| New York Stock Exchange: PFD
The Flaherty & Crumrine Preferred Income Fund ("PFD") is a closed-end, diversified investment company which invests primarily in preferred stocks. It commenced investment operations in January, 1991 through an initial public offering of common stock. The Fund also uses financial leverage as a strategy to achive its investment objective. At September 4, 2012 there were 10,908,491 common shares outstanding. The Preferred Income Fund concentrates its investments in the utility and banking industries. Positions will vary from time to time, but normally utilities and banks will each account for at least 25% of the Fund's portfolio. Naturally, the Fund will be significantly impacted by developments affecting these two industries. The investment objective of the Fund is high current income for holders of its common stock consistent with preservation of capital. What makes the Fund 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.