QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS OF REGISTERED MANAGEMENT INVESTMENT COMPANY

Investment Company Act file number 811-21333

Nuveen Preferred and Convertible Income Fund 2
(Exact name of registrant as specified in charter)

333 West Wacker Drive, Chicago, Illinois 60606
(Address of principal executive offices) (Zip code)

Jessica R. Droeger—Vice President and Secretary
333 West Wacker Drive, Chicago, Illinois 60606
(Name and address of agent for service)

Registrant's telephone number, including area code: 312-917-7700

Date of fiscal year end: 12/31

Date of reporting period: 03/31/05

Form N-Q is to be used by management investment companies, other than small business investment companies registered on Form N-5 (§§ 239.24 and 274.5 of this chapter), to file reports with the Commission, not later than 60 days after the close of the first and third fiscal quarters, pursuant to rule 30b1-5 under the Investment Company Act of 1940 (17 CFR 270.30b1-5). The Commission may use the information provided on Form N-Q in its regulatory, disclosure review, inspection, and policymaking roles.

A registrant is required to disclose the information specified by Form N-Q, and the Commission will make this information public. A registrant is not required to respond to the collection of information contained in Form N-Q unless the Form displays a currently valid Office of Management and Budget (“OMB”) control number. Please direct comments concerning the accuracy of the information collection burden estimate and any suggestions for reducing the burden to the Secretary, Securities and Exchange Commission, 450 Fifth Street, NW, Washington, DC 20549-0609. The OMB has reviewed this collection of information under the clearance requirements of 44 U.S.C. § 3507.

Item 1. Schedule of Investments

Portfolio of Investments (Unaudited)
Nuveen Preferred and Convertible Income Fund 2 (JQC)
March 31, 2005

							Market
	Shares	Description⁽¹⁾					Value

		COMMON STOCKS - 1.3% (0.9% of Total Investments)
		Communications Equipment - 0.1%

	182,325	Corning Incorporated #					$ 2,029,277

		Diversified Financial Services - 0.4%

	163,728	Gabelli Asset Management Inc.					7,310,473

		Office Electronics - 0.1%

	110,126	Xerox Corporation #					1,668,409

		Oil & Gas - 0.5%

	140,807	Kerr-McGee Corporation					11,029,412

		Software - 0.2%

	172,555	Computer Associates International, Inc.					4,676,254

		Total Common Stock (cost $25,160,085)					26,713,825

						Ratings*
							Market
	Shares	Description⁽¹⁾	Coupon	Maturity	Moody's	S&P	Value

		$25 PAR (or similar) SECURITIES - 47.0% (31.9% of Total Investments)
		Auto Components - 0.1%

	84,278	Delphi Trust I	8.250%	Ba3	B+		1,567,571

		Automobiles - 0.0%

	3,000	DaimlerChrysler AG (CORTS)	7.875%	A3	BBB		75,420
	2,000	DaimlerChrysler Corp (PPLUS)	7.250%	A3	BBB		50,600

		Capital Markets - 4.5%

	112,800	Bear Stearns Capital Trust III	7.800%	A2	BBB		2,930,544
	107,600	Bear Stearns Companies, Series G (a)	5.490%	A3	BBB		5,439,180
	27,000	BNY Capital Trust IV, Series E	6.875%	A1	A-		680,130
	306,984	BNY Capital Trust V, Series F	5.950%	A1	A-		7,521,108
	204,700	Compass Capital Trust III	7.350%	A3	BBB-		5,287,401
	31,000	CSFB USA, Series 2002-10 (SATURNS)	7.000%	Aa3	A+		809,100
	49,000	First Union Capital II, Series II (CORTS)	7.500%	A1	BBB+		1,264,200
	22,600	First Union Institutional Capital II (CORTS)	8.200%	A1	BBB+		636,077
	18,800	First Union Institutional Capital II, Series III (CORTS)	7.500%	A1	BBB+		477,708
	12,300	Goldman Sachs Group Inc., Series 2003-06 (SATURNS)	6.000%	Aa3	A+		290,526
	22,000	JPMorgan Chase Capital Trust IX, Series I	7.500%	A1	A-		572,220
	198,350	Lehman Brothers Holdings Inc., Series C (a)	5.940%	NR	BBB+		10,314,200
	96,800	Lehman Brothers Holdings Inc., Series D (a)	5.670%	A3	BBB+		4,840,000
	425,000	Lehman Brothers Holdings Inc., Series F (a)	6.500%	A3	BBB+		11,177,500
	239,000	Merrill Lynch Capital Trust	7.000%	A1	A-		6,142,300
	47,800	Merrill Lynch Preferred Capital Trust	7.750%	A1	A-		1,249,014
	186,200	Merrill Lynch Preferred Capital Trust IV	7.120%	A1	A-		4,813,270
	283,400	Merrill Lynch Preferred Capital Trust V	7.280%	A1	A-		7,439,250
	117,580	Morgan Stanley (PPLUS)	7.050%	Aa3	A+		2,974,774
	211,850	Morgan Stanley Capital Trust II	7.250%	A1	A-		5,467,849
	203,200	Morgan Stanley Capital Trust III	6.250%	A1	A-		4,996,688
	137,900	Morgan Stanley Capital Trust IV	6.250%	A1	A-		3,396,477
	20,900	Safeco Capital Trust I (CORTS)	8.750%	Baa2	BBB-		616,655
	16,800	Safeco Capital Trust IV (CORTS)	8.375%	Baa2	BBB-		445,368
	16,400	UBS Preferred Funding Trust III	7.250%	A1	AA-		421,480

		Commercial Banks - 10.9%

	301,600	Abbey National plc	7.375%	A2	A-		7,901,920
	53,700	Abbey National plc, Series B	7.250%	A1	A-		1,380,627
	34,200	Abbey National plc, Series B	7.375%	A2	A		913,140
	863,770	ABN AMRO Capital Fund Trust V	5.900%	A2	A		20,454,074
	80,779	ABN AMRO Capital Fund Trust VI	6.250%	A2	A		1,999,280
	17,021	ABN AMRO Capital Trust Fund VII	6.080%	A2	A		415,823
	113,300	ASBC Capital I	7.625%	Baa1	BBB-		2,968,460
	203,410	BAC Capital Trust I	7.000%	Aa3	A		5,227,637
	560,200	BAC Capital Trust II	7.000%	Aa3	A		14,469,966
	163,900	BAC Capital Trust III	7.000%	Aa3	A		4,259,761
	1,010,000	Banco Santander	6.410%	A2	BBB+		25,805,500
	71,750	Banco Totta & Acores Finance, Series A	8.875%	A3	NR		1,926,043
	20,400	BancWest Capital I	9.500%	A3	A-		532,440
	13,400	Banesto Holdings, Series A, 144A	10.500%	A2	NR		408,700
	167,700	Bank One Capital Trust VI	7.200%	A1	A-		4,343,430
	32,200	Bank One Capital V	8.000%	A1	A-		837,200
	51,900	BankNorth Capital Trust II	8.000%	A3	BB+		1,347,843
	145,800	Chittenden Capital Trust I	8.000%	Baa1	BB+		3,787,884
	146,500	Cobank ABC, 144A	7.000%	NR	NR		7,829,107
	110,200	Comerica Capital Trust I	7.600%	A3	BBB+		2,826,630
	18,900	Fleet Capital Trust II (CORTS)	8.000%	Aa3	A		497,070
	512,200	Fleet Capital Trust VII	7.200%	Aa3	A		13,163,540
	430,300	Fleet Capital Trust VIII	7.200%	Aa3	A		11,106,043
	35,000	KeyCorp (PCARS)	7.500%	A3	NR		924,350
	104,400	KeyCorp Capital Trust V	5.875%	A3	BBB		2,536,920
	29,600	KeyCorp, Series 2001-7 (CORTS)	7.750%	A3	BBB		761,016
	34,300	KeyCorp, Series B (CORTS)	8.250%	A3	BBB		895,916
	85,500	National Commerce Capital Trust II	7.700%	A1	A-		2,223,855
	63,900	National Westminster Bank plc, Series A	7.875%	Aa2	A+		1,640,952
	21,700	ONB Capital Trust II	8.000%	Baa2	BB+		563,115
	54,200	PNC Capital Trust	6.125%	A3	BBB		1,308,388
	26,000	Regions Finance Trust I	8.000%	A2	BBB+		668,460
	300,700	Royal Bank of Scotland Group plc, Series L	5.750%	A1	A		7,162,674
	155,300	SunTrust Capital Trust IV	7.125%	A1	A-		3,953,938
	108,900	SunTrust Capital Trust V	7.050%	A1	A-		2,784,573
	664,800	USB Capital Trust III	7.750%	Aa3	A-		17,318,040
	332,900	USB Capital Trust IV	7.350%	Aa3	A-		8,672,045
	297,800	USB Capital Trust V	7.250%	Aa3	A-		7,623,680
	39,100	VNB Capital Trust I	7.750%	Baa1	BBB		1,011,908
	47,000	Washington Mutual Capital Trust I, Series 2001-22, Class A-1 (CORTS)	7.650%	Baa1	BBB		1,213,070
	40,000	Wells Fargo Capital Trust IV	7.000%	Aa2	A		1,030,000
	480,300	Wells Fargo Capital Trust V	7.000%	Aa2	A		12,295,680
	112,800	Wells Fargo Capital Trust VI	6.950%	Aa2	A-		2,878,656
	236,550	Wells Fargo Capital Trust VII	5.850%	Aa2	A		5,719,779
	117,300	Zions Capital Trust B	8.000%	Baa1	BB+		3,097,893

		Computers & Peripherals - 0.1%

	16,400	IBM Inc. (CORTS)	7.125%	A1	A+		426,892
	28,200	IBM Inc., Series 2001-1 (SATURNS)	7.125%	A1	A+		727,560
	11,000	IBM Trust II (CORTS)	7.125%	A1	A+		283,800
	18,300	IBM Trust IV (CORTS)	7.000%	A1	A+		483,120

		Consumer Finance - 0.8%

	40,900	Household Capital Trust VI	8.250%	A2	BBB+		1,068,717
	98,100	Household Capital Trust VII	7.500%	A2	BBB+		2,550,600
	62,200	HSBC Finance Corporation	6.875%	A1	A		1,624,664
	18,300	SLM Corporation	6.000%	A2	A		452,376
	174,000	SLM Corporation, Series A (a)	6.970%	Baa1	BBB+		9,570,000

		Diversified Financial Services - 5.0%

	13,800	BBVA Preferred Capital Ltd., Series B	7.750%	A1	A-		353,280
	26,500	CIT Group Incorporated (CORTS)	7.750%	A3	BBB+		722,920
	268,800	Citigroup Capital Trust IX	6.000%	Aa2	A		6,556,032
	193,100	Citigroup Capital Trust VII	7.125%	Aa2	A		4,978,118
	1,072,422	Citigroup Capital Trust VIII	6.950%	Aa2	A		27,454,003
	24,000	Citigroup Inc., Series H (a)	6.231%	Aa3	NR		1,242,000
	1,600	Citigroup, Series CIT (CORTS)	6.750%	A3	BBB+		41,104
	40,100	General Electric Capital Corporation	6.625%	Aaa	AAA		1,034,981
	2,300	Goldman Sachs Group Inc., Series 2004-04 (SATURNS)	6.000%	A1	A-		53,705
	5,000	ING Capital Funding Trust II	9.200%	A2	A-		126,750
	722,775	ING Group NV	7.050%	NR	A-		18,546,407
	584,220	ING Group NV	7.200%	A2	A-		15,096,245
	43,200	JPM Capital Trust (CORTS)	7.200%	A2	A-		1,104,192
	9,900	JPM Capital Trust I, Series 2001-1, Class A-1 (CORTS)	7.850%	A1	A-		255,668
	71,965	JPMorgan Chase & Company (PCARS)	7.125%	A2	A-		1,849,860
	712,420	JPMorgan Chase Capital Trust X	7.000%	A1	NR		18,380,436
	73,600	JPMorgan Chase Trust, Series 2002-6, Class A (SATURNS)	7.125%	A1	A-		1,889,312
	71,500	Merrill Lynch Capital Trust II	8.000%	A1	A-		1,893,320

		Diversified Telecommunication Services - 0.6%

	37,400	BellSouth Capital Funding (CORTS)	7.100%	A1	A		958,188
	24,600	BellSouth Corporation (CORTS)	7.000%	Aa3	A		627,792
	49,200	BellSouth Corporation, Series 2001-3 (SATURNS)	7.125%	A2	A		1,252,140
	30,800	BellSouth Inc. (CORTS)	7.000%	A2	A		797,720
	70,600	BellSouth Telecommunications (PPLUS)	7.300%	Aa3	A		1,808,772
	59,800	Deutsche Telekom International Finance B.V., Series 2001-24, Class A-1 (CORTS)	7.875%	Baa1	A-		1,574,534
	59,000	SBC Communications Inc.	7.000%	A2	A		1,502,730
	26,300	Verizon Communications (CORTS)	7.625%	A2	A+		707,470
	47,300	Verizon Communications (CORTS)	7.375%	A2	A+		1,241,625
	50,700	Verizon New England Inc., Series B	7.000%	A2	NR		1,307,046
	29,900	Verizon South Inc., Series F	7.000%	A2	A+		761,254

		Electric Utilities - 0.6%

	5,000	Consolidated Edison Company	7.250%	A2	A-		129,350
	16,300	Consolidated Edison Company of New York Inc.	7.500%	A1	A		419,888
	21,100	DTE Energy Trust I	7.800%	Baa3	BB+		563,159
	27,400	Entergy Louisiana Inc.	7.600%	Baa1	A-		715,140
	6,900	Entergy Mississippi Inc.	7.250%	Baa2	A-		180,504
	3,000	Georgia Power Capital Trust V	7.125%	A3	BBB+		77,400
	130,000	Interstate Power and Light Company (a)	7.100%	Baa3	BBB-		3,461,900
	11,000	Mississippi Power Capital Trust II	7.200%	A2	BBB+		283,195
	4,500	National Rural Utilities Cooperative Finance Corporation	7.600%	A3	BBB+		114,750
	41,200	National Rural Utilities Cooperative Finance Corporation	6.100%	A3	BBB+		992,096
	4,000	National Rural Utilities Cooperative Finance Corporation	5.950%	A3	BBB+		92,920
	33,600	Northern States Power Company	8.000%	A3	BBB-		899,472
	30,300	Southern Company Capital Trust I (CORTS)	7.375%	Baa1	BBB+		778,862
	13,900	Southern Company Capital Trust I (CORTS)	8.190%	Baa1	BBB+		375,439
	13,100	Southern Company Capital Trust VI	7.125%	Baa1	BBB+		337,325
	2,000	Tennessee Valley Authority, Series A	2.400%	Aaa	AAA		47,340
	122,500	Virginia Power Capital Trust	7.375%	Baa1	BBB-		3,203,375

		Food Products - 0.4%

	75,000	Dairy Farmers of America Inc., 144A (a)	7.875%	Baa3	BBB-		7,884,375

		Gas Utilities - 0.1%

	75,300	AGL Capital Trust II	8.000%	Baa2	BBB		1,954,788

		Health Care Providers & Services - 0.8%

	587,500	Aetna Incorporated	8.500%	Baa1	BBB+		15,333,750

		Industrial Conglomerates - 0.0%

	1,500	General Electric Company, Series GE (CORTS)	6.800%	Aaa	AAA		38,220

		Insurance - 7.7%

	157,500	ACE Capital Trust I, Series 1999	8.875%	Baa1	BBB-		3,992,625
	1,171,383	Ace Ltd., Series C	7.800%	Baa2	BBB-		30,467,672
	6,100	Allstate Corporation (PCARS)	7.150%	A2	A-		156,770
	2,300	AMBAC Financial Group Inc.	7.000%	Aa2	AA		58,857
	89,800	AMBAC Financial Group Inc.	5.950%	Aa2	AA		2,217,162
	675,101	Delphi Financial Group Inc.	8.000%	Baa3	BBB		17,505,369
	194,956	EverestRe Capital Trust II	6.200%	Baa1	BBB		4,466,442
	91,500	EverestRe Group Limited	7.850%	Baa1	BBB		2,379,000
	11,800	Financial Security Assurance Holdings	6.875%	Aa2	AA		300,900
	284,700	Hartford Capital Trust III, Series C	7.450%	Baa1	BBB		7,302,555
	43,900	Hartford Life Capital Trust II, Series B	7.625%	Baa1	BBB		1,134,815
	56,500	Lincoln National Capital Trust V, Series E	7.650%	Baa1	BBB		1,450,920
	1,402,300	Lincoln National Capital Trust VI	6.750%	Baa1	BBB		35,422,098
	81,600	PartnerRe Limited	7.900%	A3	BBB+		2,119,152
	902,402	PartnerRe Limited, Series C	6.750%	Baa1	BBB+		22,560,050
	80,000	PLC Capital Trust III	7.500%	Baa1	BBB+		2,065,600
	67,200	PLC Capital Trust IV	7.250%	Baa1	BBB+		1,747,200
	13,800	PLC Capital Trust V	6.125%	Baa1	BBB+		335,340
	38,800	Prudential plc	6.750%	Baa1	A		987,072
	3,400	RenaissanceRe Holdings Limited, Series C	6.080%	Baa2	BBB+		80,240
	115,800	RenaissanceRe Holdings Ltd., Series A	8.100%	Baa2	BBB+		3,020,064
	124,700	RenaissanceRe Holdings Ltd., Series B	7.300%	Baa2	BBB+		3,217,260
	24,900	Safeco Capital Trust I (CORTS)	8.700%	Baa2	BBB-		658,854
	21,200	Safeco Capital Trust I, Series 2001-4 (CORTS)	8.750%	Baa2	BBB-		554,380
	46,600	Safeco Capital Trust III (CORTS)	8.072%	Baa2	BBB-		1,233,036
	37,900	Safeco Corporation, Series 2001-7 (SATURNS)	8.250%	Baa2	BBB-		1,008,140
	37,400	Safeco Corporation, Series 2002-5 (SATURNS)	8.250%	Baa2	BBB-		997,832
	55,300	Torchmark Capital Trust I	7.750%	Baa1	A-		1,437,247
	118,600	W.R. Berkley Capital Trust, Series 2002-1, CBTCS	8.125%	Baa3	BBB-		1,243,521
	68,800	XL Capital Ltd., Series A	8.000%	Baa1	BBB+		1,816,320
	101,100	XL Capital Ltd., Series B	7.625%	Baa1	BBB+		2,628,600

		Media - 0.1%

	52,700	Viacom Inc.	7.300%	A3	A-		1,338,053

		Multi-Utilities & Unregulated Power - 0.2%

	51,400	Dominion CNG Capital Trust I	7.800%	Baa1	BBB-		1,341,540
	30,700	Dominion Resources Capital Trust II	8.400%	Baa2	BBB-		797,893
	85,700	Energy East Capital Trust I	8.250%	Baa3	BBB-		2,245,340

		Oil & Gas - 0.9%

	685,000	Nexen Inc.	7.350%	Baa3	BB+		17,782,600

		Pharmaceuticals - 0.1%

	50,000	Bristol Myers Squibb Company (CORTS)	6.250%	A1	A+		1,275,000

		Real Estate - 11.6%

	318,355	AMB Property Corporation, Series L	6.500%	Baa2	BBB-		7,952,508
	77,100	AvalonBay Communities, Inc., Series H	8.700%	Baa2	BBB		2,117,166
	220,400	BRE Properties, Series B	8.080%	Baa3	BBB-		5,688,524
	251,600	BRE Properties, Series D	6.750%	Baa3	BBB-		6,056,012
	1,166,500	CarrAmerica Realty Corporation, Series E	7.500%	Baa3	BBB-		30,049,040
	104,100	Developers Diversified Realty Corporation, Series G	8.000%	Ba1	BBB-		2,688,903
	1,264,845	Developers Diversified Realty Corporation, Series H	7.375%	Ba1	BBB-		31,836,149
	21,100	Duke Realty Corporation, Series K	6.500%	Baa2	BBB		511,675
	120,000	Duke Realty Corporation, Series L	6.600%	Baa2	BBB		2,876,400
	98,000	Duke-Weeks Realty Corporation	6.625%	Baa2	BBB		2,384,340
	25,000	Duke-Weeks Realty Corporation, Series B	7.990%	Baa2	BBB		1,278,908
	5,400	Duke-Weeks Realty Corporation, Series I	8.450%	Baa2	BBB		138,348
	192,100	Equity Office Properties Trust, Series G	7.750%	Baa3	BBB		4,908,155
	3,200	Equity Residential Properties Trust, Series C	9.125%	Baa2	BBB		83,264
	15,400	Equity Residential Properties Trust, Series D	8.600%	Baa2	BBB		407,330
	467,489	Equity Residential Properties Trust, Series N	6.480%	Baa2	BBB		11,303,884
	140,000	Federal Realty Investment Trust	8.500%	Baa3	BBB-		3,710,000
	11,600	First Industrial Realty Trust, Inc., Series C	8.625%	Baa3	BBB-		306,530
	425,129	HRPT Properties Trust, Series A	9.875%	Baa3	BBB-		11,134,129
	458,600	HRPT Properties Trust, Series B	8.750%	Baa3	BBB-		12,258,378
	99,800	New Plan Excel Realty Trust, Series E	7.625%	NR	BBB-		2,608,772
	3,997	Prologis Trust, Series C	8.540%	Baa2	BBB		241,444
	96,275	Prologis Trust, Series G	6.750%	Baa2	BBB		2,406,875
	299,600	PS Business Parks Inc.	7.000%	Ba1	BBB-		7,274,288
	700	PS Business Parks Inc., Series K	7.950%	Ba1	BBB-		18,445
	240,000	PS Business Parks Inc., Series L	7.600%	Ba1	BBB-		6,026,400
	31,400	Public Storage Inc., Series Q	8.600%	Baa2	BBB+		806,980
	148,750	Public Storage Inc., Series R	8.000%	Baa2	BBB+		3,839,238
	51,760	Public Storage Inc., Series S	7.875%	Baa2	BBB+		1,326,609
	42,000	Public Storage Inc., Series T	7.625%	Baa2	BBB+		1,071,420
	173,800	Public Storage Inc., Series U	7.625%	Baa2	BBB+		4,405,830
	31,500	Public Storage Inc., Series V	7.500%	Baa2	BBB+		807,345
	166,100	Regency Centers Corporation	7.450%	Baa3	BBB-		4,177,415
	20,500	Simon Property Group, Inc., Series F	8.750%	Baa2	BBB-		534,230
	15,100	Simon Property Group, Inc., Series G	7.890%	Baa2	BBB		801,810
	165,000	Vornado Realty Trust	6.625%	Baa3	BBB-		3,927,000
	1,987,734	Wachovia Preferred Funding Corporation	7.250%	A2	BBB+		55,656,552
	130,000	Weingarten Realty Trust, Series E	6.950%	Baa1	A-		3,303,300

		Specialty Retail - 0.0%

	27,200	Sherwin Williams Company, Series III (CORTS)	7.250%	A2	A		707,200

		Thrifts & Mortgage Finance - 1.7%

	68,900	Countrywide Capital III (PPLUS)	8.050%	Baa1	BBB+		1,865,812
	79,000	Countrywide Capital Trust II, Series II (CORTS) (a)	8.000%	Baa1	BBB+		2,093,500
	666,900	Countrywide Capital Trust IV	6.750%	Baa1	BBB+		16,752,528
	23,100	Fannie Mae (a)	5.125%	Aa3	AA-		964,887
	43,800	Fannie Mae (a)	3.780%	Aa3	AA-		2,193,066
	55,000	Fannie Mae (a)	5.810%	Aa3	AA-		2,607,000
	48,100	Fannie Mae	0.000%	Aa3	AA-		2,672,556
	70,500	Federal Home Loan Mortgage Corporation (a)	6.000%	Aa3	AA-		3,528,525
	26,000	Federal Home Loan Mortgage Corporation (a)	5.100%	Aa3	AA-		1,137,500
	12,700	Federal Home Loan Mortgage Corporation (a)	5.000%	Aa3	AA-		534,035

		Wireless Telecommunication Services - 0.8%

	28,000	AT&T Wireless Services Equity, Series 2002-B (SATURNS)	9.250%	Baa2	A		754,600
	56,300	AT&T Wireless, Series 2002-7 (CORTS)	8.000%	Baa2	A		1,503,492
	117,200	Telephone and Data Systems Inc.	7.600%	Baa1	A-		2,997,973
	48,900	United States Cellular Corporation	8.750%	Baa1	A-		1,330,569
	340,000	United States Cellular Corporation	7.500%	Baa1	A-		8,901,200

		Total $25 Par (or similar) Securities (cost $958,549,277)					948,585,775

		CONVERTIBLE PREFERRED SECURITIES - 18.8% (12.8% of Total Investments)
		Automobiles - 1.1%

	96,885	Ford Motor Company Capital Trust II	6.500%	Baa2	BB		4,392,766
	883,200	General Motors Corporation	6.250%	Baa2	BBB-		18,370,560

		Capital Markets - 0.5%

	394,500	Goldmand Sachs Group Inc., Series EMC	6.125%	Aa3	NR		4,933,223
	29,725	State Street Corporation	6.750%	NR	BB+		5,915,275

		Chemicals - 0.6%

	179,435	Celanese Corporation	4.250%	NR	NR		4,979,321
	152,195	Huntsman Corporation	5.000%	NR	NR		7,761,945

		Commercial Banks - 2.3%

	12,090,000	Fortis Insurance NV, 144A	7.750%	A1	A+		12,908,009
	130,500	HSBC Finance Corporation	8.875%	A1	A		5,644,125
	273,600	National Australia Bank Limited	7.875%	NR	NR		10,041,120
	217,375	Sovereign Capital Trust IV, Convertible Security	4.375%	Ba1	BB		10,298,141
	115,725	Washington Mutual Inc., Unit 1 Trust	5.375%	Baa1	BBB		6,129,838

		Communications Equipment - 0.7%

	9,200	Lucent Technologies Capital Trust I	7.750%	Caa1	CCC-		9,581,800
	115	Nortel Networks Corp	7.000%	NR	NR		5,412,058

		Construction Materials - 0.5%

	216,700	TXI Capital Trust I	6.500%	B3	B-		10,325,755

		Consumer Finance - 0.1%

	45,000	Capital One Financial Corporation	6.250%	Baa3	BBB-		2,275,200

		Containers & Packaging - 0.4%

	149,000	Temple Inland Inc.	7.500%	Baa3	BBB		8,650,940

		Diversified Financial Services - 0.6%

	281,600	Citigroup Global Markets	2.000%	Aa1	AA-		11,470,976

		Electric Utilities - 1.5%

	260,000	Centerpoint Energy Inc.	2.000%	Ba2	BBB-		9,213,620
	154,500	FPL Group Inc.	8.000%	NR	A-		9,580,545
	2,630,000	PG&E Corporation	9.500%	NR	NR		7,094,425
	38,215	PNM Resources Inc.	6.750%	NR	NR		1,903,107

		Electrical Equipment - 0.2%

	60,775	General Cable Corporation, 144A	5.750%	NR	NR		4,360,606

		Electronic Equipment & Instruments - 0.6%

	182,200	Pioneer-Standard Financial Trust	6.750%	B2	NR		11,638,025

		Food & Staples Retailing - 0.2%

	180,520	Albertson's, Inc.	7.250%	Baa2	BBB		4,083,362

		Health Care Equipment & Supplies - 0.3%

	124,000	Baxter International Inc.	7.000%	Baa1	NR		6,677,400

		Hotels Restaurants & Leisure - 0.4%

	157,000	Host Marriott Financial Trust	6.750%	B2	CCC+		8,713,500

		Household Durables - 0.4%

	187,325	Newell Financial Trust I	5.250%	Baa3	BBB-		8,734,028

		Insurance - 2.1%

	108,450	Conseco Inc., Series B	5.500%	Caa2	B-		2,873,925
	395,000	Genworth Financial Inc.	6.000%	A2	A		12,679,500
	167,000	Reinsurance Group of America Inc.	5.750%	Baa2	BBB		9,727,750
	147,000	The Chubb Corporation	7.000%	NR	A		4,358,550
	100,000	UnumProvident Corporation	8.250%	Ba1	BB+		3,395,000
	340,650	XL Capital Ltd.	6.500%	A2	A		8,158,568

		Media - 0.7%

	137,000	Emmis Communications Corporation, Series A	6.250%	Caa1	CCC+		6,014,300
	70,350	Interpublic Group, Series A	5.375%	NR	NR		3,198,815
	97,500	Sinclair Broadcast Group Inc., Series D	6.000%	Caa1	B-		4,082,813

		Metals & Mining - 0.5%

	24,300	Phelps Dodge Corporation	0.000%	NR	BB+		5,125,356
	36,000	United States Steel Corporation, Series B	7.000%	NR	B		5,948,640

		Multi-Utilities & Unregulated Power - 1.9%

	86,975	Aquila Inc.	6.750%	B2	B-		3,021,512
	181,625	Dominion Resources Inc.	8.750%	Baa1	BBB+		10,185,530
	151,300	Public Service Enterprise Group	10.250%	Baa3	BBB-		10,575,870
	442,550	Sempra Energy	8.500%	NR	BBB+		14,630,703

		Oil & Gas - 1.4%

	54,125	Amerada Hess Corporation	7.000%	Ba3	BB		4,540,546
	8,955	Chesapeake Energy Corporation, 144A	4.125%	NR	NR		12,929,901
	222,100	Teekay Shipping Corporation	7.250%	NR	BB-		11,549,200

		Pharmaceuticals - 0.5%

	217,875	Schering-Plough Corporation	6.000%	Baa3	BBB		10,959,113

		Real Estate - 0.6%

	225,250	Equity Office Properties Trust, Series B	5.250%	Baa2	BBB		11,458,465

		Thrifts & Mortgage Finance - 0.7%

	111	Fannie Mae	5.375%	Aa3	AA-		10,434,000
	140,000	PMI Group Inc.	5.875%	A1	A		3,402,000

		Total Convertible Preferred Securities (cost $352,576,706)					380,339,727

	Principal					Ratings*
	Amount (000)/						Market
	Shares	Description⁽¹⁾	Coupon	Maturity	Moody's	S&P	Value

		CONVERTIBLE BONDS - 26.4% (17.9% of Total Investments)
		Aerospace & Defense - 0.4%

	38,600	AAR Corporation, 144A	2.875%	2/01/24	B2	BB-	3,681,475
	49,000	EDO Corporation, Convertible Subordinate Note	5.250%	4/15/07	NR	NR	5,047,000

		Airlines - 0.2%

	35,500	Pinnacle Airlines Corporation, 144A	3.250%	2/15/25	NR	NR	3,505,625

		Automobiles - 0.1%

	10,250	Fleetwood Enterprises Inc., 144A	5.000%	12/15/23	B2	B	1,054,469

		Biotechnology - 1.1%

	50,000	Cephalon Inc.	0.000%	6/15/33	NR	B-	4,756,250
	37,900	Imclone Systems Inc., 144A	1.375%	5/15/24	NR	NR	3,230,975
	85,000	Ivax Corporation, Convertible Senior Subordinated Notes	4.500%	5/15/08	NR	NR	8,553,125
	59,750	Ivax Corporation, Convertible Bonds, 144A	1.500%	3/01/24	NR	NR	6,131,844

		Capital Markets - 0.2%

	14,320	Lehman Brothers Holdings Inc., Series GIS	6.250%	10/15/07	A1	A	3,780,480

		Chemicals - 0.5%

	84,400	The Mosaic Company	7.500%	7/01/06	Caa1	NR	9,537,200

		Commercial Services & Supplies - 0.3%

	70,000	Electronic Data Systems, Convertible Senior Notes, 144A	3.875%	7/15/23	Ba1	BBB-	6,947,500

		Communications Equipment - 1.2%

	92,000	Ciena Corporation	3.750%	2/01/08	B2	B	7,900,500
	34,810	Corning Incorporated	3.500%	11/1/08	Ba2	BB+	3,990,096
	10,565	Liberty Media Corporation, Senior Debentures Exchangeable for	3.500%	1/15/31	Baa3	BB+	8,267,113
		Motorola Common Stock
	44,750	Powerwave Technologies Inc.	1.825%	11/15/24	NR	NR	4,234,469

		Computers & Peripherals - 0.2%

	32,500	Mercury Computer Systems Inc., 144A	2.000%	5/01/24	NR	NR	3,522,188

		Construction & Engineering - 0.4%

	85,000	Quanta Services Incorporated	4.000%	7/01/07	NR	B	8,064,375

		Consumer Finance - 0.4%

	80,000	Providian Financial Corporation, Convertible Senior Notes	3.250%	8/15/05	B2	B	8,030,000

		Containers & Packaging - 0.2%

	46,000	Sealed Air Corporation, 144A	3.000%	6/30/33	Baa3	BBB	4,634,500

		Diversified Financial Services - 0.3%

	26,500	JMH Finance Limited	4.750%	9/06/07	NR	NR	2,763,598
	26,200	Leucadia National Corporation, 144A	3.750%	4/15/14	Ba3	B+	2,600,350

		Electric Utilities - 0.1%

	10,350	Unisource Energy Corporation, Convertible Bonds, 144A	4.500%	3/01/35	NR	NR	1,091,925

		Electronic Equipment & Instruments - 0.7%

	21,000	Anixter International Inc.	0.000%	6/28/20	Ba3	BB-	7,481,250
	70,200	Vishay Intertechnology Inc.	3.625%	8/01/23	B3	B+	6,879,600

		Energy Equipment & Services - 2.2%

	34,950	Cal Dive International Inc.	3.250%	12/15/25	NR	NR	3,591,113
	84,000	Diamond Offshore Drilling, Inc.	1.500%	4/15/31	NR	A-	9,880,500
	85,000	Maverick Tube Corporation	4.000%	6/15/33	NR	NR	11,900,000
	71,150	Pride International Inc.	3.250%	5/01/33	Ba2	BB-	8,404,594
	92,500	Schlumberger Limited	2.125%	6/01/23	A1	A+	9,978,438
	62,500	Willbros Group Inc., 144A	2.750%	3/15/24	NR	NR	742,969

		Gas Utilities - 0.1%

	30,150	Southern Union Company, Series B	5.750%	8/16/06	Baa3	NR	2,248,580

		Health Care Equipment & Supplies - 0.7%

	57,450	Advanced Medical Optics	2.500%	7/15/24	B3	B	5,730,638
	81,950	Fisher Scientific International Inc.	3.250%	3/01/24	Ba3	BB+	8,348,656

		Health Care Providers & Services - 0.2%

	42,000	Health Management Associates Inc.	1.500%	8/01/23	Baa3	BBB+	4,609,500

		Hotels Restaurants & Leisure - 3.1%

	18,205	Carnival Corporation	1.132%	4/29/33	A3	A-	14,222,656
	75,000	Hilton Hotels Corporation	3.375%	4/15/23	Baa3	BBB-	8,718,750
	71,250	Kerzner International Limited, 144A	2.375%	4/15/24	B2	B	8,665,781
	16,000	Royal Caribbean Cruises Limited, Senior Convertible Zero	0.000%	2/02/21	Ba1	BB+	8,480,000
		Coupon Liquid Yield Option Notes
	84,750	Scientific Games Corporation	0.750%	12/01/24	B2	B+	8,263,125
	47,500	Six Flags Inc.	4.500%	5/15/15	Caa1	CCC	4,423,438
	77,550	Starwood Hotels and Resorts Worldwide Inc.	3.500%	5/16/23	Ba1	BB+	9,722,831

		Industrial Conglomerates - 0.9%

	46,500	Tyco International Group Limited, Convertible Notes, 144A	3.125%	1/15/23	Ba1	BBB	7,381,875
	72,000	Tyco International Group SA	3.125%	1/15/23	Baa3	BBB	11,430,000

		Internet & Catalog Retail - 0.2%

	23,950	Overstock.com, Inc.	3.750%	12/01/11	NR	NR	2,206,394
	27,800	Overstock.com, Inc.	3.750%	12/01/11	NR	NR	2,561,075

		Internet Software & Services - 0.2%

	78,850	Open Solutions Inc., 144A	1.467%	2/02/35	NR	NR	4,050,919

		IT Services - 0.3%

	71,000	Digital River Inc., 144A	1.250%	1/01/24	NR	NR	6,922,500

		Leisure Equipment & Products - 0.7%

	48,500	Collegiate Pacific Inc.	5.750%	12/01/09	NR	NR	5,007,625
	70,000	Hasbro Inc.	2.750%	12/01/21	Baa3	BBB-	7,595,000
	11,650	K2 Corporation, Convertible Notes, 144A	5.000%	6/15/10	NR	NR	1,520,325

		Machinery - 0.3%

	56,350	AGCO Corporation	1.750%	12/31/33	B1	BB-	5,585,694

		Media - 3.8%

	10,400	Charter Communications Inc.	5.875%	11/16/09	Ca	CCC-	900,900
	415,000	Comcast Corporation	2.000%	10/15/29	Ba2	BBB-	17,430,000
	80,500	The Walt Disney Company, Convertible Senior Notes	2.125%	4/15/23	Baa1	BBB+	8,885,188
	45,000	Interpublic Group Companies Inc.	4.500%	3/15/23	Baa3	BB-	5,557,500
	26,800	Liberty Media Corporation, Senior Debentures, Exchangeable	4.000%	11/15/29	Baa3	BB+	17,822,000
		for PCS Common Stock, Series 1
	11,000	Liberty Media Corporation, Senior Debentures, Exchangeable	3.250%	3/15/31	Baa3	BB+	9,446,250
		for Class B Viacom Common Stock
	6,990	Liberty Media Corporation	0.750%	3/30/23	Baa3	BB+	7,689,000
	3,540	Lions Gate Entertainment Corporation, 144A	2.938%	10/15/24	NR	NR	4,079,850
	3,300	Lions Gate Entertainment Corporation, 144A	3.625%	3/15/25	NR	NR	3,514,500

		Metals & Mining - 0.2%

	45,100	Trizec Hahn Corporation	3.000%	1/29/21	Ba1	NR	3,568,538

		Oil & Gas - 0.6%

	52,900	Devon Energy Corporation	4.900%	8/15/08	Baa2	BBB	6,096,725
	34,400	McMoran Exploration Corporation, Notes, 144A	6.000%	7/02/08	NR	NR	5,478,200

		Pharmaceuticals - 1.9%

	18,450	Abgenix Inc., Senior Convertible Note, 144A	1.750%	12/15/11	NR	NR	1,538,269
	45,800	Alexion Pharmaceuticals Inc., 144A	1.375%	2/01/12	NR	NR	4,253,675
	95,300	Allergan Inc., Convertible Zero Coupon Senior Notes	0.000%	11/06/22	A3	A	8,350,663
	12,550	Atherogenics, Inc., 144A	4.500%	9/01/08	NR	NR	1,463,644
	70,000	OSI Pharmaceuticals, Inc.	3.250%	9/08/23	NR	NR	7,997,500
	43,500	Valeant Pharmaceuticals International, 144A	3.000%	8/16/10	NR	B	4,192,313
	25,450	Valeant Pharmaceuticals International, 144A	4.000%	11/15/13	NR	B	2,459,106
	85,000	Wyeth, 144A	1.000%	1/15/24	Baa1	A	8,756,955

		Real Estate - 0.2%

	36,250	Avatar Holdings Inc., 144A	4.500%	4/01/24	NR	NR	3,878,750

		Semiconductors & Equipment - 1.4%

	78,500	ASM International NV	4.250%	12/6/11	NR	B-	8,065,875
	61,800	Advanced Micro Devices Inc.	0.000%	2/01/22	B3	B-	6,141,375
	83,250	Agere Systems Inc.	6.500%	12/15/09	B3	B	8,564,344
	55,000	ASM Lithography Holding NV	5.750%	10/15/06	B2	NR	6,133,600

		Software - 0.6%

	71,000	Mentor Graphics Corporation, Convertible Subordinate Notes	6.875%	6/15/07	NR	NR	7,348,500
	45,250	Sybase Inc., 144A	1.750%	2/22/25	NR	NR	4,406,219

		Specialty Retail - 1.6%

	78,200	Charming Shoppes Inc.	4.750%	6/01/12	B2	BB-	8,250,100
	11,450	Lowe's Companies, Inc.	0.000%	2/16/21	A2	A+	10,805,938
	87,000	Sonic Automotive Inc., Convertible Senior Subordinated Notes	5.250%	5/07/09	B3	B+	8,689,125
	59,000	The TJX Companies, Inc.	0.000%	2/13/21	Baa1	A-	4,992,875

		Textiles & Apparel - 0.3%

	60,250	Reebok International Limited, Series B	2.000%	5/01/24	Baa3	BBB	6,454,281

		Wireless Telecommunication Services - 0.6%

	29,750	NII Holdings Inc., 144A	3.500%	9/15/33	NR	NR	6,660,281
	41,000	NII Holdings Inc., 144A	2.875%	2/01/34	NR	NR	5,181,375

		Total Convertible Bonds (cost $512,134,782)					532,932,297

		CORPORATE BONDS - 15.8% (10.8% of Total Investments)
		Aerospace & Defense - 0.2%

	3,500	K&F Aquisition Inc.	7.750%	11/15/14	Caa1	B-	3,412,500

		Auto Components - 0.4%

	3,550	Affinia Group Inc.	9.000%	11/30/14	Caa1	B	3,301,500
	4,000	Tenneco Auto, Inc.	10.250%	7/15/13	B2	B-	4,480,000

		Automobiles - 1.5%

	7,570	Ford Motor Company, Debenture	7.700%	5/15/97	Baa1	BBB-	6,537,535
	17,095	Ford Motor Company, Debentures	9.980%	2/15/47	Baa1	BBB-	18,835,015
	4,814	General Motors Corporation, Senior Debentures	8.375%	7/15/33	Baa2	BBB-	4,129,459

		Building Products - 0.2%

	4,000	Jacuzzi Brands Inc.	9.625%	7/01/10	B3	B	4,420,000

		Chemicals - 0.7%

	6,500	OM Group Inc.	9.250%	12/15/11	Caa1	B-	6,727,500
	3,500	Resolution Performance Products LLC	8.000%	12/15/09	B2	B	3,692,500
	3,000	Rockwood Specialties Group	7.500%	11/15/14	B3	B-	3,015,000

		Commercial Services & Supplies - 0.2%

	1,518	IOS Capital LLC, Senior Notes	7.250%	6/30/08	Ba1	BB	1,584,470
	2,000	Williams Scotsman Inc.	10.000%	8/15/08	B2	B	2,150,000

		Construction Materials - 0.1%

	2,000	Texas Industries Inc.	10.250%	6/15/11	B1	BB-	2,275,000

		Containers & Packaging - 0.6%

	2,000	Berry Plastics Corporation	10.750%	7/15/12	B3	B-	2,265,000
	3,450	MDP Acquisitions plc, Senior Notes	9.625%	10/01/12	B3	B-	3,726,000
	3,000	Owens-Brockway Glass Containers, Guaranteed Senior Note	8.250%	5/15/13	B2	B	3,187,500
	3,000	Owens-Illinois Inc.	7.500%	5/15/10	B3	B	3,105,000

		Electric Utilities - 0.1%

	2,000	Midwest Generation LLC	8.750%	5/01/34	B1	B	2,240,000

		Food & Staples Retailing - 0.1%

	3,000	Stater Brothers Holdings Inc.	8.125%	6/15/12	B1	BB-	2,910,000

		Food Products - 1.0%

	7,610	Del Monte Corporation	8.625%	12/15/12	B2	B	8,275,875
	7,000	Dole Foods Company	7.875%	7/15/13	B2	B+	7,525,000
	1,096	Dole Foods Company	8.625%	5/01/09	B2	B+	1,156,280
	3,250	Seminis Vegetable Seeds Inc.	10.250%	10/01/13	B3	B-	3,851,250

		Health Care Equipment & Supplies - 0.1%

	2,500	Fisher Scientific International Inc.	8.000%	9/01/13	Ba3	BB+	2,731,250

		Health Care Providers & Services - 0.5%

	3,000	Quintiles Transitional Corporation	10.000%	10/01/13	B3	B	3,390,000
	1,000	Select Medical Corporation, 144A	7.625%	2/01/15	B3	B-	1,005,000
	2,000	Service Corporation International	7.700%	4/15/09	Ba3	BB	2,070,000
	3,000	US Oncology Inc., 144A	10.750%	8/15/14	B3	B-	3,315,000

		Hotels Restaurants & Leisure - 2.2%

	5,190	Aztar Corporation	9.000%	8/15/11	Ba3	B+	5,631,150
	2,345	Boyd Gaming Corporation	8.750%	4/15/12	B1	B+	2,550,188
	4,075	Boyd Gaming Corporation	7.750%	12/15/12	B1	B+	4,288,938
	3,172	Dominos Inc.	8.250%	7/01/11	B2	B-	3,330,600
	1,500	Herbst Gaming Inc.	7.000%	11/15/14	B3	B-	1,500,000
	4,100	Intrawest Corporation	7.500%	10/15/13	B1	B+	4,130,750
	2,000	Landry's Restaurants Inc., 144A	7.500%	12/15/14	B2	B	1,950,000
	2,000	MGM Mirage, Inc.	6.750%	8/01/07	Ba2	BB+	2,045,000
	3,500	Park Place Entertainment	7.875%	12/15/05	Ba2	BB-	3,583,125
	1,000	Park Place Entertainment	9.375%	2/15/07	Ba2	BB-	1,066,250
	1,000	Park Place Entertainment	7.875%	3/15/10	Ba2	BB-	1,095,000
	4,000	Penn National Gaming Inc., Senior Subordinated Notes	8.875%	3/15/10	B2	B	4,260,000
	3,000	Pinnacle Entertainment Inc.	8.750%	10/01/13	Caa1	B-	3,120,000
	2,000	Pinnacle Entertainment Inc.	8.250%	3/15/12	Caa1	B-	2,010,000
	4,000	Universal City Development Partners	11.750%	4/01/10	B2	B-	4,580,000

		Household Durables - 0.6%

	1,000	D.R. Horton, Inc.	10.500%	4/01/05	Ba1	BB+	1,000,000
	4,500	K. Hovnanian Enterprises Inc., Senior Subordinate Notes	8.875%	4/01/12	Ba2	B+	4,837,500
	5,000	KB Home	8.625%	12/15/08	Ba2	BB-	5,456,360

		Insurance - 0.1%

	2,500	Fairfax Financial Holdings Ltd	7.750%	4/26/12	Ba3	BB	2,425,000

		IT Services - 0.2%

	3,000	Global Cash Access LLC	8.750%	3/15/12	Caa1	B-	3,195,000

		Machinery - 0.3%

	3,000	Terex Corporation, Senior Subordinated Notes	10.375%	4/01/11	B3	B	3,277,500
	3,000	Terex Corporation, Senior Subordinated Notes	9.250%	7/15/11	B3	B	3,285,000

		Media - 3.9%

	2,000	AMC Entertainment Inc.	8.000%	3/01/14	B3	CCC+	1,920,000
	6,900	Allbritton Communications Company, Series B	7.750%	12/15/12	B3	B-	6,831,000
	6,000	American Media Operations Inc., Series B	10.250%	5/01/09	B3	B-	6,210,000
	1,345	American Media Operations Inc.	8.875%	1/15/11	B3	B-	1,392,075
	5,000	Cablevision Systems Corporation, Series B	8.125%	8/15/09	B1	BB-	5,300,000
	3,000	Cablevision Systems Corporation	7.250%	7/15/08	B1	BB-	3,090,000
	2,000	Cablevision Systems Corporation	8.125%	7/15/09	B1	BB-	2,120,000
	2,000	Charter Communications Operating LLC., 144A	8.000%	4/30/12	B2	B-	2,000,000
	6,000	Cinemark USA Inc.	9.000%	2/01/13	B3	B-	6,540,000
	1,000	Dex Media West LLC	8.500%	8/15/10	B1	B	1,072,500
	2,198	Dex Media West LLC	9.875%	8/15/13	B2	B	2,461,760
	3,000	Loews Cineplex Entertainment Corporation, 144A	9.000%	8/01/14	B3	CCC+	3,000,000
	3,855	Mail-Well I Corporation, Senior Unsecured Note, 144A	9.625%	3/15/12	B1	B+	4,124,850
	4,000	Medianews Group Inc.	6.375%	4/01/14	B2	B+	3,820,000
	1,950	Panamsat Corporation	9.000%	8/15/14	B1	B+	2,067,000
	7,000	Primedia Inc., Senior Notes	8.875%	5/15/11	B3	B	7,332,500
	2,000	R H Donnelley Finance Corp 1	10.875%	12/15/12	B2	B+	2,315,000
	2,000	Sun Media Corporation	7.625%	2/15/13	Ba3	B	2,090,000
	8,200	Vertis Inc.	9.750%	4/01/09	B3	CCC+	8,610,000
	5,500	Young Broadcasting Inc., Senior Subordinate Notes	10.000%	3/01/11	Caa1	CCC+	5,651,250
	1,000	Young Broadcasting Inc.	8.500%	12/15/08	B2	B	1,052,500
	2,000	Young Broadcasting Inc.	8.750%	1/15/14	Caa1	CCC+	1,905,000

		Metals & Mining - 0.1%

	1,682	United States Steel Corporation	9.750%	5/15/10	Ba2	BB	1,871,225

		Multiline Retail - 0.2%

	2,000	Saks Inc., Notes	7.500%	12/1/10	Ba3	BB	1,950,000
	1,000	Saks Inc.	7.375%	2/15/19	Ba3	BB	900,000
	1,000	Saks Inc., Notes	9.875%	10/01/11	Ba3	BB	1,085,000

		Multi-Utilities & Unregulated Power - 0.1%

	1,500	NRG Energy Inc., 144A	8.000%	12/15/13	B1	B	1,593,750
	500	Northwestern Corporation	5.875%	11/01/14	Ba1	BB	499,911

		Oil & Gas - 0.5%

	2,563	Chesapeake Energy Corporation	9.000%	8/15/12	Ba3	BB-	2,841,726
	2,345	Chesapeake Energy Corporation	7.750%	1/15/15	Ba3	BB-	2,491,561
	2,000	Premcor Refining Group Inc.	7.500%	6/15/15	Ba3	BB-	2,065,000
	1,000	Tesoro Petroleum Corporation, Senior Subordinate Notes, Series B	9.625%	11/01/08	B2	BB-	1,077,500
	1,000	Tesoro Petroleum Corporation	8.000%	4/15/08	Ba2	BBB-	1,050,000

		Paper & Forest Products - 0.4%

	2,000	Georgia Pacific Corporation, Debentures	7.700%	6/15/15	Ba3	BB+	2,202,500
	5,000	Georgia Pacific Corporation, Notes	8.125%	5/15/11	Ba3	BB+	5,537,500

		Real Estate - 0.0%

	1,000	Truststreet Properties Inc, 144A	7.500%	4/01/15	B1	BB-	1,000,000

		Road & Rail - 0.2%

	3,000	Laidlaw International Inc.	10.750%	6/15/11	B2	B+	3,412,500

		Specialty Retail - 0.7%

	6,000	Asbury Automotive Group Inc.	9.000%	6/15/12	B3	B	6,150,000
	8,000	Warnaco Inc., Senior Notes	8.875%	6/15/13	B1	B	8,620,000

		Textiles & Apparel - 0.2%

	4,000	Jostens IH Corporation	7.625%	10/01/12	B3	B-	3,980,000

		Trading Companies & Distributors - 0.2%

	1,300	Keystone Automotive Operations Inc.	9.750%	11/01/13	B3	B-	1,313,000
	2,000	United Rentals North America Inc.	6.500%	2/15/12	B1	BB-	1,955,000

		Wireless Telecommunication Services - 0.2%

	4,000	Nextel Communications Inc.	7.375%	8/01/15	Ba3	BB	4,245,000

		Total Corporate Bonds (cost $317,480,858)					320,677,603

		CAPITAL PREFERRED SECURITIES -36.0% (24.4% of Total Investments)
		Capital Markets - 5.3%

	15,000	BT Institutional Capital Trust A, 144A	8.090%	12/01/26	A2	A-	16,379,520
	2,000	BT Institutional Capital Trust B, 144A	7.750%	12/01/26	A2	A-	2,156,102
	6,273	BT Capital Trust, Series B1	7.900%	1/15/27	A2	A-	6,904,955
	3,000	Compass Trust I, Series A	8.230%	1/15/27	A3	BBB-	3,252,747
	3,500	First Union Capital Trust II, Series A	7.950%	11/15/29	A1	BBB+	4,403,025
	2,000	First Union Institutional Capital Securities I	8.040%	12/01/26	A1	BBB+	2,138,830
	500	First Union Institutional Capital II	7.850%	1/01/27	A1	BBB+	533,007
	6,000	Goldman Sachs Group Inc.	6.345%	2/15/34	A1	A-	6,169,896
	19,335	Mellon Capital Trust I, Series A	7.720%	12/01/26	A2	A-	20,780,156
	32,750	C.A. Preferred Funding Trust	7.000%	1/30/49	A1	A	33,526,503
	1,250	C.A. Preferred Fund Trust II	7.000%	10/30/49	A1	A	1,286,156
	9,000	State Street Institutional Capital Trust, 144A	8.035%	3/15/27	A1	A	9,779,058

		Commercial Banks - 18.3%

	2,000	AB Svensk Exportkredit, 144A	6.375%	10/27/49	Aa3	AA-	2,072,902
	19,250	Abbey National Capital Trust I	8.963%	12/30/49	A2	A-	27,162,424
	43,100	AgFirst Farm Credit Bank	7.300%	12/15/53	NR	NR	45,260,000
	12,840	Bank One Capital III	8.750%	9/01/30	A1	A-	17,327,233
	2,600	BankAmerica Institutional Capital Trust, Series B, 144A	7.700%	12/31/26	Aa3	A	2,785,814
	1,974	BankAmerica Capital II, Series 2	8.000%	12/15/26	Aa3	A	2,150,083
	5,000	BankAmerica Institutional Trust, 144A	8.070%	12/31/26	Aa3	A	5,484,540
	2,000	BankBoston Capital Trust I, Series B	8.250%	12/15/26	Aa3	A	2,209,412
	1,000	BanPonce Trust I, Series A	8.327%	2/01/27	Baa1	BBB-	1,089,002
	1,500	Barclays Bank plc, 144A	8.550%	6/15/49	Aa3	A+	1,774,539
	500	Barnett Capital I	8.060%	12/01/26	Aa3	A	543,201
	21,000	CBA Capital Trust I, 144A	5.805%	12/30/49	A2	A-	21,062,055
	2,200	DBS Capital Funding Corporation, 144A	7.657%	3/15/49	A1	A-	2,495,143
	2,350	FBS Capital Trust I	8.090%	11/15/26	Aa3	A-	2,525,641
	4,315	First Chicago NBD Institutional Capital Trust, Series B, 144A	7.750%	12/01/26	A1	NR	4,577,158
	6,000	First Chicago NBD Institutional Capital, 144A	7.950%	12/01/26	A1	NR	6,460,674
	11,550	First Empire Capital Trust II	8.277%	6/01/27	Baa1	BBB	12,722,683
	5,750	First Empire Capital Trust I	8.234%	2/01/27	Baa1	BBB	6,303,443
	4,250	First Midwest Bancorp Inc.	6.950%	12/01/33	Baa2	BBB-	4,710,471
	17,000	Lloyds TSB Bank plc, Subordinate Note	6.900%	11/22/49	Aa2	A+	17,442,323
	12,838	HSBC Capital Funding LP, 144A	9.547%	12/31/49	A1	A-	15,502,244
	14,000	HSBC Capital Funding LP, Debt	10.176%	6/30/50	A1	A-	21,572,320
	19,605	KBC Bank Fund Trust III, 144A	9.860%	11/02/49	A2	A-	23,563,112
	15,000	KeyCorp Institutional Capital Trust A	7.826%	12/01/26	A3	BBB	16,384,875
	4,000	KeyCorp Capital III	7.750%	7/15/29	A3	BBB	4,835,048
	1,000	Nordbanken AB, 144A	8.950%	11/29/49	A2	A-	1,162,734
	18,500	North Fork Capital Trust II	8.000%	12/15/27	A3	BBB-	20,492,709
	500	PNC Institutional Capital Securities, 144A	7.950%	12/15/26	A3	BBB+	535,551
	2,000	Popular North American Capital Trust I	6.564%	9/15/34	Baa1	BBB-	2,114,456
	16,750	RBS Capital Trust B	6.800%	12/31/49	A1	A	17,032,908
	2,000	Reliance Capital Trust I, Series B	8.170%	5/01/28	NR	NR	2,230,918
	1,202	Republic New York Capital II, Capital Securities	7.530%	12/04/26	A1	A-	1,290,437
	6,200	Royal Bank of Scotland Group plc	9.118%	3/31/49	A1	A	7,335,133
	3,400	Royal Bank of Scotland Group plc	7.648%	8/31/49	A1	A	4,190,524
	4,472	St. George Funding Company LLC, 144A	8.485%	6/30/47	Baa1	NR	4,909,004
	4,000	SocGen Real Estate Company LLC, 144A	7.640%	12/29/49	A1	A	4,286,836
	13,330	Unicredito Italiano Capital Trust, 144A	9.200%	10/05/49	A1	A	15,872,658
	3,800	Union Planters Capital Trust A	8.200%	12/15/26	A2	BBB+	4,129,122
	12,419	Washington Mutual Capital Trust I	8.375%	6/01/27	Baa1	BBB	13,739,214
	2,000	Zions Institutional Capital Trust, Series A	8.5365	12/15/26	Baa1	BBB-	2,176,612

		Diversified Financial Services - 5.6%

	900	Chase Capital Trust I, Series A	7.670%	12/01/26	A1	A-	967,547
	1,000	Citigroup Capital III	7.625%	12/01/36	Aa2	A	1,227,201
	10,000	ING Capital Funding Trust III	8.439%	12/30/49	A2	A-	11,722,080
	3,000	JPM Capital Trust II	7.950%	2/01/27	A1	A-	3,231,051
	2,150	JPM Capital Trust I	7.540%	1/15/27	A1	A-	2,318,577
	15,750	BNP Paribas Capital Trust	7.200%	12/31/49	A1	A+	16,183,566
	51,900	HBOS Capital Funding LP, Notes	6.850%	3/01/49	A1	A	52,948,899
	23,600	Old Mutual Capital Funding, Notes	8.000%	6/22/53	Baa2	NR	24,385,479

		Diversified Telecommunication Services - 1.6%

	24	Centaur Funding Corporation, Series B, 144A	9.080%	4/21/20	Baa1	BBB+	31,823,225

		Insurance - 3.9%

	987	Allstate Financing II	7.830%	12/01/45	A2	A-	1,049,089
	10,000	American General Capital II	8.500%	7/01/30	Aa2	AA-	13,005,160
	4,980	American General Institutional Capital, 144A	8.125%	3/15/46	Aa2	AA-	6,361,621
	612	Berkeley Capital Trust	8.197%	12/15/45	Baa3	BBB-	634,599
	3,750	Prudential plc	6.500%	6/29/49	Baa1	A	3,660,094
	14,250	Mangrove Bay, Class 3, 144A	6.102%	7/15/33	Baa1	BBB+	14,178,964
	13,500	Sun Life Canada Capital Trust, Capital Securities, 144A	8.526%	5/06/47	A1	A+	14,839,808
	23,000	Zurich Capital Trust I, 144A	8.376%	6/01/37	Baa2	A-	25,157,929

		Oil & Gas - 1.1%

	18,855	KN Capital Trust III	7.630%	4/15/28	Baa3	BB+	21,776,900

		Thrifts & Mortgage Finance - 0.2%

	500	Countrywide Capital Trust I	8.000%	12/15/26	Baa1	BBB+	516,630
	3,365	Great Western Financial Trust II, Series A	8.206%	2/01/27	Baa1	BBB	3,678,709

		Total Capital Preferred Securities (cost $728,839,518)					726,492,239

		REPURCHASE AGREEMENTS - 1.9% (1.3% of Total Investments)
$	38,806	State Street Bank, 2.400%, dated 3/31/05, due 4/01/05, repurchase
		price $38,808,838 collateralized by $30,915,000 U.S. Treasury Bonds,
		7.500%, due 11/15/16, value $39,587,307					38,806,251
	41	State Street Bank, 2.400%, dated 3/31/05, due 4/01/05, repurchase
		price $41,684 collateralized by $35,000 U.S. Treasury Bonds, 7.625%
		due 2/25/16, value $47,449					41,681

		Total Repurchase Agreements (cost $38,847,932)					38,847,932

		Total Investments (cost $2,933,589,158) - 147.2%					$ 2,974,589,398

		COMMON STOCKS SOLD SHORT - (0.3)%
		Consumer Finance - (0.1)%

	(11,424)	Capital One Financial Corporation					(854,173)

		Multi-Utilities & Unregulated Power - (0.2)%

	(109,198)	Sempra Energy					(4,350,448)

		Total Common Stocks Sold Short (proceeds $4,668,202)					(5,204,621)

		Other Assets Less Liabilities - 0.8%					15,828,825

		FundPreferred Shares, at Liquidation Value - (47.7)%					(965,000,000)

		Net Assets Applicable to Common Shares - 100%					$2,020,213,602


Interest Rate Swap Contracts outstanding at March 31, 2005:


	Notional			Termination	Unrealized
Counterparty	Amount	Fixed Rate	Floating Rate**	Date	Appreciation

Morgan Stanley	$97,000,000	2.0250%	2.8500%	1/23/06	$1,317,673
JPMorgan	97,000,000	3.3950	2.7456	7/06/06	593,515
Royal Bank of Canada	97,000,000	2.6790	2.8500	1/23/07	2,425,534
Morgan Stanley	97,000,000	3.0480	2.8500	1/23/08	3,291,112
JPMorgan	97,000,000	3.3595	2.8500	1/23/09	3,758,998

					$11,386,932


(1)	All percentages shown in the Portfolio of Investments are based on net assets applicable to Common
	shares unless otherwise noted.
*	Ratings below Baa by Moody's Investor Service, Inc. or BBB by Standard and Poor's Group are considered
	to be below investment grade.
**	Based on LIBOR (London Interbank Offered Rate)
(a)	Security is eligible for the Dividends Received Deduction.
144A	144A securities are those which are exempt from registration under Rule 144A of the Securities Act of
	1933, as amended. These securities may only be resold in transactions exempt from registration which
	ware normally those transactions with qualified institutional buyers.
(CBTCS)	Corporate Backed Trust Certificates.
(CORTS)	Corporate Backed Trust Securities.
(PCARS)	Public Credit and Repackaged Securities.
(PPLUS)	PreferredPlus Trust.
(SATURNS)	Structured Asset Trust Unit Repackaging.

	Income Tax Information

	The following information is presented on an income tax basis. Differences between amounts for financial
	statement and federal income tax purposes are primarily due to the recognition of income on certain securities
	which are treated as debt securities for income tax purposes and equity securities for financial statement
	purposes, and timing differences in recognizing certain gains and losses on security transactions.

	At March 31, 2005, the cost of investments was $2,933,736,060.

	Gross unrealized appreciation and gross unrealized depreciation of investments at March 31, 2005, were as
	follows:

	Gross unrealized:
	Appreciation	$103,295,105
	Depreciation	(67,646,388)

	Net unrealized appreciation of investments	$35,648,717

Item 2. Controls and Procedures.

The registrant's principal executive and principal financial officers, or persons performing similar functions, have concluded that the registrant's disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940, as amended (the "1940 Act") (17 CFR 270.30a-3(c))) are effective, as of a date within 90 days of the filing date of this report that includes the disclosure required by this paragraph, based on their evaluation of the controls and procedures required by Rule 30a-3(b) under the 1940 Act (17 CFR 270.30a-3(b)) and Rule 13a-15(b) or 15d-15(b) under the Securities Exchange Act of 1934 (17 CFR 240.13a-15(b) or 240.15d-15(b)).
There were no changes in the registrant's internal control over financial reporting (as defined in Rule 30a-3(d) under the 1940 Act (17 CFR 270.30a-3(d)) that occurred during the registrant's last fiscal quarter that have materially affected, or are reasonably likely to materially affect, the registrant's internal control over financial reporting.

Item 3. Exhibits.

File as exhibits as part of this Form a separate certification for each principal executive officer and principal financial officer of the registrant as required by Rule 30a-2(a) under the 1940 Act (17 CFR 270.30a-2(a)), exactly as set forth below: EX-99 CERT Attached hereto.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

(Registrant) Nuveen Preferred and Convertible Income Fund 2

By (Signature and Title)* /s/ Jessica R. Droeger--Vice President and Secretary

Date 05/27/05

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

By (Signature and Title)* /s/ Gifford R. Zimmerman--Chief Administrative Officer (principal executive officer)

Date 05/27/05

By (Signature and Title)* /s/ Stephen D. Foy--Vice President and Controller (principal financial officer)

Date 05/27/05

* Print the name and title of each signing officer under his or her signature.

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM N-Q

QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS OF REGISTERED MANAGEMENT INVESTMENT COMPANY

SIGNATURES

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

FORM N-Q