EX-99.77Q1 OTHR EXHB

[the wording of (a)(i) and (a)(ii) may be changed to reflect the Fund's

findings; however, the wording in (a)(iii) cannot be changed]

Exhibit to 77Q3

(a)(i) The Principal Executive and Financial Officers

concluded that the Registrant's Disclosure Controls and

Procedures are effective based on their evaluation of the

Disclosure Controls and Procedures as of a date within 90

days of the filing date of this report.

(a)(ii) There were no significant changes in Registrant's

internal controls or in other factors that could

significantly affect those controls subsequent to the

date of their evaluation, including any corrective

actions with regard to significant deficiencies or

material weaknesses.

(a)(iii) Certifications:

Form N-SAR Certification

I, Donald F. Crumrine, certify that:

[identify the certifying individual]

1. I have reviewed this report on Form N-SAR of Preferred Income Fund ;

[identify registrant]

2. Based on my knowledge, this report does not contain any untrue

statement of a material fact or omit to state a material fact necessary

to make the statements made, in light of the circumstances under which

such statements were made, not misleading with respect to the period

covered by this report;

3. Based on my knowledge, the financial information included in this

report, and the financial statements on which the financial information

is based, fairly present in all material respects the financial

condition, results of operations, changes in net assets, and cash flows

(if the financial statements are required to include a statement of

cash flows) of the registrant as of, and for, the periods presented in

this report;

4. The registrant's other certifying officers and I are responsible for

establishing and maintaining disclosure controls and procedures (as

defined in rule 30a-2(c) under the Investment Company Act) for the

registrant and have:

a) designed such disclosure controls and procedures to ensure that

material information relating to the registrant, including its

consolidated subsidiaries, is made known to us by others within those

entities, particularly during the period in which this report is being

prepared;

b) evaluated the effectiveness of the registrant's disclosure controls

and procedures as of a date within 90 days prior to the filing date of

this report (the "Evaluation Date"); and

c) presented in this report our conclusions about the effectiveness of

the disclosure controls and procedures based on our evaluation as of

the Evaluation Date;

5. The registrant's other certifying officers and I have disclosed,

based on our most recent evaluation, to the registrant's auditors and

the audit committee of the registrant's board of directors (or persons

performing the equivalent functions):

a) all significant deficiencies in the design or operation of internal

controls which could adversely affect the registrant's ability to

record, process, summarize and report financial data and have

identified for the registrant's auditors any material weaknesses in

internal controls; and

b) any fraud, whether or not material, that involves management or

other employees who have a significant role in the registrant's

internal controls; and

6. The registrant's other certifying officers and I have indicated in

this report whether or not there were significant changes in internal

controls or in other factors that could significantly affect internal

controls subsequent to the date of our most recent evaluation, including

any corrective actions with regard to significant deficiencies and

material weaknesses.

Date: 1/23/03

[Signature] /s/ Donald F. Crumrine

[Title] Chief Executive Officer

EX-99.77Q1 OTHR EXHB

[the wording of (a)(i) and (a)(ii) may be changed to reflect the Fund's

findings; however, the wording in (a)(iii) cannot be changed]

Exhibit to 77Q3

(a)(i) The Principal Executive and Financial Officers

concluded that the Registrant's Disclosure Controls and

Procedures are effective based on their evaluation of the

Disclosure Controls and Procedures as of a date within 90

days of the filing date of this report.

(a)(ii) There were no significant changes in Registrant's

internal controls or in other factors that could

significantly affect those controls subsequent to the

date of their evaluation, including any corrective

actions with regard to significant deficiencies or

material weaknesses.

(a)(iii) Certifications:

Form N-SAR Certification

I, Peter C. Stimes, certify that:

[identify the certifying individual]

1. I have reviewed this report on Form N-SAR of Preferred Income Fund ;

[identify registrant]

2. Based on my knowledge, this report does not contain any untrue

statement of a material fact or omit to state a material fact necessary

to make the statements made, in light of the circumstances under which

such statements were made, not misleading with respect to the period

covered by this report;

3. Based on my knowledge, the financial information included in this

report, and the financial statements on which the financial information

is based, fairly present in all material respects the financial

condition, results of operations, changes in net assets, and cash flows

(if the financial statements are required to include a statement of

cash flows) of the registrant as of, and for, the periods presented in

this report;

4. The registrant's other certifying officers and I are responsible for

establishing and maintaining disclosure controls and procedures (as

defined in rule 30a-2(c) under the Investment Company Act) for the

registrant and have:

a) designed such disclosure controls and procedures to ensure that

material information relating to the registrant, including its

consolidated subsidiaries, is made known to us by others within those

entities, particularly during the period in which this report is being

prepared;

b) evaluated the effectiveness of the registrant's disclosure controls

and procedures as of a date within 90 days prior to the filing date of

this report (the "Evaluation Date"); and

c) presented in this report our conclusions about the effectiveness of

the disclosure controls and procedures based on our evaluation as of

the Evaluation Date;

5. The registrant's other certifying officers and I have disclosed,

based on our most recent evaluation, to the registrant's auditors and

the audit committee of the registrant's board of directors (or persons

performing the equivalent functions):

a) all significant deficiencies in the design or operation of internal

controls which could adversely affect the registrant's ability to

record, process, summarize and report financial data and have

identified for the registrant's auditors any material weaknesses in

internal controls; and

b) any fraud, whether or not material, that involves management or

other employees who have a significant role in the registrant's

internal controls; and

6. The registrant's other certifying officers and I have indicated in

this report whether or not there were significant changes in internal

controls or in other factors that could significantly affect internal

controls subsequent to the date of our most recent evaluation, including

any corrective actions with regard to significant deficiencies and

material weaknesses.

Date: 1/23/03

[Signature] /s/ Peter C. Stimes

[Title] Chief Financial Officer

EX-99.77I NEW SECUR

EXHIBIT 77(i)

TERMS OF NEW OR AMENDED SECURITIES

PREFERRED INCOME FUND INCORPORATED

On June 4, 2002 Preferred Income Fund Incorporated (the "Fund") completed its offering of 225 newly issued shares of Money Market Cumulative Preferred Stock ("MMP â ") which increased the number of its shares of MMP â outstanding to 800. The 225 newly issued shares of MMP (New MMP) had a purchase price of $100,000 per share. Except for the Initial Rate Period, the Date of Original Issue and the initial Dividend Payment Date, the terms of New MMP are the same as the terms of the Fund's currently outstanding MMP. The 225 shares of New MMP were offered by Lehman Brothers Inc. It was a condition to their issuance that the shares of New MMP be issued with a rating of "Aa1" from Moody's Investors Service.

Dividends on shares of New MMP will accumulate at the Applicable Rate per annum from the Date of Original Issue and will be payable, when, as and if declared by the Board of Directors of the Fund out of funds legally available therefor, on Thursday, June 6, 2002. Thereafter, dividends on shares of New MMP will accumulate at the Applicable Rate determined from an Auction, subject to certain exceptions, of the New MMP together with all existing MMP shares. Such dividends will be payable on each succeeding seventh Thursday, subject to certain exceptions. After the Initial Rate Period, the Fund, subject to certain conditions, may designate any Subsequent Rate Period as a Special Rate Period that consists of 91 Rate Period Days, 182 Rate Period Days, 1 year, 3 years or 5 years, subject to certain exceptions.

Dividends will be paid through the Securities Depository (The Depository Trust Company or any successor) on each Dividend Payment Date in accordance with its normal procedures, which provide for it to distribute dividends in next-day funds to Agent Members, who in turn are expected to distribute such dividend payments to the persons for whom they are acting as agents. The dividend rate for shares of New MMP for the Initial Rate Period thereof will be 1.64% per annum. For each Subsequent Rate Period, the dividend rate on all shares of MMP will be the Applicable Rate that the Auction Agent (Bankers Trust Company or any successor) advises the Fund has resulted from an Auction, subject to certain exceptions.

As long as any shares of MMP are outstanding, the Fund will not declare, pay or set apart for payment any dividend or other distribution in respect of the Common Stock, or call for redemption, redeem, purchase or otherwise acquire for consideration any Common Stock, unless (i) immediately thereafter, the 1940 Act Asset Coverage, the Eligible Asset Coverage and the Dividend Coverage are met, (ii) full cumulative dividends due on all shares of MMP for all past Rate Periods and any Additional Distributions then due have been paid or declared and a sum sufficient for the payment of such dividends and Additional Distributions has been set apart for payment and (iii) the Fund has redeemed the full number of shares of MMP required to be redeemed pursuant to any provision of the Articles of Incorporation, as amended, of the Fund, including the Articles Supplementary on file with the State Department of Assessments and Taxation of the State of Maryland, requiring such mandatory redemption.

EX-99.77B ACCT LTTR

The Board of Directors and Shareholders

Preferred Income Fund Incorporated

In planning and performing our audit of the financial statements of Preferred Income Fund Incorporated, for the year ended November 30, 2002, we considered its internal control, including control activities for safeguarding securities, in order to determine our auditing procedures for the purpose of expressing our opinion on the financial statements and to comply with the requirements of Form N-SAR, not to provide assurance on internal control.

The management of Preferred Income Fund Incorporated is responsible for establishing and maintaining internal control. In fulfilling this responsibility, estimates and judgments by management are required to assess the expected benefits and related costs of controls. Generally, controls that are relevant to an audit pertain to the entity's objective of preparing financial statements for external purposes that are fairly presented in conformity with accounting principles generally accepted in the United States of America. Those controls include the safeguarding of assets against unauthorized acquisition, use, or disposition.

Because of inherent limitations in internal control, error or fraud may occur and not be detected. Also, projection of any evaluation of internal control to future periods is subject to the risk that it may become inadequate because of changes in conditions or that the effectiveness of the design and operation may deteriorate.

Our consideration of internal control would not necessarily disclose all matters in internal control that might be material weaknesses under standards established by the American Institute of Certified Public Accountants. A material weakness is a condition in which the design or operation of one or more of the internal control components does not reduce to a relatively low level the risk that misstatements caused by error or fraud in amounts that would be material in relation to the financial statements being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. However, we noted no matters involving internal control and its operation, including controls for safeguarding securities, which we consider to be material weaknesses as defined above as of November 30, 2002.

This report is intended solely for the information and use of management and the Board of Directors of the Preferred Income Fund Incorporated and the Securities and Exchange Commission and is not intended to be and should not be used by anyone other than these specified parties.

/s/ KPMG

Boston, Massachusetts

January 6, 2003