PREFERRED INCOME OPPORTUNITY FUND RAISES DIVIDEND

Business Editors

PASADENA, Calif. - June 3, 2002 - Preferred Income Opportunity Fund (NYSE: PFO) has increased the dividend on its common shares by 7.4% to a new regular monthly rate of 7.3 cents per share.

The higher rate will be effective with the dividend payable June 28, 2002 to shareholders of record on June 21 2002.

The new rate represents a dividend yield of 7.40% based on the closing market price of PFO on Monday, June 3, 2002.

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