Business Editors


PASADENA, Calif.December 16, 2002 – Preferred Income Fund (NYSE: PFD) today announced an extra year-end dividend distribution of 12.85 cents per share of common stock.


In addition, the Fund increased the regular monthly dividend on its common shares 4.0%.  The new monthly dividend rate is 9.15 cents per share and will be paid to shareholders this month in addition to the extra year-end dividend.


Both regular and extra dividends consist entirely of net investment income and will be treated as ordinary income for Federal tax purposes.  No capital gains are included in these distributions.


The extra year-end dividend reflects the accumulation of additional income for common shareholders attributable in large part to low short-term interest rates and the corresponding savings to the Fund on the cost of its leverage. 


The increased regular monthly dividend rate comes in response to the successful investment of proceeds of the additional shares of Money Market Cumulative Preferred Stock issued in June of this year.


Both extra and regular dividends will be paid on December 31, 2002, to shareholders of record as of December 26, 2002.  The expected ex-dividend date is December 20, 2002.


For additional information, contact the Fund’s investment adviser, Flaherty & Crumrine Incorporated, at 626-795-7300.




Contact person: Peter C. Stimes, Treasurer





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