UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM N-Q
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QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS OF REGISTERED
MANAGEMENT INVESTMENT COMPANY
INVESTMENT COMPANY ACT FILE NUMBER 811-8747
CHARTWELL DIVIDEND AND INCOME FUND, INC.
(Exact name of registrant as specified in charter)
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1235 Westlakes Drive, Suite 400
Berwyn, PA 19312
(Address of principal executive offices) (Zip code)
PNC Bank, National Association
400 Bellevue Parkway
Wilmington, DE 19809
Attn: Closed-End Department
(Name and address of agent for service)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: 1-610-296-1400
DATE OF FISCAL YEAR END: NOVEMBER 30,2006
DATE OF REPORTING PERIOD: AUGUST 31, 2006
ITEM 1. SCHEDULE OF INVESTMENTS
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CHARTWELL DIVIDEND AND INCOME FUND, INC. AUGUST 31, 2006
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SCHEDULE OF INVESTMENTS (Unaudited)
NUMBER OF MARKET
SHARES VALUE
----------- ------------
COMMON STOCK--74.8%
BANKS--13.9%
AmSouth Bancorporation........................................................ 46,760 $ 1,339,674
Bank of America Corporation................................................... 262,000 13,485,140
National City Corporation..................................................... 100,000 3,458,000
New York Community Bancorp, Inc............................................... 119,000 1,952,790
Old National Bancorp, Inc..................................................... 50,000 935,500
------------
21,171,104
------------
BASIC INDUSTRY--1.6%
Alcoa, Inc.................................................................... 25,000 714,750
Packaging Corporation of America.............................................. 20,000 462,800
Weyerhaeuser Company.......................................................... 20,000 1,240,000
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2,417,550
------------
CONSUMER CYCLICAL--3.5%
Coinmach Corporation- IDS..................................................... 204,850 3,533,663
Coinmach Corporation, Class A................................................. 175,850 1,740,915
------------
5,274,578
------------
CONSUMER STAPLES--12.9%
Altria Group, Inc............................................................. 132,950 11,105,313
B&G Foods, Inc................................................................ 41,000 702,330
Loews Corporation - Carolina Group............................................ 60,000 3,435,600
Reddy Ice Holdings, Inc....................................................... 100,000 2,372,000
Regal Entertainment Group, Class A............................................ 100,000 1,973,000
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19,588,243
------------
ENERGY--5.8%
Calumet Specialty Products Partners LP(c)..................................... 5,000 161,100
Chevron Corporation........................................................... 30,000 1,932,000
Enterprise Products Partners LP(c)............................................ 50,000 1,338,500
Halliburton Company........................................................... 20,000 652,400
Linn Energy LLC(c)............................................................ 7,000 163,100
Marathon Oil Corporation...................................................... 20,000 1,670,000
Precision Drilling............................................................ 30,000 1,099,800
Sunoco Logistics Partners LP(c)............................................... 40,000 1,796,000
------------
8,812,900
------------
FINANCIAL--12.5%
AllianceBernstein Holding LP(c)............................................... 80,000 5,336,000
American Capital Strategies Limited........................................... 100,000 3,873,000
Apollo Investment Corporation................................................. 49,800 994,506
Chubb Corporation............................................................. 7,002 351,221
Goldman Sachs Group, Inc...................................................... 20,000 2,973,000
Hartford Financial Services Group, Inc........................................ 39,200 3,365,712
People's Choice Europe Limited+............................................... 34,000 102,000
Washington Mutual, Inc........................................................ 50,000 2,094,500
------------
19,089,939
------------
HEALTHCARE--0.4%
Bristol-Myers Squibb Company.................................................. 25,000 543,750
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REAL ESTATE INVESTMENT TRUST--9.9%
CapitalSource, Inc............................................................ 100,000 2,430,000
Deerfield Triarc Capital Corporation.......................................... 50,000 663,000
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CHARTWELL
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CHARTWELL DIVIDEND AND INCOME FUND, INC. AUGUST 31, 2006
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SCHEDULE OF INVESTMENTS (Unaudited)
NUMBER OF
SHARES/
PRINCIPAL MARKET
AMOUNT VALUE
----------- ------------
COMMON STOCK (CONTINUED)
REAL ESTATE INVESTMENT TRUST (CONTINUED)
HomeBanc Corporation.......................................................... 300,000 $ 2,010,000
iStar Financial, Inc.......................................................... 50,000 2,096,000
Longview Fibre Company........................................................ 126,014 2,626,132
LTC Properties, Inc........................................................... 50,000 1,191,000
Mack-Cali Realty Corporation.................................................. 82 4,358
New Century Financial Corporation............................................. 35,000 1,354,850
Reckson Associates Realty Corporation......................................... 63,000 2,695,770
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15,071,110
------------
TECHNOLOGY--1.0%
Technology Investment Capital Corporation..................................... 100,595 1,504,901
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TELECOMMUNICATIONS--7.1%
Alaska Communications Systems Group, Inc...................................... 175,000 2,413,250
Citizens Communications Company............................................... 200,000 2,758,000
Consolidated Communications Holdings, Inc..................................... 40,000 686,000
Fairpoint Communications, Inc................................................. 100,000 1,635,000
Windstream Corporation........................................................ 250,000 3,300,000
------------
10,792,250
------------
TRANSPORTATION--2.4%
Aries Maritime Transport Limited.............................................. 50,000 548,000
Arlington Tankers Limited..................................................... 42,100 972,089
K-Sea Transportation Partners LP(c)........................................... 10,000 330,000
Seaspan Corporation........................................................... 33,400 759,850
Teekay LNG Partners LP(c)..................................................... 35,000 1,060,500
------------
3,670,439
------------
UTILITIES--3.8%
AmeriGas Partners LP(c)....................................................... 15,200 462,688
Kinder Morgan Energy Partners LP(c)........................................... 45,000 2,014,650
Oneok Partners LP(c).......................................................... 26,600 1,479,492
TEPPCO Partners LP(c)......................................................... 34,800 1,302,564
Transmontaigne Partners LP(c)................................................. 15,000 464,700
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5,724,094
------------
TOTAL COMMON STOCK (COST $103,312,261) ....................................... 113,660,858
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CORPORATE NOTES/BONDS--42.6%
BASIC INDUSTRY--5.9%
Buhrmann US, Inc.
8.250%, 07/01/14............................................................ $ 620,000 623,100
Commercial Vehicle Group
8.000%, 07/01/13............................................................ 855,000 818,663
Goodman Global Holdings
7.875%, 12/15/12............................................................ 1,130,000 1,065,025
K. Hovnanian Enterprises
8.875%, 04/01/12............................................................ 1,000,000 970,000
Koppers Industries
9.875%, 10/15/13............................................................ 1,063,000 1,156,012
Ply Gem Industries, Inc.
9.000%, 02/15/12............................................................ 1,120,000 912,800
Quebecor Media
7.750%, 03/15/16............................................................ 1,060,000 1,054,700
TRW Automotive, Inc.
9.375%, 02/15/13............................................................ 1,185,000 1,270,912
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CHARTWELL
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CHARTWELL DIVIDEND AND INCOME FUND, INC. AUGUST 31, 2006
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SCHEDULE OF INVESTMENTS (Unaudited)
PRINCIPAL MARKET
AMOUNT VALUE
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CORPORATE NOTES/BONDS (CONTINUED)
Williams Scotsman, Inc.
8.500%, 10/01/15............................................................ $1,070,000 $ 1,091,400
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8,962,612
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CAPITAL GOODS--2.8%
Clarke American Corporation
11.750%, 12/15/13........................................................... 450,000 472,500
Levi Strauss & Company
9.750%, 01/15/15............................................................ 1,230,000 1,279,200
Norcross Safety Products LLC, Series B
9.875%, 08/15/11............................................................ 850,000 896,750
PH Glatfelter+
7.125%, 05/01/16............................................................ 680,000 673,736
Verso Paper Holdings LLC+
11.375%, 08/01/16........................................................... 1,000,000 995,000
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4,317,186
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CONSUMER CYCLICAL--3.0%
Allied Security Escrow
11.375%, 07/15/11........................................................... 515,000 511,137
H&E Equipment Services+
8.375%, 07/15/16............................................................ 875,000 892,500
Rent-A-Center, Inc.
7.500%, 05/01/10............................................................ 1,220,000 1,204,750
Sonic Automotive, Inc., Series B
8.625%, 08/15/13............................................................ 990,000 987,525
TDS Investor Corporation+
9.875%, 09/01/14............................................................ 1,000,000 982,500
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4,578,412
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CONSUMER STAPLES--5.2%
AMC Entertainment, Inc.
9.875%, 02/01/12............................................................ 1,000,000 1,027,500
Brown Shoe Company, Inc.
8.750%, 05/01/12............................................................ 800,000 828,000
Chiquita Brands International, Inc.
7.500%, 11/01/14............................................................ 950,000 840,750
Crown Americas LLC+
7.750%, 11/15/15............................................................ 1,020,000 1,030,200
MGM Mirage, Inc.
8.500%, 09/15/10............................................................ 1,125,000 1,189,687
MTR Gaming Group, Inc.+
9.000%, 06/01/12............................................................ 700,000 708,750
MTR Gaming Group, Inc., Series B
9.750%, 04/01/10............................................................ 520,000 549,250
Stater Brothers Holdings
8.125%, 06/15/12............................................................ 895,000 897,238
Steinway Musical Instruments+
7.000%, 03/01/14............................................................ 830,000 805,100
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7,876,475
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ENERGY--2.7%
Bluewater Finance Limited
10.250%, 02/15/12........................................................... 1,000,000 1,008,750
Copano Energy LLC
8.125%, 03/01/16............................................................ 935,000 951,362
Encore Acquisition Company
7.250%, 12/01/17............................................................ 825,000 810,563
Hanover Compress Company
8.625%, 12/15/10............................................................ 1,260,000 1,316,700
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4,087,375
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CHARTWELL
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CHARTWELL DIVIDEND AND INCOME FUND, INC. AUGUST 31, 2006
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SCHEDULE OF INVESTMENTS (Unaudited)
PRINCIPAL MARKET
AMOUNT VALUE
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CORPORATE NOTES/BONDS (CONTINUED)
FINANCIALS--4.4%
E*Trade Financial Corporation
8.000%, 06/15/11............................................................ $ 870,000 $ 906,975
Ford Motor Credit Company
7.000%, 10/01/13............................................................ 1,950,000 1,822,398
General Motors Acceptance Corporation
8.000%, 11/01/31............................................................ 1,590,000 1,611,360
Labranche & Company, Inc.
11.000%, 05/15/12........................................................... 1,260,000 1,357,650
Nielsen Finance, LLC+
10.000%, 08/01/14........................................................... 1,000,000 1,028,750
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6,727,133
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HEALTHCARE--3.3%
Bio-Rad Laboratories, Inc.
7.500%, 08/15/13............................................................ 500,000 510,000
Hanger Orthopedic Group
10.250%, 06/01/14........................................................... 1,000,000 1,007,500
HCA, Inc.
7.875%, 02/01/11............................................................ 910,000 871,325
Iasis Healthcare Corporation
8.750%, 06/15/14............................................................ 1,000,000 957,500
Town Sports International
9.625%, 04/15/11............................................................ 654,000 691,605
Universal Hospital Services
10.125%, 11/01/11........................................................... 995,000 1,034,800
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5,072,730
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INDUSTRIALS--7.2%
Allied Waste North America
7.250%, 03/15/15............................................................ 1,165,000 1,150,437
Douglas Dynamics, LLC+
7.750%, 01/15/12............................................................ 535,000 508,250
Freeport-McMoRan Copper & Gold, Inc.
10.125%, 02/01/10........................................................... 1,010,000 1,079,185
General Cable Corporation
9.500%, 11/15/10............................................................ 680,000 731,000
Gibraltar Industries, Inc.+
8.000%, 12/01/15............................................................ 1,340,000 1,333,300
Ineos Group Holdings+
8.500%, 02/15/16............................................................ 1,080,000 1,031,400
INVISTA+
9.250%, 05/01/12............................................................ 1,315,000 1,387,325
Nalco Company
7.750%, 11/15/11............................................................ 1,050,000 1,073,625
Quebecor World Cap Corporation+
8.750%, 03/15/16............................................................ 975,000 921,375
Superior Essex Communications, LLC
9.000%, 04/15/12............................................................ 900,000 918,000
Tronox Worldwide Finance Corporation
9.500%, 12/01/12............................................................ 835,000 862,138
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10,996,035
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REAL ESTATE--1.5%
Boyd Gaming Corporation
7.750%, 12/15/12............................................................ 1,090,000 1,098,175
Geo Group, Inc.
8.250%, 07/15/13............................................................ 1,120,000 1,120,000
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2,218,175
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CHARTWELL
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CHARTWELL DIVIDEND AND INCOME FUND, INC. AUGUST 31, 2006
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SCHEDULE OF INVESTMENTS (Unaudited)
NUMBER OF
SHARES/
PRINCIPAL MARKET
AMOUNT VALUE
----------- ------------
CORPORATE NOTES/BONDS (CONTINUED)
TELECOMMUNICATIONS--5.6%
Albritton Communications Company
7.750%, 12/15/12............................................................ $ 990,000 $ 983,812
Charter Communications Operating, LLC+
8.000%, 04/30/12............................................................ 900,000 906,750
Cincinnati Bell, Inc.
8.375%, 01/15/14............................................................ 1,390,000 1,402,162
CSC Holdings, Inc.
7.875%, 02/15/18............................................................ 785,000 806,588
Hughes Network Systems, LLC+
9.500%, 04/15/14............................................................ 1,080,000 1,101,600
Intelsat Holdings Company
8.625%, 01/15/15............................................................ 855,000 867,825
Qwest Corporation
8.875%, 03/15/12............................................................ 1,390,000 1,511,625
WII Compents, Inc.
10.000%, 02/15/12........................................................... 1,000,000 995,000
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8,575,362
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TRANSPORTATION--0.6%
Ship Finance International Limited
8.500%, 12/15/13............................................................ 1,000,000 962,500
------------
UTILITIES--0.4%
NRG Energy, Inc.
7.375%, 02/01/16............................................................ 625,000 617,188
------------
TOTAL CORPORATE NOTES/BONDS (COST $65,508,734) ............................... 64,991,183
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CONVERTIBLE PREFERRED STOCK--2.0%
FINANCIAL--2.0%
ACE Limited,7.800%............................................................ 26,025 673,527
Merrill Lynch & Company, RIG CAP APP Notes Transocean, 11.000%, 10/31/06(a) .. 16,653 1,034,484
Metlife, Inc., 6.375%......................................................... 25,000 723,500
XL Capital Limited, 6.500%.................................................... 10,000 218,300
XL Capital Limited, 7.000%.................................................... 13,859 343,426
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TOTAL CONVERTIBLE PREFERRED STOCKS (COST $2,259,784) ......................... 2,993,237
------------
PREFERRED STOCK--1.6%
FINANCIAL--1.6%
Felcor Lodging Trust, Inc..................................................... 40,000 990,000
Public Storage................................................................ 40,000 1,035,600
TransCanada Corporation....................................................... 14,905 386,934
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TOTAL PREFERRED STOCK (COST $3,006,501) ...................................... 2,412,534
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PREFERRED TERM SECURITIES(a)--11.5%
Alesco Preferred Funding IX+.................................................. 1,000 970,000
Alesco Preferred Funding X+................................................... 1,000 1,000,000
Alesco Preferred Funding XI+.................................................. 5000 500,000
Alesco Trust Funding+......................................................... 15,000 1,500,000
I-Preferred Term Securities IV................................................ 100,000 870,000
Preferred Term Securities IV.................................................. 200,000 912,500
Preferred Term Securities XIII................................................ 1000,000 890,000
Preferred Term Securities XIV................................................. 2000,000 1,741,200
Preferred Term Securities XV.................................................. 200,000 1,824,000
Preferred Term Securities XVI................................................. 100,000 1,004,300
5
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CHARTWELL
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CHARTWELL DIVIDEND AND INCOME FUND, INC. AUGUST 31, 2006
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SCHEDULE OF INVESTMENTS (Unaudited)
NUMBER OF
SHARES/
WRITTEN MARKET
CONTRACTS VALUE
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PREFERRED TERM SECURITIES (CONTINUED)
Preferred Term Securities XVII................................................ 60,000 $ 507,000
Preferred Term Securities XVIII............................................... 100,000 845,300
Preferred Term Services XIX+.................................................. 100,000 912,000
Preferred Term Securities XX.................................................. 100,000 941,500
Preferred Term Securities XXI................................................. 100,000 988,900
Preferred Term Services XXII+................................................. 1,000 980,000
Taberna Preferred Funding I+.................................................. 250 242,500
Taberna Preferred Funding II+................................................. 500 495,000
Taberna Preferred Funding Limited+............................................ 50,000 500,000
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TOTAL PREFERRED TERM SECURITIES (COST $17,372,978) ........................... 17,624,200
------------
CASH EQUIVALENT(b)--2.5%
SEI Daily Income Trust, Prime Obligations Fund, Class A Shares, 5.310%........ 877,645 877,645
SEI Daily Income Trust, Treasury Fund, Class A Shares, 5.220%................. 2,931,650 2,931,650
------------
TOTAL CASH EQUIVALENT (COST $3,809,295) ...................................... 3,809,295
------------
TOTAL INVESTMENTS--135.0%
(COST $195,269,553)* ....................................................... 205,491,307
------------
COVERED CALL OPTIONS WRITTEN--(0.2)%
Alcoa, Inc. Oct. 30........................................................... (250) (18,750)
Bank Of America Corporation Oct. 52.50........................................ (200) (17,000)
Bristol-Myers Squibb Company Sept. 22.50...................................... (250) (10,000)
Chevron Corporation Sept. 65.................................................. (300) (25,500)
Chubb Corporation Sept. 50.................................................... (70) (5,250)
Goldman Sachs Group, Inc. Sept. 155........................................... (200) (18,000)
Halliburton Company Oct. 37.50................................................ (200) (5,000)
Hartford Financial Services Group, Inc. Sept. 85.............................. (392) (68,600)
Marathon Oil Corporation Sept. 90............................................. (200) (7,000)
National City Corporation Oct. 37.5........................................... (1,000) (12,500)
New Century Financial Corporation Sept. 40.................................... (350) (28,000)
Washington Mutual, Inc. Sept. 45.............................................. (500) (2,500)
Weyerhaeuser Company Sept. 60................................................. (200) (53,000)
------------
TOTAL COVERED CALL OPTIONS WRITTEN (PREMIUMS RECEIVED $308,278) .............. (271,100)
------------
OTHER LIABILITIES IN EXCESS OF OTHER ASSETS -- (34.8)% ....................... (53,013,564)++
------------
NET ASSETS -- 100.0% ......................................................... $152,206,643
============
* At August 31, 2006, the tax basis cost of the Fund's investments was $195,269,553,
and the unrealized appreciation and depreciation were $14,386,500 and
$(4,164,746), respectively.
+ Security exempt from registration under Rule 144A of the Securities Act of 1933.
These securities may be resold in transactions exempt from registration normally
to qualified institutions. At August 31, 2006, these securities amounted to
$21,508,036 or 14.1% of net assets.
++ As of August 31, 2006, $55,000,000 of commercial paper was outstanding with an
amortized cost of $54,629,901. The average discount rate of commercial paper
outstanding at August 31, 2006, was 5.47%. The average daily balance of commercial
paper outstanding for the quarter ended August 31, 2006, was $54,640,121 at a
weighted average discount rate of 5.47%. The maximum face amount of commercial
paper outstanding at any time during the quarter ended August 31, 2006, was
$55,000,000. In conjunction with the issuance of the commercial paper, the Fund
has entered into a line of credit arrangement with a bank for $30,000,000.
Interest on borrowing is based on market rates in effect at the time of borrowing.
The commitment fee is computed at the rate of 0.30% per annum on the unused
balance. There were no borrowings under this arrangement during the quarter ended
August 31, 2006.
(a) Securities considered illiquid. The total value of such securities as of August
31, 2006 was $18,658,684 and 12.3% of net assets.
(b) Rate shown is the 7-day effective yield as of August 31, 2006
(c) Securities are considered Master Limited Partnerships. At August 31, 2006, these
securities amounted to $15,909,294 or 10.5% of net assets.
6
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CHARTWELL
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CHARTWELL DIVIDEND AND INCOME FUND, INC. AUGUST 31, 2006
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SCHEDULE OF INVESTMENTS (Unaudited)
IDS Income Deposit Security
LLC Limited Liability Company
LP Limited Partnership
For information regarding the Fund's policy regarding valuation of investments and
other significant accounting policies, please refer to the Fund's most recent
semi-annual or annual financial statements.
7
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CHARTWELL
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 of
this report that includes the disclosure required by this paragraph, based on
their evaluation of these controls and procedures, required by Rule 30a-3(b)
under the 1940 Act and Rules 13a-15(b) or 15d-15(b) under the Securities
Exchange Act of 1934, as amended.
(b) There were no significant 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 last fiscal quarter that has materially affected, or is
reasonably likely to materially affect, the Registrant's internal control over
financial reporting.
ITEM 3. EXHIBITS.
(a) A separate certification for the principal executive officer and the
principal financial officer of the Registrant as required by Rule 30a-2(a) under
the Investment Company Act of 1940, as amended (17 CFR 270.30a-2(a)), are
attached hereto as EX-99Cert.
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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) Chartwell Dividend and Income Fund, Inc.
By (Signature and Title)* /s/ Winthrop S. Jessup
-----------------------------
Winthrop S. Jessup, President
(Principal Executive Officer)
Date October 25, 2006
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/ Winthrop S. Jessup
-----------------------------
Winthrop S. Jessup, President
(Principal Executive Officer)
Date October 25, 2006
By (Signature and Title)* /s/ G. Gregory Hagar
----------------------------------------
G. Gregory Hagar, Vice President and CFO
(Principal Financial Officer)
Date October 25, 2006
* Print the name and title of each signing officer under his or her signature.