Merger Details:

Effective December 31, 2008, Flaherty & Crumrine Investment Grade Preferred Fund merged with Flaherty & Crumrine Investment Grade Fixed Income Fund. Flaherty & Crumrine Investment Grade Fixed Income Fund is the surviving fund. Flaherty & Crumrine Investment Grade Preferred Fund holders received in exchange, 1.119448 units of Flaherty & Crumrine Investment Grade Fixed Income Fund for each unit of Flaherty & Crumrine Investment Grade Preferred Fund previously held. This was a taxable event, therefore the Preferred Fund unitholder will be considered to have disposed of the units exchanged for proceeds equal to the fair market value of the Fixed Income units acquired. The closing price for F&C Investment Grade Fixed Income Fund on December 30, 2008 was $5.95.