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

Donald F. Crumrine
Flaherty & Crumrine Incorporated
301 E. Colorado Boulevard, Suite 720
Pasadena,CA 91101

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

Date of fiscal year end: November 30

Date of reporting period: May 31, 2011

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.

Flaherty & Crumrine/Claymore Preferred Securities Income Fund Incorporated

Correction to Semi-Annual Report for the Six Months Ended May 31, 2011

Please note that the semi-annual report mailed by the Fund in late July 2011 contained a chart on page 7 with incorrect data. The corrected chart is shown below.

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:

     During the three month period ending May 31, 2011, the Fund’s total return on net asset value was +5.4%. Over the first half of fiscal 2011 the return on NAV was +11.8%. The table below presents these and other performance measures of interest to investors.

TOTAL RETURN ON NET ASSET VALUE
FOR PERIODS ENDED MAY 31, 2011

		ACTUAL RETURNS												AVERAGE ANNUALIZED RETURNS
		THREE				SIX				ONE				THREE				FIVE				LIFE OF
		MONTHS				MONTHS				YEAR				YEARS				YEARS				FUND(1)
Flaherty & Crumrine/Claymore
Preferred Securities Income Fund			5.4	%			11.8	%			32.7	%			14.3	%			5.9	%			6.5	%
Barclays Capital U.S. Aggregate Index(2)			2.6	%			1.9	%			5.8	%			6.5	%			6.6	%			5.2	%
S&P 500 Index(3)			1.8	%			15.0	%			26.0	%			0.9	%			3.3	%			7.6	%

Current performance may be lower or higher than the quoted past performance, which cannot guarantee future results. In addition, NAV performance will vary from market price performance, and you may have a taxable gain or loss when you sell your shares.

     At the risk of sounding like a broken record, we reprise our caution of the past few letters: returns of this magnitude are unlikely to be repeated. The market for preferred securities has had a nice run recovering from the depths of the financial crisis in early 2009. Prices on many securities are now at or above levels of three years ago, and we view the overall preferred market as fairly priced relative to other broad asset classes.

     Of course, this does not mean all individual securities are perfectly valued. Pricing inefficiencies are an endearing part of the preferred market, and it is unlikely this will change. Part of our job is to identify and take advantage of opportunities as they present themselves. Our credit analysis and security selection, as well as effective management of leverage, have been at the heart of the Fund’s excellent performance.

     Financial markets are still facing some major uncertainties. First and foremost, the economic outlook is as cloudy as ever. European leaders are dealing with the Greek debt crisis, and other sovereign credit problems are lurking in the background. Private sector debt shrunk during the financial crisis; now it’s the public sector’s turn, and it is far from clear how that will play out. Effects of the Japanese earthquake and

tsunami are still being felt and likely will take years to resolve fully. The housing market remains an albatross around the neck of the U.S. economy (among others). And worldwide, financial regulators have yet to fully articulate a new set of rules for bank capital and regulation.

     We see both risk and opportunity in these uncertainties. As always, we will do our best to minimize, the risk and capitalize on the opportunities.

     In the discussion topics that follow, we present a more detailed review of the Fund’s performance, as well as further discussion on several topics mentioned above. As always, we encourage you to visit www.fcclaymore.com to read our Quarterly Economic Update, as well as more detailed discussion of the wonderful world of preferred securities.

Sincerely,

-s- Donald F. Crumrine		-s- Robert M. Ettinger
Donald F. Crumrine Chairman		Robert M. Ettinger President

July 8, 2011

DISCUSSION TOPICS

THE FUND’S PORTFOLIO RESULTS AND COMPONENTS OF TOTAL RETURN ON NET ASSET VALUE (NAV)

     The table below reflects performance of each investment technique available for use by the Fund to achieve its objective, namely: (a) investing in a portfolio of securities; (b) possibly 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 the Fund’s NAV.

COMPONENTS OF FFC’S TOTAL RETURN ON NAV
FOR THE SIX MONTHS ENDED MAY 31, 2011

		Six Months*
Total Return on Unleveraged Securities Portfolio (including principal and income)			+8.3	%
Return from Interest Rate Hedging Strategy			N/A
Impact of Leverage (including leverage expense)			+4.0	%
Expenses (excluding leverage expense)			-0.5	%
Total Return on NAV			+11.8	%

     Over the first half of fiscal 2011, the Fund’s investment portfolio has continued to perform well, both absolutely and relative to various sectors of the preferred market as measured by the various Bank of America Merrill Lynch preferred market indices shown in the table below. During this recent six month period, only the Bank of America Merrill Lynch adjustable-rate preferred index, reflecting just 2% of the total preferred market, earned a comparable return to that of the Fund’s portfolio (the first row of the above table).

TOTAL RETURNS OF BANK OF AMERICA MERRILL LYNCH PREFERRED SECURITIES INDICES*
FOR THE SIX MONTHS ENDED MAY 31, 2011

		Six Months*
BofA Merrill Lynch 8% Capped DRD Preferred Stock IndexSM			+6.0	%
BofA Merrill Lynch 8% Capped Hybrid Preferred Securities IndexSM			+5.1	%
BofA Merrill Lynch 8% Capped Corporate U.S. Capital Securities IndexSM			+6.2	%
BofA Merrill Lynch Adjustable Preferred Stock, 7% Constrained IndexSM			+8.1	%

     The Fund’s six-month NAV performance (positive 11.8%) demonstrates continued success of the strategy of using leverage to enhance return on the Fund’s portfolio sufficiently to absorb its expenses and permit the NAV of the Fund to still outperform all of the unleveraged preferred market indices.

TOTAL RETURN ON MARKET PRICE OF FUND SHARES

     While our focus continues to be on managing the Fund’s investment portfolio, an investor’s actual return is comprised of monthly dividend payments plus changes in the market price of Fund shares. Even following the strong results over recent years, the market price of Fund shares continued to perform well during the current fiscal year-to-date, producing a total return of +13.1% through May 31st.

     In a perfect world, the market price of Fund shares would track the Fund’s NAV. As can be seen from the graph below, this often is not the case. Since the Fund’s inception, its market price has generally been moderately below its NAV (in market parlance, “trading at a discount”), and dropped well below the underlying value of each Fund share during the depths of the recent financial crisis. However, more recently the market price has traded more in line with the underlying value of the Fund’s shares, and currently is trading at a premium to NAV. Because the Fund’s premium to NAV expanded slightly over the current fiscal year-to-date, the total return earned on its market price exceeded the total return on NAV.

Flaherty & Crumrine/Claymore Preferred Securities Income Fund (FFC)
Premium/Discount of Market Price to NAV through 06/30/2011

     Based on a closing price of $17.80 on June 30th and the Fund’s current monthly dividend of $0.13, the current distribution rate on market price of the Fund’s shares is 8.8%. Because of the leverage employed by the Fund and other factors, this distribution rate compares very favorably with those available on other strategies investing in preferred securities, including ETFs and open-end funds.

PREFERRED MARKET CONDITIONS

     Conditions in the market remain positive, although an uncertain economic environment and unresolved regulatory issues are impacting activity. The best barometers for market conditions are trading volume, bid-offer spreads, and new issue activity. At present, all three measures are off from last quarter, but still indicate healthy conditions.

     Market activity often slows during the summer, so we don’t read anything meaningful in the decline. We are more focused on the impact of new regulations (discussed below) and how financial institutions transition to the new rules. Of particular interest are securities which under certain circumstances may be called by the issuer to the detriment of investors. In May, Fifth Third Bancorp exercised such a call and the market was certainly caught by surprise. As a result, other issues with similar features declined in price to reflect the risk of early redemption. Having been aware of this risk for some time, the Fund’s portfolio had limited exposure to these issues.

     There were 26 new issues during the quarter, totaling just under $10 billion. The bulk of the issuance was from REITs and insurance companies. And, reflecting ongoing demand from retail investors, most of these new issues came in a format favored by individual investors-$25 par, exchange listed and five years of call protection.

     During the quarter, issuers redeemed 28 issues with a market value of just under $8.8 billion. The fact that the number and amount approximate those of new issues is mostly coincidental; however, some companies did take advantage of market conditions to refinance high-cost preferred securities with new, less-expensive securities. Of course, as issuers reduce interest expense, investor income falls as well. We try to minimize the impact of these transactions, but over time, if interest rates remain low, income earned by the Fund is likely to decline.

     Finally, we observe with a sense of irony the likely shift back to days of old when “traditional” preferred stock was the only security (other than common stock) that banks could treat as capital (discussed more fully in the discussion of bank regulation below). The market appears well positioned to handle a transition in which hybrid and trust preferred issues get replaced with non-cumulative, perpetual preferred stock. This change is likely to have a significant impact on the Fund’s portfolio, although it is too early to know the overall effect of the change. We believe bank credit quality will improve; however, income earned on the Fund’s portfolio may fall if new issues come to market at lower yields.

UPDATE ON REGULATORY AND CAPITAL REFORM FOR BANKS

     June saw further clarification on new “Basel III” international banking regulations being developed by the Basel Committee on Banking Supervision. The Committee announced that it had determined that globally-systemically important financial institutions should hold up to an additional 2.5% of common equity above and beyond that required of smaller banks. The idea is to reduce the likelihood of a failure of a large global bank, which could put the entire financial system at risk because of the bank’s size, interconnectedness, lack of substitutability, global activity and complexity.

     As we’ve discussed previously, international and national banking regulators have responded to the 2008-2009 financial crisis with new regulation and stiffer capital requirements. As a refresher, we’ll briefly summarize the key features of bank regulatory reform from the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank), and bank capital requirements of the Basel III framework — both from the perspective of preferred investors.

     Of primary importance to investors in preferred securities are the regulations surrounding bank capital requirements: in other words, (1) how much and what types of capital will banks be required to hold, and (2) what features will securities need in order to qualify as a particular form of capital? We expect national regulators to offer preliminary rules on capital later this summer or early fall, followed by a comment period of several months. That should put the market on track for final U.S. bank capital rules late this year or early next year.

     How much capital? Under Basel III, banks will be required to maintain much higher levels of capital than in the past, particularly at the common equity level. Minimum common equity capital will rise from the current 2.5% of risk-weighted assets (RWA) to 7%, including a “capital conservation buffer” when fully implemented in 2019.

     Basel III still leaves a role for preferred securities in a bank’s capital structure, as it requires total Tier 1 capital of 8.5%, with the additional 1.5% comprised of common and/or preferred equity. Further, total capital must be 10.5%, with the additional 2.0% above Tier 1 consisting of both Tier 1 and other capital.

     In addition, all banks will be subject to a “countercyclical” capital buffer ranging from 0% to 2.5%, as determined by national regulators; and large global banks will be subject to the 1% to 2.5% “systemically important financial institution” capital buffer.

     While individual countries still need to adopt these standards, we expect that the great majority will do so. In fact, Switzerland has already announced that its two systemically important banks, UBS and Credit Suisse, will be required to hold total capital of at least 19% of RWA, including a Tier 1 common equity ratio of 10% — well in excess of the Basel III standard.

     What type of preferred security qualifies as Tier 1 capital? Basel III also introduces loss absorbency rules for preferred securities. The theory is that all Tier 1 capital should be able to absorb losses on both a “gone concern” basis 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. Basel III provides that regulators must have the ability to force the conversion of preferreds to common stock, or lower or write off the preferred liability if they believe the bank is no longer viable.

     Preferred securities, however, don’t need to incorporate such terms explicitly. If a country’s bank resolution regime incorporates a system for allocating losses to capital providers prior to the injection of state funding, then the loss provision language is not required. While we won’t know for sure until final rules are written for the United States, it appears that Dodd-Frank gives U.S. bank regulators just such authority. As a result, it is likely that perpetual, noncumulative U.S. bank preferreds eligible for the dividends received deduction will remain qualifying Tier 1 capital under the new rules. Other countries are likely to adopt similar resolution regimes as well.

     Dodd-Frank also makes significant changes to U.S. banks’ operations and capital requirements. Most importantly for preferred investors, it eliminates trust preferred securities (TruPS) from Tier 1 capital for most banks the Fund invests in. 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 May 31, approximately 20% of the Fund’s portfolio was invested in TruPS issued by U.S. banks.

     We continue to believe that the Dodd-Frank and Basel III regulatory changes will be positive for investors in preferred securities. Banks will need to hold significantly more common equity capital than they have in the past. In fact, they already do. This will give banks much more capacity to absorb losses before preferred investments are in danger of impairment. While all these regulatory changes create uncertainty in the market, we believe they will be beneficial for preferreds.

THE FUND’S LEVERAGE

     Leverage is an important part of the Fund’s strategy for producing high current income. The cost of leverage typically is lower than the yield on the Fund’s portfolio. The difference between what the Fund earns on its investments and pays on borrowed money increases income available to common shareholders. Over the past six months, the Fund has paid an average annualized interest rate of 1.3% on its borrowed money. Given the much higher current yields generated by the Fund’s portfolio, this use of leverage has had a meaningful positive impact on the Fund’s dividends to common shareholders.

     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.

     As reflected by the table, the dramatic recovery in asset prices has meant the Fund has been able to comfortably increase borrowings and use the money to purchase additional securities. During the first six months of this fiscal year, the Fund has continued to increase its leverage balances, while not significantly increasing the leverage ratio.

     The “right” percentage of leverage in a fund is never simple to determine. Type of borrowing, 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.

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. Therefore, 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.

     Re-examining those three factors today, we believe that conditions have moved us closer to reinstating the Fund’s hedging strategy, but we are not there yet. First, the correlation between preferred securities and our hedging instruments has improved, but it remains both weaker and significantly less stable than historical norms. Second, owing largely to the steepness of the yield curve, options continue to be very expensive. The third factor, preferred securities’ valuation, currently sits within the range we would consider “normal,” but by itself that does not persuade us to hedge the Fund’s portfolio exposure just yet. We will continue to evaluate market conditions and may reinstate the Fund’s hedging strategy if we judge that conditions warrant it.

INVESTMENT POLICY MODIFICATION

     On February 3, 2011 the Fund announced the following changes to its investment policies. These changes were effective on April 4, 2011.

     OLD POLICY: At time of purchase, at least 80% of the securities that the Fund will acquire will be rated investment grade by either Moody’s Investors Services, Inc. (“Moody’s”) or Standard & Poor’s Corporation (“S&P”), or, if unrated, judged to be comparable in quality. In addition, the Fund may invest up to 20% of its assets at the time of purchase in securities rated below investment grade by both Moody’s and S&P, if (a) such securities are rated at least “Ba3” by Moody’s or “BB-” by S&P and (b) such securities are issued by an issuer having an outstanding class of senior debt rated investment grade at the time of purchase. Thus, the Fund may not invest in securities rated below “Ba3” by Moody’s and below “BB-” by S&P.

     NEW POLICY: At time of purchase, at least 80% of the securities that the Fund will acquire will be rated investment grade by any one of Moody’s, S&P or Fitch Ratings Group (“Fitch”). In addition, the Fund may invest up to 20% of its assets at the time of purchase in securities rated below investment grade by all of Moody’s, S&P and Fitch, provided that (a) such securities are rated at least “Ba3” by Moody’s, “BB-” by S&P, or “BB-” by Fitch or (b) such securities are issued by an issuer having an outstanding class of senior debt rated investment grade by any one of Moody’s, S&P, or Fitch at the time of purchase. Thus, the Fund may invest in securities rated below “Ba3” by Moody’s, “BB-” by S&P and “BB-” by Fitch if the issuer has investment grade senior debt outstanding.

IMPACT OF CHANGES:

	(1)		Fitch is now one of the approved ratings agencies for determining whether a security meets the definition of “investment grade” for purposes of the Fund’s policy of investing at least 80% of its assets in securities rated investment grade at the time of purchase or in securities of equivalent quality;
	(2)		The Fund may now purchase securities rated below Ba3/BB-/BB- by each of Moody’s, S&P and Fitch, respectively, as long as the senior debt of the same issuer is rated investment grade by any one of Moody’s, S&P or Fitch at the time of purchase; and
	(3)		If the senior debt of an issuer is unrated or it has no outstanding senior debt, the Fund may now purchase its preferred securities if they are rated at least Ba3/BB-/BB- by any one of Moody’s, S&P or Fitch, respectively.

     As a result of these changes, a security would be counted as investment grade if it had an investment grade rating by any one of Moody’s, S&P or Fitch, even if the other two rating agencies rated it below investment grade. The effect of this change would be to reduce the Fund’s holdings deemed below investment grade purchases, as of January 31, 2011, from 15.7% to 12.0%. In addition, the Fund would be authorized to purchase below Ba or BB securities of investment grade issuers, subject to an overall 20% limit on purchasing below investment grade securities. While this change would permit the Fund to acquire securities rated B and below, the Fund’s adviser has no current intention of doing so.

     As before, the Fund will apply the ratings criteria at the time of purchase and the Fund will not be required to dispose of securities if, after purchase, they are downgraded, although the adviser may take this into account in determining whether to retain the security. As a result, more than 20% of the Fund’s holdings at any time may be rated below investment grade or in equivalent securities. In addition, as before, the Fund may invest in unrated securities that the Fund’s investment adviser deems to be comparable in quality to rated issues in which the Fund is authorized to invest.

RISKS OF INVESTING IN SECURITIES RATED BELOW BA3/BB-

     The Fund can purchase below-investment grade securities with ratings of at least Ba3 by Moody’s and BB- by S&P and Fitch; such ratings generally indicate an issuer that is less vulnerable to non-payment of its obligations than other speculative issuers. The issuer, however, faces major ongoing uncertainty or exposure to adverse business, financial or economic conditions that could lead to inadequate capacity to meet its financial commitments. Under the Fund’s new investment policy with respect to the investment grade rating of securities, the Fund may invest in securities with ratings below Ba3/BB- so long as the issuer of such securities has an outstanding class of senior debt rated investment grade by any one of Moody’s, S&P or Fitch. Although a company’s senior debt rating may be investment grade, an underlying security issued by such company in which the Fund may invest may have a lower than investment grade rating. A security with a rating below Ba3/BB- generally indicates the issuer of such security has a high degree of vulnerability of not paying its financial obligations. A security rated B1 to B3 by Moody’s, or B+ to B- by S&P or Fitch, for example, indicates an issuer that is more vulnerable to not paying its obligations than a Ba3 or BB- issuer; the issuer, however, currently has the capacity to meet its financial commitments, although adverse business, financial, or economic conditions will likely impair the issuer’s capacity or willingness to meet its financial commitments. Securities rated Caa by Moody’s or CCC by S&P or Fitch indicate an issuer that is highly speculative and likely to be in, or very near default with some prospects of recovery of principal and interest, although the issuer is dependent upon favorable business, financial, and economic conditions to meet its financial commitments. Securities rated below Caa or CCC generally indicate an issuer that is highly vulnerable to not paying its obligations or that has defaulted on an obligation.

Flaherty & Crumrine/Claymore Preferred Securities Income Fund Incorporated
PORTFOLIO OVERVIEW
MAY 31, 2011 (UNAUDITED)

FUND STATISTICS
Net Asset Value		$	17.41
Market Price		$	18.16
Premium			4.31	%
Yield on Market Price			8.59	%
Common Stock Shares Outstanding			42,943,323

MOODY’S RATINGS		% OF NET ASSETS+
AAA			0.4	%
A			8.0	%
BBB			73.9	%
BB			12.5	%
Below “BB”			3.0	%
Not Rated*			0.5	%
Below Investment Grade(**)			8.8	%

TOP 10 HOLDINGS BY ISSUER		% OF NET ASSETS+
Liberty Mutual Group			5.6	%
Banco Santander			5.3	%
Capital One Financial			4.2	%
Metlife			3.9	%
Dominion Resources			3.3	%
HSBC Plc			3.1	%
Enbridge Energy Partners			2.8	%
Axis Capital			2.7	%
Wells Fargo			2.6	%
Puget Energy			2.5	%

		% OF NET ASSETS***+
Holdings Generating Qualified Dividend Income (QDI) for Individuals			33	%
Holdings Generating Income Eligible for the Corporate Dividends Received Deduction (DRD)			17	%

Flaherty & Crumrine/Claymore Preferred Securities Income Fund Incorporated
PORTFOLIO OF INVESTMENTS
May 31,2011 (Unaudited)

SHARES/$ PAR						VALUE
PREFERRED SECURITIES — 93.9%
				BANKING — 37.0%
$	17,750,000			Astoria Capital Trust I, 9.75% 11/01/29, Series B		$	18,520,740	(1)
	2,046,320			Banco Santander, 10.50% Pfd., Series 10			59,755,613	**(1)(2)
				Bank of America Corporation:
	128,305			8.20% Pfd			3,359,025	*
	103,235			8.625% Pfd			2,726,436	*(1)
$	2,815,000			BankAmerica Institutional, Series A, 8.07% 12/31/26, 144A****			2,906,487
				Barclays Bank PLC:
$	14,750,000			6.278%			13,201,250	**(1)(2)
	3,300			7.75% Pfd., Series 4			84,711	**(2)
	529,700			8.125% Pfd., Series 5			13,925,813	**(1)(2)
	27,800			BB&T Capital Trust V, 8.95% Pfd. 09/15/63			741,045
	143,290			BB&T Capital Trust VI, 9.60% Pfd. 08/01/64			3,808,648
$	8,490,000			BBVA International Preferred, 5.919%			7,406,540	**(1)(2)
$	13,500,000			BNP Paribas, 7.195%, 144A****			13,500,000	**(1)(2)
$	34,990,000			Capital One Capital III, 7.686% 08/15/36			36,127,175	(1)
$	5,362,000			Capital One Capital V, 10.25% 08/15/39			5,737,340
$	5,350,000			Capital One Capital VI, 8.875% 05/15/40			5,584,063	(1)
	341,100			Citigroup Capital XIII, 7.875% Pfd. 10/30/40			9,540,158	(1)
$	35,100,000			Colonial BancGroup, 7.114%, 144A****			1,579,500	(3)
	28,800			FBOP Corporation, Adj. Rate Pfd., 144A****			72,000	*(3)(4)
$	8,785,000			Fifth Third Capital Trust IV, 6.50% 04/15/37			8,785,000	(1)
	40,000			Fifth Third Capital Trust V, 7.25% Pfd. 08/15/67			1,018,800
	513,700			Fifth Third Capital Trust VI, 7.25% Pfd. 11/15/67			13,147,535	(1)
	7,850			First Republic Preferred Capital Corporation, 10.50% Pfd., 144A****			8,075,688	(1)
	14,500			First Tennessee Bank, Adj. Rate Pfd., 3.75%(5), 144A****			9,610,781	*
$	1,500,000			Fleet Capital Trust II, 7.92% 12/11/26			1,548,750
	8			FT Real Estate Securities Company, 9.50% Pfd., 144A****			7,760,000
				Goldman Sachs:
$	2,550,000			Capital I, 6.345% 02/15/34			2,463,558	(1)
$	4,362,000			Capital II, 5.793%			3,664,080	(1)
	3,600			STRIPES Custodial Receipts, Adj. Rate, 10.70%(5), Pvt			2,264,400	*(3)(4)
	714,400			HSBC Holdings PLC, 8.00% Pfd., Series 2			19,556,700	**(1)(2)
$	1,500,000			HSBC USA Capital Trust II, 8.38% 05/15/27, 144A****			1,567,186
				HSBC USA, Inc.:
	500,000			6.50% Pfd., Series H			12,656,250	*(1)
	3,750			$2.8575 Pfd			182,813	*
	98,825			ING Groep NV, 8.50% Pfd			2,542,767	**(2)

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

Flaherty & Crumrine/Claymore Preferred Securities Income Fund Incorporated
PORTFOLIO OF INVESTMENTS (CONTINUED)
MAY 31, 2011 (UNAUDITED)

SHARES/$ PAR						VALUE
PREFERRED SECURITIES — (CONTINUED)
				BANKING — (CONTINUED)
$	5,900,000			JPMorgan Chase Capital XVIII, 6.95% 08/17/36, Series R		$	6,084,222	(1)
$	6,500,000			JPMorgan Chase Capital XXVII, 7.00% 11/01/39, Series AA			6,719,615	(1)
	30,405			Keycorp Capital VIII, 7.00% Pfd. 06/15/66			775,328
	241,593			Keycorp Capital IX, 6.75% Pfd. 12/15/66			6,170,648	(1)
	279,600			Keycorp Capital X, 8.00% Pfd. 03/15/68			7,224,864	(1)
$	17,800,000			Lloyds Banking Group PLC, 6.657%, 144A****			13,928,500	**(2)+
	78,000			National City Capital Trust II, 6.625% Pfd. 11/15/36			1,990,677
$	9,265,000			National City Preferred Capital Trust I, 12.00%			10,192,955
$	4,767,000			NB Capital Trust IV, 8.25% 04/15/27			4,939,804	(1)
	164,520			PNC Financial Services, 9.875% Pfd., Series L			4,704,252	*(1)
$	2,500,000			PNC Preferred Funding Trust III, 8.70%, 144A****			2,676,627	(1)
	8,641			Sovereign REIT, 12.00% Pfd., Series A, 144A****			10,217,983
	60			Union Planters Preferred Funding, 7.75% Pfd., Series A, 144A****			5,551,875
	535,705			Wachovia Preferred Funding, 7.25% Pfd., Series A			14,143,951	(1)
				Washington Mutual:
$	2,100,000			9.75%, 144A****			52,500	++
$	10,050,000			6.534%, 144A****			251,250	++
$	11,067,000			Webster Capital Trust IV, 7.65% 06/15/37			11,084,895	(1)
				Wells Fargo & Company:
	11,173			7.50% Pfd., Series L			12,122,705	*
	100,000			8.00% Pfd., Series J			2,884,000	*
$	105,000			Wells Fargo Capital XV, 9.75%			113,400
							415,250,903
				FINANCIAL SERVICES - 3.6%
$	1,340,000			Ameriprise Financial, Inc., 7.518% 06/01/66			1,443,850	(1)
$	5,230,000			Claudius, Ltd. — Credit Suisse AG, 7.875%, Series B			5,471,887	(2)
$	7,000,000			Gulf Stream-Compass 2005 Composite Notes, 144A****			5,080,250	(3)(4)
				Heller Financial, Inc.:
	150,000			6.687% Pfd., Series C			14,948,445	*(1)
	31,730			6.95% Pfd., Series D			3,212,662	*(1)
	12,726			HSBC Finance Corporation, 6.36% Pfd., Series B			310,992	*
				Lehman Brothers Holdings, Inc.:
	34,000			5.67% Pfd., Series D			9,180	*++
	471,500			7.95% Pfd			5,187	*++
	20,000			Lehman Capital Trust III, 6.375% Pfd., Series K			4,250	++

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

Flaherty & Crumrine/Claymore Preferred Securities Income Fund Incorporated
PORTFOLIO OF INVESTMENTS (CONTINUED)
MAY 31, 2011 (UNAUDITED)

SHARES/$ PAR						VALUE
PREFERRED SECURITIES — (CONTINUED)
				FINANCIAL SERVICES — (CONTINUED)
$	10,000,000			RACERS(R) Series 2005 AMMC V Trust, 144A****		$	6,445,057	(3)(4)
$	3,000,000			Schwab Capital Trust I, 7.50% 11/15/37			3,184,626	(1)
							40,116,386
				INSURANCE — 22.9%.
$	4,566,000			Ace Capital Trust II, 9.70% 04/01/30			6,169,543	(1)(2)
$	455,000			AON Corporation, 8.205% 01/01/27			535,678
				Arch Capital Group Ltd.:
	117,750			7.875% Pfd., Series B			2,980,547	**(1)(2)
	100,000			8.00% Pfd., Series A			2,571,880	**(1)(2)
				AXA SA:
$	3,150,000			6.379%, 144A****			2,921,625	**(1)(2)
$	5,350,000			6.463%, 144A****			4,922,000	**(1)(2)
				Axis Capital Holdings:
	117,707			7.25% Pfd., Series A			2,986,815	**(1)(2)
	281,505			7.50% Pfd., Series B			27,798,619	(1)(2)
	37,000			Corts Provident Financing Trust I, 8.50% Pfd			994,375	(1)
	558,000			Delphi Financial Group, 7.376% Pfd. 05/15/37			13,705,875	(1)
$	20,919,000			Everest Re Holdings, 6.60% 05/15/37			20,396,025	(1)
$	4,650,000			Great West Life & Annuity Insurance, 7.153% 05/16/46, 144A****			4,905,750	(1)
$	35,418,000			Liberty Mutual Group, 10.75% 06/15/58, 144A****			48,345,570	(1)
$	6,600,000			MetLife Capital Trust IV, 7.875% 12/15/37, 144A****			7,405,926	(1)
$	13,285,000			MetLife Capital Trust X, 9.25% 04/08/38, 144A****			16,938,375	(1)
$	13,520,000			MetLife, Inc., 10.75% 08/01/39			19,216,422	(1)
				Principal Financial Group:
	77,000			5.563% Pfd., Series A			7,594,125	*(1)
	383,000			6.518% Pfd., Series B			9,826,363	*(1)
				Renaissancere Holdings Ltd.:
	161,510			6.08% Pfd., Series C			3,915,002	**(1)(2)
	193,019			6.60% Pfd., Series D			4,850,567	**(1)(2)
	407,200			Scottish Re Group Ltd., 7.25% Pfd			4,631,900	**(2)+
$	7,500,000			Stancorp Financial Group, 6.90% 06/01/67			7,423,793	(1)
$	7,425,000			USF&G Capital, 8.312% 07/01/46, 144A****			8,768,182	(1)
$	13,000,000			USF&G Capital I, 8.50% 12/15/45, 144A****			15,662,452	(1)
$	12,200,000			XL Capital Ltd., 6.50%, Series E			11,635,750	(1)(2)
							257,103,159

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

Flaherty & Crumrine/Claymore Preferred Securities Income Fund Incorporated
PORTFOLIO OF INVESTMENTS (CONTINUED)
MAY 31, 2011 (UNAUDITED)

SHARES/$ PAR						VALUE
PREFERRED SECURITIES — (CONTINUED)
				UTILITIES — 24.5%
	320,000			Alabama Power.Company, 6.45% Pfd		$	8,510,016	*(1)
				Baltimore Gas & Electric Company:
	10,000			6.70% Pfd., Series 1993			1,030,938	*(1)
	15,000			7.125% Pfd., Series 1993			1,519,219	*
	462,029			Calenergy Capital Trust III, 6.50% Pfd. 09/01/27			23,216,957	(1)
$	18,533,000			COMED Financing III, 6.35% 03/15/33			16,384,469	(1)
	146,100			Constellation. Energy Group, 8.625% Pfd. 06/15/63, Series A			3,949,083
$	19,675,000			Dominion Resources Capital Trust I, 7.83% 12/01/27			20,452,280	(1)
$	15,262,000			Dominion Resources, Inc., 7.50% 06/30/66			16,194,768	(1)
	294,975			Entergy Arkansas, Inc., 6.45% Pfd			7,263,759	*(1)
	102,000			Entergy Louisiana, Inc., 6.95% Pfd			10,149,000	*(1)
				FPL Group Capital, Inc.:
$	17,620,000			6.65% 06/15/67			17,773,964	(1)
$	4,000,000			7.30% 09/01/67, Series D			4,215,272	(1)
	165,000			Georgia Power. Company, 6.50% Pfd., Series 2007A			17,165,165	*(1)
	20,000			Gulf Power Company, 6.45% Pfd., Series 2007A			2,075,506	*
	119,805			Indianapolis Power & Light Company, 5.65% Pfd			11,269,158	*
	343,606			Interstate Power & Light Company, 8.375% Pfd., Series B			9,986,049	*(1)
$	2,386,000			PECO Energy Capital Trust III, 7.38% 04/06/28, Series D			2,431,635	(1)
$	24,500,000			PECO Energy Capital Trust IV, 5.75% 06/15/33			20,960,657	(1)
$	4,485,000			PPL Capital Funding, 6.70% 03/30/67, Series A			4,456,655	(1)
	268,000			PPL Electric Utilities Corporation, 6.25% Pfd			6,758,638	*(1)
$	28,015,000			Puget Sound Energy, Inc., 6.974% 06/01/67			28,645,169	(1)
				Southern California Edison:
	118,850			6.00% Pfd., Series C			11,294,470	*(1)
	15,245			6.125% Pfd			1,486,388	*
	112,250			6.50% Pfd., Series D			11,200,451	*(1)
$	7,475,000			Wisconsin Energy Corporation, 6.25% 05/15/67			7,577,751	(1)
$	10,000,000			WPS Resources.Corporation, 6.11% 12/01/66			9,911,390	(1)
							275,878,807
				ENERGY — 4.9%
$	28,500,000			Enbridge Energy Partners LP, 8.05% 10/01/37			31,561,897	(1)
				Enterprise Products Partners:
$	565,000			7.00% 06/01/67			569,825	(1)
$	20,706,000			8.375% 08/01/66, Series A			22,593,290	(1)
							54,725,012

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

Flaherty & Crumrine/Claymore Preferred Securities Income Fund Incorporated
PORTFOLIO OF INVESTMENTS (CONTINUED)
MAY 31, 2011 (UNAUDITED)

SHARES/$ PAR						VALUE
PREFERRED SECURITIES — (CONTINUED)
				REAL ESTATE INVESTMENT TRUST (REIT) — 0.2%
				PS Business Parks, Inc.:
	34,947			6.70% Pfd., Series P		$	881,321
	25,000			6.875% Pfd., Series R			629,500
	35,545			Public Storage, Inc., 6.50% Pfd., Series Q			904,265
							2,415,086
				MISCELLANEOUS INDUSTRIES — 0.8%
	112,750			Ocean Spray Cranberries, Inc., 6.25% Pfd., 144A****			9,488,623	*(1)
							9,488,623
				TOTAL PREFERRED SECURITIES (Cost $1,046,721,765			1,054,977,976
CORPORATE DEBT SECURITIES — 4.3%
				BANKING — 0.4%
$	4,900,000			Goldman Sachs Group, 6.75% 10/01/37, Sub Notes			4,938,597	(1)
							4,938,597
				FINANCIAL SERVICES — 0.1%
$	4,726,012			Lehman Brothers, Guaranteed Note, Variable Rate, 12/16/16, 144A****			899,833	(3)(4)++
							899,833
				INSURANCE — 1.6%
$	15,750,000			Liberty Mutual Insurance, 7.697% 10/15/97, 144A****			15,085,870	(1)
$	2,500,000			UnumProvident Corporation, 7.25% 03/15/28			2,697,255	(1)
							17,783,125
				UTILITIES — 1.8%
				Southern Union Company:
$	9,300,000			7.60% 02/01/24, Senior Notes			10,900,279	(1)
$	7,587,000			8.25% 11/15/29, Senior			9,205,095	(1)
							20,105,374

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

Flaherty & Crumrine/Claymore Preferred Securities Income Fund Incorporated
PORTFOLIO OF INVESTMENTS (CONTINUED)
MAY 31, 2011 (UNAUDITED)

SHARES/$ PAR										VALUE
CORPORATE DEBT SECURITIES — (CONTINUED)
				MISCELLANEOUS INDUSTRIES - 0.4%
	16,500			Corp-Backed Trust Certificates, 7.00% 11/15/28, Series Sprint						$	406,725	(1)
				Pulte Homes, Inc.:
	58,240			7.375% 06/01/46							1,424,638	(1)
$	3,550,000			7.875% 06/15/32							3,292,625	(1)
											5,123,988
				TOTAL CORPORATE DEBT SECURITIES (Cost $48,986,351)							48,850,917
COMMON STOCK — 0.3%
				BANKING - 0.2%
	54,740			CIT Group, Inc							2,426,624	*+
											2,426,624
				UTILITIES — 0.1%
	46,587			PPL Corporation							1,313,288	*
											1,313,288
				TOTAL COMMON STOCK (Cost $12,048,887)							3,739,912
MONEY MARKET FUND - 0.1%
	673,488			BlackRock Liquidity Funds, T-Fund							673,488
				TOTAL MONEY MARKET FUND (Cost $673,488)							673,488
TOTAL INVESTMENTS (Cost $1,108,430,491***)							98.6	%			1,108,242,293
OTHER ASSETS AND LIABILITIES (Net)							1.4	%			15,385,466
TOTAL MANAGED ASSETS							100.0	%++		$	1,123,627,759
LOAN PRINCIPAL BALANCE											(376,075,000	)
TOTAL NET ASSETS AVAILABLE TO COMMON STOCK										$	747,552,759

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

Flaherty & Crumrine/Claymore Preferred Securities Income Fund Incorporated
PORTFOLIO OF INVESTMENTS (CONTINUED)
MAY 31, 2011 (UNAUDITED)

		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.

Flaherty & Crumrine/Claymore Preferred Securities Income Fund Incorporated
STATEMENT OF ASSETS AND LIABILITIES
MAY 31, 2011 (UNAUDITED)

ASSETS:
Investments, at value (Cost $1,108,430,491)						$	1,108,242,293
Dividends and interest receivable							16,359,601
Prepaid expenses							108,621
Total Assets							1,124,710,515
LIABILITIES:
Loan Payable		$	376,075,000
Dividends payable to Common Stock Shareholders			338,479
Investment advisory fees payable			414,798
Administration, Transfer Agent and Custodian fees payable			79,639
Servicing agent fees payable			108,837
Professional fees payable			52,267
Directors’ fees payable			1,920
Accrued expenses and other payables			86,816
Total Liabilities							377,157,756
NET ASSETS AVAILABLE TO COMMON STOCK						$	747,552,759
NET ASSETS AVAILABLE TO COMMON STOCK consist of:
Undistributed net investment income						$	2,638,116
Accumulated net realized loss on investments sold							(270,333,110	)
Unrealized depreciation of investments							(188,198	)
Par value of Common Stock							429,433
Paid-in capital in excess of par value of Common Stock							1,015,006,518
Total Net Assets Available to Common Stock						$	747,552,759
NET ASSET VALUE PER SHARE OF COMMON STOCK:
Common Stock (42,943,323 shares outstanding)						$	17.41

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

Flaherty & Crumrine/Claymore Preferred Securities Income Fund Incorporated
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED MAY 31, 2011 (UNAUDITED)

INVESTMENT INCOME:
Dividends+						$	16,690,098
Interest							24,326,346
Total Investment Income							41,016,444
EXPENSES:
Investment advisory fees		$	2,352,067
Servicing agent fees			607,779
Administrator’s fees			245,355
Professional fees			62,790
Insurance expenses			59,738
Transfer Agent fees			91,770
Directors’ fees			37,492
Custodian fees			44,294
Compliance fees			19,694
Interest expense			2,298,203
Other			170,675
Total Expenses							5,989,857
NET INVESTMENT INCOME							35,026,587
REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS
Net realized gain on investments sold during the period							7,175,445
Change in unrealized appreciation/depreciation of investments							38,307,662
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS							45,483,107
NET INCREASE IN NET ASSETS TO COMMON STOCK RESULTING FROM OPERATIONS						$	80,509,694

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

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

		SIX MONTHS ENDED
		MAY 31, 2011				YEAR ENDED
		(UNAUDITED)				NOVEMBER 30, 2010
OPERATIONS:
Net investment income		$	35,026,587			$	67,301,449
Net realized gain/(loss) on investments sold during the period			7,175,445				17,024,524
Change in net unrealized appreciation/ depreciation of investments			38,307,662				103,628,475
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS			80,509,694				187,954,448
DISTRIBUTIONS:
Dividends paid from net investment income to Common Stock Shareholders(1)			(35,175,445	)			(61,140,267	)
TOTAL DISTRIBUTIONS TO COMMON STOCK SHAREHOLDERS			(35,175,445	)			(61,140,267	)
FUND SHARE TRANSACTIONS:
Increase from shares issued under the Dividend Reinvestment and Cash Purchase Plan			1,591,171				2,673,596
NET INCREASE IN NET ASSETS AVAILABLE TO COMMON STOCK RESULTING FROM FUND SHARE TRANSACTIONS			1,591,171				2,673,596
NET INCREASE IN NET ASSETS AVAILABLE TO COMMON STOCK FOR THE PERIOD		$	46,925,420			$	129,487,777
NET ASSETS AVAILABLE TO COMMON STOCK:
Beginning of period		$	700,627,339			$	571,139,562
Net increase in net assets during the period			46,925,420				129,487,777
End of period (including undistributed net investment income of $2,638,116 and $2,786,974, respectively)		$	747,552,759			$	700,627,339

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

Flaherty & Crumrine/Claymore Preferred Securities Income Fund Incorporated
STATEMENT OF CASH FLOWS

For the Six Months Ended May 31, 2011 (Unaudited)

INCREASE/(DECREASE) IN CASH
CASH FLOWS FROM OPERATING ACTIVITIES:
Net increase in net assets resulting from operations		$	80,509,694
ADJUSTMENTS TO RECONCILE NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS TO NET CASH PROVIDED BY OPERATING ACTIVITIES:
Purchase of investment securities			(144,356,788	)
Proceeds from disposition of investment securities			100,040,373
Sale of short-term investment securities, net			791,785
Cash received from litigation claim			39,129
Increase in dividends and interest receivable			(62,904	)
Increase in prepaid expenses			(54,462	)
Net amortization/(accretion) of premium/(discount)			(586,317	)
Decrease in payable for investments purchased			(1,480,118	)
Increase in payables to related parties			54,610
Increase in accrued expenses and other liabilities			24,992
Change in net unrealized appreciation/depreciation on securities			(38,307,662	)
Net realized gain from investments sold			(7,175,445	)
Net cash provided by operating activities			(10,563,113	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from loan			44,100,000
Dividend paid (net of reinvestment of dividends and change in dividends payable) to common stock shareholders from net investment income			(33,536,887	)
Net cash used by financing activities			10,563,113
Net increase/(decrease) in cash			—
CASH:
Beginning of the period			—
End of the period		$	—
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Interest paid during the period		$	2,259,810
Reinvestment of dividends			1,591,171
Increase in dividends payable to common stock shareholders			47,387

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

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

     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.

		SIX MONTHS
		ENDED
		MAY 31, 2011				YEAR ENDED NOVEMBER 30,
		(UNAUDITED)				2010				2009				2008				2007				2006
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period		$	16.35			$	13.38			$	8.34			$	19.28			$	23.45			$	22.64
INVESTMENT OPERATIONS:
Net investment income			0.82				1.57				1.34				1.97				2.24				2.04
Net realized and unrealized gain/ (loss) on investments			1.06				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			1.88				4.40				6.41				(9.34	)			(2.64	)			2.38
DISTRIBUTIONS TO COMMON STOCK SHAREHOLDERS:
From net investment income			(0.82	)			(1.43	)			(1.35	)			(1.60	)			(1.53	)			(1.57	)
From return of capital			—				—				(0.02	)			—				—				—
Total distributions to Common Stock Shareholders			(0.82	)			(1.43	)			(1.37	)			(1.60	)			(1.53	)			(1.57	)
Net asset value, end of period		$	17.41			$	16.35			$	13.38			$	8.34			$	19.28			$	23.45
Market value , end of period		$	18.16			$	16.86			$	12.65			$	7.45			$	17.17			$	21.89
Total investment return based on net asset value**			11.78	%****			34.15	%			85.69	%			(50.63	%)			(11.33	%)			11.78	%
Total investment return based on market value **			13.06	%****			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 period (in 000’s)		$	747,553			$	700,627			$	571,140			$	355,370			$	821,177			$	999,199
Operating expenses including interest expense(1)			1.67	%***			1.73	%			2.53	%			2.39	%			—				—
Operating expenses excluding interest expense			1.03	%***			1.00	%			1.16	%			1.49	%			1.18	%			1.15	%
Net investment income			9.75	%***			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			9	%****			31	%			41	%			43	%			60	%			55	%
Total managed assets, end of period (in 000’s)		$	1,123,628			$	1,032,602			$	854,015			$	636,145			$	1,363,177			$	1,541,199
Ratio of operating expenses including interest expense (1)(2) to total managed assets			1.11	%***			1.16	%			1.59	%			1.36	%			—				—
Ratio of operating expenses excluding interest expense (2) to total managed assets			0.69	%***			0.67	%			0.73	%			0.85	%			0.75	%			0.74	%

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

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

		TOTAL												DIVIDEND
		DIVIDENDS				NET ASSET				NYSE				REINVESTMENT
		PAID				VALUE				CLOSING PRICE				PRICE (1)
December 31, 2010 - Extra		$	0.0400			$	16.34			$	16.21			$	16.28
December 31, 2010			0.1300				16.34				16.21				16.28
January 31, 2011			0.1300				16.56				16.58				16.56
February 28, 2011			0.1300				16.88				17.01				16.88
March 31, 2011			0.1300				16.91				17.08				16.91
April 29, 2011			0.1300				17.24				17.83				17.24
May 31, 2011			0.1300				17.41				18.16				17.41

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

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)

05/31/11**

—

N/A

N/A

$

376,075

$

2,988

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

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

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

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.

Flaherty & Crumrine/Claymore Preferred Securities Income Fund Incorporated
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (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 May 31, 2011 is as follows:

										LEVEL 2				LEVEL 3
		TOTAL				LEVEL 1				SIGNIFICANT				SIGNIFICANT
		VALUE AT				QUOTED				OBSERVABLE				UNOBSERVABLE
		MAY 31, 2011				PRICE				INPUTS				INPUTS
Preferred Securities
Banking		$	415,250,903			$	275,749,092			$	137,850,311			$	1,651,500
Financial Services			40,116,386				310,992				32,554,467				7,250,927
Insurance			257,103,159				138,369,617				118,733,542				—
Utilities			275,878,807				13,935,132				261,943,675				—
Energy			54,725,012				—				54,725,012				—
Real Estate Investment Trust (REIT)			2,415,086				2,415,086				—				—
Miscellaneous Industries			9,488,623				—				9,488,623				—
Corporate Debt Securities			48,850,917				26,875,334				21,075,750				899,833
Common Stock
Banking			2,426,624				2,426,624				—				—
Utilities			1,313,288				1,313,288				—				—
Money Market Fund			673,488				673,488				—				—
Total Investments		$	1,108,242,293			$	462,068,653			$	636,371,380			$	9,802,260

     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

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

may be observed for securities that are similar in many respects to those being valued. The Fund may 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
										FINANCIAL				CORPORATE DEBT
		TOTAL INVESTMENTS				BANKING				SERVICES				SECURITIES
BALANCE AS OF 11/30/10		$	6,068,024			$	127,411			$	5,291,259			$	649,354
Accrued discounts/premiums			—				—				—				—
Realized gain/ (loss)			—				—				—				—
Change in unrealized appreciation/ (depreciation)			2,154,736				(55,411	)			1,959,668				250,479
Net purchases/(sales)			—				—				—				—
Transfers in and/or out of Level 3			1,579,500				1,579,500				—				—
BALANCE AS OF 05/31/11		$	9,802,260			$	1,651,500			$	7,250,927			$	899,833

     As of May 31, 2011, total change in unrealized gain/(loss) on Level 3 securities still held at period-end and included in the change in net assets was $2,154,736. 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.

Flaherty & Crumrine/Claymore Preferred Securities Income Fund Incorporated
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (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 preferred shareholders, during 2011 and 2010 were as follows:

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

DISTRIBUTIONS PAID IN FISCAL YEAR 2011

DISTRIBUTIONS PAID IN FISCAL YEAR 2010

ORDINARY

LONG-TERM

ORDINARY

LONG-TERM

INCOME

CAPITAL GAINS

INCOME

CAPITAL GAINS

Common

N/A

N/A

$

61,140,267

$

0

Preferred

N/A

N/A

N/A

N/A

     As of November 30, 2010, the components of distributable earnings (i.e., ordinary income and capital gain/loss) available to 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.

     The Regulated Investment Company Modernization Act of 2010 (“Modernization Act”) was signed into law on December 22, 2010. Under the Modernization Act the Fund will be permitted to carry forward capital losses incurred in taxable years beginning after December 22, 2010 (Fiscal Year 2012 for the Fund) indefinitely. However, any losses incurred during those future taxable years must be utilized prior to the losses incurred in pre-enactment taxable years. As a result, pre-enactment capital loss carryforwards may be more likely to expire unused. Additionally, post-enactment capital losses that are carried forward will retain their character as either short-term or long-term capital losses rather than being considered all short-term under previous law.

     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 paid $115,172 of federal excise taxes attributable to calendar year 2010 in March 2011.

     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.

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

     In May 2011, FASB issued Accounting Standards Update (“ASU”) No. 2011-04 “Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs”. ASU 2011-04 includes common requirements for measurement of and disclosure about fair value between U.S. GAAP and IFRS. ASU 2011-04 will require reporting entities to disclose the following information for fair value measurements categorized within Level 3 of the fair value hierarchy: quantitative information about the unobservable inputs used in the fair value measurement, the valuation processes used by the reporting entity and a narrative description of the sensitivity of the fair value measurement to changes in unobservable inputs and the interrelationships between those unobservable inputs. In addition, ASU 2011-04 will require reporting entities to make disclosures about amounts and reasons for all transfers in and out of Level 1 and Level 2 fair value measurements. The new and revised disclosures are effective for interim and annual reporting periods beginning after December 15, 2011. Management is currently evaluating the implications of ASU No. 2011-04 and its impact on the financial statements.

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 six months ended May 31, 2011 and the fiscal year ended 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.

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

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 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”) 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”) 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

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

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.

5. PURCHASES AND SALES OF SECURITIES

     For the six months ended May 31, 2011, the cost of purchases and proceeds from sales of securities excluding short-term investments, aggregated $144,356,788 and $100,040,373, respectively.

     At May 31, 2011, the aggregate cost of securities for federal income tax purposes was $1,110,033,306, the aggregate gross unrealized appreciation for all securities in which there is an excess of value over tax cost was $115,241,182 and the aggregate gross unrealized depreciation for all securities in which there is an excess of tax cost over value was $117,032,195.

6. COMMON STOCK

     At May 31, 2011, 240,000,000 shares of $0.01 par value Common Stock were authorized.

     Common Stock transactions were as follows:

		SIX MONTHS ENDED								YEAR ENDED
		05/31/11								11/30/10
		SHARES				AMOUNT				SHARES				AMOUNT
Shares issued under the Dividend Reinvestment and Cash Purchase Plan			94,744			$	1,591,171				175,000			$	2,673,596

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.

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 uses 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

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

May 31, 2011, the committed amount, and amount borrowed, under the Financing Agreement was $376.075 million.

     Effective January 1, 2011, the lender charges an annualized rate of 0.80% on the undrawn (committed) balance, and three-month LIBOR (reset quarterly) plus 0.95% on the drawn (borrowed) balance. Prior to January 1, 2011, the lender charged an annualized rate of 1.00% on the undrawn balance and three-month LIBOR (reset quarterly) plus 1.10% on the drawn balance. For the six months ended May 31, 2011, the daily weighted average annualized interest rate on the drawn balance was 1.268% and the average daily loan balance was $358,333,791. 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 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 assets at the time of purchase in securities rated below investment grade by all of Moody’s, S&P and Fitch, provided that (a) such securities are rated at least “Ba3” by Moody’s, “BB-” by S&P, or “BB-” by Fitch or (b) such securities are issued by an issuer having an outstanding class of senior debt rated investment grade by any one of Moody’s, S&P, or Fitch at the time of purchase. Thus, the Fund may invest in securities rated below “Ba3” by Moody’s, “BB-” by S&P and “BB-” by Fitch if the issuer has investment grade senior debt outstanding. In addition, the Fund may invest in unrated securities that the Fund’s investment adviser deems to be comparable in quality to rated issues in which the Fund is authorized to invest.

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

     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 terminated its securities lending agreements effective April 15, 2011.

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.

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. Registered shareholders may elect to receive cash by contacting BNY Mellon at the number provided below. If shares are registered in the name of a broker-dealer or other nominee (that is, in “street name”) and the broker or nominee participates in the Plan, distributions may be reinvested by the broker or nominee in additional shares under the Plan, unless the shareholder elects to receive distributions in cash. Shareholders may elect to receive cash by contacting their broker or nominee. 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 six months ended May 31, 2011, there were $646 in brokerage commissions 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.

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 February 28, 2011. 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.

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.

MEETING OF SHAREHOLDERS

     On April 15, 2011, the Fund held its Annual Meeting of Shareholders (the “Annual Meeting”) for the following purpose: Election of Director of the Fund (the “Proposal”). The Proposal was approved by shareholders and the results of the voting are as follows:

PROPOSAL 1: ELECTION OF DIRECTOR.

NAME		FOR				WITHHELD
David Gale			37,764,112				762,088