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<TYPE>EX-99.77Q1 OTHR EXHB
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<FILENAME>pfo77q1.txt
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EXHIBIT 77Q1(a)
FLAHERTY & CRUMRINE PREFERRED INCOME OPPORTUNITY FUND
INCORPORATED
(the "Fund")


Use of Credit Derivatives

	The Fund may invest up to 10% of its total net assets
in credit derivatives and/or premiums paid therefore as a
"buyer" of credit protection. Also, Flaherty & Crumrine
Incorporated ("F&C") as the investment adviser to the Fund
is authorized to enter into credit derivative transactions
as a buyer with such entities as F&C deems creditworthy and
on such terms as F&C considers to be reasonable and
appropriate. This change in investment policy was
instituted by the Fund's Board of Directors at its regular
board meeting on July 23, 2004.
G:\Clients\Preferred\PFD\N-SAR\113004\PFD Exhibit 77Q1(a) - 113004.doc

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