35.0%
 6/4/2010      34.8%
 6/11/2010     34.7%
 6/18/2010     34.5%
 6/25/2010     34.6%
 6/30/2010     34.5%
 7/2/2010      34.5%
 7/9/2010      34.4%
 7/16/2010     34.0%
 7/23/2010     33.9%
 7/30/2010     33.6%
 8/6/2010      33.2%
 8/13/2010     33.1%
 8/20/2010     32.9%
 8/27/2010     33.0%
 8/31/2010     32.8%
 9/3/2010      32.9%
 9/10/2010     32.7%
 9/17/2010     32.5%
 9/24/2010     32.5%
 9/30/2010     32.3%
 10/1/2010     32.2%
 10/8/2010     32.1%
10/15/2010     32.2%
10/22/2010     32.2%
10/29/2010     31.9%
 11/5/2010     31.8%
11/12/2010     31.9%
11/19/2010     32.0%
11/26/2010     32.2%
11/30/2010     32.2%
 12/3/2010     32.2%
12/10/2010     32.2%
12/17/2010     33.3%
12/23/2010     33.6%
12/31/2010     33.3%




 MONTH END     MONEY MARKET    LOAN AMOUNT
   DATE      PREFERRED STOCK      DRAWN
----------   ---------------   -----------
                         
12/31/2007         542              0
 1/31/2008         542              0
 2/29/2008         542              0
 3/31/2008         542              0
 4/30/2008         542              0
 5/31/2008         214             328
 6/30/2008         165             377
 7/31/2008         165             324
 8/31/2008         165             324
 9/30/2008         165             324
10/31/2008          92             219
11/30/2008          92             189
12/31/2008          92             189
 1/31/2009          92             189
 2/28/2009          92             149
 3/31/2009          92             134
 4/30/2009          92             134
 5/31/2009          92             134
 6/30/2009          92             134
 7/31/2009          0              226
 8/31/2009          0              226
 9/30/2009          0              275
10/31/2009          0              283
11/30/2009          0              283
12/31/2009          0              283
 1/31/2010          0              283
 2/28/2010          0              310
 3/31/2010          0              320
 4/30/2010          0              332
 5/31/2010          0              332
 6/30/2010          0              332
 7/31/2010          0              332
 8/31/2010          0              332
 9/30/2010          0              332
10/31/2010          0              332
11/30/2010          0              332
12/31/2010          0              349




                                        7



     When the leverage was comprised entirely of auction preferred stock, the
AMOUNT of leverage rarely changed. As a result, the PERCENTAGE of the Fund's
leverage to total net assets varied as the value the portfolio moved up or
down. As can be seen in the chart, the leverage percentage climbed steadily as
the financial crisis unfolded from 2007 through early 2009 and the value of the
Fund's investment portfolio fell.

     As the leverage ratio rose to unsustainable levels, the Fund sold assets
and used the proceeds to reduce leverage. While this meant that monthly
distributions to shareholders had to be cut, it also served to reduce the NAV
and market price risk to the Fund's common shareholders.

     With debt leverage, the Fund now has the ability to INCREASE the amount
borrowed by the Fund (within certain limits!). This is important because the
dramatic recovery in asset prices meant the Fund could comfortably borrow more
and use the money to purchase additional securities. Throughout 2010, the Fund
continued to increase its leverage balances. These increases, at very favorable
interest rates, allowed the Fund to increase its monthly dividend three times
since December 2009, for a total of 14% in cumulative increases.

     The "right" percentage of leverage in a fund is never a simple matter to
determine. Type of borrowing, the cost of funds and market conditions all will
be factors to consider. At present, we are comfortable with the leverage
percentage used by the Fund, and we will consider increasing or decreasing the
amount of borrowing based on future market conditions. Of course, we
continuously monitor our leverage balances and try to use leverage in a manner
consistent with the Fund's objective.

MONTHLY DISTRIBUTIONS TO FUND SHAREHOLDERS

     The Fund makes monthly distributions of income to shareholders consistent
with the objective of the Fund to provide high current income. The Fund is a
regulated investment company, and as such, there are a number of tax laws that
require the Fund to distribute almost all of its net investment income to
shareholders each year. If the Fund were to not satisfy the minimum distribution
requirements, it could risk its pass-through status and perhaps face financial
penalties.

     Even though these rules are well-defined, we still believe that there is a
bit of art involved in setting dividend policy. One approach to distributions
would be for the Fund to simply pay out its net earnings each month. Because of
the uneven nature of the Fund's income and expenses, this would likely result in
distribution rates that would change every month. This approach has never seemed
terribly appealing to us.

     We believe our shareholders are better served by a more stable level of
monthly distributions. In striving for more stability and to reflect the
inherent uncertainty in predicting future net earnings, in any particular month
the Fund may pay out less than the amount earned for the same month; in other
months the distribution may be comprised of current month's earnings PLUS income
from prior months.

     The rules mentioned above also impose a specific time-frame on the
decisions about distributions, as they require true-up over each fiscal year. If
the Fund has excess income at the end of this annual period, the Fund must make
decisions that balance the goal of income stability and the requirements imposed
by law. The Fund has always met the legal distribution requirements, but many
times in the past the Fund has decided to not exceed the minimum requirements
with the intent of "carrying over" a bit of income to the next fiscal-year
period. Given that the minimum requirements are quite high, the carryover can
never be more than a modest amount (less than one-month's dividend). There is an
economic cost associated with this decision in the form of an excise tax on
portions of the undistributed amounts, but we believe this cost is minimal and
more than offset by the benefits of a more stable distribution rate over time.
Details on the amount of undistributed net investment income and the incurrence
of any related excise tax, if applicable, are available in the Notes to the
financial statements.


                                        8



     As mentioned above, we believe this is more art than science, but the goal
of high current income that is sustainable over a reasonable period of time
seems to us consistent with trying to maximize value over the long-run for
shareholders.

FEDERAL TAX ADVANTAGES OF 2010 CALENDAR YEAR DISTRIBUTIONS

     In 2010, the Fund passed on a portion of its income to individuals in the
form of qualified dividend income or QDI. Under federal law, QDI is taxed at a
maximum 15% rate instead of an individual's ordinary income tax rate. As a
result of recent changes to the Internal Revenue Code, it is expected that this
favorable tax rate for QDI will continue through 2012.

     In calendar year 2010, approximately 31% of distributions made by the Fund
was eligible for QDI treatment. For an individual in the 28% marginal tax
bracket, this means that the Fund's total distributions will only be taxed at a
blended 24.1% rate versus the 28% rate which would apply to distributions by a
fund containing traditional corporate bonds. This tax advantage means that, all
other things being equal, such an individual who held 100 shares of Common Stock
of the Fund for the calendar year would have had to receive approximately $157
in distributions from a traditional corporate bond fund to net the same
after-tax amount as the $149 distributions paid by the Fund.

     For detailed information about the tax treatment of the particular
distributions received from the Fund, please see the Form 1099 you receive from
either the Fund or your broker.

     Corporate shareholders also receive a federal tax benefit from the 9.0% of
distributions that were eligible for the inter-corporate, dividends received
deduction or DRD.

     It is important to remember that the composition of the portfolio and the
income distributions can change from one year to the next, and that the QDI or
DRD portions of 2011's distributions may not be the same (or even similar) to
2010.

STATUS OF THE FUND'S HEDGING STRATEGY

     The Fund suspended its interest rate hedging program as the financial
crisis intensified in the autumn of 2008. There were three principal reasons why
we suspended the program at the time. First, the relationship between preferred
securities' prices and the Fund's hedging instruments (Treasury bond futures,
interest rate swaps, and options on both) was turned on its head during the
financial crisis. Historically, preferred prices had tended to rise (fall) in
periods of falling (rising) long-term Treasury rates, but as the financial
crisis unfolded, the opposite occurred: preferred prices plunged while Treasury
and swap rates fell as investors sold risky assets and raced into Treasuries.
Hedging lost its effectiveness. Second, the cost of hedging rose dramatically as
the yield curve steepened and options prices rose sharply. Finally, preferred
securities became exceptionally cheap and were likely to offer high returns to
shareholders even if Treasury yields increased moderately. Add them up, and we
believed that hedging simply would not work under market conditions at the time.

     Looking at the hedging strategy currently, we conclude that it remains too
early to reinstate the hedging program. Although some preferred securities are
starting to move in concert with the general level of long-term Treasury rates,
many are not. For the preferred market as a whole, correlations between
movements in prices of preferreds and the hedge instruments we use are
increasing. However, they are too unstable to convince us that portfolio hedging
would be reliably effective. Meanwhile, the cost of hedging is high, and
preferreds continue to be attractively priced. At some point we expect that
these circumstances will change. When they do, we will consider hedging again
and may implement hedges prior to being able to communicate such a change to
shareholders in our regular quarterly reporting.


                                        9


Flaherty & Crumrine/Claymore Preferred Securities Income Fund Incorporated
PORTFOLIO OVERVIEW
NOVEMBER 30, 2010 (UNAUDITED)



FUND STATISTICS
---------------
                     
Net Asset Value         $     16.35
Market Price            $     16.86
Premium                        3.12%
Yield on Market Price          8.90%
Common Stock Shares
Outstanding              42,848,579




MOODY'S RATINGS            % OF NET ASSETS+
---------------            ----------------
                        
AAA                               0.4%
A                                 7.0%
BBB                              71.3%
BB                               16.5%
Below "BB"                        2.6%
Not Rated*                        0.4%
Below Investment Grade**         15.6%


*    Does not include net other assets and liabilities of 1.8%.

**   Below investment grade by both Moody's and S&P.

                                   (PIE CHART)



INDUSTRY CATEGORIES   % OF NET ASSETS+
-------------------   ----------------
                   
Energy                        5%
Other                         3%
Banking                      39%
Utilities                    26%
Insurance                    24%
Financial Services            3%




TOP 10 HOLDINGS BY ISSUER   % OF NET ASSETS+
-------------------------   ----------------
                         
Liberty Mutual Group               5.6%
Banco Santander                    5.4%
Capital One Financial              4.5%
Wells Fargo                        3.6%
Dominion Resources                 3.5%
Metlife                            3.1%
Puget Energy                       3.1%
Enbridge Energy Partners           3.1%
Axis Capital                       2.8%
Barclays Bank Plc                  2.8%




                                                                                           % OF NET ASSETS***+
                                                                                           -------------------
                                                                                        
Holdings Generating Qualified Dividend Income (QDI) for Individuals                                28%
Holdings Generating Income Eligible for the Corporate Dividends 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. See accompanying
     notes to financial statements for the tax characterization of 2010
     distributions.

+    Net Assets includes assets attributable to the use of leverage.


                                       10



      Flaherty & Crumrine/Claymore Preferred Securities Income Fund Incorporated
                                                        PORTFOLIO OF INVESTMENTS
                                                               NOVEMBER 30, 2010


 SHARES/$ PAR                                                                                                    VALUE
-------------                                                                                                -------------
                                                                                                       
PREFERRED SECURITIES -- 94.6%
                BANKING -- 38.3%
$  17,750,000   Astoria Capital Trust I, 9.75% 11/01/29, Series B ........................................   $  18,492,678(1)
    2,046,320   Banco Santander, 10.50% Pfd., Series 10 ..................................................      55,634,325**(1)(2)
       87,400   Bank of America Corporation, 8.625% Pfd. .................................................       2,191,118*(1)
$   2,815,000   BankAmerica Institutional, Series A, 8.07% 12/31/26, 144A**** ............................       2,850,187
                Barclays Bank PLC:
$  14,750,000      6.278% ................................................................................      12,980,000**(1)(2)
      269,800      6.625% Pfd., Series 2 .................................................................       6,280,944**(1)(2)
        3,300      7.75% Pfd., Series 4 ..................................................................          83,952**(2)
      369,700      8.125% Pfd., Series 5 .................................................................       9,538,260**(1)(2)
       32,000   BB&T Capital Trust V, 8.95% Pfd. 09/15/63 ................................................         896,000
      165,000   BB&T Capital Trust VI, 9.60% Pfd. 08/01/64 ...............................................       4,613,400(1)
$   8,490,000   BBVA International Preferred, 5.919% .....................................................       6,842,176**(2)
$   4,100,000   BNP Paribas, 7.195%, 144A**** ............................................................       4,089,750**(2)
$  34,490,000   Capital One Capital III, 7.686% 08/15/36 .................................................      34,834,900(1)
$   5,362,000   Capital One Capital V, 10.25% 08/15/39 ...................................................       5,703,827
$   5,350,000   Capital One Capital VI, 8.875% 05/15/40 ..................................................       5,630,875(1)
      341,100   Citigroup Capital XIII, 7.875% Pfd. 10/30/40 .............................................       9,009,304
$  35,100,000   Colonial BancGroup, 7.114%, 144A**** .....................................................         888,030++
       28,800   FBOP Corporation, Adj. Rate Pfd., 144A**** ...............................................         127,411*+(3)
$   8,785,000   Fifth Third Capital Trust IV, 6.50% 04/15/37 .............................................       8,235,937(1)
       35,000   Fifth Third Capital Trust V, 7.25% Pfd. 08/15/67 .........................................         871,850
      490,000   Fifth Third Capital Trust VI, 7.25% Pfd. 11/15/67 ........................................      12,265,925(1)
       12,100   Fifth Third Capital Trust VII, 8.875% Pfd. 05/15/68 ......................................         313,088
        7,850   First Republic Preferred Capital Corporation, 10.50% Pfd., 144A**** ......................       8,109,050(1)
       14,500   First Tennessee Bank, Adj. Rate Pfd., 144A**** ...........................................       9,053,438*
$   3,000,000   First Tennessee Capital I, 8.07% 01/06/27, Series A ......................................       2,833,659(1)
$   9,135,000   First Union Institutional Capital I, 8.04% 12/01/26 ......................................       9,361,548(1)
$   1,500,000   Fleet Capital Trust II, 7.92% 12/11/26 ...................................................       1,515,000
            6   FT Real Estate Securities Company, 9.50% Pfd., 144A**** ..................................       5,640,000
                Goldman Sachs:
$   1,500,000      Capital I, 6.345% 02/15/34 ............................................................       1,403,340(1)
$   6,342,000      Capital II, 5.793% ....................................................................       5,390,700(1)
        3,600      STRIPES Custodial Receipts, Pvt. ......................................................       2,430,000*(3)
      604,700   HSBC Holdings PLC, 8.00% Pfd., Series 2 ..................................................      16,345,827**(1)(2)
$   1,500,000   HSBC USA Capital Trust II, 8.38% 05/15/27, 144A**** ......................................       1,532,620
                HSBC USA, Inc.:
      344,300      6.50% Pfd., Series H ..................................................................       8,553,720*(1)
       13,500      $2.8575 Pfd. ..........................................................................         643,360*


    The accompanying notes are an integral part of the financial statements.


                                       11



Flaherty & Crumrine/Claymore Preferred Securities Income Fund Incorporated
PORTFOLIO OF INVESTMENTS (CONTINUED)
NOVEMBER 30, 2010



 SHARES/$ PAR                                                                                                    VALUE
-------------                                                                                                -------------
                                                                                                       
PREFERRED SECURITIES -- (CONTINUED)
                BANKING -- (CONTINUED)
       98,825   ING Groep NV, 8.50% Pfd. .................................................................   $   2,452,837**(2)
$   3,500,000   JPMorgan Chase Capital XVIII, 6.95% 08/17/36, Series R ...................................       3,520,926
$   6,500,000   JPMorgan Chase Capital XXVII, 7.00% 11/01/39, Series AA ..................................       6,655,467(1)
      265,000   Keycorp Capital IX, 6.75% Pfd. 12/15/66 ..................................................       6,596,248
        7,000   Keycorp Capital VIII, 7.00% Pfd. 06/15/66 ................................................         173,471
      279,600   Keycorp Capital X, 8.00% Pfd. 03/15/68 ...................................................       7,199,700(1)
$  17,800,000   Lloyds Banking Group PLC, 6.657%, 144A**** ...............................................      12,015,000**(2)+
       78,000   National City Capital Trust II, 6.625% Pfd. 11/15/36 .....................................       1,950,975
$  13,825,000   National City Preferred Capital Trust I, 12.00% ..........................................      15,659,826(1)
$   4,767,000   NB Capital Trust IV, 8.25% 04/15/27 ......................................................       4,838,505(1)
      164,520   PNC Financial Services, 9.875% Pfd., Series L ............................................       4,591,144*(1)
$   2,500,000   PNC Preferred Funding Trust III, 8.70%, 144A**** .........................................       2,691,293(1)
        8,641   Sovereign REIT, 12.00% Pfd., Series A, 144A**** ..........................................       9,872,343
           60   Union Planters Preferred Funding, 7.75% Pfd., Series A, 144A**** .........................       4,235,625
$   3,000,000   Wachovia Capital Trust I, 7.64% 01/15/27, 144A**** .......................................       3,052,881
$   8,000,000   Wachovia Capital Trust V, 7.965% 06/01/27, 144A**** ......................................       8,077,576(1)
      509,900   Wachovia Preferred Funding, 7.25% Pfd., Series A .........................................      13,018,512(1)
                Washington Mutual:
$   2,100,000      9.75%, 144A**** .......................................................................          73,500++
$  10,050,000      6.534%, 144A**** ......................................................................         351,750++
$  11,067,000   Webster Capital Trust IV, 7.65% 06/15/37 .................................................       9,617,079(1)
      100,000   Wells Fargo & Company, 8.00% Pfd., Series J ..............................................       2,673,000*
$     650,000   Wells Fargo Capital XV, 9.75% ............................................................         727,188
                                                                                                             -------------
                                                                                                               395,231,045
                                                                                                             -------------
                FINANCIAL SERVICES -- 2.7%
$   1,340,000   Ameriprise Financial, Inc., 7.518% 06/01/66 ..............................................       1,396,950(1)
$   7,000,000   Gulf Stream-Compass 2005 Composite Notes, 144A**** .......................................       3,400,670(3)
      147,820   Heller Financial, Inc., 6.687% Pfd., Series C ............................................      14,232,302*
                Lehman Brothers Holdings, Inc.:
       34,000      5.67% Pfd., Series D ..................................................................           9,350*++
      471,500      7.95% Pfd. ............................................................................           7,544*++
       20,000   Lehman Capital Trust III, 6.375% Pfd., Series K ..........................................           2,050++


    The accompanying notes are an integral part of the financial statements.


                                       12



      Flaherty & Crumrine/Claymore Preferred Securities Income Fund Incorporated
                                            PORTFOLIO OF INVESTMENTS (CONTINUED)
                                                               NOVEMBER 30, 2010



 SHARES/$ PAR                                                                                                    VALUE
-------------                                                                                                -------------
                                                                                                       
PREFERRED SECURITIES -- (CONTINUED)
                FINANCIAL SERVICES -- (CONTINUED)
$  10,000,000   RACERS(R) Series 2005 AMMC V Trust, 144A**** .............................................   $   6,115,327(3)
$   3,000,000   Schwab Capital Trust I, 7.50% 11/15/37 ...................................................       3,143,871(1)
                                                                                                             -------------
                                                                                                                28,308,064
                                                                                                             -------------
                INSURANCE -- 22.7%
$   4,566,000   Ace Capital Trust II, 9.70% 04/01/30 .....................................................       5,572,908(1)(2)
$     455,000   AON Corporation, 8.205% 01/01/27 .........................................................         482,445
                Arch Capital Group Ltd.:
      117,750      7.875% Pfd., Series B .................................................................       2,989,849**(1)(2)
      100,000      8.00% Pfd., Series A ..................................................................       2,550,000**(1)(2)
$   8,500,000   AXA SA, 6.463%, 144A**** .................................................................       7,820,000**(1)(2)
                Axis Capital Holdings:
      117,707      7.25% Pfd., Series A ..................................................................       2,935,318**(1)(2)
      281,505      7.50% Pfd., Series B ..................................................................      26,004,024(1)(2)
       37,000   Corts Provident Financing Trust I, 8.50% Pfd. ............................................         974,673(1)
      558,000   Delphi Financial Group, 7.376% Pfd. 05/15/37 .............................................      13,060,715(1)
$  20,919,000   Everest Re Holdings, 6.60% 05/15/37 ......................................................      19,873,050(1)
$   4,650,000   Great West Life & Annuity Insurance, 7.153% 05/16/46, 144A**** ...........................       4,638,375(1)
$  35,418,000   Liberty Mutual Group, 10.75% 06/15/58, 144A**** ..........................................      43,564,140(1)
$  12,000,000   MetLife Capital Trust X, 9.25% 04/08/38, 144A**** ........................................      14,250,000(1)
$  13,520,000   MetLife, Inc., 10.75% 08/01/39 ...........................................................      18,265,209(1)
                Principal Financial Group:
       90,000      5.563% Pfd., Series A .................................................................       8,263,125*(1)
      352,000      6.518% Pfd., Series B .................................................................       8,778,000*(1)
                Renaissancere Holdings Ltd.:
      161,510      6.08% Pfd., Series C ..................................................................       3,695,349**(1)(2)
      202,779      6.60% Pfd., Series D ..................................................................       5,037,030**(1)(2)
      407,200   Scottish Re Group Ltd., 7.25% Pfd. .......................................................       3,486,650**(2)+
$   7,500,000   Stancorp Financial Group, 6.90% 06/01/67 .................................................       7,209,217(1)
$   7,425,000   USF&G Capital, 8.312% 07/01/46, 144A**** .................................................       8,111,100(1)
$  13,000,000   USF&G Capital I, 8.50% 12/15/45, 144A**** ................................................      14,497,418(1)
$  12,200,000   XL Capital Ltd., 6.50%, Series E .........................................................      10,522,500(1)(2)
$   2,000,000   ZFS Finance USA Trust V, 6.50% 05/09/37, 144A**** ........................................       1,955,000
                                                                                                             -------------
                                                                                                               234,536,095
                                                                                                             -------------


    The accompanying notes are an integral part of the financial statements.


                                       13



Flaherty & Crumrine/Claymore Preferred Securities Income Fund Incorporated
PORTFOLIO OF INVESTMENTS (CONTINUED)
NOVEMBER 30, 2010



 SHARES/$ PAR                                                                                                    VALUE
-------------                                                                                                -------------
                                                                                                       
                UTILITIES -- 24.8%
                Baltimore Gas & Electric Company:
       10,000      6.70% Pfd., Series 1993 ...............................................................   $     996,250*(1)
       10,000      7.125% Pfd., Series 1993 ..............................................................       1,005,000*
      489,309   Calenergy Capital Trust III, 6.50% Pfd. 09/01/27 .........................................      24,294,192(1)
$  18,533,000   COMED Financing III, 6.35% 03/15/33 ......................................................      16,097,801(1)
        6,100   Constellation Energy Group, 8.625% Pfd. 06/15/63, Series A ...............................         164,090
$  19,675,000   Dominion Resources Capital Trust I, 7.83% 12/01/27 .......................................      20,220,234(1)
$  15,262,000   Dominion Resources, Inc., 7.50% 06/30/66 .................................................      15,890,459(1)
      296,300   Entergy Arkansas, Inc., 6.45% Pfd. .......................................................       7,305,662*
       69,500   Entergy Louisiana, Inc., 6.95% Pfd. ......................................................       6,804,488*
                FPL Group Capital, Inc.:
$   7,500,000      6.65% 06/15/67 ........................................................................       7,415,918(1)
$   4,000,000      7.30% 09/01/67, Series D ..............................................................       4,115,440(1)
      158,640   Georgia Power Company, 6.50% Pfd., Series 2007A ..........................................      16,910,040*(1)
      119,805   Indianapolis Power & Light Company, 5.65% Pfd. ...........................................      11,250,444*
      343,606   Interstate Power & Light Company, 8.375% Pfd., Series B ..................................       9,961,997*(1)
$   2,386,000   PECO Energy Capital Trust III, 7.38% 04/06/28, Series D ..................................       2,317,887(1)
$  24,500,000   PECO Energy Capital Trust IV, 5.75% 06/15/33 .............................................      21,228,735(1)
$  32,500,000   Puget Sound Energy, Inc., 6.974% 06/01/67 ................................................      31,903,690(1)
                Southern California Edison:
      118,850      6.00% Pfd., Series C ..................................................................      11,539,598*(1)
       15,245      6.125% Pfd. ...........................................................................       1,518,783*
$  10,570,000   Southern Union Company, 7.20% 11/01/66 ...................................................       9,724,400(1)
$  26,000,000   Wisconsin Energy Corporation, 6.25% 05/15/67 .............................................      25,513,280(1)
$  10,000,000   WPS Resources Corporation, 6.11% 12/01/66 ................................................       9,711,960(1)
                                                                                                             -------------
                                                                                                               255,890,348
                                                                                                             -------------
                ENERGY -- 5.1%
$  30,000,000   Enbridge Energy Partners LP, 8.05% 10/01/37 ..............................................      31,516,440(1)
                Enterprise Products Partners:
$   4,915,000      7.00% 06/01/67 ........................................................................       4,839,491(1)
$  15,000,000      8.375% 08/01/66, Series A .............................................................      15,955,455(1)
                                                                                                             -------------
                                                                                                                52,311,386
                                                                                                             -------------
                REAL ESTATE INVESTMENT TRUST (REIT) -- 0.1%
       45,947   PS Business Parks, Inc., 6.70% Pfd., Series P ............................................       1,130,411
                                                                                                             -------------
                                                                                                                 1,130,411
                                                                                                             -------------


    The accompanying notes are an integral part of the financial statements.


                                       14



      Flaherty & Crumrine/Claymore Preferred Securities Income Fund Incorporated
                                            PORTFOLIO OF INVESTMENTS (CONTINUED)
                                                               NOVEMBER 30, 2010



 SHARES/$ PAR                                                                                                    VALUE
-------------                                                                                                -------------
                                                                                                       
                MISCELLANEOUS INDUSTRIES -- 0.9%
      112,750   Ocean Spray Cranberries, Inc., 6.25% Pfd., 144A**** ......................................   $   9,315,969*(1)
                                                                                                             -------------
                                                                                                                 9,315,969
                                                                                                             -------------
                TOTAL PREFERRED SECURITIES
                   (Cost $1,003,279,622) .................................................................     976,723,318
                                                                                                             -------------
CORPORATE DEBT SECURITIES -- 3.7%
                FINANCIAL SERVICES -- 0.1%
$   4,726,012   Lehman Brothers, Guaranteed Note, Variable Rate, 12/16/16, 144A**** ......................         649,354++(3)
                                                                                                             -------------
                                                                                                                   649,354
                                                                                                             -------------
                INSURANCE -- 1.6%
$  15,750,000   Liberty Mutual Insurance, 7.697% 10/15/97, 144A**** ......................................      14,302,780(1)
$   2,500,000   UnumProvident Corporation, 7.25% 03/15/28 ................................................       2,592,575(1)
                                                                                                             -------------
                                                                                                                16,895,355
                                                                                                             -------------
                UTILITIES -- 1.2%
                Southern Union Company:
$   5,300,000      7.60% 02/01/24, Senior Notes ..........................................................       5,874,345(1)
$   6,047,000      8.25% 11/15/29, Senior Notes ..........................................................       6,711,698(1)
                                                                                                             -------------
                                                                                                                12,586,043
                                                                                                             -------------
                REAL ESTATE INVESTMENT TRUST (REIT) -- 0.3%
$   3,500,000   Realty Income Corporation, 5.875% 03/15/35 ...............................................       3,244,286(1)
                                                                                                             -------------
                                                                                                                 3,244,286
                                                                                                             -------------
                MISCELLANEOUS INDUSTRIES -- 0.5%
       16,500   Corp-Backed Trust Certificates, 7.00% 11/15/28, Series Sprint ............................         376,035(1)
                Pulte Homes, Inc.:
       58,240      7.375% 06/01/46 .......................................................................       1,392,664(1)
$   3,550,000      7.875% 06/15/32 .......................................................................       3,195,000(1)
                                                                                                             -------------
                                                                                                                 4,963,699
                                                                                                             -------------
                TOTAL CORPORATE DEBT SECURITIES
                   (Cost $41,537,308) ....................................................................      38,338,737
                                                                                                             -------------


    The accompanying notes are an integral part of the financial statements.


                                       15



Flaherty & Crumrine/Claymore Preferred Securities Income Fund Incorporated
PORTFOLIO OF INVESTMENTS (CONTINUED)
NOVEMBER 30, 2010



 SHARES/$ PAR                                                                                                     VALUE
-------------                                                                                                --------------
                                                                                                    
COMMON STOCK -- 0.2%
                BANKING -- 0.2%
       54,740   CIT Group, Inc. ...............................................................              $    2,160,040*+
                                                                                                             --------------
                TOTAL COMMON STOCK
                   (Cost $10,901,025) .........................................................                   2,160,040
                                                                                                             --------------
MONEY MARKET FUND -- 0.2%
    1,465,273   BlackRock Liquidity Funds, T-Fund .............................................                   1,465,273
                                                                                                             --------------
                TOTAL MONEY MARKET FUND
                   (Cost $1,465,273) ..........................................................                   1,465,273
                                                                                                             --------------
TOTAL INVESTMENTS (Cost $1,057,183,228***) ....................................................    98.7%      1,018,687,368
OTHER ASSETS AND LIABILITIES (Net) ............................................................     1.3%         13,914,971
                                                                                                  -----      --------------
NET ASSETS BEFORE LOAN ........................................................................   100.0%+++  $1,032,602,339
                                                                                                  -----      --------------
LOAN PRINCIPAL BALANCE ........................................................................                (331,975,000)
                                                                                                             --------------
TOTAL NET ASSETS AVAILABLE TO COMMON STOCK ....................................................              $  700,627,339
                                                                                                             ==============


----------
*    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. At November 30, 2010, these
     securities amounted to $201,280,587 or 19.5% of net assets before the loan.

(1)  All or a portion of this security is pledged as collateral for the Fund's
     loan. The total value of such securities was $700,088,577 at November 30,
     2010.

(2)  Foreign Issuer.

(3)  Illiquid.

+    Non-income producing.

++   The issuer has filed for bankruptcy protection. As a result, the Fund may
     not be able to recover the principal invested and also does not expect to
     receive income on this security going forward.

+++  The percentage shown for each investment category is the total value of
     that category as a percentage of total net assets before the loan.

ABBREVIATIONS:

CORTS   -- Corporate-Backed Trust Securities

PFD.    -- Preferred Securities

PVT.    -- Private Placement Securities

RACERS  -- Restructured Asset Certificates with Enhanced Returns

REIT    -- Real Estate Investment Trust

STRIPES -- Structured Residual Interest Preferred Enhanced Securities

    The accompanying notes are an integral part of the financial statements.


                                       16


      Flaherty & Crumrine/Claymore Preferred Securities Income Fund Incorporated
                                             STATEMENT OF ASSETS AND LIABILITIES
                                                               NOVEMBER 30, 2010


                                                               
ASSETS:
   Investments, at value (Cost $1,057,183,228) ................                     $1,018,687,368
   Dividends and interest receivable ..........................                         16,296,697
   Prepaid expenses ...........................................                             54,159
                                                                                    --------------
      Total Assets ............................................                      1,035,038,224
LIABILITIES:
   Loan Payable ...............................................   $  331,975,000
   Payable for investments purchased ..........................        1,480,118
   Dividends payable to Common Stock Shareholders .............          291,092
   Investment advisory fees payable ...........................          374,450
   Administration, Transfer Agent and Custodian fees payable ..           66,204
   Servicing agent fees payable ...............................           95,213
   Professional fees payable ..................................           63,362
   Directors' fees payable ....................................            1,282
   Accrued expenses and other payables ........................           64,164
                                                                  --------------

      Total Liabilities .......................................                        334,410,885
                                                                                    --------------
NET ASSETS AVAILABLE TO COMMON STOCK ..........................                     $  700,627,339
                                                                                    --------------
NET ASSETS AVAILABLE TO COMMON STOCK consist of:
   Undistributed net investment income ........................                     $    2,786,974
   Accumulated net realized loss on investments sold ..........                       (277,508,555)
   Unrealized depreciation of investments .....................                        (38,495,860)
   Par value of Common Stock ..................................                            428,486
   Paid-in capital in excess of par value of Common Stock .....                      1,013,416,294
                                                                                    --------------
      Total Net Assets Available to Common Stock ..............                     $  700,627,339
                                                                                    ==============
NET ASSET VALUE PER SHARE OF COMMON STOCK:
   Common Stock (42,848,579 shares outstanding) ...............                     $        16.35
                                                                                    ==============


    The accompanying notes are an integral part of the financial statements.


                                       17



Flaherty & Crumrine/Claymore Preferred Securities Income Fund Incorporated
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED NOVEMBER 30, 2010


                                                           
INVESTMENT INCOME:
   Dividends+ .............................................                  $ 29,885,259
   Interest ...............................................                    48,615,251
                                                                             ------------
      Total Investment Income .............................                    78,500,510
EXPENSES:
   Investment advisory fees ...............................   $  4,271,149
   Servicing agent fees ...................................      1,051,681
   Administrator's fees ...................................        467,351
   Professional fees ......................................        105,142
   Insurance expenses .....................................        131,877
   Transfer Agent fees ....................................        155,682
   Directors' fees ........................................         71,298
   Custodian fees .........................................         86,607
   Compliance fees ........................................         37,697
   Interest expense .......................................      4,685,842
   Other ..................................................        134,735
                                                              ------------
      Total Expenses ......................................                    11,199,061
                                                                             ------------
NET INVESTMENT INCOME .....................................                    67,301,449
                                                                             ------------
REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS
   Net realized gain on investments sold during the year ..                    17,024,524
   Change in unrealized appreciation/depreciation
      of investments ......................................                   103,628,475
                                                                             ------------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS ...........                   120,652,999
                                                                             ------------
NET INCREASE IN NET ASSETS TO COMMON STOCK
   RESULTING FROM OPERATIONS ..............................                  $187,954,448
                                                                             ============


----------
+    For Federal income tax purposes, a significant portion of this amount may
     not qualify for the inter-corporate dividends received deduction ("DRD") or
     as qualified dividend income ("QDI") for individuals.

    The accompanying notes are an integral part of the financial statements.


                                       18



      Flaherty & Crumrine/Claymore Preferred Securities Income Fund Incorporated
                   STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE TO COMMON STOCK



                                                                              YEAR ENDED          YEAR ENDED
                                                                          NOVEMBER 30, 2010   NOVEMBER 30, 2009
                                                                          -----------------   ------------------
                                                                                        
OPERATIONS:
   Net investment income ..............................................      $ 67,301,449     $ 56,964,219
   Net realized gain/(loss) on investments sold during the year .......        17,024,524      (89,185,582)
   Change in net unrealized appreciation/depreciation of investments ..       103,628,475      307,227,774
   Distributions to AMPS* Shareholders from net investment income,
      including changes in accumulated undeclared distributions .......                --       (1,646,350)
                                                                             ------------     ------------
   NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ...............       187,954,448      273,360,061

DISTRIBUTIONS:
   Dividends paid from net investment income to Common Stock
      Shareholders(1) .................................................       (61,140,267)     (57,566,298)
   Tax return of capital to Common Stock Shareholders .................                --         (762,372)
                                                                             ------------     ------------
   TOTAL DISTRIBUTIONS TO COMMON STOCK SHAREHOLDERS ...................       (61,140,267)     (58,328,670)

FUND SHARE TRANSACTIONS:
   Increase from shares issued under the Dividend Reinvestment
      and Cash Purchase Plan ..........................................         2,673,596          738,448
                                                                             ------------     ------------
   NET INCREASE IN NET ASSETS AVAILABLE TO COMMON STOCK RESULTING
      FROM FUND SHARE TRANSACTIONS ....................................         2,673,596          738,448
                                                                             ------------     ------------
NET INCREASE IN NET ASSETS AVAILABLE TO
   COMMON STOCK FOR THE YEAR ..........................................      $129,487,777     $215,769,839
                                                                             ============     ============
NET ASSETS AVAILABLE TO COMMON STOCK:
   Beginning of year ..................................................      $571,139,562     $355,369,723
   Net increase in net assets during the year .........................       129,487,777      215,769,839
                                                                             ------------     ------------
   End of year (including undistributed net investment income of
      $2,786,974 and distributions in excess of net investment
      income of $(1,973,114), respectively) ...........................      $700,627,339     $571,139,562
                                                                             ============     ============


----------
*    Auction Market Preferred Stock.

(1)  May include income earned, but not paid out, in prior fiscal year.

    The accompanying notes are an integral part of the financial statements.


                                       19



Flaherty & Crumrine/Claymore Preferred Securities Income Fund Incorporated
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED NOVEMBER 30, 2010


                                                                                           
INCREASE/(DECREASE) IN CASH
CASH FLOWS FROM OPERATING ACTIVITIES:
   Net increase in net assets resulting from operations ...................................   $ 187,954,448
ADJUSTMENTS TO RECONCILE NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS TO NET CASH PROVIDED BY OPERATING ACTIVITIES:
   Purchase of investment securities ......................................................    (351,799,711)
   Proceeds from disposition of investment securities .....................................     291,308,860
   Sale of short-term investment securities, net ..........................................       4,496,297
   Cash received from litigation claim ....................................................         132,320
   Increase in dividends and interest receivable ..........................................      (2,046,264)
   Decrease in receivable for investments sold ............................................         271,577
   Decrease in prepaid expenses ...........................................................          14,839
   Net amortization/(accretion) of premium/(discount) .....................................      (1,916,179)
   Increase in payable for investments purchased ..........................................       1,480,118
   Increase in payables to related parties ................................................          85,105
   Decrease in accrued expenses and other liabilities .....................................         (21,569)
      Change in net unrealized appreciation/depreciation on securities ....................    (103,628,475)
   Net realized gain from investments sold ................................................     (17,024,524)
                                                                                              -------------
         Net cash provided by operating activities ........................................       9,306,842
                                                                                              -------------
CASH FLOWS FROM FINANCING ACTIVITIES:
   Proceeds from loan .....................................................................      49,100,000
   Dividends paid (net of reinvestment of dividends and change in
      dividends payable) to common stock shareholders from net investment income ..........     (58,406,842)
                                                                                              -------------
         Net cash used by financing activities ............................................      (9,306,842)
                                                                                              -------------
         Net increase/(decrease) in cash ..................................................              --
CASH:
   Beginning of the year ..................................................................              --
                                                                                              -------------
   End of the year ........................................................................   $          --
                                                                                              =============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
   Interest paid during the year ..........................................................   $   4,703,704
   Reinvestment of dividends ..............................................................       2,673,596
      Increase in dividends payable to common stock shareholders ..........................          59,829


    The accompanying notes are an integral part of the financial statements.


                                       20



      Flaherty & Crumrine/Claymore Preferred Securities Income Fund Incorporated
                                                            FINANCIAL HIGHLIGHTS
                      FOR A COMMON STOCK SHARE OUTSTANDING THROUGHOUT EACH YEAR.

     Contained below is per share operating performance data, total investment
returns, ratios to average net assets and other supplemental data. This
information has been derived from information provided in the financial
statements and market price data for the Fund's shares.



                                                                                         YEAR ENDED NOVEMBER 30,
                                                                        --------------------------------------------------------
                                                                           2010       2009      2008        2007         2006
                                                                        ----------  --------  --------   ----------   ----------
                                                                                                       
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of year .................................... $    13.38  $   8.34  $  19.28   $    23.45   $    22.64
                                                                        ----------  --------  --------   ----------   ----------
INVESTMENT OPERATIONS:
Net investment income .................................................       1.57      1.34      1.97         2.24         2.04
Net realized and unrealized gain/(loss) on investments ................       2.83      5.11    (10.91)       (4.20)        0.95
DISTRIBUTIONS TO AMPS* SHAREHOLDERS:
From net investment income ............................................         --     (0.04)    (0.40)       (0.68)       (0.61)
                                                                        ----------  --------  --------   ----------   ----------
Total from investment operations ......................................       4.40      6.41     (9.34)       (2.64)        2.38
                                                                        ----------  --------  --------   ----------   ----------
DISTRIBUTIONS TO COMMON STOCK SHAREHOLDERS:
From net investment income ............................................      (1.43)    (1.35)    (1.60)       (1.53)       (1.57)
From return of capital ................................................         --     (0.02)       --           --           --
                                                                        ----------  --------  --------   ----------   ----------
Total distributions to Common Stock Shareholders ......................      (1.43)    (1.37)    (1.60)       (1.53)       (1.57)
                                                                        ----------  --------  --------   ----------   ----------
Net asset value, end of year .......................................... $    16.35  $  13.38  $   8.34   $    19.28   $    23.45
                                                                        ==========  ========  ========   ==========   ==========
Market value, end of year ............................................. $    16.86  $  12.65  $   7.45   $    17.17   $    21.89
Total investment return based on net asset value** ....................      34.15%    85.69%   (50.63%)     (11.33%)      11.78%
Total investment return based on market value ** ......................      46.31%    96.54%   (50.48%)     (15.40%)      17.94%
RATIOS TO AVERAGE NET ASSETS AVAILABLE
   TO COMMON STOCK SHAREHOLDERS:
      Total net assets, end of year (in 000's) ........................ $  700,627  $571,140  $355,370   $  821,177   $  999,199
      Operating expenses including interest expense(1) ................       1.73%     2.53%     2.39%          --           --
      Operating expenses excluding interest expense ...................       1.00%     1.16%     1.49%        1.18%        1.15%
      Net investment income + .........................................      10.37%    13.33%       --           --           --
      Net investment income, including payments to AMPS
         Shareholders + ...............................................         --     12.95%    10.28%        7.05%        6.32%

SUPPLEMENTAL DATA: ++
      Portfolio turnover rate .........................................         31%       41%       43%          60%          55%
      Net assets before loan, end of year (in 000's) .................. $1,032,602  $854,015  $636,145   $1,363,177   $1,541,199
      Ratio of operating expenses including interest expense(1)(2)
         to net assets before loan and AMPS ...........................       1.16%     1.59%     1.36%          --           --
      Ratio of operating expenses excluding interest expense(2) to net
         assets before loan and AMPS ..................................       0.67%     0.73%     0.85%        0.75%        0.74%


----------
*    Auction Market Preferred Stock.

**   Assumes reinvestment of distributions at the price obtained by the Fund's
     Dividend Reinvestment and Cash Purchase Plan.

+    The net investment income ratios reflect income net of operating expenses,
     including interest expense.

++   Information presented under heading Supplemental Data includes AMPS and
     loan principal balance.

(1)  See Note 8.

(2)  Does not include distributions to AMPS Shareholders.

    The accompanying notes are an integral part of the financial statements.


                                       21



Flaherty & Crumrine/Claymore Preferred Securities Income Fund Incorporated
FINANCIAL HIGHLIGHTS (CONTINUED)
PER SHARE OF COMMON STOCK



                          TOTAL                                   DIVIDEND
                        DIVIDENDS   NET ASSET        NYSE       REINVESTMENT
                          PAID        VALUE     CLOSING PRICE     PRICE (1)
                        ---------   ---------   -------------   ------------
                                                    
December 31, 2009 ...    $0.1140      $13.99        $13.97         $13.99
January 29, 2010 ....     0.1140       14.52         14.34          14.51
February 26, 2010 ...     0.1140       14.52         14.89          14.52
March 31, 2010 ......     0.1140       15.12         15.28          15.12
April 30, 2010 ......     0.1140       15.49         15.72          15.49
May 28, 2010 ........     0.1200       14.43         14.86          14.43
June 30, 2010 .......     0.1200       14.72         15.64          14.86
July 30, 2010 .......     0.1200       15.37         16.32          15.50
August 31, 2010 .....     0.1250       15.86         16.50          15.86
September 30, 2010 ..     0.1250       16.27         16.87          16.27
October 29, 2010 ....     0.1250       16.55         16.89          16.55
November 30, 2010 ...     0.1250       16.35         16.86          16.35


----------
(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 reinvestment 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.

    The accompanying notes are an integral part of the financial statements.


                                       22


      Flaherty & Crumrine/Claymore Preferred Securities Income Fund Incorporated
                                                FINANCIAL HIGHLIGHTS (CONTINUED)

SENIOR SECURITIES



                                            INVOLUNTARY
                                  ASSET     LIQUIDATION     TOTAL DEBT       ASSET
                                 COVERAGE    PREFERENCE    OUTSTANDING    COVERAGE PER
           TOTAL AMPS* SHARES    PER AMPS     PER AMPS    END OF PERIOD     $1,000 OF
  DATE      OUTSTANDING (1)     SHARE (2)    SHARE (3)      (000S) (4)      DEBT (5)
--------   ------------------   ---------   -----------   -------------   ------------
                                                           
11/30/10             --               N/A         N/A        $331,975        $3,110
11/30/09             --               N/A         N/A         282,875         3,019
11/30/08          3,671          $121,819     $25,000             N/A           N/A
11/30/07         21,680            62,900      25,000             N/A           N/A
11/30/06         21,680            71,112      25,000             N/A           N/A


----------
(1)  See note 7.

(2)  Calculated by subtracting the Fund's total liabilities (excluding the AMPS)
     from the Fund's total assets and dividing that amount by the number of AMPS
     shares outstanding.

(3)  Excludes accumulated undeclared dividends.

(4)  See note 8.

(5)  Calculated by subtracting the Fund's total liabilities (excluding the loan)
     from the Fund's total assets and dividing that amount by the loan
     outstanding in 000's.

*    Auction Market Preferred Stock.

    The accompanying notes are an integral part of the financial statements.


                                       23



Flaherty & Crumrine/Claymore Preferred Securities Income Fund Incorporated
NOTES TO FINANCIAL STATEMENTS

1.   ORGANIZATION

     Flaherty & Crumrine/Claymore Preferred Securities Income Fund Incorporated
(the "Fund") was incorporated as a Maryland corporation on May 23, 2002, and
commenced operations on January 31, 2003 as a diversified, closed-end management
investment company under the Investment Company Act of 1940, as amended (the
"1940 Act"). The Fund's investment objective is to provide its common
shareholders with high current income consistent with the preservation of
capital.

2.   SIGNIFICANT ACCOUNTING POLICIES

     The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. The
preparation of the financial statements is in conformity with U.S. generally
accepted accounting principles ("US GAAP") and requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities in the financial statements and the reported amounts of increases
and decreases in net assets from operations during the reporting period. Actual
results could differ from those estimates.

     PORTFOLIO VALUATION: The net asset value of the Fund's Common Stock is
determined by the Fund's Administrator no less frequently than on the last
business day of each week and month in accordance with the policies and
procedures approved by the Board of Directors of the Fund. It is determined by
dividing the value of the Fund's net assets available to Common Stock by the
number of shares of Common Stock outstanding. The value of the Fund's net assets
available to Common Stock is deemed to equal the value of the Fund's total
assets less (i) the Fund's liabilities and (ii) the aggregate liquidation value
of any outstanding preferred stock.

     The Fund's preferred and debt securities are valued on the basis of current
market quotations provided by independent pricing services or dealers approved
by the Board of Directors of the Fund. Each quotation is based on the mean of
the bid and asked prices of a security. In determining the value of a particular
preferred or debt security, a pricing service or dealer may use information with
respect to transactions in such investments, quotations, market transactions in
comparable investments, various relationships observed in the market between
investments, and/or calculated yield measures based on valuation technology
commonly employed in the market for such investments. Common stocks that are
traded on stock exchanges are valued at the last sale price or official close
price on the exchange, as of the close of business on the day the securities are
being valued or, lacking any sales, at the last available mean price. Futures
contracts and option contracts on futures contracts are valued on the basis of
the settlement price for such contracts on the primary exchange on which they
trade. Investments in over-the-counter derivative instruments, such as interest
rate swaps and options thereon ("swaptions"), are valued using prices supplied
by a pricing service, or if such prices are unavailable, prices provided by a
single broker or dealer that is not the counterparty or, if no such prices are
available, at a price at which the counterparty to the contract would repurchase
the instrument or terminate the contract. Investments for which market
quotations are not readily available or for which management determines that the
prices are not reflective of current market conditions are valued at fair value
as determined in good faith by or under the direction of the Board of Directors
of the Fund, including reference to valuations of other securities which are
comparable in quality, maturity and type.


                                       24



      Flaherty & Crumrine/Claymore Preferred Securities Income Fund Incorporated
                                       NOTES TO FINANCIAL STATEMENTS (CONTINUED)

     Investments in money market instruments and all debt and preferred
securities which mature in 60 days or less are valued at amortized cost.
Investments in money market funds are valued at the net asset value of such
funds.

     FAIR VALUE MEASUREMENT: The inputs and valuation techniques used to measure
fair value of the Fund's investments are summarized into three levels as
described in the hierarchy below:

     -    Level 1 - quoted prices in active markets for identical securities

     -    Level 2 - other significant observable inputs (including quoted prices
                    for similar securities, interest rates, prepayment speeds,
                    credit risk, etc.)

     -    Level 3 - significant unobservable inputs (including the Fund's own
                    assumptions in determining the fair value of investments)

     The inputs or methodology used for valuing securities are not necessarily
an indication of the risk associated with investing in those securities.
Transfers in and out of levels are recognized at market value at the end of the
period. A summary of the inputs used to value the Fund's investments as of
November 30, 2010 is as follows:



                                                                               LEVEL 2       LEVEL 3
                                               TOTAL            LEVEL 1      SIGNIFICANT   SIGNIFICANT
                                             VALUE AT           QUOTED       OBSERVABLE    UNOBSERVABLE
                                         NOVEMBER 30, 2010       PRICE         INPUTS         INPUTS
                                         -----------------   ------------   ------------   ------------
                                                                               
Preferred Securities
   Banking                                 $  395,231,045    $242,805,843   $152,297,791    $  127,411
   Financial Services                          28,308,064              --     23,016,805     5,291,259
   Insurance                                  234,536,095      76,022,793    158,513,302            --
   Utilities                                  255,890,348      26,016,546    229,873,802            --
   Energy                                      52,311,386              --     52,311,386            --
   Real Estate Investment Trust (REIT)          1,130,411       1,130,411             --            --
   Miscellaneous Industries                     9,315,969              --      9,315,969            --
Corporate Debt Securities                      38,338,737      14,354,742     23,334,641       649,354
Common Stock
   Banking                                      2,160,040       2,160,040             --            --
Money Market Fund                               1,465,273       1,465,273             --            --
                                           --------------    ------------   ------------    ----------
Total Investments                          $1,018,687,368    $363,955,648   $648,663,696    $6,068,024
                                           ==============    ============   ============    ==========


     The Fund did not have any significant transfers in and out of Level 1 and
Level 2 during the period.

     The Fund's investments in Level 2 and Level 3 are based primarily on market
information, where available. This includes, but is not limited to, prices
provided by third-party providers, observable trading activity (including the
recency, depth, and consistency of such information with quoted levels), and the
depth and consistency of broker-quoted prices. In the event market information
is not directly available, comparable information may be observed for securities
that are similar in many respects to those being valued. The Fund may


                                       25



Flaherty & Crumrine/Claymore Preferred Securities Income Fund Incorporated
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

employ an income approach for certain securities that also takes into account
credit risk, interest rate risk, and potential recovery prospects.

     The following is a reconciliation of Level 3 investments for which
significant unobservable inputs were used to determine fair value:



                                                            PREFERRED SECURITIES
                                                   --------------------------------------
                                        TOTAL                  FINANCIAL   CORPORATE DEBT
                                     INVESTMENTS    BANKING    SERVICES      SECURITIES
                                     -----------   --------   ----------   --------------
                                                               
BALANCE AS OF 11/30/09                $2,574,696   $158,400   $1,920,537      $495,759
Accrued discounts/premiums                    --         --           --            --
Realized gain/(loss)                          --         --           --            --
Change in unrealized appreciation/
   (depreciation)                      3,493,328    (30,989)   3,370,722       153,595
Net purchases/(sales)                         --         --           --            --
Transfers in and/or out of Level 3            --         --           --            --
                                      ----------   --------   ----------      --------
BALANCE AS OF 11/30/10                $6,068,024   $127,411   $5,291,259      $649,354


     As of November 30, 2010, total change in unrealized gain/(loss) on Level 3
securities still held at period-end and included in the change in net assets was
$3,493,328. Total unrealized gain/(loss) for all securities (including Level 1
and Level 2) can be found on the accompanying Statement of Operations.

     SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities transactions are
recorded as of the trade date. Realized gains and losses from securities sold
are recorded on the specific identified cost basis. Dividend income is recorded
on ex-dividend dates. Interest income is recorded on the accrual basis. The Fund
also amortizes premiums and accretes discounts on fixed income securities using
the effective yield method.

     OPTIONS: Purchases of options are recorded as an investment, the value of
which is marked-to-market at each valuation date. When the Fund enters into a
closing sale transaction, the Fund will record a gain or loss depending on the
difference between the purchase and sale price.

     When the Fund writes an option, an amount equal to the premium received by
the Fund is recorded as a liability, the value of which is marked-to-market at
each valuation date. When a written option expires, the Fund realizes a gain
equal to the amount of the premium originally received. When the Fund enters
into a closing purchase transaction, the Fund realizes a gain (or loss if the
cost of the closing purchase transaction exceeds the premium received when the
option was written) without regard to any unrealized gain or loss on the
underlying security, and the liability related to such option is eliminated.
When a call option is exercised, the Fund realizes a gain or loss from the sale
of the underlying security and the proceeds from such sale are increased by the
amount of the premium originally received. When a put option is exercised, the
amount of the premium originally received will reduce the cost of the security
which the Fund purchased upon exercise.


                                       26



      Flaherty & Crumrine/Claymore Preferred Securities Income Fund Incorporated
                                       NOTES TO FINANCIAL STATEMENTS (CONTINUED)

     REPURCHASE AGREEMENTS: The Fund may engage in repurchase agreement
transactions. The Fund's investment adviser reviews and approves the eligibility
of the banks and dealers with which the Fund may enter into repurchase agreement
transactions. The value of the collateral underlying such transactions is at
least equal at all times to the total amount of the repurchase obligations,
including interest. The Fund maintains possession of the collateral through its
custodian and, in the event of counterparty default, the Fund has the right to
use the collateral to offset losses incurred. There is the possibility of loss
to the Fund in the event the Fund is delayed or prevented from exercising its
rights to dispose of the collateral securities.

     FEDERAL INCOME TAXES: The Fund intends to continue to qualify as a
regulated investment company by complying with the requirements under subchapter
M of the Internal Revenue Code of 1986, as amended, applicable to regulated
investment companies and intends to distribute substantially all of its taxable
net investment income to its shareholders. Therefore, no federal income tax
provision is required.

     Management has analyzed the Fund's tax positions taken on Federal income
tax returns for all open tax years (November 30, 2010, 2009, 2008 and 2007), and
has concluded that no provision for federal income tax is required in the Fund's
financial statements. The Fund's major tax jurisdictions are federal and
California. The Fund's federal and state income and federal excise tax returns
for tax years for which the applicable statutes of limitations have not expired
are subject to examination by the Internal Revenue Service and state departments
of revenue.

     DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS: The Fund expects to declare
dividends on a monthly basis to shareholders of Common Stock ("Shareholders").
Distributions to Shareholders are recorded on the ex-dividend date. Any net
realized short-term capital gains will be distributed to Shareholders at least
annually. Any net realized long-term capital gains may be distributed to
Shareholders at least annually or may be retained by the Fund as determined by
the Fund's Board of Directors. Capital gains retained by the Fund are subject to
tax at the capital gains corporate tax rate. Subject to the Fund qualifying as a
regulated investment company, any taxes paid by the Fund on such net realized
long-term capital gains may be used by the Fund's Shareholders as a credit
against their own tax liabilities. The Fund may pay distributions in excess of
the Fund's net investment company taxable income and this excess would be a
tax-free return of capital distributed from the Fund's assets.

     Income and capital gain distributions are determined and characterized in
accordance with income tax regulations which may differ from US GAAP. These
differences are primarily due to (1) differing treatments of income and gains on
various investment securities held by the Fund, including timing differences,
(2) the attribution of expenses against certain components of taxable investment
income, and (3) federal regulations requiring proportionate allocation of income
and gains to all classes of shareholders.

     Distributions from net realized gains for book purposes may include
short-term capital gains, which are included as ordinary income for tax purposes
and may exclude amortization of premium on certain fixed income securities,
which are not reflected in ordinary income for tax purposes. The tax character
of distributions paid, including changes in accumulated undeclared distributions
to AMPS shareholders, during 2010 and 2009 were as follows:


                                       27



Flaherty & Crumrine/Claymore Preferred Securities Income Fund Incorporated
NOTES TO FINANCIAL STATEMENTS (CONTINUED)



               DISTRIBUTIONS PAID IN               DISTRIBUTIONS PAID IN
                 FISCAL YEAR 2010                     FISCAL YEAR 2009
            ---------------------------   ---------------------------------------
              ORDINARY      LONG-TERM       ORDINARY      LONG-TERM     RETURN OF
               INCOME     CAPITAL GAINS      INCOME     CAPITAL GAINS    CAPITAL
            -----------   -------------   -----------   -------------   ---------
                                                         
Common      $61,140,267         $0        $57,566,298        $0          $762,372
Preferred           N/A        N/A        $ 1,646,350        $0          $      0


     As of November 30, 2010, the components of distributable earnings (i.e.,
ordinary income and capital gain/loss) available to Common Stock Shareholders,
on a tax basis, were as follows:



                               UNDISTRIBUTED     UNDISTRIBUTED         NET UNREALIZED
CAPITAL (LOSS) CARRYFORWARD   ORDINARY INCOME   LONG-TERM GAIN   APPRECIATION/(DEPRECIATION)
---------------------------   ---------------   --------------   ---------------------------
                                                        
       $(275,905,740)            $4,777,548           $0                $(40,098,675)


     The composition of the Fund's $275,905,740 accumulated realized capital
losses was $21,795,557, $17,502,863, $19,167,841, $126,679,158 and $90,760,321
incurred in 2004, 2005, 2007, 2008 and 2009, respectively. These losses may be
carried forward and offset against any future capital gains through 2012, 2013,
2015, 2016 and 2017, respectively. During the year ended November 30, 2010, the
Fund utilized $17,719,631 of capital losses expiring in 2012.

     RECLASSIFICATION OF ACCOUNTS: During the year ended November 30, 2010,
reclassifications were made in the Fund's capital accounts to report these
balances on a tax basis, excluding temporary differences, as of November 30,
2010. Additional adjustments may be required in subsequent reporting periods.
These reclassifications have no impact on the net asset value of the Fund. The
calculation of net investment income per share in the financial highlights
excludes these adjustments. Below are the reclassifications:



PAID-IN       UNDISTRIBUTED       ACCUMULATED NET REALIZED
CAPITAL   NET INVESTMENT INCOME      GAIN ON INVESTMENTS
-------   ---------------------   ------------------------
                            
$74,353        $(1,401,094)              $1,326,741


     EXCISE TAX: The Internal Revenue Code of 1986, as amended, imposes a 4%
nondeductible excise tax on the Fund to the extent the Fund does not distribute
by the end of any calendar year at least (1) 98% of the sum of its net
investment income for that year and its capital gains (both long-term and
short-term) for its fiscal year and (2) certain undistributed amounts from
previous years. The Fund is subject to a payment of an estimated $112,000 of
Federal excise taxes attributable to calendar year 2010. The Fund paid $14,343
of Federal excise taxes attributable to calendar year 2009 in March 2010.

     ADDITIONAL ACCOUNTING STANDARDS: In January 2010, the Financial Accounting
Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2010-06,
"Improving Disclosures about Fair Value Measurements". ASU No. 2010-06 amends
FASB Accounting Standards Codification Topic 820, Fair Value Measurements and
Disclosures, to require additional disclosures regarding fair value
measurements. Certain disclosures required by ASU No. 2010-06 are effective for
interim and annual reporting periods beginning after December 15, 2009, and
other required disclosures are effective for fiscal years beginning after
December 15, 2010, and for interim periods within those fiscal years. Management
has evaluated the impact and has incorporated disclosures required by ASU No.
2010-06 in its financial statement disclosures.


                                       28



      Flaherty & Crumrine/Claymore Preferred Securities Income Fund Incorporated
                                       NOTES TO FINANCIAL STATEMENTS (CONTINUED)

3.   DERIVATIVE INSTRUMENTS

     The Fund intends to use derivatives primarily to economically hedge against
risks in the portfolio, namely interest rate risk and credit risk. Historically
the Fund has used options on treasury futures contracts for the purpose of
economically hedging against a significant increase in long-term interest rates.
When the strategy has been employed, the Fund would purchase put options on
treasury futures contracts that would increase in value if long-term interest
rates increased significantly, offsetting some of the related decline in
portfolio asset values. The Fund has also purchased and written call options on
treasury futures contracts to supplement the put option strategy and also to
reduce the overall cost of the interest rate hedge (by earning premiums from the
net sale of call options).

     The Fund has the authority to use other derivatives for hedging or to
increase expected return, but has not employed any of these derivatives to-date
and does not anticipate broad use of these derivatives in the near future
(although this may change without advance notice). Other approved derivatives
strategies include: buying and selling credit default swaps, interest rate swaps
and options thereon (swaptions), and options on securities. Accounting policies
for specific derivatives, including the location of these items in the financial
statements, are included in Note 2 as appropriate. No assurance can be given
that such use of derivatives will achieve their desired purposes or, in the case
of hedging, will result in an overall reduction of risk to the Fund.

     The Fund did not use any derivatives during the fiscal years ended November
30, 2009 and November 30, 2010.

     OPTIONS ON FINANCIAL FUTURES CONTRACTS: When the interest rate hedging
strategy is employed, the Fund intends to use options on financial futures
contracts in much the same way as described above. The risk associated with
purchasing options, and therefore the maximum loss the Fund would incur, is
limited to the purchase price originally paid. The risk in writing a call option
is that the Fund may forego the opportunity for profit if the market price of
the underlying security increases and the option is exercised. The risk in
writing a put option is that the Fund may incur a loss if the market price of
the underlying security decreases and the option is exercised.

4.   INVESTMENT ADVISORY FEE, SERVICING AGENT FEE, ADMINISTRATION FEE, TRANSFER
     AGENT FEE, CUSTODIAN FEE, DIRECTORS' FEES AND CHIEF COMPLIANCE OFFICER FEE

     Flaherty & Crumrine Incorporated (the "Adviser") serves as the Fund's
investment adviser. The Fund pays the Adviser a monthly fee at an annual rate of
0.525% of the first $200 million of the Fund's average weekly total managed
assets, 0.45% of the next $300 million of the Fund's average weekly total
managed assets, and 0.40% of the Fund's average weekly total managed assets
above $500 million.

     For purposes of calculating the fees payable to the Adviser, Servicing
Agent, Administrator and Custodian, the Fund's average weekly total managed
assets means the total assets of the Fund (including any assets attributable to
any Fund auction market preferred stock that may be outstanding or otherwise
attributable to the use of leverage) minus the sum of accrued liabilities (other
than debt, if any, representing


                                       29



Flaherty & Crumrine/Claymore Preferred Securities Income Fund Incorporated
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

financial leverage). For purposes of determining total managed assets, the
liquidation preference of any outstanding preferred shares issued by the Fund is
not treated as a liability.

     Guggenheim Funds Distributors, Inc. (the "Servicing Agent") (formerly known
as Claymore Securities, Inc.), serves as the Fund's shareholder servicing agent.
As compensation for its services, the Fund pays the Servicing Agent a fee
computed and paid monthly at the annual rate of 0.025% of the first $200 million
of the Fund's average weekly total managed assets, 0.10% of the next $300
million of the Fund's average weekly total managed assets and 0.15% of the
Fund's average weekly total managed assets above $500 million.

     BNY Mellon Investment Servicing (US) Inc. ("BNY Mellon") (formerly known as
PNC Global Investment Servicing (U.S.) Inc.) serves as the Fund's Administrator.
As Administrator, BNY Mellon calculates the net asset value of the Fund's shares
attributable to Common Stock and generally assists in all aspects of the Fund's
administration and operation. As compensation for BNY Mellon's services as
Administrator, the Fund pays BNY Mellon a monthly fee at an annual rate of 0.10%
of the first $200 million of the Fund's average weekly total managed assets,
0.04% of the next $300 million of the Fund's average weekly total managed
assets, 0.03% of the next $500 million of the Fund's average weekly total
managed assets and 0.02% of the Fund's average weekly total managed assets above
$1 billion.

     BNY Mellon also serves as the Fund's Common Stock dividend-paying agent and
registrar (Transfer Agent). As compensation for BNY Mellon's services, the Fund
pays BNY Mellon a fee at an annual rate of 0.02% of the first $150 million of
the Fund's average weekly net assets attributable to Common Stock, 0.0075% of
the next $350 million of the Fund's average weekly net assets attributable to
Common Stock, and 0.0025% of the Fund's average weekly net assets attributable
to Common Stock above $500 million, plus certain out of pocket expenses. For the
purpose of calculating such fee, the Fund's average weekly net assets
attributable to Common Stock are deemed to be the average weekly value of the
Fund's total assets minus the sum of the Fund's liabilities. For this
calculation, the Fund's liabilities are deemed to include the aggregate
liquidation preference of any outstanding preferred shares and the loan
principal balance.

     PFPC Trust Company ("PFPC Trust"), a member of BNY Mellon, serves as the
Fund's Custodian. As compensation for PFPC Trust's services as custodian, the
Fund pays PFPC Trust a monthly fee at the annual rate of 0.01% of the first $200
million of the Fund's average weekly total managed assets, 0.008% of the next
$300 million of the Fund's average weekly total managed assets, 0.006% of the
next $500 million of the Fund's average weekly total managed assets and 0.005%
of the Fund's average weekly total managed assets above $1 billion.

     The Fund currently pays each Director who is not a director, officer or
employee of the Adviser a fee of $9,000 per annum, plus $750 for each in-person
meeting of the Board of Directors or Audit Committee, $500 for each in-person
meeting of the Nominating Committee, and $250 for each telephone meeting. The
Audit Committee Chairman receives an additional annual fee of $3,000. The Fund
also reimburses all Directors for travel and out-of-pocket expenses incurred in
connection with such meetings.

     The Fund currently pays the Adviser a fee of $37,500 per annum for Chief
Compliance Officer services and reimburses out-of-pocket expenses incurred in
connection with providing services in this role.


                                       30



      Flaherty & Crumrine/Claymore Preferred Securities Income Fund Incorporated
                                       NOTES TO FINANCIAL STATEMENTS (CONTINUED)

5.   PURCHASES AND SALES OF SECURITIES

     For the year ended November 30, 2010, the cost of purchases and proceeds
from sales of securities excluding short-term investments, aggregated
$351,799,711 and $291,308,860, respectively.

     At November 30, 2010, the aggregate cost of securities for federal income
tax purposes was $1,058,786,043, the aggregate gross unrealized appreciation for
all securities in which there is an excess of value over tax cost was
$89,819,054 and the aggregate gross unrealized depreciation for all securities
in which there is an excess of tax cost over value was $129,917,729.

6.   COMMON STOCK

     At November 30, 2010, 240,000,000 shares of $0.01 par value Common Stock
were authorized.

     Common Stock transactions were as follows:



                                                     YEAR ENDED            YEAR ENDED
                                                      11/30/10              11/30/09
                                                --------------------   -----------------
                                                 SHARES     AMOUNT     SHARES    AMOUNT
                                                -------   ----------   ------   --------
                                                                    
Shares issued under the Dividend Reinvestment
   and Cash Purchase Plan ...................   175,000   $2,673,596   71,860   $738,448
                                                -------   ----------   ------   --------


7.   AUCTION MARKET PREFERRED STOCK (AMPS)

     The Fund's Articles of Incorporation authorize the issuance of up to
10,000,000 shares of $0.01 par value preferred stock. Prior to July 30, 2009,
the Fund had preferred stock issued in the form of AMPS. The AMPS was senior to
the Common Stock and resulted in the financial leveraging of the Common Stock.
As of July 30, 2009, the Fund redeemed and cancelled the last remaining shares
of AMPS and does not currently have any issued and outstanding shares of
preferred stock.

     The Fund redeemed AMPS shares as detailed in the table below. Shares were
redeemed at a redemption price equal to the liquidation preference of $25,000
per share, plus the amount of accumulated but unpaid dividends for each
redemption date, respectively. After these redemptions, borrowings from its debt
facility were the Fund's sole source of leverage.



REDEMPTION DATE     $ AMOUNT OF AMPS
-----------------   ----------------
                 
May 21, 2008          $105,025,000
May 22, 2008            55,650,000
May 23, 2008            55,650,000
May 27, 2008           111,300,000
June 5, 2008            49,375,000
October 20, 2008        13,875,000
October 27, 2008        11,850,000
November 3, 2008        42,050,000*
November 10, 2008        5,450,000*
July 13, 2009           13,550,000
July 14, 2009           13,550,000



                                       31



Flaherty & Crumrine/Claymore Preferred Securities Income Fund Incorporated
NOTES TO FINANCIAL STATEMENTS (CONTINUED)



REDEMPTION DATE     $ AMOUNT OF AMPS
-----------------   ----------------
                 
July 15, 2009          25,575,000
July 16, 2009          13,550,000
July 17, 2009          13,550,000
July 30, 2009          12,000,000


*    Shares were redeemed on the dates reflected; however, from the Fund's
     perspective, the November 3rd and November 10th redemptions were effective
     as of October 24, 2008. The earlier effective date was due to the
     unconditional deposit of funds with the paying agent.

8.   COMMITTED FINANCING AGREEMENT

     The Fund has entered into a committed financing agreement ("Financing
Agreement") that allows the Fund to borrow on a secured basis, which the Fund
will use in the normal course of business as financial leverage. Such leveraging
tends to magnify both the risks and opportunities to Shareholders. The Financing
Agreement has been amended from time to time to allow for changes in the
committed amount. As of November 30, 2010, the committed amount, and amount
borrowed, under the Financing Agreement was $331.975 million.

     The lender charges an annualized rate of 1.00% on the undrawn (committed)
balance, and three-month LIBOR (reset quarterly) plus 1.10% on the drawn
(borrowed) balance. Effective January 1, 2011 (subsequent to the reporting
period), the interest rates charged by the lender will be reduced. The
annualized rate on the undrawn balance will be 0.80% and the rate on the drawn
balance will be three-month LIBOR (reset quarterly) plus 0.95%. For the year
ended November 30, 2010, the daily weighted average annualized interest rate on
the drawn balance was 1.443% and the average daily loan balance was
$319,971,438. LIBOR rates may vary in a manner unrelated to the income received
on the Fund's assets, which could have either a beneficial or detrimental impact
on net investment income and gains available to Shareholders.

     The Fund is required to meet certain asset coverage requirements under the
Financing Agreement and under the 1940 Act. In accordance with the asset
coverage requirements, at least two-thirds of the Fund's assets are expected to
be pledged as collateral assuming the full committed amount is drawn. Securities
pledged as collateral are identified in the portfolio of investments. If the
Fund fails to meet these requirements, or maintain other financial covenants
required under the Financing Agreement, the Fund may be required to repay
immediately, in part or in full, the amount borrowed under the Financing
Agreement. Additionally, failure to meet the foregoing requirements or covenants
could restrict the Fund's ability to pay dividends to Shareholders and could
necessitate sales of portfolio securities at inopportune times. The Financing
Agreement has no stated maturity, but may be terminated by either party without
cause with six months' advance notice.

9.   PORTFOLIO INVESTMENTS, CONCENTRATION AND INVESTMENT QUALITY

     The Fund invests primarily in a diversified portfolio of preferred
securities. This includes fully taxable preferred securities and traditional
preferred stocks eligible for the inter-corporate dividends received deduction
("DRD"). Under normal market conditions, at least 80% of the value of the Fund's
total assets will


                                       32



      Flaherty & Crumrine/Claymore Preferred Securities Income Fund Incorporated
                                       NOTES TO FINANCIAL STATEMENTS (CONTINUED)

be invested in preferred securities. Also, under normal market conditions, the
Fund invests at least 25% of its total assets in securities issued by companies
in the utilities industry and at least 25% of its total assets in securities
issued by companies in the banking industry. The Fund's portfolio may therefore
be subject to greater risk and market fluctuation than a portfolio of securities
representing a broader range of investment alternatives.

     The Fund may invest up to 20% of its total assets in securities rated below
investment grade. These securities must be rated at least either "Ba3" by
Moody's Investors Service, Inc. or "BB-" by Standard & Poor's or, if unrated,
judged to be comparable in quality by the Adviser, in any case, at the time of
purchase. However, these securities must be issued by an issuer having a class
of senior debt rated investment grade outstanding.

     The Fund may invest up to 15% of its total assets in common stocks, which
total includes those convertible securities that trade in close relationship to
the underlying common stock of an issuer, and, under normal market conditions,
may invest up to 20% of its total assets in debt securities. Certain of its
investments in hybrid, i.e., fully taxable, preferred securities, will be
subject to the foregoing 20% limitation to the extent that, in the opinion of
the Adviser, such investments are deemed to be debt-like in key characteristics.
Typically, a security will not be considered debt-like (a) if an issuer can
defer payment of income for eighteen months or more without triggering an event
of default and (b) if such issue is a junior and fully subordinated liability of
an issuer or its ultimate guarantor.

     In addition to foreign money market securities, the Fund may invest up to
30% of its total assets in the securities of companies organized or having their
principal place of business outside the United States. All foreign securities
held by the Fund will be denominated in U.S. dollars.

     The Fund may employ certain investment techniques in accordance with its
fundamental investment policies. These may include the use of when-issued and
delayed delivery transactions. Securities purchased or sold on a when-issued or
delayed delivery basis may be settled within 45 days after the date of the
transaction. The Fund may also enter into transactions, in accordance with its
investment policies, involving short sales of securities and purchases of
securities on margin. Such transactions may expose the Fund to credit and market
valuation risk greater than that associated with regular trade settlement
procedures.

10.  SECURITIES LENDING

     The Fund may lend up to 15% of its total assets (including the value of the
loan collateral) to certain qualified brokers in order to earn additional
income. The Fund receives compensation in the form of fees or interest earned on
the investment of any cash collateral received. The Fund also continues to
receive interest and dividends on the securities loaned. The Fund receives
collateral in the form of cash or securities with a market value at least equal
to the market value of the securities on loan, including accrued interest. In
the event of default or bankruptcy by the borrower, the Fund could experience
delays and costs in recovering the loaned securities or in gaining access to the
collateral. The Fund has the right under the lending agreement to recover the
securities from the borrower on demand. As of November 30, 2010 there were no
securities on loan by the Fund.


                                       33



Flaherty & Crumrine/Claymore Preferred Securities Income Fund Incorporated
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

11.  SUBSEQUENT EVENTS

     Management has evaluated the impact of all subsequent events on the Fund
through the date the financial statements were issued, and has determined that
there were no subsequent events requiring recognition or disclosure in the
financial statements.


                                       34



             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Shareholders
Flaherty & Crumrine/Claymore Preferred Securities Income Fund Incorporated

     We have audited the accompanying statement of assets and liabilities of
Flaherty & Crumrine/Claymore Preferred Securities Income Fund Incorporated,
including the portfolio of investments, as of November 30, 2010, and the related
statement of operations for the year then ended, the statements of changes in
net assets for each of the years in the two-year period then ended, the
statement of cash flows for the year then ended, and the financial highlights
for each of the years in the five-year period then ended. These financial
statements and financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.

     We conducted our audits in accordance with the standards of the Public
Company Accounting Oversight Board (United States). Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether the
financial statements and financial highlights are free of material misstatement.
An audit includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. Our procedures included
confirmation of securities owned as of November 30, 2010 by correspondence with
the custodian and brokers, or by other appropriate auditing procedures where
replies from brokers were not received. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

     In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
Flaherty & Crumrine/Claymore Preferred Securities Income Fund Incorporated as of
November 30, 2010, the results of its operations and its cash flows for the year
then ended, the changes in its net assets for each of the years in the two-year
period then ended, and the financial highlights for each of the years in the
five-year period then ended, in conformity with U.S. generally accepted
accounting principles.


(KPMG LLP)

Boston, Massachusetts
January 24, 2011


                                       35



Flaherty & Crumrine/Claymore Preferred Securities Income Fund Incorporated
ADDITIONAL INFORMATION (UNAUDITED)

DIVIDEND REINVESTMENT AND CASH PURCHASE PLAN

     Under the Fund's Dividend Reinvestment and Cash Purchase Plan (the "Plan"),
a shareholder whose Common Stock is registered in his or her own name will have
all distributions reinvested automatically by BNY Mellon as agent under the
Plan, unless the shareholder elects to receive cash. Distributions with respect
to shares registered in the name of a broker-dealer or other nominee (that is,
in "street name") may be reinvested by the broker or nominee in additional
shares under the Plan, but only if the service is provided by the broker or
nominee, unless the shareholder elects to receive distributions in cash. A
shareholder who holds Common Stock registered in the name of a broker or other
nominee may not be able to transfer the Common Stock to another broker or
nominee and continue to participate in the Plan. Investors who own Common Stock
registered in street name should consult their broker or nominee for details
regarding reinvestment.

     The number of shares of Common Stock distributed to participants in the
Plan in lieu of a cash dividend is determined in the following manner. Whenever
the market price per share of the Fund's Common Stock is equal to or exceeds the
net asset value per share on the valuation date, participants in the Plan will
be issued new shares valued at the higher of net asset value or 95% of the then
current market value. Otherwise, BNY Mellon will buy shares of the Fund's Common
Stock in the open market, on the New York Stock Exchange ("NYSE") or elsewhere,
on or shortly after the payment date of the dividend or distribution and
continuing until the ex-dividend date of the Fund's next distribution to holders
of the Common Stock or until it has expended for such purchases all of the cash
that would otherwise be payable to the participants. The number of purchased
shares that will then be credited to the participants' accounts will be based on
the average per share purchase price of the shares so purchased, including
brokerage commissions. If BNY Mellon commences purchases in the open market and
the then current market price of the shares (plus any estimated brokerage
commissions) subsequently exceeds their net asset value most recently determined
before the completion of the purchases, BNY Mellon will attempt to terminate
purchases in the open market and cause the Fund to issue the remaining dividend
or distribution in shares. In this case, the number of shares received by the
participant will be based on the weighted average of prices paid for shares
purchased in the open market and the price at which the Fund issues the
remaining shares. These remaining shares will be issued by the Fund at the
higher of net asset value or 95% of the then current market value.

     Plan participants are not subject to any charge for reinvesting dividends
or capital gains distributions. Each Plan participant will, however, bear a
proportionate share of brokerage commissions incurred with respect to BNY
Mellon's open market purchases in connection with the reinvestment of dividends
or capital gains distributions. For the year ended November 30, 2010, $1,141 in
brokerage commissions were incurred.

     The automatic reinvestment of dividends and capital gains distributions
will not relieve Plan participants of any income tax that may be payable on the
dividends or capital gains distributions. A participant in the Plan will be
treated for Federal income tax purposes as having received, on the dividend
payment date, a dividend or distribution in an amount equal to the cash that the
participant could have received instead of shares.


                                       36



      Flaherty & Crumrine/Claymore Preferred Securities Income Fund Incorporated
                                  ADDITIONAL INFORMATION (UNAUDITED) (CONTINUED)

     In addition to acquiring shares of Common Stock through the reinvestment of
cash dividends and distributions, a shareholder may invest any further amounts
from $100 to $3,000 semi-annually at the then current market price in shares
purchased through the Plan. Such semi-annual investments are subject to any
brokerage commission charges incurred.

     A shareholder whose Common Stock is registered in his or her own name may
terminate participation in the Plan at any time by notifying BNY Mellon in
writing, by completing the form on the back of the Plan account statement and
forwarding it to BNY Mellon, or by calling BNY Mellon, directly. A termination
will be effective immediately if notice is received by BNY Mellon not less than
10 days before any dividend or distribution record date. Otherwise, the
termination will be effective, and only with respect to any subsequent dividends
or distributions, on the first day after the dividend or distribution has been
credited to the participant's account in additional shares of the Fund. Upon
termination and according to a participant's instructions, BNY Mellon will
either (a) issue certificates for the whole shares credited to the shareholder's
Plan account and a check representing and fractional shares or (b) sell the
shares in the market. Shareholders who hold Common Stock registered in the name
of a broker or other nominee should consult their broker or nominee to terminate
participation.

     The Plan is described in more detail in the Fund's Plan brochure.
Information concerning the Plan may be obtained from BNY Mellon at
1-866-351-7446.

ADDITIONAL COMPENSATION AGREEMENT

     The Adviser has agreed to compensate Merrill Lynch from its own resources
at an annualized rate of 0.10% of the Fund's total managed assets for certain
services, including after-market support services designed to maintain
visibility of the Fund.

PROXY VOTING POLICIES AND PROXY VOTING RECORD ON FORM N-PX

     The Fund files Form N-PX with its complete proxy voting record for the 12
months ended June 30th no later than August 31st of each year. The Fund filed
its latest Form N-PX with the Securities and Exchange Commission ("SEC") on
August 23, 2010. This filing as well as the Fund's proxy voting policies and
procedures are available (i) without charge, upon request, by calling the Fund's
transfer agent at 1-866-351-7446 and (ii) on the SEC's website at www.sec.gov.
In addition, the Fund's proxy voting policies and procedures are available on
the Fund's website at www.fcclaymore.com.

PORTFOLIO SCHEDULE ON FORM N-Q

     The Fund files a complete schedule of portfolio holdings with the SEC for
the first and third fiscal quarters on Form N-Q, the latest of which was filed
for the quarter ended August 31, 2010. The Fund's Form N-Q is available on the
SEC's website at www.sec.gov or may be viewed and obtained from the SEC's Public
Reference Room in Washington D.C. Information on the operation of the Public
Reference Section may be obtained by calling 1-800-SEC-0330.


                                       37



Flaherty & Crumrine/Claymore Preferred Securities Income Fund Incorporated
ADDITIONAL INFORMATION (UNAUDITED) (CONTINUED)

PORTFOLIO MANAGEMENT TEAM

     In managing the day-to-day operations of the Fund, the Adviser relies on
the expertise of its team of money management professionals, consisting of
Messrs. Crumrine, Ettinger, Stone and Chadwick. The professional backgrounds of
each member of the management team are included in the "Information about Fund
Directors and Officers" section of this report.

SUPPLEMENTARY TAX INFORMATION

     Distributions to Common Stock Shareholders are characterized as follows for
purposes of Federal income taxes (as a percentage of total distributions):



                     INDIVIDUAL SHAREHOLDER   CORPORATE SHAREHOLDER
                     ----------------------   ---------------------
                                ORDINARY                ORDINARY
                         QDI     INCOME           DRD    INCOME
                        -----   --------         ----   --------
                                            
Fiscal Year 2010        29.62%   70.38%          9.13%   90.87%
Calendar Year 2010      30.65%   69.35%          9.02%   90.98%


     Qualified Dividend Income ("QDI") distributions are taxable at a maximum
15% personal tax rate.


                                       38



      Flaherty & Crumrine/Claymore Preferred Securities Income Fund Incorporated
                                  ADDITIONAL INFORMATION (UNAUDITED) (CONTINUED)

INFORMATION ABOUT FUND DIRECTORS AND OFFICERS

     The business and affairs of the Fund are managed under the direction of the
Fund's Board of Directors. Information pertaining to the Directors and officers
of the Fund is set forth below.



                                                                           PRINCIPAL           NUMBER OF FUNDS
                                               TERM OF OFFICE            OCCUPATION(S)         IN FUND COMPLEX
      NAME, ADDRESS,          POSITION(S)       AND LENGTH OF             DURING PAST              OVERSEEN     OTHER DIRECTORSHIPS
         AND AGE            HELD WITH FUND      TIME SERVED*               FIVE YEARS            BY DIRECTOR     HELD BY DIRECTOR**
--------------------------  ---------------  ------------------  ----------------------------  ---------------  -------------------
                                                                                                 
NON-INTERESTED
DIRECTORS:

DAVID GALE                     Director      Class I Director    President of Delta                   4
Delta Dividend Group, Inc.                         since         Dividend Group, Inc.
220 Montgomery Street                          January 2003      (investments)
Suite 426
San Francisco, CA 94104
Age: 61

MORGAN GUST                    Director      Class II Director   Owner and operator of                4         CoBiz Financial,
301 E. Colorado Boulevard                          since         various entities engaged                       Inc. (financial
Suite 720                                      January 2003      in agriculture and real                        services)
Pasadena, CA 91101                                               estate; Former President
Age: 63                                                          of Giant Industries, Inc.
                                                                 (petroleum refining and
                                                                 marketing) from March
                                                                 2002 through June 2007

KAREN H. HOGAN+                Director      Class II Director   Active Committee Member              4
301 E. Colorado Boulevard                          since         and Volunteer to several
Suite 720                                        July 2005       non-profit organizations;
Pasadena, CA 91101                                               from September 1985 to
Age: 49                                                          January 1997, Senior Vice
                                                                 President of Preferred Stock
                                                                 Origination at Lehman
                                                                 Brothers and previously,
                                                                 Vice President of New
                                                                 Product Development


----------
*    The Fund's Board of Directors is divided into three classes, each class
     having a term of three years. Each year the term of office of one class
     expires and the successor or successors elected to such class serve for a
     three year term. The three year term for each class expires as follows:

          CLASS I DIRECTOR - three year term expires at the Fund's 2011 Annual
          Meeting of Shareholders; director may continue in office until his
          successor is duly elected and qualified.

          CLASS II DIRECTORS - three year term expires at the Fund's 2012 Annual
          Meeting of Shareholders; directors may continue in office until their
          successors are duly elected and qualified.

          CLASS III DIRECTORS - three year term expires at the Fund's 2013
          Annual Meeting of Shareholders; directors may continue in office until
          their successors are duly elected and qualified.

**   Each Director also serves as a Director for Flaherty & Crumrine Preferred
     Income Fund, Flaherty & Crumrine Preferred Income Opportunity Fund, and
     Flaherty & Crumrine/Claymore Total Return Fund.

+    As a Director, until July 30, 2009, represented holders of shares of the
     Fund's Auction Market Preferred Stock.


                                       39



Flaherty & Crumrine/Claymore Preferred Securities Income Fund Incorporated
ADDITIONAL INFORMATION (UNAUDITED) (CONTINUED)



                                                                           PRINCIPAL           NUMBER OF FUNDS
                                               TERM OF OFFICE            OCCUPATION(S)         IN FUND COMPLEX
 NAME, ADDRESS,                POSITION(S)      AND LENGTH OF             DURING PAST             OVERSEEN      OTHER DIRECTORSHIPS
     AND AGE                 HELD WITH FUND     TIME SERVED*              FIVE YEARS             BY DIRECTOR    HELD BY DIRECTOR**
--------------------------  ---------------  ------------------  ----------------------------  ---------------  -------------------
                                                                                                 
NON-INTERESTED
DIRECTORS:

ROBERT F. WULF                 Director      Class III Director  Financial Consultant;                4
P.O. Box 753                   and Audit            since        Trustee, University of
Neskowin, OR 97149             Committee         January 2003    Oregon Foundation;
Age: 73                        Chairman                          Trustee, San Francisco
                                                                 Theological Seminary

INTERESTED
DIRECTOR:

DONALD F. CRUMRINE+             Director,    Class III Director  Chairman of the Board                4
301 E. Colorado               Chairman of         since          and Director of Flaherty &
Boulevard                    the Board and      January 2003     Crumrine Incorporated
Suite 720                       Chief
Pasadena, CA 91101             Executive
Age: 63                        Officer


----------
*    The Fund's Board of Directors is divided into three classes, each class
     having a term of three years. Each year the term of office of one class
     expires and the successor or successors elected to such class serve for a
     three year term. The three year term for each class expires as follows:

          CLASS I DIRECTOR - three year term expires at the Fund's 2011 Annual
          Meeting of Shareholders; director may continue in office until his
          successor is duly elected and qualified.

          CLASS II DIRECTORS - three year term expires at the Fund's 2012 Annual
          Meeting of Shareholders; directors may continue in office until their
          successors are duly elected and qualified.

          CLASS III DIRECTORS - three year term expires at the Fund's 2013
          Annual Meeting of Shareholders; directors may continue in office until
          their successors are duly elected and qualified.

**   Each Director also serves as a Director for Flaherty & Crumrine Preferred
     Income Fund, Flaherty & Crumrine Preferred Income Opportunity Fund, and
     Flaherty & Crumrine/Claymore Total Return Fund.

+    "Interested person" of the Fund as defined in the 1940 Act. Mr. Crumrine is
     considered an "interested person" because of his affiliation with Flaherty
     & Crumrine Incorporated, which acts as the Fund's investment adviser.


                                       40



      Flaherty & Crumrine/Claymore Preferred Securities Income Fund Incorporated
                                  ADDITIONAL INFORMATION (UNAUDITED) (CONTINUED)



                                                                               PRINCIPAL
                                                 TERM OF OFFICE             OCCUPATION(S)
      NAME, ADDRESS,           POSITION(S)        AND LENGTH OF              DURING PAST
         AND AGE             HELD WITH FUND        TIME SERVED               FIVE YEARS
-------------------------   ------------------   --------------   -------------------------------------
                                                         
OFFICERS:

ROBERT M. ETTINGER              President             Since       President and Director of
301 E. Colorado Boulevard                         January 2003    Flaherty & Crumrine Incorporated
Suite 720
Pasadena, CA 91101
Age: 52

R. ERIC CHADWICK             Chief Financial          Since       Director of Flaherty & Crumrine
301 E. Colorado Boulevard     Officer, Vice         July 2004     Incorporated since June 2006;
Suite 720                     President and                       Vice President of Flaherty &
Pasadena, CA 91101              Treasurer                         Crumrine Incorporated
Age: 35

CHAD C. CONWELL              Chief Compliance         Since       Chief Compliance Officer of
301 E. Colorado Boulevard      Officer, Vice        July 2005     Flaherty & Crumrine Incorporated
Suite 720                     President and                       since September 2005; Vice
Pasadena, CA 91101               Secretary                        President of Flaherty &
Age: 38                                                           Crumrine Incorporated since July 2005

BRADFORD S. STONE             Vice President          Since       Director of Flaherty & Crumrine
47 Maple Street               and Assistant         July 2003     Incorporated since June 2006;
Suite 403                       Treasurer                         Vice President of Flaherty &
Summit, NJ 07901                                                  Crumrine Incorporated
Age: 51

LAURIE C. LODOLO                Assistant            Since        Assistant Compliance Officer and
301 E. Colorado Boulevard       Compliance         July 2004      Secretary of Flaherty & Crumrine
Suite 720                   Officer, Assistant                    Incorporated
Pasadena, CA 91101            Treasurer and
Age: 47                         Assistant
                                Secretary

LINDA M. PUCHALSKI              Assistant             Since       Administrator of Flaherty & Crumrine
301 E. Colorado Boulevard       Treasurer          August 2010    Incorporated
Suite 720
Pasadena, CA 91101
Age: 54



                                       41



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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
   Laurie C. Lodolo
      Assistant Compliance Officer,
      Assistant Treasurer and
      Assistant Secretary
   Linda M. Puchalski
      Assistant Treasurer

INVESTMENT ADVISER
   Flaherty & Crumrine Incorporated
   e-mail: flaherty@pfdincome.com

SERVICING AGENT
   Guggenheim Funds Distributors, Inc.
   1-866-233-4001

QUESTIONS CONCERNING YOUR SHARES OF FLAHERTY & CRUMRINE/CLAYMORE PREFERRED
SECURITIES INCOME FUND?

     -    If your shares are held in a Brokerage Account, contact your Broker.

     -    If you have physical possession of your shares in certificate form,
          contact the Fund's Transfer Agent --

               BNY Mellon Shareowner Services
               1-866-351-7446

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.

      (Flaherty & Crumrine/Claymore PREFERRED SECURITIES INCOME FUND LOGO)

                                     Annual
                                     Report

                                November 30, 2010

                               www.fcclaymore.com


ITEM 2. CODE OF ETHICS.

     (a)  The registrant, as of the end of the period covered by this report,
          has adopted a code of ethics that applies to the registrant's
          principal executive officer, principal financial officer, principal
          accounting officer or controller, or persons performing similar
          functions, regardless of whether these individuals are employed by the
          registrant or a third party.

     (c)  There have been no amendments, during the period covered by this
          report, to a provision of the code of ethics that applies to the
          registrant's principal executive officer, principal financial officer,
          principal accounting officer or controller, or persons performing
          similar functions, regardless of whether these individuals are
          employed by the registrant or a third party, and that relates to any
          element of the code of ethics description.

     (d)  The registrant has not granted any waivers, including an implicit
          waiver, from a provision of the code of ethics that applies to the
          registrant's principal executive officer, principal financial officer,
          principal accounting officer or controller, or persons performing
          similar functions, regardless of whether these individuals are
          employed by the registrant or a third party, that relates to one or
          more of the items set forth in paragraph (b) of this item's
          instructions.

ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.

As of the end of the period covered by the report, the registrant's board of
directors has determined that David Gale, Karen H. Hogan and Robert F. Wulf are
each qualified to serve as an audit committee financial expert serving on its
audit committee and that they all are "independent," as defined by the
Securities and Exchange Commission.

ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.

AUDIT FEES

     (a)  The aggregate fees billed for each of the last two fiscal years for
          professional services rendered by the principal accountant for the
          audit of the registrant's annual financial statements or services that
          are normally provided by the accountant in connection with statutory
          and regulatory filings or engagements for those fiscal years are
          $46,400 for 2010 and $46,400 for 2009.

AUDIT-RELATED FEES

     (b)  The aggregate fees billed in each of the last two fiscal years for
          assurance and related services by the principal accountant that are
          reasonably related to the performance of the audit of the



          registrant's financial statements and are not reported
          under paragraph (a) of this Item are $0 for 2010 and $0 for 2009.

TAX FEES

     (c)  The aggregate fees billed in each of the last two fiscal years for
          professional services rendered by the principal accountant for tax
          compliance, tax advice, and tax planning are $8,100 for 2010 and
          $8,100 for 2009.

ALL OTHER FEES

     (d)  The aggregate fees billed in each of the last two fiscal years for
          products and services provided by the principal accountant, other than
          the services reported in paragraphs (a) through (c) of this Item are
          $0 for 2010 and $8,600 for 2009. These services consist of the
          principal accountant providing a "Quarterly Agreed-Upon-Procedures
          Report on Articles Supplementary". These Agreed-Upon-Procedures
          ("AUP") are requirements arising from the Articles Supplementary
          creating the Fund's preferred stock. Specifically, the credit rating
          agencies require such AUP be undertaken in order to maintain the
          preferred stock's rating.

     (e)(1) The Fund's Audit Committee Charter states that the Audit Committee
          shall have the duty and power to pre-approve all audit and non-audit
          services to be provided by the auditors to the Fund, and all non-audit
          services to be provided by the auditors to the Fund's investment
          adviser and any service providers controlling, controlled by or under
          common control with the Fund's investment adviser that provide ongoing
          services to the Fund, if the engagement relates directly to the
          operations and financial reporting of the Fund.

     (e)(2) The percentage of services described in each of paragraphs (b)
          through (d) of this Item that were approved by the audit committee
          pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X are
          as follows:

               (b) 0%

               (c) 0%

               (d) 0%

     (f)  The percentage of hours expended on the principal accountant's
          engagement to audit the registrant's financial statements for the most
          recent fiscal year that were attributed to work performed by persons
          other than the principal accountant's full-time, permanent employees
          was 0%.

     (g)  The aggregate non-audit fees billed by the registrant's accountant for
          services rendered to the registrant, and rendered to the registrant's
          investment adviser (not including any sub-adviser whose role is
          primarily portfolio management and is subcontracted with or overseen
          by another investment adviser), and any entity controlling, controlled
          by, or under common control with the adviser that provides ongoing
          services to the registrant for each of the last two fiscal years of
          the registrant was $0 for 2010 and $0 for 2009.

     (h)  Not applicable.



ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.

(a)  The registrant has a separately designated audit committee consisting of
     all the independent directors of the registrant. The members of the audit
     committee are: David Gale, Morgan Gust, Karen H. Hogan, and Robert F. Wulf.

ITEM 6. INVESTMENTS.

(a)  Schedule of Investments in securities of unaffiliated issuers as of the
     close of the reporting period is included as part of the report to
     shareholders filed under Item 1 of this form.

(b)  Not applicable.

ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.

The Proxy Voting Policies are attached herewith.

                  ADVISER PROXY VOTING POLICIES AND PROCEDURES

Flaherty & Crumrine Incorporated ("F&C") acts as discretionary investment
adviser for various clients, including the following six pooled investment
vehicles (the "Funds"):

As adviser to the "U.S.
Funds"                           Flaherty & Crumrine Preferred Income Fund
                                 Flaherty & Crumrine Preferred Income
                                 Opportunity Fund
                                 Flaherty & Crumrine/Claymore Preferred
                                 Securities Income Fund
                                 Flaherty & Crumrine/Claymore Total Return Fund

As sub-adviser
to the "Canadian Fund"           Flaherty & Crumrine Investment Grade Fixed
                                 Income Fund

F&C's authority to vote proxies for its clients is established through the
delegation of discretionary authority under its investment advisory contracts
and the U.S. Funds have adopted these policies and procedures for themselves

PURPOSE

These policies and procedures are designed to satisfy F&C's duties of care and
loyalty to its clients with respect to monitoring corporate events and
exercising proxy authority in the best interests of such clients.

In connection with this objective, these policies and procedures are designed to
deal with potential complexities which may arise in cases where F&C's interests
conflict or appear to conflict with the interests of its clients.

These policies and procedures are also designed to communicate with clients the
methods and rationale whereby F&C exercises proxy voting authority.



This document is available to any client or Fund shareholder upon request and
F&C will make available to such clients and Fund shareholders the record of
F&C's votes promptly upon request and to the extent required by Federal law and
regulations.

FUNDAMENTAL STANDARD

F&C will be guided by the principle that, in those cases where it has proxy
voting authority, it will vote proxies, and take such other corporate actions,
consistent with the interest of its clients in a manner free of conflicts of
interest with the objective of client wealth maximization.

GENERAL

F&C has divided its discussion in this document into two major categories:
voting with respect to common stock and voting with respect to senior equity,
e.g., preferred stock and similar securities. In those events where F&C may have
to take action with respect to debt, such as in the case of amendments of
covenants or in the case of default, bankruptcy, reorganization, etc., F&C will
apply the same principles as would apply to common or preferred stock, MUTATIS
MUTANDIS.

These policies and procedures apply only where the client has granted
discretionary authority with respect to proxy voting. Where F&C does not have
authority, it will keep appropriate written records evidencing that such
discretionary authority has not been granted.

F&C may choose not to keep written copies of proxy materials that are subject to
SEC regulation and maintained in the SEC's EDGAR database. In other instances,
F&C will keep appropriate written records in its files or in reasonably
accessible storage.

Similarly, F&C will keep in its files, or reasonably accessible storage, work
papers and other materials that were significant to F&C in making a decision how
to vote.

For purposes of decision making, F&C will assume that each ballot for which it
casts votes is the only security of an issuer held by the client. Thus, when
casting votes where F&C may have discretionary authority with regard to several
different securities of the same issuer, it may vote securities "in favor" for
those securities or classes where F&C has determined the matter in question to
be beneficial while, at the same time, voting "against" for those securities or
classes where F&C has determined the matter to be adverse. Such cases
occasionally arise, for example, in those instances where a vote is required by
both common and preferred shareholders, voting as separate classes, for a change
in the terms regarding preferred stock issuance.

F&C will reach its voting decisions independently, after appropriate
investigation. It does not generally intend to delegate its decision making or
to rely on the recommendations of any third party, although it may take such
recommendations into consideration. F&C may consult with such other experts,
such as CPA's, investment bankers, attorneys, etc., as it regards necessary to
help it reach informed decisions.

Absent good reason to the contrary, F&C will generally give substantial weight
to management recommendations regarding voting. This is based on the view that
management is usually in the best position to know which corporate actions are
in the best interests of common shareholders as a whole.

With regard to those shareholder-originated proposals which are typically
described as "social, environmental, and corporate responsibility" matters, F&C
will typically give weight to management's recommendations and vote against such
shareholder proposals, particularly if the adoption of such proposals would
bring about burdens or costs not borne by those of the issuer's competitors.



In cases where the voting of proxies would not justify the time and costs
involved, F&C may refrain from voting. From the individual client's perspective,
this would most typically come about in the case of small holdings, such as
might arise in connection with spin-offs or other corporate reorganizations.
From the perspective of F&C's institutional clients, this envisions cases (1) as
more fully described below where preferred and common shareholders vote together
as a class or (2) other similar or analogous instances.

Ultimately, all voting decisions are made on a case-by-case basis, taking
relevant considerations into account.

VOTING OF COMMON STOCK PROXIES

F&C categorizes matters as either routine or non-routine, which definition may
or may not precisely conform to the definitions set forth by securities
exchanges or other bodies categorizing such matters. Routine matters would
include such things as the voting for directors and the ratification of auditors
and most shareholder proposals regarding social, environmental, and corporate
responsibility matters. Absent good reason to the contrary, F&C normally will
vote in favor of management's recommendations on these routine matters.

Non-routine matters might include, without limitation, such things as (1)
amendments to management incentive plans, (2) the authorization of additional
common or preferred stock, (3) initiation or termination of barriers to takeover
or acquisition, (4) mergers or acquisitions, (5) changes in the state of
incorporation, (6) corporate reorganizations, and (7) "contested" director
slates. In non-routine matters, F&C, as a matter of policy, will attempt to be
generally familiar with the questions at issue. This will include, without
limitation, studying news in the popular press, regulatory filings, and
competing proxy solicitation materials, if any. Non-routine matters will be
voted on a case-by-case basis, given the complexity of many of these issues.

VOTING OF PREFERRED STOCK PROXIES

Preferred stock, which is defined to include any form of equity senior to common
stock, generally has voting rights only in the event that the issuer has not
made timely payments of income and principal to shareholders or in the event
that a corporation desires to effectuate some change in its articles of
incorporation which might modify the rights of preferred stockholders. These are
non-routine in both form and substance.

In the case of non-routine matters having to do with the modification of the
rights or protections accorded preferred stock shareholders, F&C will attempt,
wherever possible, to assess the costs and benefits of such modifications and
will vote in favor of such modifications only if they are in the bests interests
of preferred shareholders or if the issuer has offered sufficient compensation
to preferred stock shareholders to offset the reasonably foreseeable adverse
consequences of such modifications. A similar type of analysis would be made in
the case where preferred shares, as a class, are entitled to vote on a merger or
other substantial transaction.

In the case of the election of directors when timely payments to preferred
shareholders have not been made ("contingent voting"), F&C will cast its votes
on a case-by-case basis after investigation of the qualifications and
independence of the persons standing for election.

Routine matters regarding preferred stock are the exception, rather than the
rule, and typically arise when the preferred and common shareholders vote
together as a class on such matters as election of directors. F&C will vote on a
case-by-case basis, reflecting the principles set forth elsewhere in this



document. However, in those instances (1) where the common shares of an issuer
are held by a parent company and (2) where, because of that, the election
outcome is not in doubt, F&C does not intend to vote such proxies since the time
and costs would outweigh the benefits.

ACTUAL AND APPARENT CONFLICTS OF INTEREST

Potential conflicts of interest between F&C and F&C's clients may arise when
F&C's relationships with an issuer or with a related third party conflict or
appear to conflict with the best interests of F&C's clients.

F&C will indicate in its voting records available to clients whether or not a
material conflict exists or appears to exist. In addition, F&C will communicate
with the client (which means the independent Directors or Director(s) they may
so designate in the case of the U.S. Funds and the investment adviser in the
case of the Canadian Funds) in instances when a material conflict of interest
may be apparent. F&C must describe the conflict to the client and state F&C's
voting recommendation and the basis therefor. If the client considers there to
be a reasonable basis for the proposed vote notwithstanding the conflict or, in
the case of the Funds, that the recommendation was not affected by the conflict
(without considering the merits of the proposal), F&C will vote in accordance
with the recommendation it had made to the client.

In all such instances, F&C will keep reasonable documentation supporting its
voting decisions and/or recommendations to clients.

AMENDMENT OF THE POLICIES AND PROCEDURES

These policies and procedures may be modified at any time by action of the Board
of Directors of F&C but will not become effective, in the case of the U.S.
Funds, unless they are approved by majority vote of the non-interested directors
of the U.S. Funds. Any such modifications will be sent to F&C's clients by mail
and/or other electronic means in a timely manner. These policies and procedures,
and any amendments hereto, will be posted on the U.S. Funds' websites and will
be disclosed in reports to shareholders as required by law.

ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.

The following paragraphs provide certain information with respect to the
portfolio managers of the Fund and the material conflicts of interest that may
arise in connection with their management of the investments of the Fund, on the
one hand, and the investments of other client accounts for which they have
responsibility, on the other hand. Certain other potential conflicts of interest
with respect to personal trading and proxy voting are discussed above under
"Item 2 - Codes of Ethics" and "Item 7 - Proxy Voting Policies."

(A)(1) PORTFOLIO MANAGERS

R. Eric Chadwick, Donald F. Crumrine, Robert M. Ettinger and Bradford S. Stone
jointly serve as the Portfolio Managers of the Fund. Additional biographical
information about the portfolio managers is available in the Annual Report
included in Response to Item 1 above.

(A)(2) OTHER ACCOUNTS MANAGED BY PORTFOLIO MANAGERS

The tables below illustrate other accounts where each of the above-mentioned
four portfolio managers has significant day-to-day management responsibilities
as of November 30, 2010:





                                                                                                      # of Accounts
                                                                                                    Managed for which
                                                                         Total                       Advisory Fee is
Name of Portfolio Manager                                            # of Accounts   Total Assets        Based on
      or Team Member                   Type Of Accounts                 Managed          (mm)          Performance
-------------------------   --------------------------------------   -------------   ------------   -----------------
                                                                                        
1. Donald F. Crumrine       Other Registered Investment Companies:          3              602              0
                            Other Pooled Investment Vehicles:               1              194              0
                            Other Accounts:                                12            2,155              0
2. Robert M. Ettinger       Other Registered Investment Companies:          3              602              0
                            Other Pooled Investment Vehicles:               1              194              0
                            Other Accounts:                                12            2,155              0
3. R. Eric Chadwick         Other Registered Investment Companies:          3              602              0
                            Other Pooled Investment Vehicles:               1              194              0
                            Other Accounts:                                12            2,155              0
4. Bradford S. Stone        Other Registered Investment Companies:          3              602              0
                            Other Pooled Investment Vehicles:               1              194              0
                            Other Accounts:                                12            2,155              0


POTENTIAL CONFLICTS OF INTEREST

In addition to the Fund, the Portfolio Managers jointly manage accounts for
three other closed-end funds, one Canadian fund and other institutional clients.
As a result, potential conflicts of interest may arise as follows:

     -    ALLOCATION OF LIMITED TIME AND ATTENTION. The Portfolio Managers may
          devote unequal time and attention to the management of all accounts.
          As a result, the Portfolio Managers may not be able to formulate as
          complete a strategy or identify equally attractive investment
          opportunities for each of those accounts as might be the case if they
          were to devote substantially more attention to the management of one
          account.

     -    ALLOCATION OF LIMITED INVESTMENT OPPORTUNITIES. If the Portfolio
          Managers identify an investment opportunity that may be suitable for
          multiple accounts, the Fund may not be able to take full advantage of
          that opportunity because the opportunity may need to be allocated
          among other accounts.

     -    PURSUIT OF DIFFERING STRATEGIES. At times, the Portfolio Managers may
          determine that an investment opportunity may be appropriate for only
          some accounts or may decide that certain of these accounts should take
          differing positions (i.e., may buy or sell the particular security at
          different times or the same time or in differing amounts) with respect
          to a particular security. In these cases, the Portfolio Manager may
          place separate transactions for one or more accounts which may affect
          the market price of the security or the execution of the transaction,
          or both, to the detriment of one or more other accounts.

     -    VARIATION IN COMPENSATION. A conflict of interest may arise where the
          financial or other benefits available to the Portfolio Manager differ
          among accounts. While the Adviser only charges fees based on assets
          under management and does not receive a performance fee from any of
          its accounts, and while it strives to maintain uniform fee schedules,
          it does have different fee schedules based on the differing advisory
          services required by some accounts. Consequently, though the
          differences in such fee rates are slight, the Portfolio Managers may
          be motivated to favor certain accounts over others. In addition, the
          desire to maintain assets under management or to derive other rewards,
          financial or otherwise, could



          influence the Portfolio Managers in affording preferential treatment
          to those accounts that could most significantly benefit the Adviser.

The Adviser and the Fund have adopted compliance policies and procedures that
are designed to address the various conflicts of interest that may arise for the
Adviser and its staff members. However, there is no guarantee that such policies
and procedures will be able to detect and prevent every situation in which an
actual or potential conflict may arise.

(A)(3) PORTFOLIO MANAGER COMPENSATION

Compensation is paid solely by the Adviser. Each Portfolio Manager receives the
same fixed salary. In addition, each Portfolio Manager receives a bonus based on
peer reviews of his performance and the total net investment advisory fees
received by Flaherty & Crumrine (which are in turn based on the value of its
assets under management). The Portfolio Managers do not receive deferred
compensation, but participate in a profit-sharing plan available to all
employees of the Adviser; amounts are determined as a percentage of the
employee's eligible compensation for a calendar year based on IRS limitations.
Each Portfolio Manager is also a shareholder of Flaherty & Crumrine and receives
quarterly dividends based on his equity interest in the company.

(A)(4) DISCLOSURE OF SECURITIES OWNERSHIP

The following indicates the dollar range of beneficial ownership of shares by
each Portfolio Manager as of November 30, 2010:



                     Dollar Range of Fund Shares
       Name              Beneficially Owned*
------------------   ---------------------------
                  
Donald F. Crumrine      $100,001 to $  500,000
Robert M. Ettinger      $500,001 to $1,000,000
R. Eric Chadwick        $100,001 to $  500,000
Bradford S. Stone       $100,001 to $  500,000


*    INCLUDES 4,346 SHARES HELD BY FLAHERTY & CRUMRINE INCORPORATED OF WHICH
     EACH PORTFOLIO MANAGER HAS BENEFICIAL OWNERSHIP.

(B)  Not applicable.

ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.

Not applicable.

ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

There have been no material changes to the procedures by which the shareholders
may recommend nominees to the registrant's board of directors, where those
changes were implemented after the registrant last provided disclosure in
response to the requirements of Item 407(c)(2)(iv) of Regulation S-K (17 CFR
229.407) (as required by Item 22(b)(15) of Schedule 14A (17 CFR 240.14a-101)),
or this Item.



ITEM 11. 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 second
          fiscal quarter of the period covered by this report that has
          materially affected, or is reasonably likely to materially affect, the
          registrant's internal control over financial reporting.

ITEM 12. EXHIBITS.

     (a)(1) Code of ethics, or any amendment thereto, that is the subject of
          disclosure required by Item 2 is attached hereto.

     (a)(2) Certifications pursuant to Rule 30a-2(a) under the 1940 Act and
          Section 302 of the Sarbanes-Oxley Act of 2002 are attached hereto.

     (a)(3) Not applicable.

     (b)  Certifications pursuant to Rule 30a-2(b) under the 1940 Act and
          Section 906 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 January 26, 2011

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 January 26, 2011


By (Signature and Title)* /s/ R. Eric Chadwick
                          --------------------------------------
                          R. Eric Chadwick, Chief Financial
                          Officer, Treasurer and Vice President
                          (principal financial officer)

Date January 26, 2011

*    Print the name and title of each signing officer under his or her
     signature.