PREFERRED
INCOME
FUND
Quarterly
Report
February 29, 1996
<PAGE>
PREFERRED INCOME FUND
INCORPORATED
Dear Shareholder:
The Preferred Income Fund turned in a solid performance in the fiscal first
quarter ending February 29, 1996. The total return on the net asset value
("NAV") of the Fund's shares was -1.1%. That was a good result considering the
rise in interest rates, which put pressure on fixed income investments
generally, and some disruptive tax proposals introduced in Washington.
Long term interest rates, as represented by yields on Treasury bonds,
suddenly spurted to almost 6.5% in the last few weeks of February after drifting
just above 6% for most of the quarter. Investors appeared to throw in the towel
on the chances for meaningful action this year on deficit reduction because of
the deadlock in Washington and the distractions caused by the Republican primary
campaigns. The bond market headed south, and most preferred stocks followed
along.
As we would expect, the Fund's hedges were a strong positive under these
circumstances. The put options owned by the Fund appreciated roughly $1.7
million ($0.18 per share) in the quarter. An immediate benefit of these gains
was that they offset part of the decline in the value of the Fund's preferred
stock holdings. If the gains persist over a period of time, they also will make
it possible to add to the preferred stock portfolio and, possibly, increase the
Fund's income.
As I have mentioned before in these letters, hedging with put options is not
a "free lunch." Using the analogy of buying an insurance policy, there is a
premium to be paid and a deductible to be met before any money comes back to
cover losses. Ordinarily, hedging should provide better protection against large
increases in interest rates than smaller ones. All these factors played a role
in the results for the last quarter.
In the budget negotiations in early December, the Clinton Administration
proposed a long list of "corporate welfare" provisions which could have an
impact on the Fund. Those included a reduction of the intercorporate dividends
received deduction ("DRD") from 70% to 50%, which would make preferred stocks
less attractive to corporate investors if it were enacted. Initially, this put
pressure on preferred prices, but the market has subsequently recovered.
Investors now appear to view the proposals as a political maneuver over a
deficit reduction bill that is not likely to become law. We are encouraged by
the strong support for the DRD that we have encountered in Congress, but we are
continuing to monitor the situation closely.
Uncertainty surrounding interest rates and the tax laws has not helped the
market price of the Fund's shares. The discount from NAV widened in reaction to
the tax changes proposed in December, and it continues to linger around 15%. The
market appears to be giving little recognition to the Fund's strong performance
based on NAV and its success in meeting its income objective as discussed in our
Annual Report.
Sincerely,
/s/Robert T. Flaherty
Robert T. Flaherty
Chairman of the Board
March 18, 1996
<PAGE>
- ------------------------------------------------------------------------------
Preferred Income Fund Incorporated
SUMMARY OF INVESTMENTS
FEBRUARY 29, 1996 (UNAUDITED)
- ----------------------------
PERCENT
VALUE OF TOTAL
(000'S) NET ASSETS
------- ----------
ADJUSTABLE RATE PREFERRED STOCK
Utilities ................................. $ 16,250 7.8%
Banking ................................... 39,148 18.8
-------- ----
Total Adjustable Rate ................. 55,398 26.6
-------- -----
FIXED RATE PREFERRED STOCK
Utilities ................................. 81,477 39.1
Banking ................................... 45,866 22.0
Financial Services ........................ 5,190 2.5
Insurance ................................. 2,512 1.2
Other ..................................... 7,981 3.8
-------- -----
Total Fixed Rate ...................... 143,026 68.6
-------- -----
TOTAL PREFERRED STOCK ......................... 198,424 95.2
REPURCHASE AGREEMENTS ......................... 2,600 1.3
PURCHASED PUT OPTIONS ......................... 4,360 2.1
-------- -----
TOTAL INVESTMENTS ............................. 205,384 98.6
OTHER ASSETS AND LIABILITIES (NET) ............ 3,001 1.4
-------- -----
TOTAL NET ASSETS .......................... $208,385 100.0%
======== =====
<PAGE>
FINANCIAL DATA
PER SHARE OF COMMON STOCK (UNAUDITED)
- -------------------------------------
DIVIDEND
DIVIDEND NET ASSET NYSE REINVESTMENT
PAID VALUE CLOSING PRICE PRICE(1)
-------- --------- ------------- ------------
December 31, 1995 .... $0.087 $15.54 $13.500 $13.48
January 31, 1996 ..... 0.087 15.61 13.625 13.74
February 29, 1996 .... 0.087 15.33 13.625 13.65
- ----------
(1) Whenever the net asset value per share of the Fund's common stock is less
than or equal to the market price per share on the payment date, new shares
issued will be valued at the higher of net asset value or 95% of the then
current market price. Otherwise, the reinvestment shares of common stock
will be purchased in the open market.
- -------------------------------------------------------------------------------
Preferred Income Fund Incorporated
STATEMENT OF CHANGES IN NET ASSETS(1)
THREE MONTHS ENDED FEBRUARY 29, 1996 (UNAUDITED)
------------------------------------------------
OPERATIONS:
Net investment income ........................................ $ 3,244,267
Net realized gain on investments sold ........................ 1,096,511
Net unrealized depreciation of investments during the period . (5,747,168)
------------
Net decrease in net assets from operations ............... (1,406,390)
DISTRIBUTIONS:
Dividends paid from net investment income to Money Market
Cumulative Preferred\TM/ Stock Shareholders ................ (694,048)
Dividends paid from net investment income to Common Stock
Shareholders ............................................... (2,567,856)
------------
Net decrease in net assets ............................... (4,668,294)
NET ASSETS:
Beginning of period .......................................... 213,053,235
------------
End of period ................................................ $208,384,941
============
FINANCIAL HIGHLIGHTS(1)
THREE MONTHS ENDED FEBRUARY 29, 1996 (UNAUDITED)
FOR A COMMON SHARE OUTSTANDING THROUGHOUT THE PERIOD.
-----------------------------------------------------
OPERATING PERFORMANCE:
Net asset value, beginning of period ......................... $ 15.80
------------
Net investment income ........................................ 0.33
Net realized gain and unrealized depreciation on investments . (0.48)
------------
Net decrease in net asset value resulting from investment
operations ................................................. (0.15)
DISTRIBUTIONS:
Dividends declared to Money Market Cumulative Preferred\TM/
Stock Shareholders ......................................... (0.07)
Dividends paid from net investment income .................... (0.26)
Change in accumulated undeclared dividends on Money Market
Cumulative Preferred\TM/ Stock ............................. 0.01
------------
Total from distributions ..................................... (0.32)
------------
Net asset value, end of period ............................... $ 15.33
============
Market value, end of period .................................. $ 13.625
============
Net assets, end of period .................................... $208,384,941
============
Common shares outstanding, end of period ..................... 9,838,571
============
RATIOS TO AVERAGE NET ASSETS AVAILABLE TO COMMON STOCK SHAREHOLDERS/
SUPPLEMENTAL DATA:
Net investment income ........................................ 6.83%*
Operating expenses ........................................... 1.52%*
Portfolio turnover rate ...................................... 16%
- ----------
(1) These tables summarize the three months ended February 29, 1996 and should
be read in conjunction with the Fund's audited financial statements,
including footnotes, in its Annual Report dated November 30,1995.
* Annualized.
<PAGE>
DIRECTORS
Martin Brody
Donald F. Crumrine
Robert T. Flaherty
Morgan Gust
Robert F. Wulf
OFFICERS
Robert T. Flaherty
Chairman of the Board
and President
Donald F. Crumrine
Vice President
and Secretary
Robert M. Ettinger
Vice President
Peter C. Stimes
Vice President
and Treasurer
Carl D. Johns
Assistant Treasurer
INVESTMENT ADVISER
Flaherty & Crumrine Incorporated
QUESTIONS CONCERNING YOUR SHARES OF PREFERRED
INCOME FUND?
* If your shares are held in a Brokerage
Account, contact your Broker.
* If you have physical possession of your shares in certificate form,
contact the Fund's Transfer Agent & Shareholder Servicing
Agent --
First Data Investor Services Group, Inc.
P.O. Box 1376
Boston, MA 02104
1-800-331-1710
THIS REPORT IS SENT TO SHAREHOLDERS OF PREFERRED INCOME FUND INCORPORATED FOR
THEIR INFORMATION. IT IS NOT A PROSPECTUS, CIRCULAR OR REPRESENTATION INTENDED
FOR USE IN THE PURCHASE OR SALE OF SHARES OF THE FUND OR OF ANY SECURITIES
MENTIONED IN THIS REPORT.
<PAGE>
<PAGE>
PREFERRED
INCOME
MANAGEMENT
FUND
QUARTERLY
REPORT
FEBRUARY 29, 1996
<PAGE>
PREFERRED INCOME MANAGEMENT FUND
INCORPORATED
Dear Shareholder:
The Preferred Income Management Fund turned in a solid performance in the
fiscal first quarter ending February 29, 1996. The total return on the net asset
value ("NAV") of the Fund's shares was -1.4%. That was a good result considering
the rise in interest rates, which put pressure on fixed income investments
generally, and some disruptive tax proposals introduced in Washington.
Long term interest rates, as represented by yields on Treasury bonds,
suddenly spurted to almost 6.5% in the last few weeks of February after drifting
just above 6% for most of the quarter. Investors appeared to throw in the towel
on the chances for meaningful action this year on deficit reduction because of
the deadlock in Washington and the distractions caused by the Republican primary
campaigns. The bond market headed south, and most preferred stocks followed
along.
As we would expect, the Fund's hedges were a strong positive under these
circumstances. The put options owned by the Fund appreciated roughly $1.9
million ($0.20 per share) in the quarter. An immediate benefit of these gains
was that they offset part of the decline in the value of the Fund's preferred
stock holdings. If the gains persist over a period of time, they also will make
it possible to add to the preferred stock portfolio and, possibly, increase the
Fund's income.
As I have mentioned before in these letters, hedging with put options is not
a "free lunch." Using the analogy of buying an insurance policy, there is a
premium to be paid and a deductible to be met before any money comes back to
cover losses. Ordinarily, hedging should provide better protection against large
increases in interest rates than smaller ones. All these factors played a role
in the results for the last quarter.
In the budget negotiations in early December, the Clinton Administration
proposed a long list of "corporate welfare" provisions which could have an
impact on the Fund. Those included a reduction of the intercorporate dividends
received deduction ("DRD") from 70% to 50%, which would make preferred stocks
less attractive to corporate investors if it were enacted. Initially, this put
pressure on preferred prices, but the market has subsequently recovered.
Investors now appear to view the proposals as a political maneuver over a
deficit reduction bill that is not likely to become law. We are encouraged by
the strong support for the DRD that we have encountered in Congress, but we are
continuing to monitor the situation closely.
Uncertainty surrounding interest rates and the tax laws has not helped the
market price of the Fund's shares. The discount from NAV widened in reaction to
the tax changes proposed in December, and it continues to linger around 14%. The
market appears to be giving little recognition to the Fund's strong performance
based on NAV and its success in meeting its income objective as discussed in our
Annual Report.
Sincerely,
/s/Robert T. Flaherty
Robert T. Flaherty
Chairman of the Board
March 18, 1996
<PAGE>
- ------------------------------------------------------------------------------
Preferred Income Management Fund Incorporated
SUMMARY OF INVESTMENTS
FEBRUARY 29, 1996 (UNAUDITED)
- ----------------------------
PERCENT
VALUE OF TOTAL
(000'S) NET ASSETS
------- ----------
ADJUSTABLE RATE PREFERRED STOCK
Utilities ........................................ $ 12,376 5.9%
Banking .......................................... 35,638 17.0
-------- -----
Total Adjustable Rate ........................ 48,014 22.9
-------- -----
FIXED RATE PREFERRED STOCK
Utilities ........................................ 82,360 39.2
Banking .......................................... 48,334 23.0
Financial Services ............................... 6,103 2.9
Insurance ........................................ 3,218 1.5
Other ............................................ 8,376 4.0
-------- -----
Total Fixed Rate ............................. 148,391 70.6
-------- -----
TOTAL PREFERRED STOCK ................................ 196,405 93.5
COMMON STOCK
Utilities .......................................... 2,188 1.0
REPURCHASE AGREEMENTS ................................ 1,185 0.6
PURCHASED PUT OPTIONS ................................ 4,712 2.2
-------- -----
TOTAL INVESTMENTS .................................... 204,490 97.3
OTHER ASSETS AND LIABILITIES (NET) ................... 5,713 2.7
-------- -----
TOTAL NET ASSETS ................................. $210,203 100.0%
======== =====
FINANCIAL DATA
PER SHARE OF COMMON STOCK (UNAUDITED)
- -------------------------------------
DIVIDEND
DIVIDEND NET ASSET NYSE REINVESTMENT
PAID VALUE CLOSING PRICE PRICE(1)
-------- --------- ------------ ------------
December 31, 1995 ... $0.082 $14.31 $12.375 $12.38
January 31, 1996 .... 0.082 14.34 12.500 12.56
February 29, 1996 ... 0.082 14.06 12.250 12.28
- ----------
(1) Whenever the net asset value per share of the Fund's common stock is less
than or equal to the market price per share on the payment date, new shares
issued will be valued at the higher of net asset value or 95% of the then
current market price. Otherwise, the reinvestment shares of common stock
will be purchased in the open market.
<PAGE>
- -------------------------------------------------------------------------------
Preferred Income Management Fund Incorporated
STATEMENT OF CHANGES IN NET ASSETS(1)
THREE MONTHS ENDED FEBRUARY 29, 1996 (UNAUDITED)
------------------------------------------------
OPERATIONS:
Net investment income .................................... $ 3,237,877
Net realized gain on investments sold .................... 1,658,645
Net unrealized depreciation of investments during the period (6,298,748)
------------
Net decrease in net assets from operations ........... (1,402,226)
DISTRIBUTIONS:
Dividends paid from net investment income to Money Market
Cumulative Preferred\TM/ Stock Shareholders .......... (905,812)
Dividends paid from net investment income to Common Stock
Shareholders ........................................... (2,316,537)
------------
Net decrease in net assets ........................... (4,624,575)
NET ASSETS:
Beginning of period ...................................... 214,827,084
------------
End of period ............................................ $210,202,509
============
FINANCIAL HIGHLIGHTS(1)
THREE MONTHS ENDED FEBRUARY 29, 1996 (UNAUDITED)
FOR A COMMON SHARE OUTSTANDING THROUGHOUT THE PERIOD.
-----------------------------------------------------
OPERATING PERFORMANCE:
Net asset value, beginning of period ...................... $ 14.54
------------
Net investment income ..................................... 0.34
Net realized gain and unrealized depreciation on investments (0.48)
------------
Net decrease in net asset value resulting from investment
operations .............................................. (0.14)
DISTRIBUTIONS:
Dividends declared to Money Market Cumulative Preferred\TM/
Stock Shareholders ...................................... (0.10)
Dividends paid from net investment income ................. (0.25)
Change in accumulated undeclared dividends on Money Market
Cumulative Preferred\TM/ Stock .......................... 0.01
------------
Total from distributions .................................. (0.34)
------------
Net asset value, end of period ............................ $ 14.06
============
Market value, end of period ............................... $ 12.250
============
Net assets, end of period ................................. $210,202,509
============
Common shares outstanding, end of period .................. 9,416,743
============
RATIOS TO AVERAGE NET ASSETS AVAILABLE TO COMMON STOCK SHAREHOLDERS/
SUPPLEMENTAL DATA:
Net investment income ..................................... 7.15%*
Operating expenses ........................................ 1.84%*
Portfolio turnover rate ................................... 20%
- ----------
(1) These tables summarize the three months ended February 29, 1996 and should
be read in conjunction with the Fund's audited financial statements,
including footnotes, in its Annual Report dated November 30, 1995.
* Annualized.
<PAGE>
DIRECTORS
Martin Brody
Donald F. Crumrine
Robert T. Flaherty
Morgan Gust
Robert F. Wulf
OFFICERS
Robert T. Flaherty
Chairman of the Board
and President
Donald F. Crumrine
Vice President
and Secretary
Robert M. Ettinger
Vice President
Peter C. Stimes
Vice President
and Treasurer
Carl D. Johns
Assistant Treasurer
INVESTMENT ADVISER
Flaherty & Crumrine Incorporated
QUESTIONS CONCERNING YOUR SHARES OF PREFERRED
INCOME MANAGEMENT FUND?
o If your shares are held in a Brokerage
Account, contact your Broker.
o If you have physical possession of your shares in certificate form,
contact the Fund's Transfer Agent & Shareholder Servicing
Agent --
First Data Investor Services Group, Inc.
P.O. Box 1376
Boston, MA 02104
1-800-331-1710
THIS REPORT IS SENT TO SHAREHOLDERS OF PREFERRED INCOME MANAGEMENT FUND
INCORPORATED FOR THEIR INFORMATION. IT IS NOT A PROSPECTUS, CIRCULAR OR
REPRESENTATION INTENDED FOR USE IN THE PURCHASE OR SALE OF SHARES OF THE FUND OR
OF ANY SECURITIES MENTIONED IN THIS REPORT.
<PAGE>
PREFERRED
INCOME
OPPORTUNITY
FUND
QUARTERLY
REPORT
FEBRUARY 29, 1996
<PAGE>
PREFERRED INCOME OPPORTUNITY FUND
INCORPORATED
Dear Shareholder:
The Preferred Income Opportunity Fund turned in a solid performance in the
fiscal first quarter ending February 29, 1996. The total return on the net asset
value ("NAV") of the Fund's shares was -1.3%. That was a good result considering
the rise in interest rates, which put pressure on fixed income investments
generally, and some disruptive tax proposals introduced in Washington.
Long term interest rates, as represented by yields on Treasury bonds,
suddenly spurted to almost 6.5% in the last few weeks of February after drifting
just above 6% for most of the quarter. Investors appeared to throw in the towel
on the chances for meaningful action this year on deficit reduction because of
the deadlock in Washington and the distractions caused by the Republican primary
campaigns. The bond market headed south, and most preferred stocks followed
along.
As we would expect, the Fund's hedges were a strong positive under these
circumstances. The put options owned by the Fund appreciated roughly $1.8
million ($0.16 per share) in the quarter. An immediate benefit of these gains
was that they offset part of the decline in the value of the Fund's preferred
stock holdings. If the gains persist over a period of time, they also will make
it possible to add to the preferred stock portfolio and, possibly, increase the
Fund's income.
As I have mentioned before in these letters, hedging with put options is not
a "free lunch." Using the analogy of buying an insurance policy, there is a
premium to be paid and a deductible to be met before any money comes back to
cover losses. Ordinarily, hedging should provide better protection against large
increases in interest rates than smaller ones. All these factors played a role
in the results for the last quarter.
In the budget negotiations in early December, the Clinton Administration
proposed a long list of "corporate welfare" provisions which could have an
impact on the Fund. Those included a reduction of the intercorporate dividends
received deduction ("DRD") from 70% to 50%, which would make preferred stocks
less attractive to corporate investors if it were enacted. Initially, this put
pressure on preferred prices, but the market has subsequently recovered.
Investors now appear to view the proposals as a political maneuver over a
deficit reduction bill that is not likely to become law. We are encouraged by
the strong support for the DRD that we have encountered in Congress, but we are
continuing to monitor the situation closely.
Uncertainty surrounding interest rates and the tax laws has not helped the
market price of the Fund's shares. The discount from NAV widened in reaction to
the tax changes proposed in December, and it continues to linger around 15%. The
market appears to be giving little recognition to the Fund's strong performance
based on NAV and its success in meeting its income objective as discussed in our
Annual Report.
Sincerely,
/s/Robert T. Flaherty
Robert T. Flaherty
Chairman of the Board
March 18, 1996
<PAGE>
- ------------------------------------------------------------------------------
Preferred Income Opportunity Fund Incorporated
SUMMARY OF INVESTMENTS
FEBRUARY 29, 1996 (UNAUDITED)
- ----------------------------
PERCENT
VALUE OF TOTAL
(000'S) NET ASSETS
------- ----------
ADJUSTABLE RATE PREFERRED STOCK
Utilities ................................... $ 21,217 10.4%
Banking ..................................... 28,190 13.8
-------- -----
Total Adjustable Rate ................... 49,407 24.2
-------- -----
FIXED RATE PREFERRED STOCK
Utilities ................................... 101,698 49.9
Banking ..................................... 21,015 10.3
Financial Services .......................... 5,917 2.9
Insurance ................................... 2,764 1.4
Other ....................................... 8,241 4.1
-------- -----
Total Fixed Rate ........................ 139,635 68.6
-------- -----
TOTAL PREFERRED STOCK ........................... 189,042 92.8
COMMON STOCK
Utilities ................................... 2,188 1.1
REPURCHASE AGREEMENTS ........................... 5,904 2.9
PURCHASED PUT OPTIONS ........................... 4,342 2.1
-------- -----
TOTAL INVESTMENTS ............................... 201,476 98.9
OTHER ASSETS AND LIABILITIES (NET) .............. 2,141 1.1
-------- -----
TOTAL NET ASSETS ............................ $203,617 100.0%
======== =====
FINANCIAL DATA
PER SHARE OF COMMON STOCK (UNAUDITED)
- -------------------------------------
DIVIDEND
DIVIDEND NET ASSET NYSE REINVESTMENT
PAID VALUE CLOSING PRICE PRICE(1)
-------- --------- ------------- ------------
December 31, 1995 .....$0.0695 $12.14 $10.375 $10.47
January 31, 1996 ...... 0.0695 12.18 10.750 10.73
February 29, 1996 ..... 0.0695 11.95 10.500 10.58
- ----------
(1) Whenever the net asset value per share of the Fund's common stock is less
than or equal to the market price per share on the payment date, new shares
issued will be valued at the higher of net asset value or 95% of the then
current market price. Otherwise, the reinvestment shares of common stock
will be purchased in the open market.
<PAGE>
- -------------------------------------------------------------------------------
Preferred Income Opportunity Fund Incorporated
STATEMENT OF CHANGES IN NET ASSETS(1)
THREE MONTHS ENDED FEBRUARY 29, 1996 (UNAUDITED)
------------------------------------------------
OPERATIONS:
Net investment income ....................................... $ 3,095,377
Net realized gain on investments sold ....................... 809,184
Net unrealized depreciation of investments during the period (5,263,301)
------------
Net decrease in net assets from operations .............. (1,358,740)
DISTRIBUTIONS:
Dividends paid from net investment income to Money Market
Cumulative Preferred\TM/ Stock Shareholders ............... (419,223)
Dividends paid from net investment income to Common Stock
Shareholders .............................................. (2,325,055)
------------
Net decrease in net assets .............................. (4,103,018)
NET ASSETS:
Beginning of period ......................................... 207,720,095
------------
End of period ............................................... $203,617,077
============
FINANCIAL HIGHLIGHTS(1)
THREE MONTHS ENDED FEBRUARY 29, 1996 (UNAUDITED)
FOR A COMMON SHARE OUTSTANDING THROUGHOUT THE PERIOD.
-----------------------------------------------------
OPERATING PERFORMANCE:
Net asset value, beginning of period ......................... $ 12.35
------------
Net investment income ........................................ 0.28
Net realized gain and unrealized depreciation on investments . (0.40)
------------
Net decrease in net asset value resulting from investment
operations ................................................. (0.12)
DISTRIBUTIONS:
Dividends declared to Money Market Cumulative Preferred\TM/
Stock Shareholders ......................................... (0.04)
Dividends paid from net investment income .................... (0.21)
Change in accumulated undeclared dividends on Money Market
Cumulative Preferred\TM/ Stock ............................. (0.03)
------------
Total from distributions ..................................... (0.28)
------------
Net asset value, end of period ............................... $ 11.95
============
Market value, end of period .................................. $ 10.500
============
Net assets, end of period .................................... $203,617,077
============
Common shares outstanding, end of period ..................... 11,151,287
============
RATIOS TO AVERAGE NET ASSETS AVAILABLE TO COMMON STOCK SHAREHOLDERS/
SUPPLEMENTAL DATA:
Net investment income ........................................ 6.91%*
Operating expenses ........................................... 1.71%*
Portfolio turnover rate ...................................... 16%
- ----------
(1) These tables summarize the three months ended February 29, 1996 and should
be read in conjunction with the Fund's audited financial statements,
including footnotes, in its Annual Report dated November 30, 1995.
* Annualized.
<PAGE>
DIRECTORS
Martin Brody
Donald F. Crumrine
Robert T. Flaherty
Morgan Gust
Robert F. Wulf
OFFICERS
Robert T. Flaherty
Chairman of the Board
and President
Donald F. Crumrine
Vice President
and Secretary
Robert M. Ettinger
Vice President
Peter C. Stimes
Vice President
and Treasurer
Carl D. Johns
Assistant Treasurer
INVESTMENT ADVISER
Flaherty & Crumrine Incorporated
QUESTIONS CONCERNING YOUR SHARES OF PREFERRED
INCOME OPPORTUNITY FUND?
o If your shares are held in a Brokerage
Account, contact your Broker.
o If you have physical possession of your shares in certificate form,
contact the Fund's Transfer Agent & Shareholder Servicing
Agent --
First Data Investor Services Group, Inc.
P.O. Box 1376
Boston, MA 02104
1-800-331-1710
THIS REPORT IS SENT TO SHAREHOLDERS OF PREFERRED INCOME OPPORTUNITY FUND
INCORPORATED FOR THEIR INFORMATION. IT IS NOT A PROSPECTUS, CIRCULAR OR
REPRESENTATION INTENDED FOR USE IN THE PURCHASE OR SALE OF SHARES OF THE FUND OR
OF ANY SECURITIES MENTIONED IN THIS REPORT.
