Edgar Filing: DIVIDEND & INCOME FUND, INC.

dninqfeb2011.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM N-Q

QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS OF REGISTERED
MANAGEMENT INVESTMENT COMPANY

Investment Company Act File Number: 811-8747

DIVIDEND AND INCOME FUND, INC.

(Exact name of registrant as specified in charter)

11 Hanover Square, 12th Floor New York, NY	10005
(Address of principal executive offices)	(Zip Code)

John F. Ramírez, Esq.

Dividend and Income Fund, Inc.

11 Hanover Square

New York, NY 10005

(Name and address of agent for service)

Registrant's telephone number, including area code: 1-212-785-0400

Date of Fiscal Year End: 11/30

Date of Reporting Period: 02/28/11

Item 1. Schedule of Investments

DIVIDEND AND INCOME FUND, INC.

SCHEDULE OF PORTFOLIO INVESTMENTS

February 28, 2011

(Unaudited)

Shares			Cost		Value
		COMMON STOCKS (69.45%)
		Aircraft Engines & Engine Parts (1.06%)
	10,000	United Technologies Corp.	$	727,426	$	835,400

		Beverages (2.02%)
	15,000	Coca-Cola Company		835,674		958,800
	10,000	PepsiCo, Inc.		529,400		634,200
				1,365,074		1,593,000

		Cigarettes (1.76%)
	30,000	Altria Group, Inc.		634,550		761,100
	10,000	Philip Morris International, Inc.		485,376		627,800
				1,119,926		1,388,900

		Computer & Office Equipment (1.79%)
	25,000	Hewlett-Packard Company		1,088,505		1,090,750
	2,000	International Business Machines Corp.		258,964		323,760
				1,347,469		1,414,510

		Crude Petroleum & Natural Gas (1.05%)
	8,160	Occidental Petroleum Corp.		527,752		832,075

		Deep Sea Foreign Transportation of Freight (1.01%)
	50,000	Seaspan Corp.		347,030		801,000

		Dolls & Stuffed Toys (0.79%)
	25,000	Mattel, Inc.		610,742		626,500

		Electric Services (3.13%)
	65,000	Southern Company		2,326,432		2,477,150

		Electronic & Other Electrical Equipment (3.36%)
	20,000	Emerson Electric Company		747,590		1,193,200
	70,000	General Electric Company		1,166,254		1,464,400
				1,913,844		2,657,600

		Fire, Marine & Casualty Insurance (1.60%)
	20,000	Ace Ltd.		829,324		1,265,000

		Food & Kindred Products (0.40%)
	10,000	Kraft Foods, Inc. Class A		258,704		318,400

		Investment Advice (0.68%)
	20,000	Invesco Ltd.		437,950		536,800

		Life Insurance (3.60%)
	30,000	Lincoln National Corp.		670,430		951,600
	40,000	MetLife, Inc.		699,693		1,894,400
				1,370,123		2,846,000

		Miscellaneous Business Credit Institution (3.97%)
	110,000	Apollo Investment Corp.		1,274,509		1,360,700
	40,000	Horizon Technology Finance Corp.		621,453		640,400
	35,465	Solar Capital Ltd.		665,861		868,890
	46,169	Star Asia Financial Ltd. (a)(b)(c)		686,145		249,313
	15,000	Star Asia SPV, LLC (b)(c)		84,805		17,850
				3,332,773		3,137,153

		Motor Vehicle Parts & Accessories (1.83%)
	25,000	Honeywell International, Inc.		889,529		1,447,750

		National Commercial Banks (2.17%)
	36,800	JPMorgan Chase & Company		774,303		1,718,192

		Natural Gas Transmission (3.81%)
	39,000	Energy Transfer Partners LP		2,014,654		2,138,370
	20,000	Enterprise Products Partners LP		374,214		872,000
				2,388,868		3,010,370

		Paints, Varnishes, Lacquers, Enamels & Allied Products (1.12%)
	10,000	PPG Industries, Inc.		657,378		883,800

		Perfumes, Cosmetics & Other Toilet Preparations (1.76%)
	50,000	Avon Products, Inc.		1,596,424		1,390,500

		Petroleum Refining (2.16%)
	20,000	Exxon Mobil Corp.		1,337,943		1,710,600

		Pharmaceutical Preparations (6.39%)
	30,000	Abbott Laboratories		1,522,047		1,443,000
	55,000	Bristol-Myers Squibb Company		1,241,872		1,419,550
	20,000	Merck & Company, Inc.		680,994		651,400
	80,000	Pfizer, Inc.		1,211,079		1,539,200
				4,655,992		5,053,150

		Plastic Materials, Resins & Nonvulcanelastomers (2.33%)
	20,000	E.I. du Pont de Nemours & Company		751,716		1,097,400
	20,000	Dow Chemical Co.		580,754		743,200
				1,332,470		1,840,600

		Radio & TV Communications Equipment (0.75%)
	10,000	QUALCOMM, Inc.		383,189		595,800

		Radio Telephone Communications (0.73%)
	20,000	Vodafone Group PLC ADR		453,234		572,400

		Real Estate Investment Trusts (2.82%)
	53,400	Annaly Capital Management, Inc.		922,335		957,462
	150,000	MFA Financial, Inc.		1,201,341		1,270,500
				2,123,676		2,227,962

		Refuse Systems (0.70%)
	15,000	Waste Management, Inc.		532,822		555,900

		Retail-Variety Stores (1.06%)
	16,000	Target Corp.		660,150		840,800

		Retail-Women's Clothing Stores (2.19%)
	54,000	Limited Brands, Inc.		475,950		1,729,080

		Savings Institution, Federally Chartered (1.00%)
	60,000	People's United Financial, Inc.		826,108		790,800

		Security & Commodity Brokers, Dealers, Exchanges & Services (0.70%)
	15,000	NYSE Euronext		372,671		555,000


		Semiconductors & Related Devices (2.72%)
	40,000	Intel Corp.		796,500		858,800
	35,000	Microchip Technology, Inc.		998,143		1,291,850
				1,794,643		2,150,650

		Services-Engineering, Accounting, Research, Management (0.43%)
	10,000	Paychex, Inc.		309,491		336,300

		Services-Prepackaged Software (1.01%)
	30,000	Microsoft Corp.		900,672		797,400

		Surgical & Medical Instruments & Apparatus (2.33%)
	20,000	3M Company		1,133,436		1,844,600



		Telephone Communications (No Radiotelephone) (4.75%)
	45,000	AT&T, Inc.		1,672,513		1,277,100
	140,000	Frontier Communications Corp.		1,920,849		1,188,600
	35,000	Verizon Communications, Inc.		1,206,032		1,292,200
				4,799,394		3,757,900

		Water Transportation (0.47%)
	15,000	Nordic American Tanker Shipping Ltd.		448,114		367,350


		Total common stocks		45,361,026		54,906,392

		Exchange Traded Fund (2.18%)
	65,000	SPDR KBW Bank		871,731		1,722,500

		Preferred Stock ( 0.03%)
		Financial (0.03%)
	80,000	Solar Cayman Ltd. (a)(b)(c)		604,763		26,400

Principal
Amount
		Corporate Bonds and Notes (45.14%)
		Accident & Health Insurance (0.68%)
	500,000	CNO Financial Group, Inc. 9%, 1/15/18		507,355		535,000

		Basic Industry (1.35%)
	1,000,000	WireCo WorldGroup, 9.50%, 5/15/17 (b)		976,994		1,067,500

		Cable & Other Pay Television Services (1.64%)
	500,000	CCO Holdings LLC, 7%, 1/15/19		499,568		511,250
	750,000	Mediacom Broadband LLC, 8.50%, 10/15/15		758,491		783,750
				1,258,059		1,295,000

		Cable Television (1.34%)
	1,000,000	Cequel Communications Holdings I LLC and Cequel Capital Corp., 8.625%, 11/15/17 (b)		1,012,261		1,062,500

		Cogeneration Services & Small Power Producers (0.60%)
	450,000	Covanta Holding Corp., 7.25%, 12/1/20		458,094		474,868

		Communications Services, NEC (1.33%)
	1,000,000	Hughes Network Systems LLC, 9.50%, 4/15/14		1,012,289		1,048,750

		Concrete Products, Except Block & Brick (1.12%)
	750,000	Headwaters, Inc., 11.375%, 11/1/14		767,964		885,000

		Converted Paper & Paperboard Prods (No Containers/Boxes) (1.32%)
	1,000,000	Appleton Papers, Inc., 10.50%, 6/15/15 (b)		996,126		1,040,000

		Crude Petroleum & Natural Gas (0.34%)
	250,000	Plains Exploration & Productions Company, 7.625%, 6/1/18		250,706		268,438

		Drawing & Insulating of Nonferrous Wire (0.64%)
	500,000	Belden, Inc., 7%, 3/15/17		481,731		510,000

		Drilling Oil & Gas Wells (0.71%)
	500,000	Offshore Group Investments Ltd., 11.50%, 8/1/15 (b)		501,059		562,500

		Electric Services (1.61%)
	650,000	Edison Mission Energy, 7.00%, 5/15/17		650,905		531,375
	745,589	Elwood Energy LLC, 8.159%, 7/5/26		789,817		744,657
				1,440,722		1,276,032

		Fats & Oils (0.69%)
	500,000	Darling International Inc., 8.50%, 12/15/18		520,721		541,875

		Gaming (0.51%)
	360,000	Yonkers Racing Corp., 11.375%, 7/15/16 (b)		358,646		405,900

		Hospital & Medical Service Plans (0.32%)
	250,000	Health Net, Inc., 6.375%, 6/1/17		234,388		256,250

		Hotels & Motels (0.83%)
	700,000	MTR Gaming Group, Inc., 9%, 6/1/12		702,046		652,750

		Ice Cream & Frozen Desserts (0.66%)
	500,000	Dean Foods Company, 9.75%, 12/15/18		505,378		521,250

		Machinery (0.82%)
	600,000	Cleaver-Brooks, Inc., 12.25%, 5/1/16 (b)		603,579		648,000

		Machine Tools, Metal Cutting Types (0.57%)
	425,000	Thermadyne Holdings Corp., 9%, 12/15/17 (b)		427,813		451,031

		Metals & Mining (0.42%)
	300,000	Atkore International Inc., 9.875%, 1/1/18		306,319		328,125

		Metal Forgings & Stampings (0.24%)
	170,000	Trimas Corp., 9.75%, 12/15/17 (b)		166,874		189,550

		Miscellaneous Business Credit Institution (0.69%)
	500,000	PHH Corp., 9.25%, 3/1/16 (b)		507,059		545,000

		Miscellaneous Electrical Machinery, Equipment & Supplies (0.42%)
	55,000	Exide Technologies, 8.625%, 2/1/18		55,000		58,919
	240,000	Spectrum Brands Holdings, Inc., 9.50%, 6/15/18 (b)		245,106		270,000
				300,106		328,919

		Mortgage Banks (0.70%)
	500,000	Provident Funding Associates, 10.25%, 4/15/17 (b)		500,000		555,000

		Motor Vehicle Parts & Accessories (0.68%)
	480,000	Tower Automotive Holdings USA LLC, 10.625%, 9/1/17 (b)		486,635		540,000

		Natural Gas Transmission (2.41%)
	435,000	Copano Energy LLC, 8.125%, 3/1/16		442,394		455,119
	500,000	Energy Transfer Equity LP, 7.50%, 10/15/20		514,728		544,375
	500,000	Niska Gas Storage US LLC, 8.875%, 3/15/18 (b)		511,285		547,500
	350,000	Southern Star Central Corp., 6.75%, 3/1/16		322,920		358,750
				1,791,327		1,905,744

		Oil & Gas Equipment & Services (1.05%)
	780,000	Complete Production Services, Inc., 8%, 12/15/16		791,692		828,750

		Oil & Gas Field Exploration Services (0.67%)
	500,000	CGG-Veritas, 7.75%, 5/15/17		511,927		531,250

		Paper Mills (1.07%)
	750,000	ABI Escrow Corp., 10.25%, 10/15/18 (b)		756,899		843,750

		Papers & Allied Products (0.66%)
	500,000	Cascades, Inc., 7.75%, 12/15/17		490,622		525,625

		Paper & Forest Products (0.37%)
	250,000	PE Paper Escrow, 12%, 8/1/14 (b)		240,746		289,161

		Personal Credit Institutions (1.01%)
	740,000	Credit Acceptance Corp., 9.125%, 2/1/17 (b)		760,059		801,050

		Petroleum Refining (0.66%)
	272,000	Coffeyville Resources LLC, 9%, 4/1/15 (b)		275,997		297,840
	200,000	Coffeyville Resources LLC, 10.875%, 4/1/17 (b)		199,242		227,500
				475,239		525,340

		Pharmaceutical Preparations (1.32%)
	1,000,000	Patheon, Inc., 8.625%, 4/15/17 (b)		1,025,212		1,045,000

		Radio Broadcasting Stations (0.20%)
	150,000	Citadel Broadcasting Corp., 7.75%, 12/15/18		152,923		161,625

		Radio & TV Broadcasting & Communications Equipment (0.66%)
	500,000	CommScope, Inc., 8.25%, 1/15/19		511,448		521,250

		Retail-Convenience Stores (0.69%)
	500,000	Susser Holdings LLC, 8.50%, 5/15/16		508,004		545,625

		Retail-Miscellaneous Retail (0.31%)
	250,000	Ferrellgas Partners, L.P., 6.50%, 5/1/21		245,038		245,000

		Rolling Drawing & Extruding of Nonferrous Metals (0.70%)
	500,000	Novelis, Inc., 8.375%, 12/15/17		506,276		553,750

		Security Brokers, Dealers & Flotation Companies (0.97%)
	750,000	Penson Worldwide, Inc., 12.50%, 5/15/17 (b)		759,031		770,625

		Semiconductors & Related Devices (0.33%)
	250,000	Advanced Micro Devices, 7.75%, 8/1/20		258,686		262,500

		Services-Business Services, NEC (0.68%)
	500,000	DynCorp International, Inc. 10.375%, 7/1/07 (b)		502,054		540,000

		Services-Computer Integrated Systems Design (0.56%)
	400,000	Scientific Games International, Inc., 9.25%, 6/15/19		431,681		441,000

		Services-Equipment Rental & Leasing, NEC (0.71%)
	500,000	Aircastle Ltd., 9.75%, 8/1/18		503,274		560,000

		Services-Miscellaneous Amusement & Recreation (1.04%)
	750,000	Cedar Fair LP, 9.125%, 8/1/18 (b)		754,015		821,250

		Services-Miscellaneous Equipment Rental & Leasing (0.89%)
	675,000	H&E Equipment Services, Inc., 8.375%, 7/15/16		681,253		703,687

		Services-Miscellaneous Repair Services (0.67%)
	500,000	Aquilex Holdings LLC, 11.125%, 12/15/16		495,869		528,750

		Services-Motion Picture Theaters (0.13%)
	95,000	Regal Entertainment Group, 9.125%, 8/15/18		96,243		102,125

		Steel Works, Blast Furnaces & Rolling & Finishing Mills (1.09%)
	840,000	Gibraltar Industries, Inc., 8%, 12/1/15		840,891		864,150

		Telephone Communications (No Radiotelephone) (1.91%)
	500,000	Equinix, Inc., 8.125%, 3/1/18		510,109		545,000
	1,000,000	Cincinnati Bell, Inc., 8.75%, 3/15/18		1,009,316		963,750
				1,519,425		1,508,750

		Textiles, Apparel & Luxury Goods (0.07%)
	50,000	Empire Today LLC, 11.375%, 2/1/17		49,464		52,500

		Transportation (0.54%)
	400,000	Marquette Transportation Company, 10.875%, 1/15/17 (b)		401,705		426,000

		Utilities (0.57%)
	400,000	North American Energy Alliance LLC, 10.875%, 6/1/16 (b)		409,834		454,000

		Water Transportation (2.17%)
	900,000	Hornbeck Offshore Services, Inc., 8%, 9/1/17		907,481		928,125
	750,000	American Petroleum Tankers LLC, 10.25%, 5/1/15 (b)		736,213		788,437
				1,643,694		1,716,562

		Wholesale-Electronic Parts & Equipment, NEC (0.41%)
	300,000	Brightstar Corp., 9.50%, 12/1/16 (b)		300,000		322,500

		Wholesale-Petroleum & Petroleum Products (No Bulk Stations) (0.39%)
	275,000	Crosstex Energy LP, 8.875%, 2/15/18		275,639		304,562


		Total corporate bonds and notes		33,973,094		35,691,119

Shares		MONEY MARKET FUND (7.56%)
	5,976,798	Wells Fargo Advantage Cash Investment Money Market Fund, 7 day annualized yield 0.01%		5,976,798		5,976,798

		Total investments (124.36%)	$	86,787,412		98,323,209

		Liabilities in excess of other assets (-24.36%) (d)				(19,256,942	)

		Net assets (100.00%)			$	79,066,267

(a)		Non-income producing.

(b)		These securities are exempt from registration under Rule 144A of the Securities Act of 1933, as amended. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers.

(c)		Illiquid and/or restricted security that has been fair valued.

(d)		The Fund had $20 million in borrowings outstanding pursuant to a $25 million line of credit with a bank. Borrowings under the line of credit are secured by a perfected security interest on all of the Fund's assets.

ADR		American Depositary Receipt
LLC		Limited Liability Company
LP		Limited Partnership
PLC		Public Limited Company
SPDR		Standard & Poor’s Depositary Receipt
SPV		Special Purpose Vehicle

Notes to Schedule of Portfolio Investments (Unaudited)

Security Valuation

Portfolio securities are valued by various methods depending on the primary market or exchange on which they trade. Most equity securities for which the primary markets is the United States are valued at the official closing price, last sale price or, if no sale has occurred, at the closing bid price. Most equity securities for which the primary market is outside the United States are valued using the official closing price or the last sale price in the principal market in which they are traded. If the last sale price (on the local exchange) is unavailable, the last evaluated quote or closing bid price normally is used. Certain of the securities in which the Fund invests are priced through pricing services that may utilize a matrix pricing system which takes into consideration factors such as yields, prices, maturities, call features, and ratings on comparable securities. Corporate bonds and notes may be valued according to prices quoted by a bond dealer that offers pricing services. Open end investment companies are valued at their net asset value. Securities for which quotations are not readily available or reliable and other assets may be valued as determined in good faith by the Investment Manager under the direction of or pursuant to procedures established by the Fund’s Board of Directors. Due to the inherent uncertainty of valuation, these values may differ from the value that would have been used had a readily available market for the securities existed. These differences in valuation could be material. A security’s valuation may differ depending on the method used for determining value. The use of fair value pricing by the Fund may cause the net asset value of its shares to differ from the net asset value that would be calculated using market prices.

Fair Value Measurements

The Fund uses a three level hierarchy for fair value measurements based on the transparency of inputs to the valuation of an asset or liability. Inputs may be observable or unobservable and refer broadly to the assumptions that market participants would use in pricing the asset or liability. Observable inputs reflect the assumptions market participants would use in pricing the asset or liability based on market data obtained from sources independent of the Fund. Unobservable inputs reflect a Fund’s own assumptions about the assumptions that market participants would use in pricing the asset or liability developed based on the best information available under the circumstances. The Fund’s investment in its entirety is assigned a level based upon the inputs which are significant to the overall valuation. The inputs or methodology used for valuing investments are not an indication of the risk associated with investing in those securities.

The hierarchy of inputs is summarized below.

·	Level 1 - unadjusted quoted prices in active markets for identical assets or liabilities including securities actively traded on a securities exchange.

·	Level 2 - observable inputs other than quoted prices included in Level 1 that are observable for the asset or liability which may include quoted prices for similar instruments, interest rates, prepayment speeds, credit risk, yield curves, default rates, and similar data.

·	Level 3 - unobservable inputs for the asset or liability including the Fund’s own assumptions about the assumptions a market participant would use in valuing the asset or liability.

The following is a summary of the inputs used as of February 28, 2011 in valuing the Fund’s assets carried at fair value. Refer to the Schedule of Portfolio Investments for detailed information on specific investments.

	Level 1		Level 2		Level 3		Total

Assets
Common stocks	$	54,639,229	$	-	$	267,163	$	54,906,392
Exchange traded fund		1,722,500		-		-		1,722,500
Preferred stock		-		-		26,400		26,400
Corporate bonds and notes		-		35,691,119		-		35,691,119
Money market fund		5,976,798		-		-		5,976,798

Total investments	$	62,338,527	$	35,691,119	$	293,563	$	98,323,209

There were no transfers between Level 1 and Level 2 during the three months ended February 28, 2011.

The following is a reconciliation of Level 3 investments for which significant unobservable inputs were used to determine fair value:

					Corporate
	Common		Preferred		Bonds and
	Stocks		Stocks		Notes			Total
Balance, November 30, 2010	$	200,256	$	26,400	$	950,000		$	1,176,656
									-
Proceeds from sales		-		-		(960,000	)		(960,000	)
Realized loss		-		-		(40,000	)		(40,000	)
Change in unrealized depreciation		66,907		-		50,000			116,907
Transfers in or out Level 3		-		-		-			-

Balance, February 28, 2011	$	267,163	$	26,400	$	-		$	293,563

Illiquid and Restricted Securities

The Fund owns securities which have a limited trading market and/or certain restrictions on trading and, therefore, may be illiquid and/or restricted. Such securities have been valued at fair value in accordance with the procedures described above. Due to the inherent uncertainty of valuation, these values may differ from the values that would have been used had a readily available market for the securities existed. These differences in valuation could be material. Illiquid and/or restricted securities owned at February 28, 2011, were as follows:

	Acquisition
	Date	Cost			Value
Solar Cayman Ltd.	3/7/07	$	604,763		$	26,400
Star Asia Financial Ltd.	2/22/07		686,145			249,313
Star Asia SPV, LLC	2/22/07		84,805			17,850
		$	1,375,713		$	293,563
Percent of net assets			1.74	%		0.37	%

Cost for Federal Income Tax Purposes

At February 28, 2011, for federal income tax purposes the aggregate cost of securities was $86,787,412 and net unrealized depreciation was $11,535,797, comprised of gross unrealized appreciation of $14,539,108 and gross unrealized depreciation of $3,003,311.

Item 2. Controls and Procedures

(a) The registrant's principal executive officer and principal financial officer 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")) 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 disclosure controls and procedures required by Rule 30a-3(b) under the 1940 Act and 15d-15(b) under the Securities Exchange Act of 1934.

(b) The registrant's principal executive officer and principal financial officer are not aware of any changes in the registrant's internal control over financial reporting (as defined in Rule 30a-3(d) under the 1940 Act) 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

(a) Certifications of the registrant's principal executive officer and principal financial officer as required by Rule 30a-2(a) under the 1940 Act.

Signatures

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

Dividend and Income Fund, Inc.

By: /s/Thomas B. Winmill

Thomas B. Winmill, President

Date: April 29, 2011

Pursuant to the requirements of the Securities Exchange Act of 1934 and the 1940 Act, 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: /s/Thomas B. Winmill

Thomas B. Winmill, President

Date: April 29, 2011

By: /s/Thomas O'Malley

Thomas O'Malley, Chief Financial Officer

Date: April 29, 2011

Exhibit Index

(a) Certifications of the registrant's principal executive and principal financial officer as required by Rule 30a-2(a) under the 1940 Act. (EX-99.CERT)