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Rating Action:

MOODY'S ASSIGNS Aaa RATINGS TO FUND PREFERRED SHARES ISSUED BY NUVEEN PREFERRED AND CONVERTIBLE INCOME FUND

28 May 2003
MOODY'S ASSIGNS Aaa RATINGS TO FUND PREFERRED SHARES ISSUED BY NUVEEN PREFERRED AND CONVERTIBLE INCOME FUND

Approximately $708.0 Million of Preferred Securities Affected.

New York, May 28, 2003 -- Moody's Investors Service assigned ratings of Aaa to fund preferred shares issued by the Nuveen Preferred and Convertible Income Fund. (NYSE: JPC), a recently launched diversified, closed-end fund trading on the New York Stock Exchange. The Fund has issued five series of preferred securities (M, T, W, TH, F, F2), each with 4,720 shares and a liquidation preference of $25,000 which pay dividends that are determined on a seven day Dutch auction basis. Moody's Aaa ratings reflect its assessment that the preferred shares issued from this closed-end fund constitute top quality investments with good asset protection and low risk of dividend impairment consistent with the expected loss profile of other Aaa rated securities.

The Fund's primary investment objective is high current income while its secondary objective is total return. To this end, the Fund will employ a multistrategy pursuant to which, under normal circumstances, it will invest at least 80% of its managed assets in preferred securities, convertible securities and related instruments. The Fund may invest up to 20% of its managed assets in other securities, including debt instruments and common stocks acquired upon conversion of a convertible security (such common stocks not normally to exceed 5% of the Fund's managed assets).

The ratings reflect an assessment that the market value of the underlying assets of the portfolio is sufficient to provide good asset protection to investors in the preferred stock issued by this Fund. In addition to satisfying regulatory requirements, Moody's rating guidelines establish that funds support preferred stock issues with eligible assets in amounts that are sufficient to withstand a severe loss in value. To meet Aaa preferred stock rating guidelines, funds adhere to stricter diversification standards by seeking to reduce underlying obligor concentrations. These rating agency guidelines supplement regulatory requirements which mandate asset coverage ratios of 200% to cover the fund's liabilities pursuant to the Investment Company Act of 1940. Moody's Aaa ratings assigned to the preferred shares also reflect the credit quality of the underlying assets in the portfolio which largely consist of investment grade issuers. In support of the Aaa ratings on the preferred shares, Moody's also cites the Fund's asset allocation strategy and conservative single issuer diversification parameters that serve to strengthen the asset coverage of the preferred shares.

The goal of the multistrategy approach is to effectively capture the diversification benefits provided by the low return-correlation across the three asset classes, namely preferred stock, convertible securities and other debt instruments, and at the same time provide the potential for high income generation and capture the opportunity to participate in rising equity markets with some protection against risks associated with rising interest rates. Nuveen Investment Advisory Corporation (NIAC) believes that the opportunity will exist from time-to-time to potentially enhance the Fund's total return by over-weighting or under-weighting these asset classes as the relative attractiveness of the asset classes changes. Initially, NIAC has allocated approximately 60%, 30% and 10% of the Fund's managed assets to preferred securities, convertible securities and other debt instruments, respectively. The Fund's assets allocated to preferred securities are managed by Spectrum Asset Management. The Fund's assets allocated to convertible securities are managed by Froley, Revy; and the Fund's assets allocated to other debt instruments are managed by NIAC.

At the time of their issuance, the Fund's preferred shares constitute approximately 33% of the total capital of the Nuveen Preferred and Convertible Income Fund. Moody's notes that under current market conditions the new Fund, by issuing preferred obligations and investing the net proceeds of such issuance in accordance with the Fund's investment policies, could increase earnings per common share.

Nuveen Investment Advisory Corporation will be responsible for determining the Fund's overall investment strategy, including the allocation of the Fund's assets to be invested in preferred securities, convertible securities and other debt instruments. NIAC, a registered investment adviser, is a wholly owned subsidiary of Nuveen Investments, Inc. The firm and its affiliate companies managed approximately $80 billion in assets as of January 31, 2003. Nuveen is the leading sponsor of closed-end exchange-traded funds as measured by the number of funds (102) and the amount of fund assets under management (approximately $40 billion) as of January 31, 2003.

Spectrum Asset Management Incorporated is a registered investment advisor with approximately $6.2 billion in assets under management as of December 31, 2002. Spectrum commenced operations in 1987 and is the largest exclusive manager of preferred securities portfolios. The firm is an independently managed, wholly-owned subsidiary of Principal Capital Management which is part of the Principal Financial Group, a publicly-traded, diversified, insurance and financial services company. Collectively, subsidiaries and affiliates of Principal Capital Management manage over $80 billion in assets worldwide.

The Fund's assets allocated to convertible securities are managed by Froley, Revy. The firm, which has been in business since 1975, specializes in the management of convertible security portfolios for institutional investors, including pension funds, insurance companies and foundations and has assets under management of approximately $2.2 billion. Effective May 17, 2002, Froley Revy began to operate independently as a wholly owned subsidiary of First

New York
Henry Shilling
Senior Vice President
Managed Funds Group
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

New York
Martin Duffy
VP - Senior Credit Officer
Managed Funds Group
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

No Related Data.
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