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SIGNATURE RICHARD H. ROSE
TITLE ASSISTANT TREASURER
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 001
<NAME> PREFERRED INCOME OPPORTUNITY FUND INC.
<S> <C>
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<INVESTMENTS-AT-COST> 201,004,926
<INVESTMENTS-AT-VALUE> 212,970,107
<RECEIVABLES> 2,738,312
<ASSETS-OTHER> 0
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<SENIOR-EQUITY> 70,000,000
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<SHARES-COMMON-STOCK> 11,151,287
<SHARES-COMMON-PRIOR> 11,151,287
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<OVERDISTRIBUTION-GAINS> 0
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</TABLE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Board of Directors
of Preferred Income Opportunity Fund Incorporated:
In planning and performing our audit of the financial statements and
financial highlights of Preferred Income Opportunity Fund Incorporated
for the year ended November 30, 1996 we considered its internal
control structure, including procedures for safeguarding securities,
in order to determine our auditing procedures for the purpose of
expressing an opinion on the financial statements and financial
highlights and to comply with the requirements of Form N-SAR, not to
provide assurance on the internal control structure.
The management of Preferred Income Opportunity Fund Incorporated is
responsible for establishing and maintaining an internal control
structure. In fulfilling this responsibility, estimates and judgments
by management are required to assess the expected benefits and
related costs of internal control structure policies and procedures.
Two of the objectives of an internal control structure are to provide
management with reasonable, but not absolute, assurance that assets
are safeguarded against loss from unauthorized use or disposition and
that transactions are executed in accordance with management's
authorization and recorded properly to permit preparation of
financial statements in conformity with generally accepted
accounting principles.
Because of inherent limitations in any internal control structure,
errors or irregularities may occur and not be detected. Also,
projection of any evaluation of the structure to future periods is
subject to the risk that it may become inadequate because of
changes in conditions or that the effectiveness of the design
and operations may deteriorate.
Our consideration of the internal control structure would not
necessarily disclose all matters in the internal control structure
that might be material weaknesses under standards established by the
American Institute of Certified Public Accountants. A material weakness
is a condition in which the design or operation of the specific internal
control structure elements does not reduce to a relatively low level the
risk that errors or irregularities in amounts that would be material
in relation to the financial statements and financial highlights being
audited may occur and not be detected within a timely period by
employees in the normal course of performing their assigned functions.
However, we noted no matters involving the internal control structure,
including procedures for safeguarding securities, that we consider to
be material weaknesses, as defined above, as of November 30, 1996.
This report is intended solely for the information and use of
management of Preferred Income Opportunity Fund Incorporated and
the Securities and Exchange Commission.
Boston, Massachusetts COOPERS & LYBRAND L.L.P.
January 3, 1997
