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The
Flaherty & Crumrine Preferred Income Fund and Preferred Income Opportunity
Fund are diversified closed-end investment companies, which invest primarily
in preferred stocks and related securities. Both pay monthly dividends
and are listed on the New York Stock Exchange (Symbols PFD and PFO, respectively).
Both Funds use leverage in the form of Money Market Cumulative Preferred
(TM) Stock ("MMP®") to enhance the distributions paid to
the holders of Common Stock. |
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The
investment objective of each Fund is high current income for holders of
its common stock consistent with preservation of capital. What makes the
Funds unusual, however, is the use of strategies which are expected to
result in the Fund's income increasing as long-term interest rates rise
significantly, while being relatively resistant to declines in long-term
interest rates. The charts on the "Income" pages for each Fund
demonstrate how effective these strategies have been in the past. The
Funds do not hedge against the impact of short-term interest rate movements. |
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Both
Funds are hedged against significant increases in long-term interest rates.
The Funds primarily use purchased put options on U.S. Treasury futures
to limit the downside potential in the portfolio associated with these
increases. This hedging strategy explains why the dividends paid have
been relatively well maintained in falling long-term interest rate environments,
yet have risen with increasing long-term interest rates. See the "Income"
section on each Fund's respective web page. |
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A good many of our shareholders reinvest all distributions, including the monthly dividends, through each Fund's Dividend Reinvestment Plan ("DRIP"). The DRIP is a particularly efficient way to reinvest on a regular basis with a minimum of hassle. To view historical performance of a DRIP participant from inception, Click PFD or PFO and view the “Performance of NAV and Market Price” chart under the performance tab. If your shares are held in a brokerage account, ask your broker how to participate in the Fund's DRIP. If you hold your shares in certificate form, call the Plan's agent, PFPC Inc., at 1-800-331-1710 for more information. For other information, see the Contact Us page. |
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