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, 2008
DATE OF REPORTING PERIOD: AUGUST 31, 2008
ITEM 1. SCHEDULE OF INVESTMENTS
CHARTWELL DIVIDEND & INCOME FUND, INC. AUGUST 31, 2008
SCHEDULE OF INVESTMENTS (UNAUDITED)
NUMBER OF MARKET
SHARES VALUE
----------- -------------
COMMON STOCK - 79.9%
BANKS - 10.2%
Bank of America Corporation ...................... 200,000 $ 6,228,000
JPMorgan Chase & Company ......................... 25,000 962,250
US Bancorp ....................................... 110,000 3,504,600
-------------
10,694,850
-------------
BASIC INDUSTRY - 1.6%
Dow Chemical Company ............................. 50,000 1,706,500
-------------
CONSUMER STAPLES - 9.3%
B&G Foods, Inc., Class A ......................... 100,000 806,000
B&G Foods, Inc. .................................. 41,000 651,900
Entercom Communications Corporation, Class A ..... 100,000 611,000
Philip Morris International, Inc. ................ 80,000 4,296,000
Regal Entertainment Group, Class A ............... 110,000 1,843,600
Reynolds American, Inc. .......................... 30,000 1,589,400
-------------
9,797,900
-------------
ENERGY - 10.4%
ConocoPhillips ................................... 20,000 1,650,200
Energy Transfer Partners LP (a) .................. 100,000 4,450,000
Exxon Mobil Corporation .......................... 40,000 3,200,400
Occidental Petroleum Corporation ................. 20,000 1,587,200
-------------
10,887,800
-------------
FINANCIAL - 7.8%
AllianceBernstein Holding LP (a) ................. 83,800 4,544,474
Apollo Investment Corporation * .................. 100,000 1,770,000
MCG Capital Corporation .......................... 100,000 348,000
Star Asia Financial Limited + .................... 150,000 663,000
XL Capital Limited, Class A ...................... 45,000 904,500
-------------
8,229,974
-------------
HEALTH CARE PROVIDERS & SERVICES - 1.7%
Brookdale Senior Living, Inc. .................... 80,000 1,764,000
-------------
HEALTHCARE - 4.4%
Bristol-Myers Squibb Company ..................... 75,000 1,600,500
CHARTWELL DIVIDEND & INCOME FUND, INC. AUGUST 31, 2008
SCHEDULE OF INVESTMENTS (UNAUDITED)
NUMBER OF MARKET
SHARES VALUE
----------- -------------
COMMON STOCK (CONTINUED)
HEALTHCARE (CONTINUED)
Pfizer, Inc. ..................................... 160,000 $ 3,057,600
-------------
4,658,100
-------------
HOTELS, RESTAURANTS & LEISURE - 1.8%
Carnival Corporation ............................. 50,000 1,853,000
-------------
MACHINERY - 3.4%
Caterpillar, Inc. ................................ 50,000 3,536,500
-------------
REAL ESTATE INVESTMENT TRUSTS - 7.5%
Annaly Capital Management, Inc. .................. 110,000 1,645,600
CapitalSource, Inc. .............................. 219,800 2,765,084
iStar Financial, Inc. ............................ 80,000 447,200
Liberty Property Trust ........................... 60,000 2,265,600
MFA Mortgage Investments, Inc. ................... 106,700 725,560
-------------
7,849,044
-------------
TELECOMMUNICATIONS - 11.0%
AT&T, Inc. ....................................... 130,000 4,158,700
Consolidated Communications Holdings, Inc. ....... 110,824 1,674,551
Fairpoint Communications, Inc. ................... 200,000 1,770,000
Frontier Communications Corporation .............. 200,000 2,514,000
Verizon Communications, Inc. ..................... 40,000 1,404,800
-------------
11,522,051
-------------
TRADING COMPANIES & DISTRIBUTORS - 1.3%
Aircastle Limited ................................ 100,000 1,327,000
-------------
TRANSPORTATION - 2.7%
FreeSeas, Inc. ................................... 126,949 775,658
General Maritime Corporation ..................... 75,000 1,852,500
K-Sea Transportation Partners LP (a) ............. 10,000 256,600
-------------
2,884,758
-------------
UTILITIES - 6.8%
Kinder Morgan Energy Partners LP (a) ............. 45,000 2,584,800
ONEOK Partners LP (a) ............................ 50,900 3,056,545
CHARTWELL DIVIDEND & INCOME FUND, INC. AUGUST 31, 2008
SCHEDULE OF INVESTMENTS (UNAUDITED)
NUMBER OF MARKET
SHARES VALUE
----------- -------------
COMMON STOCK (CONTINUED)
UTILITIES (CONTINUED)
Southern Company ................................. 10,000 $ 375,100
TEPPCO Partners LP (a) ........................... 34,800 1,116,732
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7,133,177
-------------
TOTAL COMMON STOCK (COST $104,996,706) ........... 83,844,654
-------------
PREFERRED TERM SECURITIES + (d) - 6.7%
Alesco Preferred Funding IX, 06/23/36 ............ 10,000 50,000
Alesco Preferred Funding X, 09/23/08 ............. 10,000 50,000
Alesco Preferred Funding XI, 09/25/08 ............ 5,000 50,000
Alesco Preferred Funding XII, 07/15/37 ........... 5,000 25,000
Alesco Preferred Funding XIII, 09/23/37 .......... 2,500 12,500
Alesco Preferred Funding XIV, 03/15/37 ........... 5,000 25,000
Alesco Preferred Funding XV, 12/23/37 ............ 2,500 12,500
Alesco Preferred Funding XVI, 03/23/38 ........... 5,000 25,000
I-Preferred Term Securities IV, 06/24/34 ......... 10,000 650,000
Preferred Term Securities IV, 12/23/31 ........... 20,000 440,000
Preferred Term Securities XIII, 09/23/37 ......... 10,000 595,000
Preferred Term Securities XIV, 06/24/34 .......... 20,000 1,245,000
Preferred Term Securities XV, 09/24/34 ........... 20,000 985,000
Preferred Term Securities XVI, 03/23/35 .......... 10,000 647,500
Preferred Term Securities XVII, 09/23/35 ......... 6,000 126,000
Preferred Term Securities XVIII, 06/23/35 ........ 10,000 465,000
Preferred Term Securities XIX, 12/22/35 .......... 10,000 390,000
Preferred Term Securities XX, 03/22/38 ........... 10,000 195,000
Preferred Term Securities XXI, 03/22/38 .......... 10,000 265,500
Preferred Term Securities XXII, 03/22/37 ......... 10,000 153,000
Preferred Term Securities XXIII, 12/22/36 ........ 5,000 165,000
Preferred Term Securities XXIV, 03/22/37 ......... 5,000 198,750
Preferred Term Securities XXV, 06/22/37 .......... 5,000 212,500
Taberna Preferred Funding II Limited, 06/30/35 ... 5,000 5,000
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TOTAL PREFERRED TERM SECURITIES
(COST $16,401,914) ............................ 6,988,250
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CHARTWELL DIVIDEND & INCOME FUND, INC. AUGUST 31, 2008
SCHEDULE OF INVESTMENTS (UNAUDITED)
NUMBER OF MARKET
SHARES VALUE
----------- -------------
PREFERRED STOCK - 2.7%
FINANCIAL - 2.1%
Aspen Insurance Holdings Limited ................. 20,000 $ 1,014,000
Solar Cayman Limited * + ......................... 80,000 1,217,600
-------------
2,231,600
-------------
REAL ESTATE INVESTMENT TRUSTS - 0.6%
FelCor Lodging Trust, Inc. ....................... 40,000 620,000
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TOTAL PREFERRED STOCK (COST $3,346,490) .......... 2,851,600
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PRINCIPAL
AMOUNT
-----------
CORPORATE NOTES/BONDS - 52.5%
AUTOMOTIVE - 1.5%
Lear Corporation, Series B
8.750%, 12/01/16 .............................. $ 885,000 670,388
TRW Automotive, Inc. +
7.250%, 03/15/17 .............................. 1,000,000 865,000
-------------
1,535,388
-------------
BASIC INDUSTRY - 3.6%
Blount, Inc.
8.875%, 08/01/12 .............................. 750,000 768,750
H&E Equipment Services, Inc.
8.375%, 07/15/16 .............................. 1,175,000 1,022,250
Lamar Media Corporation
6.625%, 08/15/15 .............................. 1,000,000 892,500
Trimas Corporation
9.875%, 06/15/12 .............................. 1,272,000 1,138,440
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3,821,940
-------------
BROADCASTING & CABLE - 1.1%
Allbritton Communications Company
7.750%, 12/15/12 .............................. 1,315,000 1,183,500
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CHARTWELL DIVIDEND & INCOME FUND, INC. AUGUST 31, 2008
SCHEDULE OF INVESTMENTS (UNAUDITED)
PRINCIPAL MARKET
AMOUNT VALUE
----------- -------------
CORPORATE NOTES/BONDS (CONTINUED)
BUILDING MATERIALS - 1.9%
Gibraltar Industries, Inc.
8.000%, 12/01/15 .............................. $ 1,340,000 $ 1,149,050
WII Components, Inc.
10.000%, 02/15/12 ............................. 1,000,000 805,000
-------------
1,954,050
-------------
CABLE TELEVISION - 4.6%
CSC Holdings, Inc.
7.875%, 02/15/18 .............................. 1,285,000 1,214,325
DIRECTV Holdings LLC
6.375%, 06/15/15 .............................. 750,000 710,625
Echostar DBS Corporation
6.625%, 10/01/14 .............................. 1,000,000 922,500
Mediacom Broadband LLC
8.500%, 10/15/15 .............................. 1,250,000 1,146,875
Quebecor Media, Inc.
7.750%, 03/15/16 .............................. 895,000 845,775
-------------
4,840,100
-------------
CHEMICALS - 3.3%
Chemtura Corporation
6.875%, 06/01/16 .............................. 1,000,000 850,000
Ineos Group Holdings +
8.500%, 02/15/16 .............................. 820,000 528,900
Momentive Performance Materials, Inc.
9.750%, 12/01/14 .............................. 1,000,000 907,500
Nova Chemicals Corporation
5.953%, 11/15/13 (b) .......................... 1,300,000 1,124,500
-------------
3,410,900
-------------
COMPUTERS-MEMORY DEVICES - 0.6%
Seagate Technology HDD Holdings
6.800%, 10/01/16 .............................. 750,000 673,125
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CHARTWELL DIVIDEND & INCOME FUND, INC. AUGUST 31, 2008
SCHEDULE OF INVESTMENTS (UNAUDITED)
PRINCIPAL MARKET
AMOUNT VALUE
----------- -------------
CORPORATE NOTES/BONDS (CONTINUED)
CONSUMER PRODUCTS - 1.4%
Hanesbrands, Inc.
6.508%, 12/15/14 (b) .......................... $ 1,025,000 $ 891,750
Levi Strauss & Company
9.750%, 01/15/15 .............................. 675,000 611,719
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1,503,469
-------------
ELECTRONIC EQUIPMENT & INSTRUMENTS - 0.8%
Flextronics International Limited
6.500%, 05/15/13 .............................. 885,000 840,750
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ENERGY - 5.8%
Cie Generale de Geophysique
7.750%, 05/15/17 .............................. 1,000,000 1,000,000
Cimarex Energy Company
7.125%, 05/01/17 .............................. 650,000 637,000
Complete Production Services, Inc.
8.000%, 12/15/16 .............................. 780,000 770,250
Copano Energy LLC
8.125%, 03/01/16 .............................. 935,000 911,625
Newfield Exploration Company
6.625%, 04/15/16 .............................. 750,000 702,187
Pioneer Natural Resources Company
6.650%, 03/15/17 .............................. 1,000,000 916,079
Plains Exploration & Production Company
7.625%, 06/01/18 .............................. 1,000,000 947,500
Range Resources Corporation
7.500%, 05/15/16 .............................. 250,000 248,750
-------------
6,133,391
-------------
FINANCIAL - 1.8%
Ford Motor Credit Company LLC
7.000%, 10/01/13 .............................. 1,450,000 1,051,570
GMAC LLC
7.000%, 02/01/12 .............................. 1,470,000 881,361
-------------
1,932,931
-------------
CHARTWELL DIVIDEND & INCOME FUND, INC. AUGUST 31, 2008
SCHEDULE OF INVESTMENTS (UNAUDITED)
PRINCIPAL MARKET
AMOUNT VALUE
----------- -------------
CORPORATE NOTES/BONDS (CONTINUED)
GAMING - 2.7%
Boyd Gaming Corporation
7.125%, 02/01/16 .............................. $ 1,100,000 $ 838,750
MTR Gaming Group, Inc., Series B
9.750%, 04/01/10 .............................. 520,000 508,300
MTR Gaming Group, Inc.
9.000%, 06/01/12 .............................. 700,000 579,250
Seneca Gaming Corporation
7.250%, 05/01/12 .............................. 1,000,000 897,500
-------------
2,823,800
-------------
HEALTHCARE - 3.5%
Bio-Rad Laboratories, Inc.
7.500%, 08/15/13 .............................. 1,000,000 1,005,000
HCA Inc.
9.125%, 11/15/14 .............................. 1,000,000 1,030,000
Iasis Healthcare Corporation
8.750%, 06/15/14 .............................. 1,000,000 1,007,500
Omnicare, Inc.
6.875%, 12/15/15 .............................. 650,000 614,250
-------------
3,656,750
-------------
HOTELS, RESTAURANTS & LEISURE - 1.7%
MGM Mirage
6.750%, 09/01/12 .............................. 1,000,000 865,000
Scientific Games Corporation
6.250%, 12/15/12 .............................. 1,000,000 947,500
-------------
1,812,500
-------------
METALS & MINING - 1.0%
Freeport-McMoRan Copper & Gold, Inc.
8.375%, 04/01/17 .............................. 1,000,000 1,061,629
-------------
PAPER & FOREST PRODUCTS - 2.5%
Abitibi-Consolidated, Inc.
8.550%, 08/01/10 .............................. 615,000 348,244
CHARTWELL DIVIDEND & INCOME FUND, INC. AUGUST 31, 2008
SCHEDULE OF INVESTMENTS (UNAUDITED)
PRINCIPAL MARKET
AMOUNT VALUE
----------- -------------
CORPORATE NOTES/BONDS (CONTINUED)
PAPER & FOREST PRODUCTS (CONTINUED)
Bowater Canada Finance Corporation
7.950%, 11/15/11 .............................. $ 615,000 $ 387,450
P H Glatfelter +
7.125%, 05/01/16 .............................. 1,190,000 1,175,125
U.S. Corrugated
10.000%, 06/01/13 ............................. 1,000,000 700,000
-------------
2,610,819
-------------
PUBLISHING - 0.4%
Idearc, Inc.
8.000%, 11/15/16 .............................. 875,000 400,313
-------------
REAL ESTATE MANAGEMENT - 1.6%
Corrections Corp of America
7.500%, 05/01/11 .............................. 275,000 278,437
Geo Group, Inc.
8.250%, 07/15/13 .............................. 1,340,000 1,360,100
-------------
1,638,537
-------------
RETAIL - 3.4%
Autonation, Inc. +
7.000%, 04/15/14 .............................. 1,000,000 870,000
Brown Shoe Company, Inc.
8.750%, 05/01/12 .............................. 1,200,000 1,194,000
Couche-Tard US LP
7.500%, 12/15/13 .............................. 400,000 375,000
Sonic Automotive, Inc., Series B
8.625%, 08/15/13 .............................. 1,390,000 1,077,250
-------------
3,516,250
-------------
SERVICES - 3.1%
Allied Security Escrow Corporation
11.375%, 07/15/11 ............................. 1,015,000 1,077,169
ARAMARK Corporation
8.500%, 02/01/15 .............................. 1,000,000 1,012,500
CHARTWELL DIVIDEND & INCOME FUND, INC. AUGUST 31, 2008
SCHEDULE OF INVESTMENTS (UNAUDITED)
PRINCIPAL MARKET
AMOUNT VALUE
----------- -------------
CORPORATE NOTES/BONDS (CONTINUED)
SERVICES (CONTINUED)
KAR Holdings, Inc.
8.750%, 05/01/14 .............................. $ 1,270,000 $ 1,128,712
-------------
3,218,381
-------------
TELECOMMUNICATIONS - 2.4%
Cincinnati Bell, Inc.
8.375%, 01/15/14 .............................. 960,000 913,200
Hughes Network Systems LLC
9.500%, 04/15/14 .............................. 855,000 865,687
L-3 Communications Corporation
6.125%, 07/15/13 .............................. 750,000 733,125
-------------
2,512,012
-------------
TRANSPORTATION - 0.9%
Stena AB
7.500%, 11/01/13 .............................. 950,000 931,000
-------------
UTILITIES - 2.9%
Amerigas Partners LP (a)
7.250%, 05/20/15 .............................. 750,000 714,375
Edison Mission Energy
7.000%, 05/15/17 .............................. 650,000 625,625
Elwood Energy LLC
8.159%, 07/05/26 .............................. 942,253 893,551
Sierra Pacific Resources
8.625%, 03/15/14 .............................. 750,000 788,175
-------------
3,021,726
-------------
TOTAL CORPORATE NOTES/BONDS (COST $60,249,535) ... 55,033,261
-------------
CHARTWELL DIVIDEND & INCOME FUND, INC. AUGUST 31, 2008
SCHEDULE OF INVESTMENTS (UNAUDITED)
NUMBER OF MARKET
SHARES VALUE
----------- -------------
CASH EQUIVALENT - 1.2%
SEI Daily Income Trust, Prime Obligations Fund,
Cl A Shares, 2.690% (c) ....................... 1,295,805 $ 1,295,805
-------------
TOTAL CASH EQUIVALENT (COST $1,295,805) .......... 1,295,805
-------------
TOTAL INVESTMENTS - 143.0%
(COST $186,290,450) ** ........................ 150,013,570
-------------
COVERED CALL OPTIONS WRITTEN - (1.0) %
WRITTEN
CONTRACTS
-----------
Annaly Capital Management, Inc.,
Expires: 09/20/08, Strike Price: $15 .......... (984) (63,960)
Annaly Capital Management, Inc.,
Expires: 09/20/08, Strike Price: $16 .......... (16) (400)
AT&T, Inc., Expires: 09/20/08,
Strike Price: $32.50 .......................... (1,300) (72,800)
Bank of America Corporation, Expires: 09/20/08,
Strike Price: $35 ............................. (1,000) (19,000)
Bank of America Corporation, Expires: 09/20/08,
Strike Price: $32.50 .......................... (1,000) (69,000)
Bristol-Myers Squibb Company, Expires: 09/20/08,
Strike Price: $22.50 .......................... (500) (8,000)
Brookdale Senior Living, Inc., Expires: 09/20/08,
Strike Price: $22.50 .......................... (400) (36,000)
Brookdale Senior Living, Inc., Expires: 10/18/08,
Strike Price: $25 ............................. (400) (22,000)
CapitalSource, Inc., Expires: 09/20/08,
Strike Price: $12.50 .......................... (1,500) (97,500)
CapitalSource, Inc., Expires: 10/18/08,
Strike Price: $15 ............................. (698) (13,960)
Carnival Corporation, Expires: 09/20/08,
Strike Price: $40 ............................. (250) (16,250)
Carnival Corporation, Expires: 09/20/08,
Strike Price: $42.50 .......................... (250) (5,000)
Caterpillar, Inc., Expires: 09/20/08,
Strike Price: $75 ............................. (500) (24,000)
Dow Chemical Company, Expires: 09/20/08,
Strike Price: $35 ............................. (500) (25,000)
Exxon Mobil Corporation, Expires: 09/20/08,
Strike Price: $85 ............................. (400) (14,000)
CHARTWELL DIVIDEND & INCOME FUND, INC. AUGUST 31, 2008
SCHEDULE OF INVESTMENTS (UNAUDITED)
WRITTEN MARKET
CONTRACTS VALUE
----------- -------------
COVERED CALL OPTIONS WRITTEN (CONTINUED)
Frontier Communications Corporation,
Expires: 10/18/08, Strike Price: $12.50 ....... (2,000) $ (100,000)
JPMorgan Chase & Company, Expires: 09/20/08,
Strike Price: $42.50 .......................... (250) (6,750)
Kinder Morgan Energy Partners LP,
Expires: 09/20/08, Strike Price: $60 .......... (450) (4,500)
Liberty Property Trust, Expires: 09/20/08,
Strike Price: $40 ............................. (600) (36,000)
Occidental Petroleum Corporation,
Expires: 09/20/08, Strike Price: $85 .......... (200) (18,000)
Pfizer, Inc., Expires: 09/20/08,
Strike Price: $20 ............................. (1,600) (28,800)
Philip Morris International, Inc.,
Expires: 09/20/08, Strike Price: $55 .......... (800) (32,000)
PHLX Bank Index, Expires: 09/20/08,
Strike Price: $70 ............................. (300) (41,250)
Reynolds American, Inc., Expires: 10/18/08,
Strike Price: $60 ............................. (300) (3,000)
US Bancorp, Expires: 09/20/08,
Strike Price: $32.50 .......................... (500) (37,500)
US Bancorp, Expires: 09/20/08,
Strike Price: $30 ............................. (600) (145,800)
Verizon Communications, Inc., Expires: 09/20/08,
Strike Price: $35 ............................. (400) (35,200)
XL Capital Limited, Expires: 09/20/08,
Strike Price: $20 ............................. (450) (45,000)
-------------
TOTAL COVERED CALL OPTIONS WRITTEN
(PREMIUMS RECEIVED $1,463,676) ................ (1,020,670)
-------------
OTHER LIABILITIES IN EXCESS OF ASSETS - (42.0)% .. (44,082,482)
-------------
NET ASSETS - 100.0% .............................. $ 104,910,418
=============
* NON-INCOME PRODUCING SECURITY.
+ SECURITIES ARE 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, 2008, THESE
SECURITIES AMOUNTED TO $12,307,875 OR 11.7% OF NET ASSETS.
(a) SECURITIES CONSIDERED MASTER LIMITED PARTNERSHIP. AT AUGUST 31, 2008, THESE
SECURITIES AMOUNTED TO $16,723,526 OR 15.9% OF NET ASSETS.
(b) VARIABLE RATE SECURITY -- THE RATE REPORTED ON THE SCHEDULE OF INVESTMENTS
IS THE RATE IN EFFECT AT AUGUST 31, 2008.
(c) THE RATE REPORTED IS THE 7-DAY EFFECTIVE YIELD AS OF AUGUST 31, 2008.
(d) SECURITIES ARE CONSIDERED ILLIQUID. THE TOTAL VALUE OF SUCH SECURITIES AS
OF AUGUST 31, 2008 WAS $6,988,250 OF 6.7% OF THE NET ASSETS.
LLC LIMITED LIABILITY COMPANY
LP LIMITED PARTNERSHIP
CHARTWELL DIVIDEND & INCOME FUND, INC. AUGUST 31, 2008
SCHEDULE OF INVESTMENTS (UNAUDITED)
** AT AUGUST 31, 2008, THE TAX BASIS COST OF THE FUND'S INVESTMENTS WAS
$186,290,450, AND THE UNREALIZED APPRECIATION AND DEPRECIATION WERE
$2,257,982 AND $(38,534,862), RESPECTIVELY.
++ AS OF AUGUST 31, 2008, $45,000,000 OF COMMERCIAL PAPER WAS OUTSTANDING WITH
AN AMORTIZED COST OF $44,947,166. THE AVERAGE DISCOUNT RATE OF COMMERCIAL
PAPER OUTSTANDING AT AUGUST 31, 2008, WAS 2.48%. THE AVERAGE DAILY BALANCE
OF COMMERCIAL PAPER OUTSTANDING FOR THE QUARTER ENDED AUGUST 31, 2008 WAS
$52,935,191 AT A WEIGHTED AVERAGE DISCOUNT RATE OF 2.48%. THE MAXIMUM FACE
AMOUNT OF COMMERCIAL PAPER OUTSTANDING AT ANYTIME DURING THE QUARTER ENDED
AUGUST 31, 2008, WAS $50,000,000. IN CONJUNCTION WITH THE ISSUANCE OF THE
COMMERCIAL PAPER, THE FUND HAS ENTERED ONTO A LINE OF CREDIT ARRANGEMENT
WITH A BANK FOR $25,000,000. INTEREST ON BORROWING IS BASED ON MARKET RATES
IN EFFECT AT THE TIME OF BORROWING. THE COMMITMENT FEE IS COMPUTED AT THE
RATE OF 0.10% PER ANNUM ON THE UNUSED BALANCE. THERE WERE NO BORROWINGS
UNDER THIS ARRANGEMENT DURING THE QUARTER ENDED AUGUST 31, 2008.
Financial Accounting Standards Board (FASB) Statement of Financial Accounting
Standards (SFAS) No. 157 is effective for the Fund's financial statements issued
after December 1, 2007. SFAS No. 157 defines fair value, establishes a fair
value hierarchy and specifies that a valuation technique used to measure fair
value shall maximize the use of observable inputs and minimize the use of
unobservable inputs. The objective of a fair value measurement is to determine
the price that would be received to sell an asset or paid to transfer a
liability in an orderly transaction between market participants at the
measurement date (an exit price). Accordingly, the fair value hierarchy gives
the highest priority to quoted prices (unadjusted) in active markets for
identical assets or liabilities (Level 1) and the lowest priority to
unobservable inputs (Level 3). The three levels of the fair value hierarchy
under SFAS No. 157 are described below:
- Level 1 -- Unadjusted quoted prices in active markets for identical,
unrestricted assets or liabilities that the Fund has the ability to access at
the measurement date;
- Level 2 -- Quoted prices which are not active, quoted prices for
similar assets or liabilities in active markets or inputs other than quoted
prices that are observable (either directly or indirectly) for substantially the
full term of the asset or liability; and
- Level 3 -- Significant unobservable prices or inputs (including the
Fund's own assumptions in determining the fair value of investments) where there
is little or no market activity for the asset or liability at the measurement
date.
CHARTWELL DIVIDEND & INCOME FUND, INC. AUGUST 31, 2008
SCHEDULE OF INVESTMENTS (UNAUDITED)
As required by SFAS No.157, investments are classified within the level of the
lowest significant input considered in determining fair value. Investments
classified within Level 3 whose fair value measurement considers several inputs
and may include Level 1 or Level 2 inputs as components of the overall fair
value measurement. The following table sets forth information about the level
within the fair value hierarchy at which the Fund's investments are measured at
August 31, 2008:
INVESTMENTS IN OTHER FINANCIAL
VALUATION INPUTS SECURITIES INSTRUMENTS*
---------------- -------------- ---------------
LEVEL 1 $ 86,843,959 $(1,020,670)
LEVEL 2 54,333,261 --
LEVEL 3 8,836,350 --
------------ -----------
TOTAL $150,013,570 $(1,020,670)
============ ===========
* OTHER FINANCIAL INSTRUMENTS ARE COVERED CALL OPTIONS WRITTEN.
The following is a reconciliation of the investments in which significant
unobservable inputs (Level 3) were used in determining value:
INVESTMENTS IN
SECURITIES
--------------
BALANCE AS OF 5/31/08 $12,269,790
ACCRUED DISCOUNTS/PREMIUMS --
REALIZED GAIN/(LOSS) --
CHANGE IN UNREALIZED APPRECIATION/(DEPRECIATION) (3,339,703)
NET PURCHASE/(SALES) (93,737)
NET TRANSFERS IN/AND OR OUT OF LEVEL 3 --
-----------
BALANCE AS OF 8/31/08 $ 8,836,350
===========
The inputs or methodology used for valuing securities are not necessarily an
indication of the risks associated with investing in those securities.
FOR INFORMATION ON 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.
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 changes in the registrant's internal control over financial
reporting 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) 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 filed
herewith.
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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 29, 2008
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 29, 2008
By (Signature and Title)* /s/ G. Gregory Hagar
----------------------------------------
G. Gregory Hagar, Vice President and CFO
(Principal Financial Officer)
Date October 29, 2008
* Print the name and title of each signing officer under his or her signature.