UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM N-CSR
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CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
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, 2003
DATE OF REPORTING PERIOD: NOVEMBER 30, 2003
ITEM 1. REPORTS TO STOCKHOLDERS.
[Compass Graphic Omitted]
CHARTWELL
DIVIDEND AND
INCOME FUND, INC.
ANNUAL REPORT TO SHAREHOLDERS
DATED NOVEMBER 30, 2003
[COMPASS GRAPHIC OMITTED] CHARTWELL INVESTMENT
PARTNERS
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CHARTWELL DIVIDEND AND INCOME FUND, INC. NOVEMBER 30, 2003
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INVESTMENT OBJECTIVES & STRATEGY
The Chartwell Dividend and Income Fund's [the "Fund"] primary investment
objective is to seek high current income. Capital appreciation is a secondary
objective. The Fund will seek to achieve its objectives by investing, under
normal circumstances, at least 50% of its total assets in income generating
equity securities, including dividend paying common stocks, convertible
securities, preferred stocks and other equity-related securities. In addition,
the Fund may invest the balance of its total assets in non-convertible debt
securities, consisting primarily of corporate bonds. The Fund attempts to
minimize individual security risk by diversifying across many industries and
asset classes. The Fund is a closed-end management investment company which
trades on the New York Stock Exchange under the symbol CWF.
HIGH-YIELD CORPORATE BONDS
High-yield bonds are non-investment grade corporate debt obligations rated "Ba1"
or lower by Moody's Investors Service, Inc. or "BB+" or lower by Standard and
Poor's Ratings Group; they typically have a higher risk level than
investment-grade bonds. These securities have historically compensated investors
with higher levels of income for that risk. Prices usually are less sensitive to
interest rate fluctuations than higher rated bonds because of the high income
levels. However, the prices of these bonds are more sensitive to changes in the
economy.
CONVERTIBLE SECURITIES
The Fund can invest in both convertible preferred stock and convertible bonds.
Both pay fixed rates of income, but because they can be converted into common
stock, they are indirectly tied to the common stock's performance. As a result,
convertible securities generally offer higher income than common stocks and an
opportunity for price appreciation when the value of the underlying security
rises. The Fund buys convertibles when the underlying common stock offers strong
growth potential as well.
COMMON STOCK
The Fund invests in the common stocks of utility companies, Real Estate
Investment Trusts (REITs) and other industrial and financial companies as well
as other equity securities. Both utilities and REITs tend to offer a premium
dividend yield with steady growth that can lead to capital appreciation.
Industrial and financial stocks are primarily purchased for capital appreciation
based on the fundamental value of the underlying company.
2
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CHARTWELL
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CHARTWELL DIVIDEND AND INCOME FUND, INC. NOVEMBER 30, 2003
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LETTER TO SHAREHOLDERS
In 2003, equity and fixed income markets posted positive returns, gaining back
some of the losses posted over the prior three years. The first quarter of the
year was a continuance of the bear market as investors looked backward at
corporate scandals, falling earnings, bankruptcies, and the uncertainty of the
war in Iraq. However, with the end of the hot war and the passing of major tax
cuts, investors again took a forward looking perspective and redirected capital
into equities and high yield bonds. This resurgence of investor confidence and
early signs of an economic upturn were catalysts for the markets' positive
results.
The investment objective of the Fund is first to provide income and secondarily
to provide capital gains to our investors. To achieve this goal, the Fund
primarily utilizes high-yielding stocks, an option overwrite strategy on some of
these stocks and high yield, low rated, corporate bonds.
During the Fund's fiscal year ended November 30, 2003, the S&P 500 equity index
advanced 15.08% and the Merrill Lynch High Yield Cash Pay bond index returned
26.2%. The Fund's total return on a net asset value basis was 28.96%, assuming
reinvestment of dividends. The total market return of the Fund was 51.57% to
shareholders on a market basis assuming reinvestment of dividends in additional
shares of the Fund. The closing price as of November 30, 2003 was $9.80, a
premium of 15.0% to NAV. This compares to a discount to NAV as of November 30,
2002. For the Fund's fiscal year, the Fund traded between $7.09 and $9.88 and
between a 3.9% discount and a 16.8% premium to NAV.
[CHART GRAPHIC OMITTED]
PLOT POINTS ARE AS FOLLOWS:
PREMIUM/
PRICE NAV DISCOUNT
11/29/02 7.27 7.47 -2.68
12/31/02 7.30 7.37 -0.95
1/31/03 7.51 7.28 3.16
2/28/03 7.65 7.21 6.10
3/31/03 7.79 7.19 8.34
4/30/03 8.00 7.74 3.36
5/31/03 8.50 8.07 5.33
6/30/03 9.11 8.13 12.05
7/31/03 9.16 8.10 13.09
8/31/03 9.00 8.05 11.80
9/30/03 9.05 8.23 9.96
10/31/03 9.39 8.48 10.73
11/28/03 9.85 8.52 15.61
3
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CHARTWELL
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CHARTWELL DIVIDEND AND INCOME FUND, INC. NOVEMBER 30, 2003
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Our stock market outlook for 2004 is guardedly optimistic. We believe that stock
market returns will approximate the dividend yield plus earnings growth, with
less likelihood of significant valuation expansion. Similarly, we anticipate
that high yield bond returns will approximate the current yield on bonds, with
less likelihood of significant further price appreciation. We are optimistic
about our style of investing in this market. The assets in the portfolio provide
more income than the broad market and we believe our equity portfolio has room
for reasonable earnings growth, which can provide positive returns for our
holders.
At the end of the second fiscal quarter, Leslie M. Varrelman, Vice President/
Portfolio Manager of the Fund's fixed income investments, resigned from the
Advisor. We are pleased to welcome Paul Matlack who has replaced Leslie M.
Varrelman as a Fixed Income Portfolio Manager. Mr. Matlack will join Andrew
Toburen in overseeing the fixed income portion of the Fund. Mr. Matlack was
previously Senior Portfolio Manager with Turner Investment Partners and Delaware
Investment Advisers with 18 years of industry experience. Thank you for your
continuing support of the portfolio management team and of the Chartwell
Dividend and Income Fund.
Sincerely,
/s/Winthrop S. Jessup
Winthrop S. Jessup
PARTNER
CHARTWELL INVESTMENT PARTNERS
/s/ Bernard P. Schaffer /s/ Andrew S. Toburen
Bernard P. Schaffer Andrew S. Toburen
PORTFOLIO MANAGER PORTFOLIO MANAGER
PORTFOLIO MANAGEMENT TEAM
Bernard P. Schaffer Andrew S. Toburen
PORTFOLIO MANAGER PORTFOLIO MANAGER
EQUITY FIXED INCOME
Doster J. Esh Christine F. Williams
PORTFOLIO MANAGER PORTFOLIO MANAGER
EQUITY AND CONVERTIBLE SECURITIES FIXED INCOME
Paul Matlack
PORTFOLIO MANAGER
FIXED INCOME
4
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CHARTWELL
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CHARTWELL DIVIDEND AND INCOME FUND, INC. NOVEMBER 30, 2003
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FIXED INCOME RESULTS
% OF TOTAL INVESTMENTS
AS OF NOVEMBER 30, 2003
[PIE CHART OMITTED]
PERCENTAGES ARE AS FOLLOWS:
Equities 55%
Cash 1%
Fixed Income 44%
TOTAL RETURN
TWELVE MONTHS ENDING NOVEMBER 30, 2003
[BAR GRAPHIC OMITTED]
PLOT POINTS ARE AS FOLLOWS:
Merrill Lynch High Yield Cash Pay Index 26.2%
CWF High Yield 26.0%
High yield bonds staged a spectacular recovery during the 12 months ending
November 30, 2003, with the Merrill Lynch High Yield Cash Pay Index returning
26.2% over the period. The high yield portion of your Fund gained in lockstep
with the market, returning 26.0% for the year.
HIGH YIELD SECTOR PERFORMANCE 1-YEAR
(Source: Merrill Lynch, Twelve Months Ending November 30, 2003)
[SECTOR BAR GRAPHIC OMITTED]
PLOT POINTS ARE AS FOLLOWS:
BASIS POINTS
HY CCC Index 57.5%
Utilities 55.3%
Telecom 44.1%
Technology 37.2%
Energy 34.0%
Cable TV 33.0%
Shipping 27.1%
HY Index 26.2%
HY B Index 23.4%
Automotive 23.1%
Bldg Materials 20.2%
Publishing 19.8%
HY BB Index 19.6%
Broadcasting 19.6%
Consumer 18.6%
Services 18.5%
Homebuilding 18.4%
Food/Beverage 18.0%
Chemicals 17.1%
Paper 15.8%
Metals/Mining 15.2%
Gaming 14.8%
Healthcare 12.9%
Steel 0.9%
The high yield rally has been fueled by a number of factors, beginning with
oversold conditions at the start of the year, gathering signs of economic
recovery, falling interest rates, rallying stock prices, and record-breaking
inflows into high yield bond funds. Additionally, the fundamental risk factor
for high yield bonds is default rates, and that indicator has fallen to an
annual level of just 5.3%, after peaking at 10.5% during 2001.
HIGH YIELD ANNUAL DEFAULT RATES
(Source: Moody's, 2003* is Twelve Months Ending November 30, 2003)
[BAR GRAPHIC OMITTED]
PLOT POINTS ARE AS FOLLOWS:
DEFAULT RATE
1988 3.5%
1989 6.1%
1990 9.9%
1991 10.4%
1992 4.9%
1993 3.6%
1994 2.0%
1995 3.3%
1996 1.7%
1997 2.0%
1998 3.5%
1999 5.6%
2000 6.0%
2001 10.6%
2002 8.4%
2003 5.3%
5
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CHARTWELL
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CHARTWELL DIVIDEND AND INCOME FUND, INC. NOVEMBER 30, 2003
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As a result, the risk premium between high yield bonds and the comparable
duration Treasury bond declined from 800 basis points to 401 basis points over
the course of the fiscal year, an unprecedented compression of credit spreads in
so short a period.
HIGH YIELD PREMIUM OVER TREASURIES ("SPREAD")
(Source: Merrill Lynch, Bloomberg, November 30, 1994 - November 30, 2003)
[LINE GRAPHIC OMITTED]
PLOT POINTS ARE AS FOLLOWS:
BASIS POINTS
Dec-94 344%
Jan-95 342%
Feb-95 336%
Mar-95 332%
Apr-95 318%
May-95 344%
Jun-95 368%
Jul-95 338%
Aug-95 355%
Sep-95 373%
Oct-95 374%
Nov-95 387%
Dec-95 396%
Jan-96 366%
Feb-96 321%
Mar-96 325%
Apr-96 300%
May-96 282%
Jun-96 306%
Jul-96 298%
Aug-96 275%
Sep-96 270%
Oct-96 297%
Nov-96 305%
Dec-96 266%
Jan-97 260%
Feb-97 243%
Mar-97 258%
Apr-97 271%
May-97 243%
Jun-97 241%
Jul-97 242%
Aug-97 230%
Sep-97 234%
Oct-97 272%
Nov-97 266%
Dec-97 269%
Jan-98 271%
Feb-98 261%
Mar-98 260%
Apr-98 271%
May-98 293%
Jun-98 350%
Jul-98 351%
Aug-98 502%
Sep-98 573%
Oct-98 613%
Nov-98 530%
Dec 98 555%
Jan-99 550%
Feb-99 507%
Mar-99 510%
Apr-99 464%
May-99 467%
Jun-99 465%
Jul-99 444%
Aug-99 465%
Sep-99 489%
Oct-99 499%
Nov-99 470%
Dec-99 453%
Jan-00 461%
Feb-00 496%
Mar-00 584%
Apr-00 596%
May-00 618%
Jun-00 615%
Jul-00 617%
Aug-00 641%
Sep-00 664%
Oct-00 757%
Nov-00 874%
Dec-00 881%
Jan-01 739%
Feb-01 729%
Mar-01 760%
Apr-01 739%
May-01 703%
Jun-01 739%
Jul-01 745%
Aug-01 731%
Sep-01 914%
Oct-01 865%
Nov-01 752%
Dec-01 734%
Jan-02 697%
Feb-02 722%
Mar-02 621%
Apr-02 601%
May-02 643%
Jun-02 781%
Jul-02 874%
Aug-02 882%
Sep-02 966%
Oct-02 974%
Nov-02 800%
Dec-02 802%
Jan-03 747%
Feb-03 757%
Mar-03 696%
Apr-03 576%
May-03 614%
Jun-03 554%
Jul-03 488%
Aug-03 477%
Sep-03 483%
Oct-03 415%
Nov-03 401%
Returns during the fiscal year were inversely correlated with credit quality,
with the riskiest credit tiers, coupon structures, and industries outperforming
all others. For example, CCC-rated issues, the lowest rung on the credit ladder,
returned 57.5%, compared to 23.4% and 19.5% for B's and BB's, respectively.
Similarly, zero coupon high yield bonds returned 76.5% for the period, compared
to 26.2% for cash pay bonds. Industry returns followed the same pattern, ranging
from 55.3% for struggling electric utility companies to just 13.0% for higher
quality healthcare issues. Not surprisingly, the Fund's top performers were its
positions in Calpine Corp., AES Corp., and PSEG Energy Holdings, all lower
quality electric utilities. The Fund's worst performing issues were Fleming and
Healthsouth, which declined as a result of announced accounting irregularities
at both companies. These issues have been sold.
6
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CHARTWELL
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CHARTWELL DIVIDEND AND INCOME FUND, INC. NOVEMBER 30, 2003
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OUTLOOK:
Historically, the period from the trough of the economic cycle to the mid-point
of the ensuing expansion has been the performance "sweet spot" for the high
yield market, and we believe this scenario is just beginning to play out. While
credit spreads continue to narrow as the economy expands, we believe that the
most dramatic spread compression is likely behind us and returns will
increasingly consist largely of income. However, we believe the relative
performance of high yield bonds, particularly in the context of fixed income
alternatives, will remain attractive. In particular, the relative insensitivity
of high yield securities to rising interest rates (compared to higher quality
bond instruments) implies that the asset class will continue to attract capital
if the scenario of robust economic expansion unfolds as many expect.
Our high yield strategy is based on generating returns by conserving principal
and compounding the coupon stream. We implement this by building
well-diversified portfolios centered on higher quality B and BB-rated cash pay
high yield securities in industries demonstrating stable to positive growth
characteristics. Since our credit management process focuses heavily on downside
risks, the Fund's returns may be expected to modestly underperform the broad
high yield index in sharp market rallies like the one experienced since the
fourth quarter of 2002. However, we believe the conservative approach to high
yield investing remains the proven route to out performance over the full market
cycle.
7
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CHARTWELL
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CHARTWELL DIVIDEND AND INCOME FUND, INC. NOVEMBER 30, 2003
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EQUITY RETURNS
% OF TOTAL INVESTMENTS
AS OF NOVEMBER 30, 2003
[PIE CHART OMITTED]
PERCENTAGES ARE AS FOLLOWS:
Fixed Income 44%
Equities 55%
Cash 1%
[BAR GRAPHIC OMITTED]
PLOT POINTS ARE AS FOLLOWS:
TOTAL RETURN
TWELVE MONTHS ENDING NOVEMBER 30, 2003
CWF Equities 14.7%
S&P 500 15.1%
Dow Jones Industrial Average 12.6%
The equity markets were very strong in 2003, ending three years of very
difficult returns. Wars ended, taxes were cut, mortgage rates hit 40 year lows,
profits improved and the equity markets advanced. The biggest advancers for the
year generally were those sectors with the worst sentiment at the height of the
war in Iraq: industrials, technology, and consumer cyclicals. Surprise winners
were REITs and utilities which performed very well despite lacking speculative
appeal. Hurting the Fund's performance were more `stable' sectors, such as
several healthcare and Telecommunications issues.
[S&P 500 SECTOR GRAPHIC OMITTED]
PLOT POINTS ARE AS FOLLOWS:
S&P 500 TOTAL RETURN BY SECTOR
TOTAL RETURN
REITs 29.1%
Utilities 24.0%
Information Technology 24.0%
Materials 21.0%
Consumer Discretionary 20.0%
Financials 18.0%
Industrials 18.0%
Consumer Staples 13.0%
Energy 11.0%
Healthcare 6.0%
Telecommunication -9.0%
*12 Month Period Ending November 30, 2003
FUND SECTOR ALLOCATION (AS OF NOVEMBER 30, 2003)
Bonds 44%
Cash 1%
Basic Industry 1%
Capital Goods 1%
Consumer Cyclical 1%
Consumer Staples 4%
Energy 3%
Financial 24%
Healthcare 2%
Real Estate 6%
Utilities 5%
Technology 7%
Telecommunications 1%
8
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CHARTWELL
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CHARTWELL DIVIDEND AND INCOME FUND, INC. NOVEMBER 30, 2003
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TOP PERFORMING EQUITY HOLDINGS IN 2003
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Altria Group, Inc. (MO, $52.00) benefited from key court decisions. The company
continues to restructure its domestic tobacco business and growth abroad remains
positive.
ALTRIA GROUP INCORPORATED (MO)
(Source: StockVal(R))
[Altria Group Chart Graphic Omitted]
Plot points are as follows:
PRICE
11/27/02 $37.64
11/29/02 37.72
12/2/02 38.00
12/3/02 38.32
12/4/02 39.60
12/5/02 39.36
12/6/02 39.95
12/9/02 40.06
12/10/02 41.01
12/11/02 40.83
12/12/02 40.79
12/13/02 40.98
12/16/02 41.49
12/17/02 41.20
12/18/02 41.33
12/19/02 40.74
12/20/02 41.12
12/23/02 41.40
12/24/02 41.48
12/26/02 41.80
12/27/02 41.32
12/30/02 41.39
12/31/02 40.53
1/2/03 40.35
1/3/03 39.80
1/6/03 39.51
1/7/03 41.13
1/8/03 40.51
1/9/03 41.38
1/10/03 41.20
1/13/03 41.38
1/14/03 41.35
1/15/03 41.12
1/16/03 41.72
1/17/03 41.90
1/21/03 41.28
1/22/03 40.83
1/23/03 39.55
1/24/03 38.90
1/27/03 38.65
1/28/03 38.38
1/29/03 37.03
1/30/03 36.85
1/31/03 37.87
2/3/03 38.39
2/4/03 38.04
2/5/03 38.05
2/6/03 37.53
2/7/03 37.62
2/10/03 38.09
2/11/03 37.55
2/12/03 37.41
2/13/03 37.47
2/14/03 38.14
2/18/03 37.98
2/19/03 37.49
2/20/03 37.02
2/21/03 37.63
2/24/03 37.25
2/25/03 38.05
2/26/03 38.07
2/27/03 38.70
2/28/03 38.65
3/3/03 38.98
3/4/03 38.88
3/5/03 38.99
3/6/03 37.28
3/7/03 35.82
3/10/03 35.55
3/11/03 36.10
3/12/03 35.72
3/13/03 35.72
3/14/03 34.93
3/17/03 34.72
3/18/03 32.60
3/19/03 33.81
3/20/03 34.29
3/21/03 35.04
3/24/03 33.59
3/25/03 33.45
3/26/03 33.40
3/27/03 33.30
3/28/03 32.13
3/31/03 29.96
4/1/03 28.10
4/2/03 29.65
4/3/03 29.70
4/4/03 28.30
4/7/03 29.02
4/8/03 30.00
4/9/03 30.30
4/10/03 30.10
4/11/03 30.59
4/14/03 31.48
4/15/03 32.45
4/16/03 31.70
4/17/03 32.19
4/21/03 32.37
4/22/03 32.69
4/23/03 32.96
4/24/03 32.90
4/25/03 31.01
4/28/03 31.15
4/29/03 30.80
4/30/03 30.76
5/1/03 30.45
5/2/03 30.97
5/5/03 30.95
5/6/03 31.04
5/7/03 31.37
5/8/03 31.03
5/9/03 31.70
5/12/03 33.10
5/13/03 33.18
5/14/03 33.43
5/15/03 33.74
5/16/03 33.30
5/19/03 33.52
5/20/03 34.91
5/21/03 38.30
5/22/03 41.05
5/23/03 42.31
5/27/03 42.09
5/28/03 41.33
5/29/03 41.30
5/30/03 41.30
6/2/03 42.12
6/3/03 42.72
6/4/03 43.20
6/5/03 43.30
6/6/03 43.50
6/9/03 43.05
6/10/03 43.80
6/11/03 43.68
6/12/03 42.90
6/13/03 42.18
6/16/03 42.88
6/17/03 43.07
6/18/03 44.24
6/19/03 43.63
6/20/03 43.01
6/23/03 43.85
6/24/03 45.05
6/25/03 43.97
6/26/03 44.78
6/27/03 45.10
6/30/03 45.44
7/1/03 46.19
7/2/03 46.59
7/3/03 46.12
7/7/03 46.87
7/8/03 46.77
7/9/03 44.00
7/10/03 43.20
7/11/03 41.81
7/14/03 41.96
7/15/03 40.50
7/16/03 40.00
7/17/03 39.83
7/18/03 40.28
7/21/03 40.27
7/22/03 40.28
7/23/03 40.14
7/24/03 40.20
7/25/03 40.99
7/28/03 40.27
7/29/03 40.27
7/30/03 40.00
7/31/03 40.01
8/1/03 40.28
8/4/03 41.00
8/5/03 40.21
8/6/03 40.20
8/7/03 39.97
8/8/03 39.92
8/11/03 40.39
8/12/03 40.72
8/13/03 40.35
8/14/03 39.85
8/15/03 39.85
8/18/03 38.98
8/19/03 38.97
8/20/03 39.94
8/21/03 39.89
8/22/03 39.53
8/25/03 40.00
8/26/03 39.95
8/27/03 40.28
8/28/03 40.91
8/29/03 41.22
9/2/03 41.71
9/3/03 41.89
9/4/03 41.78
9/5/03 41.50
9/8/03 41.63
9/9/03 41.48
9/10/03 41.59
9/11/03 41.02
9/12/03 40.57
9/15/03 40.60
9/16/03 40.46
9/17/03 44.65
9/18/03 44.56
9/19/03 44.59
9/22/03 44.48
9/23/03 44.50
9/24/03 44.26
9/25/03 43.88
9/26/03 43.35
9/29/03 43.50
9/30/03 43.80
10/1/03 44.37
10/2/03 44.30
10/3/03 44.69
10/6/03 45.03
10/7/03 45.14
10/8/03 44.95
10/9/03 45.23
10/10/03 45.05
10/13/03 44.90
10/14/03 45.00
10/15/03 45.15
10/16/03 44.95
10/17/03 44.78
10/20/03 45.47
10/21/03 45.45
10/22/03 45.30
10/23/03 45.48
10/24/03 45.60
10/27/03 45.31
10/28/03 46.17
10/29/03 46.70
10/30/03 46.63
10/31/03 46.50
11/3/03 46.56
11/4/03 46.53
11/5/03 46.98
11/6/03 47.30
11/7/03 49.51
11/10/03 49.10
11/11/03 48.70
11/12/03 50.25
11/13/03 50.16
11/14/03 50.35
11/17/03 50.35
11/18/03 49.87
11/19/03 50.00
11/20/03 50.02
11/21/03 50.09
11/24/03 50.59
11/25/03 50.82
11/26/03 51.90
11/28/03 52.00
FleetBoston Financial Corp. (FBF, $40.60) experienced improving credit
performance and mortgage origination growth. In late October, Bank of America
made an offer to buy FBF for a substantial premium over its then current market
price.
FLEET BOSTON FINANCIAL CORPORATION (FBF)
(Source: StockVal(R))
[Chart Graphic Omitted]
Plot points are as follows:
PRICE
11/27/02 $27.49
11/29/02 27.13
12/2/02 26.84
12/3/02 26.03
12/4/02 25.87
12/5/02 24.89
12/6/02 24.96
12/9/02 24.65
12/10/02 25.35
12/11/02 25.18
12/12/02 25.42
12/13/02 25.00
12/16/02 25.73
12/17/02 25.91
12/18/02 24.94
12/19/02 24.49
12/20/02 24.60
12/23/02 24.45
12/24/02 24.35
12/26/02 24.45
12/27/02 24.00
12/30/02 24.38
12/31/02 24.30
1/2/03 25.53
1/3/03 25.81
1/6/03 27.46
1/7/03 27.18
1/8/03 27.13
1/9/03 27.50
1/10/03 27.40
1/13/03 27.46
1/14/03 27.64
1/15/03 27.37
1/16/03 27.46
1/17/03 27.26
1/21/03 27.30
1/22/03 27.01
1/23/03 27.10
1/24/03 26.10
1/27/03 25.28
1/28/03 25.72
1/29/03 25.97
1/30/03 25.40
1/31/03 26.11
2/3/03 26.31
2/4/03 25.67
2/5/03 25.42
2/6/03 25.30
2/7/03 24.99
2/10/03 25.34
2/11/03 24.57
2/12/03 24.21
2/13/03 24.00
2/14/03 24.58
2/18/03 25.22
2/19/03 24.89
2/20/03 24.70
2/21/03 25.07
2/24/03 24.67
2/25/03 24.94
2/26/03 24.71
2/27/03 24.55
2/28/03 24.56
3/3/03 24.41
3/4/03 24.07
3/5/03 24.36
3/6/03 23.25
3/7/03 22.67
3/10/03 22.00
3/11/03 21.98
3/12/03 22.00
3/13/03 23.23
3/14/03 23.24
3/17/03 23.87
3/18/03 23.99
3/19/03 24.28
3/20/03 24.72
3/21/03 25.55
3/24/03 24.36
3/25/03 24.63
3/26/03 24.32
3/27/03 24.20
3/28/03 24.21
3/31/03 23.88
4/1/03 24.55
4/2/03 25.24
4/3/03 25.24
4/4/03 25.44
4/7/03 25.61
4/8/03 25.64
4/9/03 25.03
4/10/03 25.37
4/11/03 25.09
4/14/03 25.61
4/15/03 25.97
4/16/03 25.30
4/17/03 25.31
4/21/03 25.50
4/22/03 26.52
4/23/03 26.79
4/24/03 26.59
4/25/03 26.54
4/28/03 27.03
4/29/03 26.70
4/30/03 26.52
5/1/03 26.70
5/2/03 27.36
5/5/03 27.31
5/6/03 27.46
5/7/03 28.00
5/8/03 26.91
5/9/03 27.30
5/12/03 28.10
5/13/03 28.68
5/14/03 28.86
5/15/03 29.10
5/16/03 29.23
5/19/03 28.10
5/20/03 28.48
5/21/03 28.84
5/22/03 29.00
5/23/03 29.59
5/27/03 29.49
5/28/03 29.45
5/29/03 29.00
5/30/03 29.57
6/2/03 29.47
6/3/03 30.09
6/4/03 30.48
6/5/03 31.03
6/6/03 30.93
6/9/03 29.83
6/10/03 30.40
6/11/03 30.75
6/12/03 30.45
6/13/03 30.12
6/16/03 30.81
6/17/03 31.15
6/18/03 31.00
6/19/03 30.22
6/20/03 30.88
6/23/03 30.46
6/24/03 30.20
6/25/03 29.95
6/26/03 29.96
6/27/03 29.70
6/30/03 29.71
7/1/03 30.52
7/2/03 30.97
7/3/03 30.74
7/7/03 31.27
7/8/03 31.39
7/9/03 31.09
7/10/03 30.44
7/11/03 30.65
7/14/03 31.54
7/15/03 30.43
7/16/03 30.12
7/17/03 29.80
7/18/03 30.16
7/21/03 29.96
7/22/03 30.39
7/23/03 30.39
7/24/03 30.22
7/25/03 30.51
7/28/03 30.28
7/29/03 30.22
7/30/03 31.00
7/31/03 31.09
8/1/03 30.44
8/4/03 30.55
8/5/03 29.88
8/6/03 29.72
8/7/03 29.87
8/8/03 30.09
8/11/03 30.04
8/12/03 30.60
8/13/03 30.33
8/14/03 30.67
8/15/03 30.70
8/18/03 30.72
8/19/03 30.65
8/20/03 30.65
8/21/03 30.55
8/22/03 29.93
8/25/03 29.41
8/26/03 29.60
8/27/03 29.72
8/28/03 29.61
8/29/03 29.59
9/2/03 29.75
9/3/03 29.69
9/4/03 29.85
9/5/03 29.61
9/8/03 29.79
9/9/03 29.75
9/10/03 29.35
9/11/03 29.61
9/12/03 29.77
9/15/03 29.46
9/16/03 30.17
9/17/03 30.02
9/18/03 30.89
9/19/03 30.90
9/22/03 30.34
9/23/03 30.66
9/24/03 29.97
9/25/03 29.90
9/26/03 29.98
9/29/03 30.27
9/30/03 30.15
10/1/03 31.19
10/2/03 31.18
10/3/03 31.24
10/6/03 31.50
10/7/03 31.82
10/8/03 31.80
10/9/03 31.95
10/10/03 32.12
10/13/03 32.40
10/14/03 32.63
10/15/03 32.52
10/16/03 32.85
10/17/03 32.61
10/20/03 32.70
10/21/03 32.41
10/22/03 31.99
10/23/03 32.06
10/24/03 31.80
10/27/03 39.20
10/28/03 38.80
10/29/03 39.55
10/30/03 40.10
10/31/03 40.39
11/3/03 40.52
11/4/03 40.26
11/5/03 40.55
11/6/03 40.93
11/7/03 40.50
11/10/03 40.35
11/11/03 40.52
11/12/03 40.51
11/13/03 40.20
11/14/03 40.06
11/17/03 40.00
11/18/03 39.55
11/19/03 39.90
11/20/03 39.72
11/21/03 40.00
11/24/03 40.44
11/25/03 40.47
11/26/03 40.65
11/28/03 40.60
Duke Realty Corporation (DRE, $30.80) improved with the overall REIT market,
making key property acquisitions in Indiana and Illinois.
DUKE REALTY CORPORATION (DRE)
(Source: StockVal(R))
[Chart Graphic Omitted]
Plot points are as follows:
PRICE
11/27/02 $25.10
11/29/02 25.00
12/2/02 25.40
12/3/02 25.20
12/4/02 25.10
12/5/02 25.10
12/6/02 25.00
12/9/02 25.10
12/10/02 25.10
12/11/02 25.10
12/12/02 25.20
12/13/02 25.10
12/16/02 25.30
12/17/02 25.20
12/18/02 25.20
12/19/02 25.10
12/20/02 25.30
12/23/02 25.60
12/24/02 25.70
12/26/02 25.50
12/27/02 25.50
12/30/02 25.60
12/31/02 25.50
1/2/03 25.70
1/3/03 26.20
1/6/03 26.60
1/7/03 26.10
1/8/03 25.80
1/9/03 25.70
1/10/03 25.50
1/13/03 25.50
1/14/03 25.50
1/15/03 25.50
1/16/03 25.50
1/17/03 25.50
1/21/03 24.60
1/22/03 24.60
1/23/03 24.90
1/24/03 24.60
1/27/03 24.50
1/28/03 24.50
1/29/03 24.90
1/30/03 24.80
1/31/03 25.10
2/3/03 25.10
2/4/03 25.10
2/5/03 25.40
2/6/03 25.60
2/7/03 25.60
2/10/03 25.80
2/11/03 25.50
2/12/03 24.70
2/13/03 24.70
2/14/03 24.80
2/18/03 25.30
2/19/03 25.40
2/20/03 25.30
2/21/03 25.50
2/24/03 25.40
2/25/03 26.00
2/26/03 25.70
2/27/03 26.00
2/28/03 26.00
3/3/03 25.90
3/4/03 25.80
3/5/03 25.90
3/6/03 25.80
3/7/03 25.80
3/10/03 25.70
3/11/03 25.40
3/12/03 25.20
3/13/03 25.50
3/14/03 25.60
3/17/03 26.20
3/18/03 26.20
3/19/03 26.40
3/20/03 26.70
3/21/03 27.40
3/24/03 26.80
3/25/03 27.00
3/26/03 27.40
3/27/03 27.30
3/28/03 27.20
3/31/03 27.00
4/1/03 27.80
4/2/03 27.90
4/3/03 27.60
4/4/03 27.40
4/7/03 27.60
4/8/03 27.40
4/9/03 27.60
4/10/03 27.40
4/11/03 27.30
4/14/03 27.60
4/15/03 27.70
4/16/03 27.90
4/17/03 27.90
4/21/03 28.20
4/22/03 28.30
4/23/03 28.30
4/24/03 27.90
4/25/03 27.80
4/28/03 27.70
4/29/03 27.80
4/30/03 27.40
5/1/03 27.60
5/2/03 27.80
5/5/03 28.10
5/6/03 28.10
5/7/03 28.10
5/8/03 28.30
5/9/03 28.70
5/12/03 28.10
5/13/03 28.10
5/14/03 28.00
5/15/03 28.10
5/16/03 28.70
5/19/03 28.20
5/20/03 28.30
5/21/03 28.60
5/22/03 29.00
5/23/03 29.00
5/27/03 29.30
5/28/03 28.30
5/29/03 27.90
5/30/03 28.40
6/2/03 28.10
6/3/03 27.90
6/4/03 28.30
6/5/03 28.10
6/6/03 28.50
6/9/03 28.40
6/10/03 28.80
6/11/03 28.80
6/12/03 28.50
6/13/03 27.80
6/16/03 27.70
6/17/03 27.40
6/18/03 26.90
6/19/03 27.00
6/20/03 27.00
6/23/03 26.60
6/24/03 26.90
6/25/03 27.20
6/26/03 27.20
6/27/03 27.60
6/30/03 27.60
7/1/03 27.30
7/2/03 28.00
7/3/03 28.40
7/7/03 28.60
7/8/03 28.40
7/9/03 27.90
7/10/03 27.20
7/11/03 27.50
7/14/03 27.60
7/15/03 27.70
7/16/03 27.50
7/17/03 27.50
7/18/03 27.90
7/21/03 27.90
7/22/03 28.50
7/23/03 28.50
7/24/03 28.80
7/25/03 28.90
7/28/03 28.40
7/29/03 28.70
7/30/03 29.20
7/31/03 28.80
8/1/03 28.30
8/4/03 28.20
8/5/03 28.30
8/6/03 28.20
8/7/03 28.40
8/8/03 28.00
8/11/03 28.10
8/12/03 27.70
8/13/03 27.50
8/14/03 27.50
8/15/03 27.70
8/18/03 27.60
8/19/03 27.70
8/20/03 27.90
8/21/03 28.00
8/22/03 27.50
8/25/03 27.30
8/26/03 27.30
8/27/03 27.40
8/28/03 27.50
8/29/03 27.70
9/2/03 28.40
9/3/03 28.70
9/4/03 28.70
9/5/03 28.30
9/8/03 28.30
9/9/03 28.50
9/10/03 28.00
9/11/03 28.10
9/12/03 28.40
9/15/03 28.10
9/16/03 28.20
9/17/03 28.30
9/18/03 28.90
9/19/03 29.20
9/22/03 29.20
9/23/03 29.20
9/24/03 28.90
9/25/03 29.10
9/26/03 28.90
9/29/03 29.20
9/30/03 29.20
10/1/03 29.20
10/2/03 29.80
10/3/03 29.80
10/6/03 30.00
10/7/03 29.90
10/8/03 30.10
10/9/03 30.10
10/10/03 29.90
10/13/03 29.90
10/14/03 30.00
10/15/03 29.90
10/16/03 29.90
10/17/03 29.90
10/20/03 29.90
10/21/03 29.70
10/22/03 29.50
10/23/03 29.10
10/24/03 28.70
10/27/03 29.00
10/28/03 28.60
10/29/03 28.70
10/30/03 29.30
10/31/03 29.30
11/3/03 30.00
11/4/03 29.90
11/5/03 29.80
11/6/03 30.10
11/7/03 30.20
11/10/03 30.30
11/11/03 30.20
11/12/03 30.30
11/13/03 30.20
11/14/03 30.00
11/17/03 30.00
11/18/03 30.00
11/19/03 30.20
11/20/03 29.80
11/21/03 29.90
11/24/03 30.10
11/25/03 30.30
11/26/03 30.20
11/28/03 30.80
iStar Financial, Inc. (SFI, 39.03) improved with REITs in general and benefited
from improvements in the performance of a number of its portfolio holdings.
ISTAR FINANCIAL INCORPORATED (SFI)
(Source: StockVal(R))
[Chart Graphic Omitted]
Plot points are as follows:
PRICE
11/27/02 $27.10
11/29/02 27.45
12/2/02 27.95
12/3/02 27.72
12/4/02 27.66
12/5/02 27.70
12/6/02 28.00
12/9/02 28.22
12/10/02 27.85
12/11/02 27.85
12/12/02 27.62
12/13/02 27.77
12/16/02 27.78
12/17/02 27.56
12/18/02 27.40
12/19/02 27.55
12/20/02 27.75
12/23/02 27.92
12/24/02 28.18
12/26/02 28.17
12/27/02 27.76
12/30/02 28.00
12/31/02 28.05
1/2/03 28.13
1/3/03 28.26
1/6/03 28.74
1/7/03 28.17
1/8/03 27.93
1/9/03 28.03
1/10/03 27.69
1/13/03 28.00
1/14/03 28.11
1/15/03 28.28
1/16/03 28.01
1/17/03 27.90
1/21/03 27.78
1/22/03 27.62
1/23/03 27.79
1/24/03 27.50
1/27/03 27.05
1/28/03 27.24
1/29/03 27.51
1/30/03 27.40
1/31/03 27.99
2/3/03 28.02
2/4/03 28.15
2/5/03 27.90
2/6/03 27.89
2/7/03 28.15
2/10/03 28.23
2/11/03 28.00
2/12/03 28.00
2/13/03 27.92
2/14/03 27.95
2/18/03 28.12
2/19/03 28.13
2/20/03 28.05
2/21/03 28.00
2/24/03 27.98
2/25/03 28.15
2/26/03 27.93
2/27/03 28.15
2/28/03 28.40
3/3/03 28.73
3/4/03 28.63
3/5/03 28.74
3/6/03 28.69
3/7/03 28.83
3/10/03 28.57
3/11/03 28.18
3/12/03 28.16
3/13/03 28.54
3/14/03 28.50
3/17/03 28.96
3/18/03 28.99
3/19/03 29.17
3/20/03 29.60
3/21/03 29.90
3/24/03 29.42
3/25/03 29.30
3/26/03 29.47
3/27/03 29.25
3/28/03 29.05
3/31/03 29.17
4/1/03 29.68
4/2/03 29.75
4/3/03 29.73
4/4/03 30.00
4/7/03 30.22
4/8/03 30.00
4/9/03 30.24
4/10/03 30.19
4/11/03 29.72
4/14/03 30.00
4/15/03 30.05
4/16/03 30.05
4/17/03 30.20
4/21/03 30.35
4/22/03 30.70
4/23/03 30.76
4/24/03 30.38
4/25/03 30.25
4/28/03 30.15
4/29/03 30.00
4/30/03 29.93
5/1/03 30.16
5/2/03 30.60
5/5/03 30.58
5/6/03 30.63
5/7/03 30.58
5/8/03 30.47
5/9/03 30.40
5/12/03 30.40
5/13/03 30.40
5/14/03 30.85
5/15/03 31.05
5/16/03 31.80
5/19/03 31.74
5/20/03 32.20
5/21/03 32.55
5/22/03 33.09
5/23/03 33.00
5/27/03 32.85
5/28/03 32.52
5/29/03 32.03
5/30/03 33.00
6/2/03 33.45
6/3/03 34.18
6/4/03 34.50
6/5/03 34.87
6/6/03 35.48
6/9/03 34.60
6/10/03 34.61
6/11/03 35.48
6/12/03 36.01
6/13/03 35.84
6/16/03 36.60
6/17/03 35.99
6/18/03 35.55
6/19/03 35.40
6/20/03 35.40
6/23/03 35.11
6/24/03 35.68
6/25/03 35.97
6/26/03 36.07
6/27/03 36.18
6/30/03 36.50
7/1/03 37.06
7/2/03 37.80
7/3/03 37.75
7/7/03 37.95
7/8/03 38.30
7/9/03 38.42
7/10/03 38.30
7/11/03 37.76
7/14/03 38.00
7/15/03 38.00
7/16/03 38.10
7/17/03 37.25
7/18/03 37.75
7/21/03 37.57
7/22/03 37.52
7/23/03 37.27
7/24/03 37.05
7/25/03 36.90
7/28/03 36.27
7/29/03 35.85
7/30/03 36.28
7/31/03 36.25
8/1/03 36.10
8/4/03 35.80
8/5/03 35.23
8/6/03 35.35
8/7/03 35.19
8/8/03 35.00
8/11/03 35.11
8/12/03 35.33
8/13/03 35.01
8/14/03 35.03
8/15/03 35.20
8/18/03 35.40
8/19/03 35.70
8/20/03 35.90
8/21/03 36.05
8/22/03 35.95
8/25/03 35.65
8/26/03 35.74
8/27/03 36.17
8/28/03 36.37
8/29/03 36.66
9/2/03 36.91
9/3/03 37.20
9/4/03 37.47
9/5/03 37.55
9/8/03 37.80
9/9/03 37.77
9/10/03 36.92
9/11/03 36.91
9/12/03 37.30
9/15/03 37.96
9/16/03 37.97
9/17/03 37.97
9/18/03 38.16
9/19/03 38.40
9/22/03 38.20
9/23/03 38.25
9/24/03 38.29
9/25/03 38.11
9/26/03 38.20
9/29/03 38.57
9/30/03 38.95
10/1/03 39.10
10/2/03 39.50
10/3/03 39.59
10/6/03 40.00
10/7/03 39.94
10/8/03 39.90
10/9/03 40.00
10/10/03 39.59
10/13/03 39.74
10/14/03 40.00
10/15/03 39.65
10/16/03 39.25
10/17/03 38.97
10/20/03 38.65
10/21/03 38.65
10/22/03 38.00
10/23/03 37.52
10/24/03 37.25
10/27/03 37.92
10/28/03 37.88
10/29/03 37.87
10/30/03 37.92
10/31/03 38.06
11/3/03 38.15
11/4/03 38.14
11/5/03 38.21
11/6/03 39.27
11/7/03 39.17
11/10/03 39.75
11/11/03 39.19
11/12/03 40.00
11/13/03 39.98
11/14/03 39.87
11/17/03 39.40
11/18/03 39.20
11/19/03 39.10
11/20/03 38.71
11/21/03 38.58
11/24/03 38.92
11/25/03 38.80
11/26/03 38.89
11/28/03 39.03
Citigroup, Inc.'s (C, $47.03) strong performance was fueled by improvement in
market related businesses and continuing strength in the company's credit card
and consumer operations. Global economic growth should benefit results.
CITIGROUP INCORPORATED (C)
(Source: StockVal(R))
[Chart Graphic Omitted]
Plot points are as follows:
PRICE
11/27/02 $38.97
11/29/02 38.88
12/2/02 38.52
12/3/02 37.85
12/4/02 37.85
12/5/02 37.14
12/6/02 37.56
12/9/02 36.15
12/10/02 36.79
12/11/02 36.26
12/12/02 36.62
12/13/02 36.00
12/16/02 37.48
12/17/02 37.13
12/18/02 37.15
12/19/02 37.00
12/20/02 38.14
12/23/02 37.68
12/24/02 36.50
12/26/02 36.02
12/27/02 35.17
12/30/02 35.25
12/31/02 35.19
1/2/03 36.35
1/3/03 36.11
1/6/03 37.31
1/7/03 36.98
1/8/03 36.69
1/9/03 37.03
1/10/03 37.46
1/13/03 37.04
1/14/03 37.93
1/15/03 37.45
1/16/03 37.11
1/17/03 36.80
1/21/03 36.14
1/22/03 35.90
1/23/03 37.14
1/24/03 35.79
1/27/03 35.09
1/28/03 35.46
1/29/03 35.55
1/30/03 34.20
1/31/03 34.38
2/3/03 34.65
2/4/03 33.64
2/5/03 33.65
2/6/03 33.15
2/7/03 32.91
2/10/03 32.89
2/11/03 32.05
2/12/03 31.42
2/13/03 31.84
2/14/03 32.54
2/18/03 33.24
2/19/03 33.36
2/20/03 32.86
2/21/03 33.20
2/24/03 32.43
2/25/03 32.89
2/26/03 32.26
2/27/03 32.86
2/28/03 33.34
3/3/03 33.05
3/4/03 32.37
3/5/03 33.17
3/6/03 32.79
3/7/03 33.16
3/10/03 32.20
3/11/03 31.55
3/12/03 31.66
3/13/03 33.39
3/14/03 33.75
3/17/03 34.20
3/18/03 34.73
3/19/03 35.46
3/20/03 35.83
3/21/03 37.20
3/24/03 35.70
3/25/03 35.90
3/26/03 35.89
3/27/03 35.90
3/28/03 35.90
3/31/03 34.45
4/1/03 35.60
4/2/03 37.04
4/3/03 36.52
4/4/03 37.23
4/7/03 37.22
4/8/03 37.61
4/9/03 37.04
4/10/03 36.95
4/11/03 37.35
4/14/03 38.43
4/15/03 39.25
4/16/03 38.26
4/17/03 39.04
4/21/03 38.70
4/22/03 39.94
4/23/03 40.29
4/24/03 39.15
4/25/03 38.45
4/28/03 39.26
4/29/03 39.10
4/30/03 39.25
5/1/03 39.00
5/2/03 39.70
5/5/03 39.53
5/6/03 39.95
5/7/03 40.02
5/8/03 39.21
5/9/03 39.05
5/12/03 39.39
5/13/03 39.27
5/14/03 38.90
5/15/03 39.45
5/16/03 39.15
5/19/03 38.23
5/20/03 38.52
5/21/03 38.86
5/22/03 38.72
5/23/03 39.09
5/27/03 40.18
5/28/03 41.14
5/29/03 40.77
5/30/03 41.02
6/2/03 41.37
6/3/03 42.25
6/4/03 43.02
6/5/03 43.50
6/6/03 43.69
6/9/03 42.86
6/10/03 43.20
6/11/03 44.09
6/12/03 44.07
6/13/03 44.10
6/16/03 45.24
6/17/03 45.56
6/18/03 44.91
6/19/03 43.79
6/20/03 44.05
6/23/03 43.10
6/24/03 43.42
6/25/03 43.05
6/26/03 43.72
6/27/03 43.01
6/30/03 42.80
7/1/03 43.81
7/2/03 44.40
7/3/03 43.88
7/7/03 44.94
7/8/03 45.37
7/9/03 45.99
7/10/03 45.20
7/11/03 46.15
7/14/03 47.12
7/15/03 46.83
7/16/03 45.52
7/17/03 44.82
7/18/03 45.74
7/21/03 44.95
7/22/03 45.45
7/23/03 45.64
7/24/03 44.87
7/25/03 45.73
7/28/03 45.80
7/29/03 45.44
7/30/03 45.23
7/31/03 44.80
8/1/03 43.45
8/4/03 43.87
8/5/03 43.07
8/6/03 43.52
8/7/03 44.10
8/8/03 44.40
8/11/03 44.55
8/12/03 45.19
8/13/03 44.97
8/14/03 45.13
8/15/03 44.90
8/18/03 44.65
8/19/03 44.41
8/20/03 44.16
8/21/03 43.91
8/22/03 43.10
8/25/03 42.92
8/26/03 43.31
8/27/03 42.96
8/28/03 43.09
8/29/03 43.35
9/2/03 44.18
9/3/03 44.50
9/4/03 44.41
9/5/03 44.34
9/8/03 44.52
9/9/03 44.28
9/10/03 43.95
9/11/03 44.21
9/12/03 44.30
9/15/03 44.16
9/16/03 44.70
9/17/03 44.94
9/18/03 46.65
9/19/03 46.99
9/22/03 46.38
9/23/03 47.17
9/24/03 46.53
9/25/03 45.97
9/26/03 45.36
9/29/03 46.07
9/30/03 45.51
10/1/03 47.00
10/2/03 47.25
10/3/03 47.11
10/6/03 47.31
10/7/03 47.83
10/8/03 47.56
10/9/03 47.88
10/10/03 47.90
10/13/03 48.93
10/14/03 49.00
10/15/03 48.88
10/16/03 49.00
10/17/03 48.38
10/20/03 48.14
10/21/03 47.57
10/22/03 47.20
10/23/03 47.78
10/24/03 47.60
10/27/03 46.70
10/28/03 47.58
10/29/03 47.59
10/30/03 47.52
10/31/03 47.40
11/3/03 48.04
11/4/03 48.32
11/5/03 48.50
11/6/03 48.89
11/7/03 47.75
11/10/03 47.95
11/11/03 47.39
11/12/03 47.39
11/13/03 47.10
11/14/03 46.43
11/17/03 46.30
11/18/03 45.56
11/19/03 45.94
11/20/03 45.77
11/21/03 46.34
11/24/03 46.74
11/25/03 46.91
11/26/03 46.95
11/28/03 47.03
9
---
CHARTWELL
<page>
- --------------------------------------------------------------------------------
CHARTWELL DIVIDEND AND INCOME FUND, INC. NOVEMBER 30, 2003
- --------------------------------------------------------------------------------
BOTTOM PERFORMING EQUITY HOLDINGS IN 2003
Stanley Works (SWK, $32.71) severely underperformed in early 2003 on credit
concerns, market share losses and international competition, at which time the
Fund sold the shares.
STANLEY WORKS, THE (SWK)
(Source: StockVal(R))
[Chart Graphic Omitted]
Plot points are as follows:
PRICE
11/27/02 $35.83
11/29/02 35.94
12/2/02 35.71
12/3/02 34.76
12/4/02 34.84
12/5/02 34.67
12/6/02 35.03
12/9/02 34.11
12/10/02 34.37
12/11/02 34.26
12/12/02 34.61
12/13/02 33.98
12/16/02 34.80
12/17/02 34.67
12/18/02 34.33
12/19/02 34.67
12/20/02 34.83
12/23/02 35.10
12/24/02 34.90
12/26/02 35.20
12/27/02 34.63
12/30/02 34.60
12/31/02 34.58
1/2/03 36.06
1/3/03 33.76
1/6/03 33.96
1/7/03 33.51
1/8/03 32.48
1/9/03 32.99
1/10/03 32.24
1/13/03 31.60
1/14/03 31.63
1/15/03 31.35
1/16/03 31.83
1/17/03 28.44
1/21/03 27.58
1/22/03 26.74
1/23/03 27.35
1/24/03 26.86
1/27/03 26.14
1/28/03 26.14
1/29/03 26.42
1/30/03 25.67
1/31/03 26.62
2/3/03 26.43
2/4/03 25.88
2/5/03 26.06
2/6/03 25.52
2/7/03 25.10
2/10/03 24.84
2/11/03 24.61
2/12/03 24.11
2/13/03 24.51
2/14/03 24.72
2/18/03 25.16
2/19/03 25.11
2/20/03 25.33
2/21/03 25.36
2/24/03 25.00
2/25/03 25.08
2/26/03 25.03
2/27/03 25.61
2/28/03 25.81
3/3/03 26.52
3/4/03 25.35
3/5/03 25.11
3/6/03 24.72
3/7/03 25.35
3/10/03 24.81
3/11/03 23.97
3/12/03 24.00
3/13/03 24.70
3/14/03 24.49
3/17/03 25.45
3/18/03 25.27
3/19/03 25.60
3/20/03 25.60
3/21/03 27.16
3/24/03 25.40
3/25/03 25.61
3/26/03 25.30
3/27/03 25.31
3/28/03 24.60
3/31/03 23.99
4/1/03 24.22
4/2/03 25.19
4/3/03 25.25
4/4/03 25.51
4/7/03 25.24
4/8/03 23.90
4/9/03 21.12
4/10/03 21.31
4/11/03 21.00
4/14/03 21.51
4/15/03 22.18
4/16/03 22.67
4/17/03 23.01
4/21/03 22.79
4/22/03 23.20
4/23/03 23.39
4/24/03 23.38
4/25/03 23.42
4/28/03 23.84
4/29/03 23.91
4/30/03 24.03
5/1/03 23.79
5/2/03 24.41
5/5/03 24.48
5/6/03 24.62
5/7/03 24.70
5/8/03 24.65
5/9/03 25.13
5/12/03 25.64
5/13/03 25.78
5/14/03 25.85
5/15/03 26.37
5/16/03 26.84
5/19/03 26.28
5/20/03 26.50
5/21/03 26.58
5/22/03 26.70
5/23/03 26.74
5/27/03 27.30
5/28/03 27.49
5/29/03 27.37
5/30/03 27.96
6/2/03 28.04
6/3/03 27.90
6/4/03 28.23
6/5/03 28.59
6/6/03 28.38
6/9/03 27.49
6/10/03 27.78
6/11/03 27.95
6/12/03 27.91
6/13/03 27.73
6/16/03 28.34
6/17/03 28.37
6/18/03 28.25
6/19/03 28.21
6/20/03 28.09
6/23/03 27.46
6/24/03 27.73
6/25/03 27.45
6/26/03 27.37
6/27/03 27.53
6/30/03 27.60
7/1/03 27.66
7/2/03 27.75
7/3/03 27.75
7/7/03 28.22
7/8/03 28.91
7/9/03 28.90
7/10/03 28.98
7/11/03 29.60
7/14/03 30.15
7/15/03 30.00
7/16/03 29.55
7/17/03 29.61
7/18/03 29.63
7/21/03 29.20
7/22/03 28.87
7/23/03 29.55
7/24/03 28.51
7/25/03 28.81
7/28/03 28.82
7/29/03 28.62
7/30/03 28.33
7/31/03 28.33
8/1/03 27.92
8/4/03 27.63
8/5/03 27.50
8/6/03 27.46
8/7/03 27.45
8/8/03 27.81
8/11/03 27.85
8/12/03 27.99
8/13/03 28.30
8/14/03 28.88
8/15/03 28.89
8/18/03 29.26
8/19/03 29.35
8/20/03 29.30
8/21/03 29.52
8/22/03 29.17
8/25/03 29.31
8/26/03 29.49
8/27/03 29.52
8/28/03 29.78
8/29/03 30.27
9/2/03 30.50
9/3/03 30.53
9/4/03 30.37
9/5/03 29.95
9/8/03 30.35
9/9/03 29.57
9/10/03 28.95
9/11/03 28.76
9/12/03 28.92
9/15/03 28.82
9/16/03 29.48
9/17/03 29.05
9/18/03 29.64
9/19/03 29.77
9/22/03 29.10
9/23/03 29.52
9/24/03 28.95
9/25/03 28.82
9/26/03 29.08
9/29/03 29.47
9/30/03 29.52
10/1/03 29.95
10/2/03 30.22
10/3/03 30.40
10/6/03 30.26
10/7/03 30.49
10/8/03 30.62
10/9/03 30.91
10/10/03 31.15
10/13/03 31.12
10/14/03 31.19
10/15/03 31.38
10/16/03 31.45
10/17/03 31.40
10/20/03 30.90
10/21/03 30.71
10/22/03 31.78
10/23/03 32.43
10/24/03 32.69
10/27/03 33.04
10/28/03 33.25
10/29/03 33.52
10/30/03 33.46
10/31/03 33.34
11/3/03 33.35
11/4/03 32.93
11/5/03 33.00
11/6/03 33.19
11/7/03 32.90
11/10/03 32.60
11/11/03 32.14
11/12/03 32.75
11/13/03 32.85
11/14/03 33.26
11/17/03 32.96
11/18/03 32.69
11/19/03 32.52
11/20/03 32.26
11/21/03 32.30
11/24/03 32.72
11/25/03 33.19
11/26/03 32.79
11/28/03 32.71
Newell Rubbermaid's (NWL, $22.87) new CEO has been a big disappointment,
revenues have not grown, and products need to be repositioned against
international competition.
NEWELL RUBBERMAID COMPANY (NWI)
(Source: StockVal(R))
[Chart Graphic Omitted]
Plot points are as follows:
PRICE
11/27/02 $31.75
11/29/02 31.72
12/2/02 31.97
12/3/02 31.58
12/4/02 31.66
12/5/02 31.11
12/6/02 31.50
12/9/02 31.23
12/10/02 31.55
12/11/02 31.02
12/12/02 31.05
12/13/02 31.18
12/16/02 31.71
12/17/02 31.65
12/18/02 31.57
12/19/02 31.00
12/20/02 31.35
12/23/02 31.46
12/24/02 31.35
12/26/02 31.29
12/27/02 30.92
12/30/02 30.25
12/31/02 30.33
1/2/03 31.41
1/3/03 30.43
1/6/03 30.59
1/7/03 30.30
1/8/03 30.14
1/9/03 30.43
1/10/03 30.39
1/13/03 30.06
1/14/03 29.45
1/15/03 29.33
1/16/03 29.58
1/17/03 29.56
1/21/03 28.77
1/22/03 28.62
1/23/03 29.12
1/24/03 28.68
1/27/03 27.96
1/28/03 29.25
1/29/03 28.81
1/30/03 27.83
1/31/03 27.85
2/3/03 28.29
2/4/03 28.19
2/5/03 28.36
2/6/03 28.26
2/7/03 27.95
2/10/03 28.20
2/11/03 28.01
2/12/03 28.39
2/13/03 28.30
2/14/03 29.57
2/18/03 29.53
2/19/03 28.55
2/20/03 29.22
2/21/03 29.37
2/24/03 28.94
2/25/03 29.04
2/26/03 28.54
2/27/03 28.73
2/28/03 28.20
3/3/03 27.05
3/4/03 26.46
3/5/03 25.25
3/6/03 25.28
3/7/03 25.55
3/10/03 25.09
3/11/03 25.16
3/12/03 25.36
3/13/03 26.32
3/14/03 26.67
3/17/03 27.69
3/18/03 27.63
3/19/03 28.82
3/20/03 28.94
3/21/03 29.70
3/24/03 28.48
3/25/03 28.33
3/26/03 28.00
3/27/03 28.47
3/28/03 28.40
3/31/03 28.35
4/1/03 28.73
4/2/03 29.90
4/3/03 29.63
4/4/03 29.82
4/7/03 30.04
4/8/03 30.08
4/9/03 29.66
4/10/03 29.93
4/11/03 30.26
4/14/03 30.60
4/15/03 30.85
4/16/03 29.98
4/17/03 30.52
4/21/03 30.35
4/22/03 31.15
4/23/03 31.22
4/24/03 30.80
4/25/03 30.79
4/28/03 31.00
4/29/03 30.05
4/30/03 30.48
5/1/03 29.35
5/2/03 29.47
5/5/03 29.42
5/6/03 29.13
5/7/03 29.39
5/8/03 29.34
5/9/03 28.83
5/12/03 28.58
5/13/03 28.17
5/14/03 28.15
5/15/03 28.30
5/16/03 28.24
5/19/03 27.54
5/20/03 27.83
5/21/03 27.74
5/22/03 27.98
5/23/03 27.66
5/27/03 28.58
5/28/03 28.01
5/29/03 27.77
5/30/03 28.50
6/2/03 28.40
6/3/03 27.99
6/4/03 28.35
6/5/03 28.35
6/6/03 27.89
6/9/03 27.86
6/10/03 27.93
6/11/03 27.95
6/12/03 28.75
6/13/03 28.42
6/16/03 28.90
6/17/03 28.99
6/18/03 29.10
6/19/03 29.27
6/20/03 29.05
6/23/03 28.80
6/24/03 28.81
6/25/03 28.41
6/26/03 28.09
6/27/03 27.88
6/30/03 28.00
7/1/03 27.99
7/2/03 28.00
7/3/03 27.97
7/7/03 28.00
7/8/03 27.96
7/9/03 27.90
7/10/03 27.98
7/11/03 28.04
7/14/03 27.88
7/15/03 27.82
7/16/03 28.08
7/17/03 27.89
7/18/03 28.27
7/21/03 28.16
7/22/03 28.59
7/23/03 28.97
7/24/03 28.80
7/25/03 29.14
7/28/03 29.39
7/29/03 28.76
7/30/03 28.42
7/31/03 23.63
8/1/03 23.10
8/4/03 23.35
8/5/03 23.64
8/6/03 23.58
8/7/03 23.32
8/8/03 23.46
8/11/03 23.55
8/12/03 23.64
8/13/03 22.98
8/14/03 23.00
8/15/03 22.65
8/18/03 22.83
8/19/03 23.25
8/20/03 23.55
8/21/03 24.07
8/22/03 23.50
8/25/03 23.32
8/26/03 23.64
8/27/03 23.34
8/28/03 23.41
8/29/03 23.75
9/2/03 24.36
9/3/03 24.25
9/4/03 24.36
9/5/03 24.10
9/8/03 24.30
9/9/03 23.91
9/10/03 23.78
9/11/03 23.74
9/12/03 23.90
9/15/03 24.29
9/16/03 24.37
9/17/03 24.25
9/18/03 24.00
9/19/03 22.43
9/22/03 22.00
9/23/03 21.86
9/24/03 21.67
9/25/03 21.42
9/26/03 21.33
9/29/03 21.51
9/30/03 21.67
10/1/03 22.15
10/2/03 22.20
10/3/03 22.14
10/6/03 22.36
10/7/03 22.50
10/8/03 22.84
10/9/03 22.80
10/10/03 22.85
10/13/03 23.21
10/14/03 23.23
10/15/03 23.09
10/16/03 23.00
10/17/03 22.93
10/20/03 22.73
10/21/03 22.38
10/22/03 22.36
10/23/03 22.43
10/24/03 22.33
10/27/03 22.11
10/28/03 22.21
10/29/03 22.20
10/30/03 22.80
10/31/03 22.80
11/3/03 22.88
11/4/03 22.76
11/5/03 22.69
11/6/03 22.60
11/7/03 22.79
11/10/03 22.76
11/11/03 22.62
11/12/03 22.90
11/13/03 22.89
11/14/03 22.73
11/17/03 22.75
11/18/03 22.25
11/19/03 22.28
11/20/03 22.25
11/21/03 22.85
11/24/03 22.88
11/25/03 22.89
11/26/03 22.91
11/28/03 22.87
Schering-Plough (SGP, $16.18) experienced the expiration of the patent for two
key drugs, including Claritin, which led the company to cut its dividend.
SCHERING-PLOUGH CORPORATION (SGP)
(Source: StockVal(R))
[Chart Graphic Omitted]
Plot points are as follows:
PRICE
11/27/02 $21.98
11/29/02 22.66
12/2/02 21.50
12/3/02 20.75
12/4/02 20.87
12/5/02 21.10
12/6/02 21.35
12/9/02 22.60
12/10/02 22.51
12/11/02 22.53
12/12/02 22.30
12/13/02 22.35
12/16/02 22.69
12/17/02 22.35
12/18/02 21.90
12/19/02 21.76
12/20/02 22.58
12/23/02 22.91
12/24/02 22.90
12/26/02 22.45
12/27/02 22.20
12/30/02 22.13
12/31/02 22.20
1/2/03 22.71
1/3/03 23.12
1/6/03 23.64
1/7/03 22.85
1/8/03 22.87
1/9/03 23.06
1/10/03 22.96
1/13/03 23.68
1/14/03 22.42
1/15/03 21.67
1/16/03 21.90
1/17/03 21.74
1/21/03 21.35
1/22/03 20.75
1/23/03 20.68
1/24/03 20.00
1/27/03 18.73
1/28/03 19.15
1/29/03 19.05
1/30/03 18.45
1/31/03 18.11
2/3/03 18.75
2/4/03 18.62
2/5/03 18.38
2/6/03 18.00
2/7/03 18.00
2/10/03 18.25
2/11/03 18.15
2/12/03 18.05
2/13/03 17.93
2/14/03 18.50
2/18/03 18.68
2/19/03 18.33
2/20/03 18.25
2/21/03 18.07
2/24/03 17.85
2/25/03 17.58
2/26/03 17.22
2/27/03 17.88
2/28/03 18.02
3/3/03 17.51
3/4/03 17.13
3/5/03 16.60
3/6/03 16.45
3/7/03 16.30
3/10/03 15.89
3/11/03 15.88
3/12/03 15.75
3/13/03 15.85
3/14/03 15.45
3/17/03 15.92
3/18/03 16.59
3/19/03 17.75
3/20/03 17.68
3/21/03 18.50
3/24/03 17.65
3/25/03 18.20
3/26/03 17.94
3/27/03 18.07
3/28/03 18.00
3/31/03 17.83
4/1/03 17.63
4/2/03 18.18
4/3/03 18.25
4/4/03 18.23
4/7/03 17.50
4/8/03 17.18
4/9/03 17.00
4/10/03 17.05
4/11/03 16.82
4/14/03 17.39
4/15/03 17.88
4/16/03 17.50
4/17/03 17.43
4/21/03 17.32
4/22/03 17.81
4/23/03 18.30
4/24/03 17.75
4/25/03 17.41
4/28/03 17.42
4/29/03 17.63
4/30/03 18.10
5/1/03 18.19
5/2/03 18.73
5/5/03 18.74
5/6/03 19.00
5/7/03 18.64
5/8/03 18.25
5/9/03 17.97
5/12/03 18.30
5/13/03 18.71
5/14/03 18.50
5/15/03 18.44
5/16/03 18.06
5/19/03 17.50
5/20/03 17.14
5/21/03 17.51
5/22/03 17.75
5/23/03 18.24
5/27/03 18.80
5/28/03 19.10
5/29/03 18.90
5/30/03 18.45
6/2/03 18.18
6/3/03 18.28
6/4/03 18.30
6/5/03 18.81
6/6/03 19.33
6/9/03 19.42
6/10/03 19.63
6/11/03 19.45
6/12/03 19.15
6/13/03 18.87
6/16/03 19.68
6/17/03 20.34
6/18/03 20.47
6/19/03 19.71
6/20/03 20.01
6/23/03 19.08
6/24/03 19.01
6/25/03 19.09
6/26/03 19.31
6/27/03 19.09
6/30/03 18.60
7/1/03 19.00
7/2/03 19.35
7/3/03 19.06
7/7/03 18.34
7/8/03 17.85
7/9/03 17.49
7/10/03 17.20
7/11/03 17.08
7/14/03 17.04
7/15/03 17.01
7/16/03 16.92
7/17/03 17.00
7/18/03 17.04
7/21/03 16.95
7/22/03 16.97
7/23/03 17.75
7/24/03 17.39
7/25/03 17.44
7/28/03 17.35
7/29/03 17.08
7/30/03 17.15
7/31/03 16.98
8/1/03 16.62
8/4/03 16.71
8/5/03 16.08
8/6/03 16.27
8/7/03 16.48
8/8/03 16.19
8/11/03 16.25
8/12/03 16.10
8/13/03 16.14
8/14/03 16.06
8/15/03 16.20
8/18/03 16.12
8/19/03 16.11
8/20/03 16.24
8/21/03 16.48
8/22/03 14.96
8/25/03 15.02
8/26/03 15.12
8/27/03 14.95
8/28/03 15.15
8/29/03 15.19
9/2/03 15.51
9/3/03 15.29
9/4/03 15.29
9/5/03 15.24
9/8/03 15.55
9/9/03 16.00
9/10/03 16.33
9/11/03 16.05
9/12/03 16.16
9/15/03 16.08
9/16/03 16.50
9/17/03 16.42
9/18/03 16.81
9/19/03 16.65
9/22/03 16.29
9/23/03 16.35
9/24/03 15.95
9/25/03 15.82
9/26/03 15.39
9/29/03 15.50
9/30/03 15.24
10/1/03 15.85
10/2/03 16.36
10/3/03 16.44
10/6/03 16.32
10/7/03 16.30
10/8/03 15.95
10/9/03 16.08
10/10/03 16.06
10/13/03 16.27
10/14/03 16.38
10/15/03 15.95
10/16/03 16.11
10/17/03 16.10
10/20/03 15.86
10/21/03 16.00
10/22/03 15.12
10/23/03 15.15
10/24/03 15.12
10/27/03 15.23
10/28/03 15.12
10/29/03 15.22
10/30/03 14.97
10/31/03 15.27
11/3/03 15.00
11/4/03 14.85
11/5/03 14.52
11/6/03 14.68
11/7/03 15.05
11/10/03 14.87
11/11/03 15.19
11/12/03 15.45
11/13/03 15.90
11/14/03 16.00
11/17/03 15.87
11/18/03 16.17
11/19/03 16.00
11/20/03 15.28
11/21/03 15.22
11/24/03 15.52
11/25/03 15.37
11/26/03 15.38
11/28/03 16.18
Alliance Capital Management (AC, $32.20) shares declined amid a mutual fund
scandal.
ALLIANCE CAPITAL MGT HOLDINGS LP (AC)
(Source: StockVal(R))
[Chart Graphic Omitted]
Plot points are as follows:
PRICE
11/27/02 $35.05
11/29/02 34.98
12/2/02 34.30
12/3/02 33.40
12/4/02 33.13
12/5/02 33.20
12/6/02 33.18
12/9/02 32.53
12/10/02 33.01
12/11/02 32.87
12/12/02 32.75
12/13/02 32.40
12/16/02 32.70
12/17/02 32.95
12/18/02 31.95
12/19/02 31.50
12/20/02 31.95
12/23/02 31.73
12/24/02 31.45
12/26/02 31.45
12/27/02 30.72
12/30/02 30.61
12/31/02 31.00
1/2/03 32.70
1/3/03 32.40
1/6/03 33.79
1/7/03 33.55
1/8/03 33.40
1/9/03 33.85
1/10/03 33.35
1/13/03 33.40
1/14/03 33.50
1/15/03 33.02
1/16/03 32.70
1/17/03 32.45
1/21/03 31.70
1/22/03 30.75
1/23/03 30.80
1/24/03 30.21
1/27/03 29.99
1/28/03 29.89
1/29/03 29.72
1/30/03 29.40
1/31/03 29.85
2/3/03 29.90
2/4/03 29.28
2/5/03 29.70
2/6/03 28.81
2/7/03 28.05
2/10/03 27.48
2/11/03 27.60
2/12/03 27.00
2/13/03 27.20
2/14/03 27.79
2/18/03 29.07
2/19/03 28.85
2/20/03 28.80
2/21/03 29.18
2/24/03 28.51
2/25/03 28.65
2/26/03 27.67
2/27/03 28.00
2/28/03 28.20
3/3/03 27.85
3/4/03 27.41
3/5/03 27.67
3/6/03 27.75
3/7/03 28.20
3/10/03 27.44
3/11/03 26.25
3/12/03 26.50
3/13/03 27.60
3/14/03 27.80
3/17/03 27.90
3/18/03 28.88
3/19/03 29.60
3/20/03 29.40
3/21/03 30.40
3/24/03 29.21
3/25/03 29.45
3/26/03 29.79
3/27/03 29.54
3/28/03 29.39
3/31/03 28.80
4/1/03 28.52
4/2/03 29.25
4/3/03 29.66
4/4/03 29.78
4/7/03 30.11
4/8/03 29.99
4/9/03 29.60
4/10/03 29.50
4/11/03 29.90
4/14/03 30.22
4/15/03 31.11
4/16/03 31.10
4/17/03 31.10
4/21/03 31.20
4/22/03 32.65
4/23/03 32.61
4/24/03 32.21
4/25/03 31.84
4/28/03 32.35
4/29/03 31.50
4/30/03 31.88
5/1/03 31.50
5/2/03 31.98
5/5/03 31.50
5/6/03 31.94
5/7/03 31.64
5/8/03 31.40
5/9/03 31.48
5/12/03 31.60
5/13/03 32.02
5/14/03 32.00
5/15/03 32.52
5/16/03 32.40
5/19/03 31.40
5/20/03 31.48
5/21/03 31.70
5/22/03 32.48
5/23/03 33.15
5/27/03 33.82
5/28/03 34.00
5/29/03 34.32
5/30/03 35.00
6/2/03 36.32
6/3/03 36.49
6/4/03 37.77
6/5/03 37.27
6/6/03 38.11
6/9/03 36.70
6/10/03 36.97
6/11/03 37.39
6/12/03 37.70
6/13/03 37.46
6/16/03 38.11
6/17/03 37.74
6/18/03 37.30
6/19/03 36.99
6/20/03 36.81
6/23/03 35.95
6/24/03 36.05
6/25/03 36.45
6/26/03 36.84
6/27/03 36.87
6/30/03 36.50
7/1/03 36.80
7/2/03 36.86
7/3/03 36.93
7/7/03 37.31
7/8/03 37.20
7/9/03 38.00
7/10/03 37.30
7/11/03 37.51
7/14/03 38.30
7/15/03 37.40
7/16/03 36.48
7/17/03 36.21
7/18/03 36.08
7/21/03 35.40
7/22/03 36.00
7/23/03 35.89
7/24/03 36.00
7/25/03 36.30
7/28/03 35.65
7/29/03 36.16
7/30/03 35.94
7/31/03 36.95
8/1/03 36.45
8/4/03 36.34
8/5/03 36.45
8/6/03 36.25
8/7/03 36.03
8/8/03 35.98
8/11/03 35.95
8/12/03 36.84
8/13/03 36.33
8/14/03 36.09
8/15/03 36.30
8/18/03 36.00
8/19/03 36.09
8/20/03 36.60
8/21/03 36.21
8/22/03 35.88
8/25/03 35.75
8/26/03 35.60
8/27/03 35.30
8/28/03 35.65
8/29/03 35.40
9/2/03 35.95
9/3/03 35.70
9/4/03 34.90
9/5/03 34.91
9/8/03 34.74
9/9/03 34.33
9/10/03 34.35
9/11/03 34.94
9/12/03 35.80
9/15/03 35.17
9/16/03 35.85
9/17/03 35.89
9/18/03 36.35
9/19/03 36.49
9/22/03 36.25
9/23/03 36.00
9/24/03 35.91
9/25/03 35.70
9/26/03 35.41
9/29/03 35.53
9/30/03 33.49
10/1/03 34.03
10/2/03 33.74
10/3/03 33.80
10/6/03 34.17
10/7/03 34.50
10/8/03 33.90
10/9/03 33.56
10/10/03 33.85
10/13/03 34.59
10/14/03 34.47
10/15/03 34.38
10/16/03 34.37
10/17/03 34.32
10/20/03 34.49
10/21/03 34.00
10/22/03 33.22
10/23/03 33.30
10/24/03 32.35
10/27/03 32.50
10/28/03 32.28
10/29/03 33.43
10/30/03 33.40
10/31/03 33.57
11/3/03 33.94
11/4/03 34.10
11/5/03 31.10
11/6/03 30.15
11/7/03 31.75
11/10/03 30.90
11/11/03 30.76
11/12/03 31.07
11/13/03 31.25
11/14/03 30.92
11/17/03 30.60
11/18/03 30.85
11/19/03 30.75
11/20/03 30.57
11/21/03 30.75
11/24/03 31.62
11/25/03 32.12
11/26/03 32.41
11/28/03 32.20
10
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CHARTWELL
<page>
- --------------------------------------------------------------------------------
CHARTWELL DIVIDEND AND INCOME FUND, INC. NOVEMBER 30, 2003
- --------------------------------------------------------------------------------
OUTLOOK:
We have a relatively restrained outlook for equity returns in 2004. Investor
friendly tax cuts will likely continue to induce investors to put money into
stocks. We believe that companies with stable, growing earnings will eventually
assume leadership from cyclical, economically sensitive stocks. We are carefully
monitoring consumer spending while waiting for more signs of corporate capital
spending.
Going forward, we expect much more moderate returns from the equity markets as
contrasted to last year's surge. Earnings should improve approximately 10% for
the S&P 500 according to Thomson First Call estimates. As of December 31, 2003,
the P/E on the S&P 500 is 17x forward earnings estimates while the 10-year
Treasury bond yields 4.2%, which should sustain current valuations. We see room
for positive equity returns in 2004 roughly commensurate with earnings growth.
11
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CHARTWELL
<page>
- --------------------------------------------------------------------------------
CHARTWELL DIVIDEND AND INCOME FUND, INC. NOVEMBER 30, 2003
- --------------------------------------------------------------------------------
UTILIZATION OF LEVERAGE
The Chartwell Dividend and Income Fund has utilized leverage through the
issuance of commercial paper. As of November 30, 2003, the Fund had $50 million
in leverage outstanding (out of $60 million available) in the form of commercial
paper rated A1/P1 by Moody's Investors Service, Inc./Standard & Poor's Ratings
Group. These ratings should enhance the marketability and reduce the interest
costs associated with the issuance of the commercial paper. However, it must be
noted that the utilization of leverage involves the risk of lower portfolio
returns if the cost of leverage is higher than the resulting yields on assets or
if the Fund experiences capital losses in excess of the yield spread, if any.
Therefore, the addition of leverage also increases the potential volatility of
the Fund. The Fund has the ability to leverage to a maximum of 33% of the Fund's
gross assets.
The Fund utilizes leveraging to seek to enhance the yield and net asset value of
its common stock. However, these objectives cannot be achieved in all interest
rate environments. To leverage, the Fund issues commercial paper, which is
issued at a discount equivalent to short-term interest rates, and invests the
proceeds in long-term securities. The interest earned on these investments is
paid to common stock shareholders in the form of dividends, and the value of
these portfolio holdings is reflected in the per share net asset value of the
Fund's common stock. However, in order to benefit common stock shareholders, the
yield curve must be positively sloped; that is, short-term interest rates must
be lower than long-term interest rates. At the same time, a period of generally
declining interest rates will benefit common stock shareholders. IF EITHER OF
THESE CONDITIONS CHANGE, THEN THE RISKS OF LEVERAGING WILL BEGIN TO OUTWEIGH THE
BENEFITS.
To illustrate these concepts, assume a fund's common stock capitalization of
$100 million and the issuance of commercial paper for an additional $50 million,
creating a total value of $150 million available for investment in long-term
securities. If prevailing short-term interest rates are approximately 3% and
long-term interest rates are approximately 6%, the yield curve has a strongly
positive slope. The fund pays a discount on the $50 million of commercial paper
based on the lower short-term interest rates. At the same time, the fund's total
portfolio of $150 million earns the income based on long-term interest rates.
In this case, the discount paid to commercial paper holders is significantly
lower than the income earned on the Fund's long-term investments, and therefore
the common stock shareholders are the beneficiaries of the incremental yield.
However, IF SHORT-TERM INTEREST RATES RISE, narrowing the differential between
short-term and long-term interest rates, THE INCREMENTAL YIELD PICK-UP ON THE
COMMON STOCK WILL BE REDUCED OR ELIMINATED COMPLETELY. At the same time, the
market value on the Fund's common stock (that is, its price as listed on the New
York Stock Exchange), may, as a result, decline. Furthermore, IF LONG-TERM
INTEREST RATES RISE, THE COMMON STOCK'S NET ASSET VALUE WILL REFLECT THE FULL
DECLINE IN THE PRICE OF THE PORTFOLIO'S INVESTMENTS, SINCE THE VALUE OF THE
FUND'S COMMERCIAL PAPER DOES NOT FLUCTUATE. In addition to the decline in net
asset value, the market value of the Fund's common stock may also decline.
12
----
CHARTWELL
<page>
- --------------------------------------------------------------------------------
CHARTWELL DIVIDEND AND INCOME FUND, INC. NOVEMBER 30, 2003
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
NUMBER OF MARKET
SHARES VALUE
--------- ------------
COMMON STOCK--73.4%
BANKS--14.3%
AmSouth Bancorporation................................. 50,760 $ 1,217,732
Bank of America Corporation............................ 106,000 7,995,580
Citigroup, Inc......................................... 64,336 3,026,366
FleetBoston Financial Corp............................. 6,600 267,960
HSBC Holdings Plc-- ADR................................ 13,240 1,007,167
JP Morgan Chase & Company.............................. 110,000 3,889,600
Mellon Financial Corporation........................... 40,000 1,152,000
National City Corporation.............................. 40,000 1,342,000
------------
19,898,405
------------
BASIC INDUSTRY--1.1%
Alcoa, Inc............................................. 45,000 1,476,450
------------
CAPITAL GOODS--1.0%
Northrop Grumman Corporation........................... 15,000 1,389,450
Tri-Union Development Corporation (a) (e).............. 590 --
------------
1,389,450
------------
CONSUMER CYCLICAL--1.5%
Masco Corporation...................................... 50,000 1,360,000
Newell Rubbermaid, Inc................................. 35,000 800,450
------------
2,160,450
------------
CONSUMER STAPLES--4.9%
Altria Group, Inc...................................... 90,700 4,716,400
Loews Corporation-Carolina Group....................... 88,725 2,049,548
------------
6,765,948
------------
ENERGY--3.4%
ConocoPhillips......................................... 22,902 1,299,459
Diamond Offshore Drilling, Inc......................... 38,930 683,222
Halliburton Company.................................... 70,000 1,634,500
Occidental Petroleum Corporation....................... 31,100 1,140,748
------------
4,757,929
------------
FINANCIAL--18.2%
ACE Limited............................................ 60,580 2,208,141
Alliance Capital Management Holdings LP................ 100,000 3,220,000
AON Corporation........................................ 30,000 658,200
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
13
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CHARTWELL
- --------------------------------------------------------------------------------
CHARTWELL DIVIDEND AND INCOME FUND, INC. NOVEMBER 30, 2003
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONTINUED)
NUMBER OF MARKET
SHARES VALUE
--------- ------------
COMMON STOCK (CONTINUED)
FINANCIAL (CONTINUED)
Fannie Mae............................................. 75,300 $ 5,271,000
Freddie Mac............................................ 35,000 1,904,700
Hartford Financial Services Group, Inc................. 51,500 2,832,500
Lincoln National Corporation........................... 57,072 2,237,793
Morgan Stanley......................................... 70,940 3,921,563
Travelers Property Casualty Corporation, Class A....... 97,390 1,519,284
XL Capital Limited, Class A............................ 20,000 1,504,000
------------
25,277,181
------------
HEALTHCARE--2.0%
Bristol-Myers Squibb Company........................... 44,800 1,180,480
Johnson & Johnson...................................... 33,000 1,626,570
------------
2,807,050
------------
REAL ESTATE--9.4%
Boston Properties, Inc................................. 30,000 1,387,500
BRE Properties, Class A................................ 19,500 659,100
CarrAmerica Realty Corporation......................... 32,600 948,008
Duke Realty Corporation................................ 80,320 2,473,856
Equity Office Properties Trust......................... 40,800 1,131,384
iStar Financial, Inc................................... 50,000 1,951,500
Mack-Cali Realty Corporation........................... 27,682 1,104,512
Reckson Associates Realty Corporation.................. 80,000 1,920,000
SL Green Realty Corporation............................ 39,200 1,464,512
------------
13,040,372
------------
TECHNOLOGY--10.1%
Accenture Limited, Class A(a).......................... 20,000 498,000
Hewlett-Packard Company................................ 70,000 1,518,300
International Business Machines Corporation............ 90,000 8,148,600
LSI Logic Corporation(a)............................... 130,000 1,218,100
Nokia OYJ.............................................. 150,000 2,697,000
------------
14,080,000
------------
TELECOMMUNICATIONS--0.9%
Verizon Communications, Inc............................ 40,000 1,310,800
------------
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
14
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CHARTWELL
- --------------------------------------------------------------------------------
CHARTWELL DIVIDEND AND INCOME FUND, INC. NOVEMBER 30, 2003
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONTINUED)
NUMBER OF
SHARES/ MARKET
PRINCIPAL AMOUNT VALUE
---------------- ------------
COMMON STOCK (CONTINUED)
UTILITIES--6.6%
AmeriGas Partners LP................................... 15,200 $ 410,704
Cinergy Corporation.................................... 34,800 1,271,940
Duquesne Light Holdings, Inc........................... 60,000 1,036,200
KeySpan Corporation.................................... 30,000 1,056,900
Kinder Morgan Energy Partners LP....................... 45,000 1,981,350
Northern Border Partners LP............................ 26,600 1,010,800
Oneok, Inc............................................. 50,000 990,500
TEPPCO Partners LP..................................... 34,800 1,371,120
------------
9,129,514
------------
TOTAL COMMON STOCK (COST $93,745,437) ................. 102,093,549
------------
CORPORATE NOTES/BONDS--57.9%
BASIC INDUSTRY--8.3%
Better Minerals & Aggregates Company
13.000%, 09/15/09................................. $1,000,000 620,000
Century Aluminum Company
11.750%, 04/15/08................................. 390,000 434,850
Crown Euro Holdings SA
9.500%, 03/01/11.................................. 1,110,000 1,248,750
Euramax International PLC+
8.500%, 08/15/11.................................. 865,000 921,225
FMC Corporation
10.250%, 11/01/09................................. 730,000 857,750
Imco Recycling, Inc.+
10.375%, 10/15/10................................. 490,000 463,050
International Wire Group, Inc.
11.750%, 06/01/05................................. 1,000,000 580,000
Koppers Industries+
9.875%, 10/15/13.................................. 800,000 872,000
MMI Products, Inc., Series B
11.250%, 04/15/07................................. 900,000 706,500
Nalco Company+
8.875%, 11/15/13.................................. 800,000 836,000
Owens-Brockway Glass Container, Inc.
8.750%, 11/15/12.................................. 680,000 746,300
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
15
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CHARTWELL
- --------------------------------------------------------------------------------
CHARTWELL DIVIDEND AND INCOME FUND, INC. NOVEMBER 30, 2003
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONTINUED)
PRINCIPAL MARKET
AMOUNT VALUE
----------- ------------
CORPORATE NOTES/BONDS (CONTINUED)
BASIC INDUSTRY (CONTINUED)
Pliant Corporation
11.125%, 09/01/09................................. $ 790,000 $ 825,550
Tekni-Plex, Inc., Series B
12.750%, 06/15/10................................. 840,000 899,850
Tenneco Automotive, Inc.
10.250%, 07/15/13................................. 750,000 855,000
Wolverine Tube, Inc.
10.500%, 04/01/09................................. 700,000 703,500
------------
11,570,325
------------
CAPITAL GOODS--4.2%
Allied Waste North America, Series B
8.500%, 12/01/08.................................. 1,030,000 1,138,150
Gencorp, Inc.+
9.500%, 08/15/13.................................. 1,185,000 1,214,625
H&E Equipment Finance
11.125%, 06/15/12................................. 805,000 776,825
Integrated Electrical Services, Inc., Series C
9.375%, 02/01/09.................................. 540,000 572,400
Jacuzzi Brands, Inc.+
9.625%, 07/01/10.................................. 1,260,000 1,379,700
Sequa Corporation
9.000%, 08/01/09.................................. 705,000 755,231
------------
5,836,931
------------
CONSUMER CYCLICAL--6.8%
Autonation, Inc.
9.000%, 08/01/08.................................. 1,110,000 1,268,175
Dex Media West, Inc.+
9.875%, 08/15/13.................................. 835,000 951,900
Mail-Well I Corporation
9.625%, 03/15/12.................................. 1,115,000 1,226,500
Mothers Work, Inc.
11.250%, 08/01/10................................. 1,360,000 1,516,400
Norcraft Companies+
9.000%, 11/01/11.................................. 570,000 604,200
Poster Financial Group+
8.750%, 12/01/11.................................. 575,000 591,531
Sonic Automotive, Inc., Series D+
8.625%, 08/15/13.................................. 800,000 846,000
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
16
----
CHARTWELL
- --------------------------------------------------------------------------------
CHARTWELL DIVIDEND AND INCOME FUND, INC. NOVEMBER 30, 2003
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONTINUED)
PRINCIPAL MARKET
AMOUNT VALUE
----------- ------------
CORPORATE NOTES/BONDS (CONTINUED)
CONSUMER CYCLICAL (CONTINUED)
Vertis, Inc., Series B
10.875%, 06/15/09................................. $1,210,000 $ 1,246,300
Von Hoffman Corporation
10.250%, 03/15/09................................. 1,210,000 1,279,575
------------
9,530,581
------------
CONSUMER STAPLES--6.6%
American Achievement Corporation, Series B
11.625%, 01/01/07................................. 800,000 886,000
Chattem Incorporated, Series B
8.875%, 04/01/08.................................. 1,255,000 1,298,925
Foamex Capital Corporation
10.750%, 04/01/09................................. 1,050,000 947,625
General Nutrition Center+(b)
8.500%, 12/01/10.................................. 800,000 820,000
Georgia-Pacific Corporation
8.875%, 02/01/10.................................. 935,000 1,063,562
Land O' Lakes, Inc.
8.750%, 11/15/11.................................. 1,025,000 948,125
Merisant Company+
9.500%, 07/15/13.................................. 835,000 860,050
Norcross Safety Products+
9.875%, 08/15/11.................................. 860,000 946,000
Rhodia SA+
8.875%, 06/01/11.................................. 770,000 685,300
Silgan Holdings, Inc.+
6.750%, 11/15/13.................................. 720,000 723,600
------------
9,179,187
------------
ENERGY--2.9%
Bluewater Finance Limited
10.250%, 02/15/12................................. 715,000 731,087
Premcor Refining Group
7.500%, 06/15/15.................................. 585,000 602,550
Tom Brown, Inc.
7.250%, 09/15/13.................................. 730,000 762,850
Western Gas Resources
10.000%, 06/15/09................................. 575,000 621,000
Williams Companies, Inc.
8.625%, 06/01/10.................................. 1,160,000 1,287,600
------------
4,005,087
------------
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
17
----
CHARTWELL
- --------------------------------------------------------------------------------
CHARTWELL DIVIDEND AND INCOME FUND, INC. NOVEMBER 30, 2003
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONTINUED)
PRINCIPAL MARKET
AMOUNT VALUE
----------- ------------
CORPORATE NOTES/BONDS (CONTINUED)
FINANCIAL--2.6%
CB Richard Ellis Service
11.250%, 06/15/11................................. $ 775,000 $ 877,687
Mobile Mini, Inc.+
9.500%, 07/01/13.................................. 620,000 676,575
United Rentals, Inc., Series B
10.750%, 04/15/08................................. 1,135,000 1,274,038
Western Financial
9.625%, 05/15/12.................................. 745,000 838,125
------------
3,666,425
------------
HEALTHCARE--3.5%
Bio-Rad Laboratories, Inc.
7.500%, 08/15/13.................................. 655,000 707,400
Fisher Scientific International
8.125%, 05/01/12.................................. 675,000 727,312
Matria Healthcare, Series B
11.000%, 05/01/08................................. 1,060,000 1,139,500
Res-Care, Inc.
10.625%, 11/15/08................................. 765,000 795,600
Town Sports International
9.625%, 04/15/11.................................. 820,000 881,500
Triad Hospitals, Inc.+
7.000%, 11/15/13.................................. 600,000 601,500
------------
4,852,812
------------
INDUSTRIAL--3.7%
Argosy Gaming Company
9.000%, 09/01/11.................................. 770,000 852,775
Dex Media, Inc.+
8.000%, 11/15/13.................................. 325,000 331,500
General Cable Corporation+
9.500%, 11/15/10.................................. 820,000 867,150
Massey Energy Company+
6.625%, 11/15/10.................................. 475,000 482,125
MediaCom Broadband, LLC
11.000%, 07/15/13................................. 560,000 603,400
Nationsrent, Inc.+
9.500%, 10/15/10.................................. 750,000 787,500
Rayovac Corporation+
8.500%, 10/01/13.................................. 1,120,000 1,170,400
------------
5,094,850
------------
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
18
----
CHARTWELL
- --------------------------------------------------------------------------------
CHARTWELL DIVIDEND AND INCOME FUND, INC. NOVEMBER 30, 2003
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONTINUED)
PRINCIPAL MARKET
AMOUNT VALUE
----------- ------------
CORPORATE NOTES/BONDS (CONTINUED)
REAL ESTATE--5.8%
Aztar Corporation
9.000%, 08/15/11.................................. $ 735,000 $ 802,987
Intrawest Corporation+
7.500%, 10/15/13.................................. 695,000 703,687
John Q Hammons Hotels, Series B
8.875%, 05/15/12.................................. 1,180,000 1,289,150
LNR Property Corporation
10.500%, 01/15/09................................. 755,000 799,356
LNR Property Corporation+
7.250%, 10/15/13.................................. 850,000 865,938
Resort International Hotel and Casino
11.500%, 03/15/09................................. 265,000 282,888
Tech Olympic USA, Inc.
9.000%, 07/01/10.................................. 1,010,000 1,083,225
Wackenhut Corrections+
8.250%, 07/15/13.................................. 860,000 912,675
WCI Communities, Inc.
10.625%, 02/15/11................................. 1,170,000 1,316,250
------------
8,056,156
------------
TECHNOLOGY--3.4%
AMI Semiconductor, Inc.
10.750%, 02/01/13................................. 551,000 658,445
ASAT Finance LLC
12.500%, 11/01/06................................. 487,500 519,187
Juno Lighting, Inc.
11.875%, 07/01/09................................. 830,000 907,813
Knowles Electronics, Inc.
13.125%, 10/15/09................................. 1,000,000 1,005,000
Nextel Communications
11.000%, 03/15/10................................. 400,000 442,000
Solectron Corporation
9.625%, 02/15/09.................................. 1,110,000 1,232,100
------------
4,764,545
------------
TELECOMMUNICATIONS--4.6%
Alliance Atlantis Communications, Inc.
13.000%, 12/15/09................................. 1,180,000 1,357,000
Charter Communications Holdings, LLC
10.750%, 10/01/09................................. 1,400,000 1,204,000
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
19
----
CHARTWELL
- --------------------------------------------------------------------------------
CHARTWELL DIVIDEND AND INCOME FUND, INC. NOVEMBER 30, 2003
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONTINUED)
PRINCIPAL MARKET
AMOUNT VALUE
----------- ------------
CORPORATE NOTES/BONDS (CONTINUED)
TELECOMMUNICATIONS (CONTINUED)
Madison River Financial
13.250%, 03/01/10................................. $1,000,000 $ 1,102,500
Muzak LLC
10.000%, 02/15/09................................. 500,000 526,250
Nextel Communications
7.375%, 08/01/15.................................. 1,295,000 1,369,463
Time Warner Inc.
9.750%, 07/15/08.................................. 835,000 847,525
------------
6,406,738
------------
TRANSPORTATION--2.8%
Advanced Accessory Systems Company
10.750%, 06/15/11................................. 630,000 683,550
General Maritime Corporation
10.000%, 03/15/13................................. 700,000 789,250
HLI Operating Company, Inc.+
10.500%, 06/15/10................................. 385,000 439,863
North American Van Lines
13.375%, 12/01/09................................. 1,160,000 1,368,800
Omi Corporation+
7.625%, 12/01/13.................................. 260,000 262,600
Stena AB+
7.500%, 11/01/13.................................. 340,000 345,525
------------
3,889,588
------------
UTILITIES--2.7%
AES Corporation
9.500%, 06/01/09.................................. 1,255,000 1,353,832
Calpine Corporation
8.750%, 07/15/07.................................. 1,310,000 1,048,000
PSEG Energy Holdings
8.625%, 02/15/08.................................. 725,000 773,031
TNP Enterprises, Inc., Series B
10.250%, 04/01/10................................. 515,000 561,350
------------
3,736,213
------------
TOTAL CORPORATE NOTES/BONDS (COST $77,054,962) ...... 80,589,438
------------
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
20
----
CHARTWELL
- --------------------------------------------------------------------------------
CHARTWELL DIVIDEND AND INCOME FUND, INC. NOVEMBER 30, 2003
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONTINUED)
NUMBER OF MARKET
SHARES VALUE
------------ ------------
CONVERTIBLE PREFERRED STOCK--1.9%
FINANCIAL--1.4%
ACE Limited
7.800%, 05/30/08.................................... 26,025 $ 696,169
Chubb Corporation
7.000%, 08/16/06.................................... 10,000 275,000
Hartford Financial Services Group, Inc.
7.000%, 08/16/06.................................... 5,000 285,750
Rhone-Poulenc, Series A
8.125%, 02/20/04.................................... 10,620 273,465
TransCanada Corporation
8.250%, 02/20/04.................................... 14,905 383,505
------------
1,913,889
------------
REAL ESTATE--0.5%
LTC Properties, Inc.(a)
8.500%, 09/19/08.................................... 25,000 747,500
------------
TOTAL CONVERTIBLE PREFERRED STOCK (COST $2,445,515) ... 2,661,389
------------
WARRANTS --0.0%
Dayton Superior Corporation(a)(c)+..................... 1,500 15
Pliant Corporation(a)(d)+.............................. 1,500 255
------------
TOTAL WARRANTS (COST $62,449) ........................ 270
------------
CASH EQUIVALENT--1.1%
INVESTMENT COMPANY--1.1%
SEI Daily Income Trust, Prime Obligation Fund.......... 1,585,866 1,585,866
------------
TOTAL CASH EQUIVALENT (COST $1,585,866) ............... 1,585,866
------------
TOTAL INVESTMENTS--134.3%
(COST $174,894,229) ................................ 186,930,512
------------
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
21
----
CHARTWELL
- --------------------------------------------------------------------------------
CHARTWELL DIVIDEND AND INCOME FUND, INC. NOVEMBER 30, 2003
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONCLUDED)
NUMBER OF MARKET
CONTRACTS VALUE
--------- ------------
COVERED CALL OPTIONS WRITTEN--(0.3)%
Accenture Limited, Class A Dec. 25 Call................ (200) $ (12,000)
Alcoa, Inc. Dec. 32.5 Call............................. (450) (47,250)
AON Corporation Jan. 22.5 Call......................... (300) (15,000)
Bank of America Corp. Dec. 75 Call..................... (300) (25,500)
Bristol-Meyers Squibb Company Jan. 27.5 Call........... (440) (15,400)
Fannie Mae Dec. 70 Call................................ (200) (27,000)
International Business Machines Corporation
Dec. 90 Call........................................ (500) (87,500)
LSI Logic Corporation Apr. 12.5 Call................... (300) (10,500)
LSI Logic Corporation Dec. 10 Call..................... (1,000) (15,000)
Mellon Financial Corporation Dec. 30 Call.............. (400) (8,000)
Morgan Stanley Dec. 60 Call............................ (700) (10,500)
National City Corporation Jan. 32.5 Call............... (400) (59,000)
Newell Rubbermaid, Inc. Dec. 25 Call................... (350) (3,500)
Nokia Corporation Dec. 17.5 Call....................... (1,000) (80,000)
Northrop Grumman Corporation Dec. 95 Call.............. (150) (8,250)
Travelers Property Casualty Corporation
Dec. 17.5 Call...................................... (950) (14,250)
Verizon Communications, Inc. Dec. 32.5 Call............ (400) (30,000)
XL Capital Limited, Class A Dec. 75 Call............... (200) (25,000)
------------
TOTAL COVERED CALL OPTIONS WRITTEN
(PREMIUM RECEIVED $527,752) ........................ (493,650)
------------
OTHER LIABILITIES IN EXCESS OF OTHER ASSETS--(34.0)% (47,299,692)
------------
NET ASSETS--100% ...................................... $139,137,170
============
+ 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 November 30, 2003,
these securities amounted to $21,162,489 or 15.2% of net assets.
(a) Non-income producing security.
(b) Security purchased on a when-issued basis.
(c) Each warrant entitles the holder to purchase 0.69 non-public shares at an
exercise price of $0.01 per share. The warrants are exercisable until
6/15/09.
(d) Each warrant entitles the holder to purchase 1.00 non-public shares at an
exercise price of $0.01 per share. The warrants are exercisable until
6/01/10.
(e) Security considered illiquid. Securities fair valued using methods
determined in good faith by the Valuation Committee of the Board of
Directors. The total value of such security as of November 30, 2003 was
zero.
ADR American Depositary Receipt
LLC Limited Liability Company
LP Limited Partnership
PLC Public Limited Company
Amounts designated as "-" are $0 or have been rounded to $0.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
22
----
CHARTWELL
- --------------------------------------------------------------------------------
CHARTWELL DIVIDEND AND INCOME FUND, INC. NOVEMBER 30, 2003
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
AS OF NOVEMBER 30, 2003
ASSETS:
Investments, at value (cost $174,894,229) (Note 1)............... $186,930,512
Receivable for securities sold................................... 2,438,352
Interest receivable.............................................. 2,109,004
Dividends receivable............................................. 170,982
Prepaid expenses and other assets................................ 25,765
------------
Total assets ............................................... 191,674,615
------------
LIABILITIES:
Commercial paper (Note 4)........................................ 49,939,003
Covered call options written, at value
(premiums received--$527,752) (Note 1)........................ 493,650
Payable for securities purchased................................. 1,776,344
Payable for investment management fees (Note 2).................. 131,558
Payable for administration fees (Note 2)......................... 15,477
Accrued expenses and other liabilities........................... 181,413
------------
Total liabilities........................................... 52,537,445
------------
NET ASSETS...................................................... $139,137,170
============
NET ASSETS CONSIST OF:
Common Stock, $0.01 par value
(authorized 100,000,000 shares)............................. $ 163,255
Additional paid-in capital.................................... 204,337,770
Distributions in excess of net investment income.............. (158,507)
Accumulated net realized losses on investments and options.... (77,275,733)
Net unrealized appreciation on investments and options........ 12,070,385
------------
NET ASSETS -- 100%............................................... $139,137,170
============
NET ASSET VALUE PER SHARE:
$139,137,170 / 16,325,515 shares of Common Stock issued
and outstanding............................................. $ 8.52
============
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
23
----
CHARTWELL
- --------------------------------------------------------------------------------
CHARTWELL DIVIDEND AND INCOME FUND, INC. NOVEMBER 30, 2003
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED
NOVEMBER 30, 2003
INVESTMENT INCOME:
Interest......................................................... $ 9,071,534
Dividends ....................................................... 3,611,316
-----------
Total investment income..................................... 12,682,850
-----------
EXPENSES:
Investment management fees (Note 2).............................. 1,680,298
Administration fees (Note 2)..................................... 176,860
Commercial paper fees............................................ 224,281
Professional fees................................................ 208,495
Printing and shareholder reports................................. 117,500
Transfer agent fees.............................................. 38,400
Registration fees................................................ 37,390
Custodian fees................................................... 32,541
Insurance fees................................................... 31,007
Directors' fees and expenses..................................... 20,330
Other operating expenses......................................... 14,390
-----------
Total operating expenses...................................... 2,581,492
Interest expense................................................. 643,353
-----------
Total expenses................................................ 3,224,845
-----------
Less:
Investment management fees waived (Note 2).................. (176,991)
-----------
Net expenses................................................ 3,047,854
-----------
NET INVESTMENT INCOME....................................... 9,634,996
-----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized loss on investments................................. (727,773)
Net realized gain on call options written........................ 1,015,316
Change in net unrealized appreciation on investments
and options.................................................... 23,260,934
-----------
Net realized and unrealized gain on investments and options...... 23,548,477
-----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS............. $33,183,473
===========
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
24
----
CHARTWELL
- --------------------------------------------------------------------------------
CHARTWELL DIVIDEND AND INCOME FUND, INC. NOVEMBER 30, 2003
- --------------------------------------------------------------------------------
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED
NOVEMBER 30, 2003
INCREASE (DECREASE) IN CASH
Cash flows provided from (used for) operating activities:
Interest and dividends received............................... $ 12,396,314
Operating expenses paid....................................... (2,495,705)
Interest paid................................................. (116,252)
Net proceeds from the sale of short-term portfolio investments 2,942,708
Purchase of long-term portfolio investments................... (235,144,763)
Proceeds from sale of long-term portfolio investments......... 232,048,990
Premiums received from written options transactions........... 2,223,961
-------------
Net cash provided from operating activities................. 11,855,253
-------------
Cash flows provided from (used for) financing activities:
Net cash provided from commercial paper issuance.............. 21,213
Cash dividends paid to shareholders........................... (14,332,122)
-------------
Net cash used for financing activities...................... (14,310,909)
-------------
Net decrease in cash............................................. (2,455,656)
Cash at beginning of year..................................... 2,455,656
-------------
Cash at end of year........................................... $ --
=============
RECONCILIATION OF NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS TO NET CASH PROVIDED FROM OPERATING ACTIVITIES
Net increase in net assets resulting from operations............. $ 33,183,473
-------------
Accretion of market discount.................................. (174,526)
Increase in investments....................................... (69,883)
Net realized gain on investments and options.................. (287,543)
Net change in unrealized appreciation
on investments and options................................. (23,260,934)
Decrease in receivable for securities sold.................... 536,115
Decrease in interest and dividend receivable.................. 778,922
Increase in commercial paper discount......................... (27,466)
Decrease in prepaid expenses and other assets................. 1,041
Increase in payable for securities purchased.................. 1,085,938
Increase in accrued expenses and other liabilities............ 90,116
-------------
Total adjustments........................................... (21,328,220)
-------------
Net cash provided from operating activities................... $ 11,855,253
=============
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
25
----
CHARTWELL
- --------------------------------------------------------------------------------
CHARTWELL DIVIDEND AND INCOME FUND, INC. NOVEMBER 30, 2003
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
FOR THE FOR THE
YEAR ENDED YEAR ENDED
NOVEMBER 30, NOVEMBER 30,
2003 2002
--------------- --------------
OPERATIONS:
Net investment income........................ $ 9,634,996 $ 10,541,868
Net realized loss on investments............. (727,773) (32,558,701)
Net realized gain on call options written.... 1,015,316 3,208,389
Change in net unrealized appreciation on
investments and options..................... 23,260,934 8,318
------------ ------------
Net increase (decrease) in net assets
resulting from operations.................... 33,183,473 (18,800,126)
------------ ------------
DIVIDENDS AND DISTRIBUTIONS TO
SHAREHOLDERS FROM:
Net investment income........................ (9,929,830) (10,544,215)
Tax return of capital........................ (6,254,835) (7,287,730)
------------ ------------
Net decrease in net assets resulting from
dividends and distributions.................. (16,184,665) (17,831,945)
------------ ------------
CAPITAL STOCK TRANSACTIONS:
Reinvestment of dividends resulting in the
issuance of Common Stock transactions........ 2,052,215 2,579,638
------------ ------------
Net increase in net assets resulting from
Common Stock transactions.................... 2,052,215 2,579,638
------------ ------------
Total increase (decrease) in net assets 19,051,023 (34,052,433)
------------ ------------
NET ASSETS:
Beginning of year............................ 120,086,147 154,138,580
------------ ------------
End of year.................................. $139,137,170 $120,086,147
============ ============
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
26
----
CHARTWELL
- --------------------------------------------------------------------------------
CHARTWELL DIVIDEND AND INCOME FUND, INC. NOVEMBER 30, 2003
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
FOR THE YEAR ENDED
THE FOLLOWING PER SHARE DATA AND RATIOS HAVE NOVEMBER 30,
BEEN DERIVED FROM INFORMATION PROVIDED IN THE ------------------------
FINANCIAL STATEMENTS 2003 2002
---------- ----------
NET ASSET VALUE, BEGINNING OF PERIOD ................... $ 7.47 $ 9.76
-------- --------
INCOME GAIN (LOSS) FROM INVESTMENT OPERATIONS: (1)
Net investment income ................................ 0.60 0.66
Net realized and unrealized gain (loss) on
investment transactions ............................ 1.45 (1.83)
-------- --------
Total from investment operations ................... 2.05 (1.17)
-------- --------
LESS DIVIDENDS AND DISTRIBUTIONS:
Dividends from net investment income ................. (0.61) (0.66)
Tax return of capital ................................ (0.39) (0.46)
-------- --------
Total dividends and distributions .................. (1.00) (1.12)
-------- --------
NET ASSET VALUE, END OF YEAR ........................... $ 8.52 $ 7.47
======== ========
MARKET VALUE, END OF YEAR .............................. $ 9.80 $ 7.27
======== ========
TOTAL RETURN BASED ON: (2)
Net asset value ...................................... 28.96% (13.50)%
======== ========
Market value ......................................... 51.57% (22.12)%
======== ========
RATIOS AND SUPPLEMENTAL DATA: (3)
Net assets, end of period (000 omitted) .............. $139,137 $120,086
======== ========
Total expenses including waiver of fees .............. 2.40% 2.81%
Total expenses excluding waiver of fees .............. 2.54% 2.86%
Total operating expenses including waiver of fees (4) 1.72% 1.81%
Total operating expenses excluding waiver of fees (4) 1.86% 1.86%
Commercial paper expenses ............................ 0.68% 1.00%
Net investment income including waiver of fees ....... 7.58% 7.64%
Portfolio turnover ................................... 99% 102%
LEVERAGE ANALYSIS:
Aggregate amount outstanding at end of year
(000 omitted) ...................................... $ 50,000 $ 50,000
Average daily balance of amortized cost of commercial
paper outstanding (000 omitted) .................... $ 49,925 $ 56,250
Asset coverage per $1,000 at end of year ............. $ 3,838 $ 3,445
- -----------------
(1) Based on average shares outstanding.
(2) Total investment return is calculated assuming a purchase of common stock on
the opening of the first day and a sale on the closing of the last day of
each period reported. Total investment return does not reflect brokerage
commissions. Dividends and distributions, if any, are assumed for the
purposes of this calculation, to be reinvested at prices obtained under the
Fund's dividend reinvestment plan. Total investment returns based on market
value, which can be significantly greater or lesser than the net asset
value, may result in substantially different returns. The total investment
returns calculated based on market value and net asset value for a period
of less than one year have not been annualized. Returns do not reflect the
deduction of taxes that a shareholder would pay on Fund distributions or
the Redemption of Fund's Shares.
(3) Ratios are stated as a percentage of average weekly net assets which
includes any liabilities constituting indebtedness in connection with
financial leverage.
(4) Exclusive of commercial paper expenses.
Amounts designated as "--" are $0 or have been rounded to $0.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
27
----
CHARTWELL
- --------------------------------------------------------------------------------
CHARTWELL DIVIDEND AND INCOME FUND, INC. NOVEMBER 30, 2003
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (CONTINUED)
FOR THE YEAR ENDED
NOVEMBER 30,
----------------------
2001 2000
-------- --------
NET ASSET VALUE, BEGINNING OF YEAR .................... $ 10.33 $ 12.54
-------- --------
INCOME GAIN (LOSS) FROM INVESTMENT OPERATIONS: (1)
Net investment income ............................... 0.65 0.80
Net realized and unrealized gain (loss) on
investment transactions ........................... 0.02 (1.77)
-------- --------
Total gain (loss) from investment operations ...... 0.67 (0.97)
-------- --------
LESS DIVIDENDS AND DISTRIBUTIONS:
Dividends from net investment income ................ (0.65) (0.80)
Tax return of capital ............................... (0.59) (0.44)
-------- --------
Total dividends and distributions ................. (1.24) (1.24)
-------- --------
NET ASSET VALUE, BEGINNING OF YEAR .................... $ 9.76 $ 10.33
======== ========
MARKET VALUE, BEGINNING OF YEAR ....................... $ 10.55 $ 9.56
======== ========
TOTAL RETURN BASED ON: (2)
Net asset value ..................................... 6.15% (7.72)%
======== ========
Market value ........................................ 23.95% 2.02%
======== ========
RATIOS AND SUPPLEMENTAL DATA: (3)
Net assets, end of period (000 omitted) ............. $154,139 $160,469
======== ========
Total expenses including waiver of fees ............. 2.62% 3.76%
Total expenses excluding waiver of fees ............. -- --
Total operating expenses including waiver of fees (4) 1.36% 1.66%
Total operating expenses excluding waiver of fees (4) -- --
Commercial paper expenses ........................... 1.26% 2.10%
Net investment income including waiver of fees ...... 4.51% 6.51%
Portfolio turnover .................................. 132% 161%
LEVERAGE ANALYSIS:
Aggregate amount outstanding at end of year
(000 omitted) ..................................... $ 60,000 $ 60,000
Average daily balance of amortized cost of commercial
paper outstanding (000 omitted) ................... $ 59,690 $ 59,579
Asset coverage per $1,000 at end of year ............ $ 3,703 $ 3,743
- -----------------
(1) Based on average shares outstanding.
(2) Total investment return is calculated assuming a purchase of common stock
on the opening of the first day and a sale on the closing of the last day
of each period reported. Total investment return does not reflect brokerage
commissions. Dividends and distributions, if any, are assumed for the
purposes of this calculation, to be reinvested at prices obtained under the
Fund's dividend reinvestment plan. Total investment returns based on market
value, which can be significantly greater or lesser than the net asset
value, may result in substantially different returns. The total investment
returns calculated based on market value and net asset value for a period
of less than one year have not been annualized. Returns do not reflect the
deduction of taxes that a shareholder would pay on Fund distributions or
the Redemption of Fund's Shares.
(3) Ratios are stated as a percentage of average weekly net assets which
includes any liabilities constituting indebtedness in connection with
financial leverage.
(4) Exclusive of commercial paper expenses.
Amounts designated as "--" are $0 or have been rounded to $0.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
28
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CHARTWELL
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CHARTWELL DIVIDEND AND INCOME FUND, INC. NOVEMBER 30, 2003
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (CONCLUDED)
FOR THE
YEAR ENDED
NOVEMBER 30,
1999
-----------------
NET ASSET VALUE, BEGINNING OF PERIOD ......................... $ 14.17
--------
INCOME GAIN (LOSS) FROM INVESTMENT OPERATIONS: (1)
Net investment income ...................................... 0.88
Net realized and unrealized loss on
investment transactions .................................. (1.27)
--------
Total loss from investment operations .................... (0.39)
--------
LESS DIVIDENDS AND DISTRIBUTIONS:
Dividends from net investment income ....................... (0.86)
Distributions from realized short-term gains ............... (0.03)
Tax return of capital ...................................... (0.35)
--------
Total dividends and distributions ........................ (1.24)
--------
NET ASSET VALUE, BEGINNING OF PERIOD ......................... $ 12.54
========
MARKET VALUE, BEGINNING OF PERIOD ............................ $ 10.50
========
TOTAL RETURN BASED ON: (2)
Net asset value ............................................ (2.47)%
========
Market value ............................................... (18.44)%
========
RATIOS AND SUPPLEMENTAL DATA: (3)
Net assets, end of period (000 omitted) .................... $194,859
========
Total expenses ............................................. 2.03%
Total operating expenses (4) ............................... 1.35%
Commercial paper expenses .................................. 0.68%
Net investment incomes ..................................... 6.51%
Portfolio turnover ......................................... 119%
LEVERAGE ANALYSIS:
Aggregate amount outstanding at end of period
(000 omitted) ............................................ $ 60,000
Average daily balance of amortized cost of commercial
paper outstanding (000 omitted) .......................... $ 59,690
Asset coverage per $1,000 at end of period ................. $ 4,378
- ----------------------------
(1) Based on average shares outstanding.
(2) Total investment return is calculated assuming a purchase of common stock on
the opening of the first day and a sale on the closing of the last day of
each period reported. Total investment return does not reflect brokerage
commissions. Dividends and distributions, if any, are assumed for the
purposes of this calculation, to be reinvested at prices obtained under the
Fund's dividend reinvestment plan. Total investment returns based on market
value, which can be significantly greater or lesser than the net asset
value, may result in substantially different returns. The total investment
returns calculated based on market value and net asset value for a period
of less than one year have not been annualized. Returns do not reflect the
deduction of taxes that a shareholder would pay on Fund distributions or
the Redemption of Fund's Shares.
(3) Ratios are stated as a percentage of average weekly net assets which
includes any liabilities constituting indebtedness in connection with
financial leverage.
(4) Exclusive of commercial paper expenses.
(5) Annualized.
Amounts designated as "--" are $0 or have been rounded to $0.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
29
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CHARTWELL
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CHARTWELL DIVIDEND AND INCOME FUND, INC. NOVEMBER 30, 2003
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
Chartwell Dividend and Income Fund, Inc. (the "Fund") was incorporated under the
laws of the State of Maryland on April 6, 1998 and is registered under the
Investment Company Act of 1940 as amended, (the "Act"), as a closed-end,
diversified management investment company. The Fund had no operations until June
17, 1998 when it sold 6,667 shares of common stock for $100,005 to Chartwell
Investment Partners, L.P. (the "Manager"). Investment operations commenced on
June 29, 1998. The Fund's primary investment objective is to seek high current
income. Capital appreciation is a secondary objective.
NOTE 1. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. The
policies are in conformity with accounting principles generally accepted in the
United States of America.
USE OF ESTIMATES: The preparation of financial statements in conformity with
accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
SECURITY VALUATION: Investment securities of the Fund that are listed on a
securities exchange, except for debt securities, and for which market quotations
are readily available, are valued at the last quoted sales price at the close of
trading on the New York Stock Exchange (normally 4:00 p.m., Eastern Time).
Investment securities of the Fund that are quoted on the NASDAQ market system
are valued at the official closing price, or if there is none, at the last sales
price. If there is no reported sale, these securities and unlisted securities
for which market quotations are not readily available, are valued at last bid
price. Long-term debt securities are valued on the basis of valuations provided
by a pricing service when such prices are believed to reflect the fair value of
such securities. All securities and assets for which quotations are not readily
available are valued at fair value as determined in good faith and pursuant to a
method approved by the Board of Directors. Short-term investments having a
maturity of less than 60 days are valued at amortized cost, which approximates
market value.
CASH AND CASH EQUIVALENTS: Idle cash is swept into a money market fund at
Wachovia Bank, N.A., the Fund's custodian, and is classified as cash on the
Statement of Assets and Liabilities. Amounts so invested are generally available
on the same business day.
30
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CHARTWELL
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CHARTWELL DIVIDEND AND INCOME FUND, INC. NOVEMBER 30, 2003
- --------------------------------------------------------------------------------
WRITTEN OPTIONS: When the Fund writes a covered call option, an amount equal to
the premium received by the Fund is included in the Fund's Statement of Assets
and Liabilities as a liability. The amount of the liability is subsequently
marked-to-market to reflect the current market value of the option written.
When a covered written call option expires on its stipulated expiration date, or
if the Fund enters into a closing purchase transaction, the Fund will realize a
gain (or loss if the cost of the closing purchase transaction exceeds the
premium received when the call option was written) without regard to any
unrealized gain or loss on the underlying security, and the liability related to
such option will be extinguished. When a covered written call option is
exercised, the Fund will realize a gain or loss from the sale of the underlying
security and the proceeds of the sale are increased by the premium originally
received. The Fund as writer of an option has no control over whether the
underlying securities may be sold (called) and as a result bears the market risk
of an unfavorable change in the price of the securities underlying the written
option.
DIVIDENDS AND DISTRIBUTIONS: The Fund will declare and pay dividends to
shareholders on a monthly basis. Long-term capital gains, if any, in excess of
loss carryforwards are distributed to shareholders annually. Dividends from net
investment income and capital gain distributions are determined in accordance
with U.S. Federal income tax regulations, which may differ from generally
accepted accounting principles. Dividends and distributions to shareholders are
recorded on the ex-dividend date.
The Fund currently intends to distribute a monthly fixed amount to shareholders.
The Fund's final distribution for each calendar year may exceed that amount,
however, to the extent necessary for the Fund to have distributed all of its net
investment company taxable income and net capital gains recognized during the
year, if any. If, for any calendar year, the total distributions exceed net
investment company taxable income and net capital gain, the excess, distributed
from the Fund's assets, will generally be treated as a tax-free return of
capital and will result in a reduction in the shareholder's basis. The Board of
Directors reserves the right to change the aforementioned dividend policy from
time-to time.
SECURITIES PURCHASED ON A WHEN-ISSUED BASIS: Delivery and payment for securities
that have been purchased by the Fund on a forward commitment or when-issued
basis can take place up to a month or more after the transaction date. The
purchase of securities on a when-issued or forward commitment basis may increase
the volatility of the Fund's net asset value if the Fund makes such investments
while remaining substantially fully invested.
31
----
CHARTWELL
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CHARTWELL DIVIDEND AND INCOME FUND, INC. NOVEMBER 30, 2003
- --------------------------------------------------------------------------------
BORROWINGS: The Fund issues short-term commercial paper at a discount from par.
The discount is amortized to interest expense over the life of the commercial
paper using the straight line method.
SECURITY TRANSACTIONS AND INVESTMENT INCOME: Security transactions are recorded
on the trade date. Realized gains and losses on sales of securities are
calculated on the identified cost basis.
Dividend income is recorded on the ex-dividend date. Interest income is recorded
on the accrual basis. The Fund accretes original issue discount on securities
using the effective interest method.
NOTE 2. INVESTMENT MANAGEMENT, ADMINISTRATION, CUSTODIAN AGREEMENTS AND OTHER
TRANSACTIONS WITH AFFILIATES
The Fund has entered into an investment management agreement with the Manager.
The Manager manages the Fund's portfolio and makes investment decisions. For
these services, the Fund pays the Manager a monthly fee at an annual rate of
0.95% of the Fund's Managed Assets. "Managed Assets" are the average weekly
value of the Fund's total assets minus the sum of the Fund's liabilities,
excluding debt related to leveraging, short-term debt and the aggregate
liquidation preference of any outstanding preferred stock. The Manager has
agreed to limit the investment management fee paid to it by the Fund to 0.85% of
the Fund's Managed Assets. This waiver is voluntary and may be changed at any
time.
The Fund has entered into an administration agreement with SEI Investments
Global Funds Services (the "Administrator"). Under such agreement, the
Administrator performs or arranges for the performance of certain administrative
services necessary for the operation of the Fund. For these services, the Fund
pays a fee to the Administrator based on the Fund's Managed Assets according to
the following rates: 0.10% on the first $250 million of such Managed Assets and
0.09% on such Managed Assets in excess of $250 million, subject to a minimum
annual fee of $180,000, which includes fees under this agreement and fees
received by the Administrator from the Chartwell Large Cap Value and Chartwell
Small Cap Value Funds. The Allocation of the minimum will be assessed based upon
Managed Assets of the Fund and net assets of the Chartwell Large Cap Value and
Chartwell Small Cap Value Funds.
Certain officers and/or directors of the Fund are officers and/or directors of
the Manager. Prior to April 16, 2003, the Fund paid to each director who is not
an "affiliated person" as defined in the Act a fee of $4,000 per year plus $250
for each meeting attended. As of April 16, 2003, directors fees paid by the Fund
consist of $6,000 per year, plus $1,000 per year for audit committee members and
an additional fee of $250 per year for the chairman of the audit committee.
32
----
CHARTWELL
- --------------------------------------------------------------------------------
CHARTWELL DIVIDEND AND INCOME FUND, INC. NOVEMBER 30, 2003
- --------------------------------------------------------------------------------
For the year ended November 30, 2003, the Fund incurred a legal expense of
$132,532, to Drinker Biddle & Reath LLP, counsel for the Fund. A partner of the
firm is an officer of the Fund.
Effective July 1, 2003, Wachovia Bank, N.A. serves as the custodian for the
Fund. Prior to July 1, 2003, PFPC Trust Company served as custodian for the
Fund.
NOTE 3. PURCHASE AND SALES OF INVESTMENTS
For the year ended November 30, 2003, purchases and sales of investments,
excluding short-term investments, totaled $171,779,741 and $171,103,654,
respectively.
The following table summarizes the Fund's call options written for the year
ended November 30, 2003.
NUMBER OF
CONTRACTS PREMIUMS
--------- --------
Options outstanding November 30, 2002 6,324 $ 726,799
Options written 84,320 6,729,016
Options expired (43,560) (3,466,704)
Options exercised (15,309) (1,457,996)
Options closed (23,535) (2,003,363)
--------- -----------
Options outstanding November 30, 2003 8,240 $ 527,752
========= ===========
NOTE 4. COMMERCIAL PAPER
As of November 30, 2003, $50,000,000 of commercial paper was outstanding with an
amortized cost of $49,939,003. The average discount rate of commercial paper
outstanding at November 30, 2003 was 1.24%. The average daily balance of
commercial paper outstanding for the year ended November 30, 2003 was
$49,924,600 at a weighted average discount rate of 1.43%. The maximum face
amount of commercial paper outstanding at any time during the year ended
November 30, 2003, was $50,000,000. In conjunction with the issuance of the
commercial paper, the Fund 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. During the year ended November 30, 2003, there were no
borrowings under this arrangement.
NOTE 5. CAPITAL STOCK
There are 100,000,000 shares of $0.01 par value common stock authorized. Of the
16,325,515 shares of common stock outstanding at November 30, 2003, the Manager
owned 12,156 shares.
For the years ended November 30, 2003 and November 30, 2002 the Fund issued
252,752 and 275,201 shares respectively, in connection with the Fund's dividend
reinvestment plan.
33
----
CHARTWELL
- --------------------------------------------------------------------------------
CHARTWELL DIVIDEND AND INCOME FUND, INC. NOVEMBER 30, 2003
- --------------------------------------------------------------------------------
NOTE 6. MARKET AND CREDIT RISKS
The Fund may invest in high-yielding fixed-income securities, which carry
ratings of BB or lower by S&P and/or Ba1 or lower by Moody's. Investments in
these higher-yielding securities may be accompanied by a greater degree of
credit risk than higher rated securities. Additionally, lower-rated securities
may be more susceptible to adverse economic and competitive industry conditions
than investment-grade securities. The Fund may invest up to 15% of its total
assets in illiquid securities and other securities which may not be readily
marketable. In addition, the Fund may purchase securities sold in reliance of
Rule 144A of the Securities Act of 1933. The relative illiquidity of some of the
Fund's portfolio securities may adversely affect the ability of the Fund to
dispose of such securities in a timely manner and at a fair price at times when
it might be necessary or advantageous for the Fund to liquidate portfolio
securities.
NOTE 7. FEDERAL TAX INFORMATION
It is the Fund's intention to continue to meet the requirements under Subchapter
M of the Internal Revenue Code applicable to regulated investment companies and
to distribute substantially all of its taxable income to shareholders.
Therefore, no provision for Federal income tax or excise tax is required.
In accordance with accounting pronouncements, the Fund has recorded several
reclassifications in the capital accounts. These reclassifications have no
impact on the net asset value of the Fund. These differences, which may result
in distribution reclassifications, are primarily due to return of capital, wash
sales, and market discount bonds sold at a gain. As of November 30, 2003, the
Fund recorded the following reclassifications to increase (decrease) the
accounts listed below:
ADDITIONAL UNDISTRIBUTED ACCUMULATED
PAID-IN- NET INVESTMENT REALIZED
CAPITAL INCOME/(LOSS) GAIN/(LOSS)
---------- -------------- -----------
$(6,254,835) $6,438,230 $(183,395)
The tax character of dividends and distributions paid during the last two fiscal
years were as follows:
ORDINARY RETURN OF
INCOME CAPITAL TOTALS
------------ --------- -------------
2003 $ 9,929,830 $6,254,835 $16,184,665
2002 10,544,215 7,287,730 17,831,945
34
----
CHARTWELL
- --------------------------------------------------------------------------------
CHARTWELL DIVIDEND AND INCOME FUND, INC. NOVEMBER 30, 2003
- --------------------------------------------------------------------------------
As of November 30, 2003, the components of Accumulated Losses were as follows:
Capital loss carryforwards $(75,776,129)
Net unrealized appreciation 10,656,380
Other temporary differences (244,106)
------------
Total accumulated losses $(65,363,855)
============
The following summarizes the capital loss carryforwards as of November 30, 2003.
These capital loss carryforwards are available to offset future gains.
EXPIRING IN FISCAL YEAR AMOUNT
----------------------- -----------
2007 $ 8,880,255
2008 9,509,213
2009 25,913,206
2010 30,533,344
2011 940,111
-----------
Total capital loss carryforwards $75,776,129
===========
For Federal income tax purposes, the cost of securities owned at November 30,
2003 and the net realized gains or losses on securities sold for the year then
ended were different from the amounts reported for financial reporting purposes,
primarily due to wash sales which cannot be used for Federal income tax purposes
in the current year and have been deferred for use in future years. The Federal
tax cost, aggregate gross unrealized appreciation and depreciation on
investments and options, held by the Fund at November 30, 2003 were as follows:
Federal Tax Cost ........................................... $175,780,482
------------
Aggregate Gross Unrealized Appreciation .................... 16,163,411
Aggregate Gross Unrealized Depreciation .................... (5,507,031)
------------
Net Unrealized Appreciation ................................ $ 10,656,380
============
NOTE 8. SUBSEQUENT EVENTS
The Board of Directors of the Fund declared the following dividends:
DECLARATION DATE EX-DATE RECORD DATE PAYABLE DATE DIVIDEND RATE
---------------- ------- ----------- ------------ -------------
December 1, 2003 December 16, 2003 December 18, 2003 December 31, 2003 $0.0833
January 2, 2004 January 20, 2004 January 22, 2004 January 30, 2004 $0.0833
35
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CHARTWELL
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CHARTWELL DIVIDEND AND INCOME FUND, INC. NOVEMBER 30, 2003
- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT AUDITORS
To the Board of Directors and Shareholders of
Chartwell Dividend and Income Fund, Inc.:
In our opinion, the accompanying statement of assets and liabilities, including
the schedule of investments, and the related statements of operations and of
cash flows and of changes in net assets and the financial highlights present
fairly, in all material respects, the financial position of Chartwell Dividend
and Income Fund, Inc.(the "Fund") at November 30, 2003, the results of its
operations and its cash flows for the year then ended, the changes in its net
assets for each of the two years in the period then ended and the financial
highlights for each of the five years in the period then ended, in conformity
with accounting principles generally accepted in the United States of America.
These financial statements and financial highlights (hereafter referred to as
"financial statements") are the responsibility of the Fund`s management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with auditing standards generally accepted in the United States of America,
which require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which included
confirmation of securities at November 30, 2003 by correspondence with the
custodian and brokers, provide a reasonable basis for our opinion.
PRICEWATERHOUSECOOPERS LLP
Philadelphia, Pennsylvania
January 12, 2004
36
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CHARTWELL
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CHARTWELL DIVIDEND AND INCOME FUND, INC. NOVEMBER 30, 2003
- --------------------------------------------------------------------------------
AUTOMATIC DIVIDEND REINVESTMENT PLAN (UNAUDITED)
Pursuant to the Fund's Automatic Dividend Reinvestment Plan (the "Plan"), unless
a shareholder otherwise elects, all dividend and capital gains distributions
will be automatically reinvested in additional shares of common stock of the
Fund by PFPC Inc., as agent for shareholders in administering the Plan (the
"Plan Agent"). Shareholders who elect not to participate in the Plan will
receive all dividends and distributions in cash, paid by check mailed directly
to the shareholder of record (or, if the shares are held in street or other
nominee name, then to such nominee) by PFPC Inc., as dividend paying agent. Such
participants may elect not to participate in the Plan and to receive all
distributions of dividends and capital gains in cash by sending written
instructions to PFPC Inc., as dividend paying agent, at the address set forth
below.
Participation in the Plan is completely voluntary and may be terminated or
resumed at any time without penalty by written notice if received by the Plan
Agent not less than ten days prior to any dividend record date. Otherwise such
termination will be effective with respect to any subsequently declared dividend
or distribution.
Whenever the Fund declares a distribution, an ordinary income dividend or a
capital gain dividend (collectively referred to as "dividends") payable either
in shares or in cash, non-participants in the Plan will receive cash, and
participants in the Plan will receive the equivalent in shares of common stock.
The shares will be acquired by the Plan Agent for the participant's account,
depending upon the circumstances described below, either (i) through receipt of
additional unissued but authorized shares of common stock from the Fund or (ii)
by purchase of outstanding shares of common stock on the open market on the NYSE
or elsewhere. If on the payment date of the dividend, the net asset value per
share of the common stock is equal to or less than the market price per share
plus estimated brokerage commissions (such condition being referred to herein as
"market premium"), the Plan Agent will invest the dividend amount in newly
issued shares on behalf of the participant. The number of newly issued shares of
common stock to be credited to the participant's account will be determined by
dividing the dollar amount of the dividend by the net asset value per share on
the date the shares are issued, provided that the maximum discount from the then
current market price per share on the date of issuance may not exceed 5%. If on
the dividend payment date the net asset value per share is greater than the
market value (such condition being referred to herein as "market discount"), the
Plan Agent will invest the dividend amount in shares acquired on behalf of the
participant in open-market purchases.
In the event of a market discount on the dividend payment date, the Plan Agent
will have until the last business day before the next date on which the shares
trade on the "ex-dividend" basis or in no event more than 30 days after the
37
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CHARTWELL
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CHARTWELL DIVIDEND AND INCOME FUND, INC. NOVEMBER 30, 2003
- --------------------------------------------------------------------------------
dividend payment date to invest the dividend amount in shares acquired in
open-market purchases. If, before the Plan Agent has completed its open-market
purchases, the market price of a share of common stock exceeds the net asset
value per share, the average per share purchase price paid by the Plan Agent may
exceed the net asset value of the Fund's shares, resulting in the acquisition of
fewer shares than if the dividend had been paid in newly issued shares on the
dividend payment date. The Plan provides that if the Plan Agent is unable to
invest the full dividend amount in open-market purchases during the purchase
period or if the market discount shifts to market premium during the purchase
period, the Plan Agent will cease making open-market purchases and will invest
the uninvested portion of the dividend amount in newly issued shares at the
close of business on the last purchase date.
The Plan Agent maintains all shareholders' accounts in the Plan and furnishes
written confirmation of all transactions in the accounts, including information
needed by shareholders for tax records. Shares in the account of each Plan
participant will be held by the Plan Agent on behalf of the Plan participant,
and each shareholder's proxy will include those shares purchased or received
pursuant to the Plan. The Plan Agent will forward all proxy solicitation
materials to participants and vote proxies for shares held pursuant to the Plan
in accordance with the instructions of the participants.
In the case of shareholders such as banks, brokers or nominees which hold shares
for others who are the beneficial owners, the Plan Agent will administer the
Plan on the basis of the number of shares certified from time to time by the
record shareholders as representing the total amount registered in the record
shareholder's name and held for the account of beneficial owners who are to
participate in the Plan.
There will be no brokerage charges with respect to shares issued directly by the
Fund as a result of dividends or capital gain distributions payable either in
shares or in cash. However, each participant will pay a pro rata share of
brokerage commissions incurred with respect to the Plan Agent's open-market
purchases in connection with reinvestment of dividends.
The automatic reinvestment of dividends and distributions will not relieve
participants of any federal, state or local income tax that may be payable (or
required to be withheld) on such dividends.
Shareholders participating in the Plan may receive benefits not available to
shareholders not participating in the Plan. If the market price plus commissions
of the Fund's shares is above the net asset value, participants in the Plan will
receive shares of the Fund at less than they could otherwise purchase them
and will have shares with a cash value greater than the value of any cash
distribution they would have received on their shares. If the market price plus
38
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CHARTWELL
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CHARTWELL DIVIDEND AND INCOME FUND, INC. NOVEMBER 30, 2003
- --------------------------------------------------------------------------------
commissions is below the net asset value, participants will receive
distributions in shares with a net asset value greater than the value of any
cash distribution they would have received on their shares. However, there may
be insufficient shares available in the market to make distributions in shares
at prices below the net asset value. Also, since the Fund does not redeem its
shares, the price on resale may be more or less than the net asset value.
Experience under the Plan may indicate that changes are desirable. Accordingly,
the Fund reserves the right to amend or terminate the Plan. There is no direct
service charge to participants in the Plan; however, the Fund reserves the right
to amend the Plan to include a service charge payable by the participants.
All correspondence concerning the Plan should be directed to the Plan Agent at
PFPC Inc., P.O. Box 43027, Providence, RI 02940-3027, Attn: Closed-End
Department.
FEDERAL TAX INFORMATION (UNAUDITED)
Information for Federal income tax purposes is presented as an aid to
shareholders in reporting the dividend distributions for the year ended November
30, 2003.
ADDITIONAL INFORMATION (UNAUDITED)
During the period, there have been no material changes in the Fund's investment
objective or fundamental policies that have not been approved by the
shareholders. There have been no changes in the Fund's charter or By-Laws that
would delay or prevent a change in control of the Fund which have not been
approved by the shareholders. There have been no changes in the principal risk
factors associated with investment in the Fund.
EFFECTS OF LEVERAGE (UNAUDITED)
Leverage of $60 million in commercial paper was initially sold by the Fund on
July 28, 1999. Through November 30, 2003, interest paid on the commercial paper
ranged from 1.15% to 2.12%. As of November 30, 2003, the Fund had $20 million
outstanding at 1.22% per annum maturing on December 2, 2003, and $30 million at
1.25% per annum maturing on February 2, 2004. All interest rates include fees
due to the broker-dealer. The Fund must experience an annual return of 0.35% to
cover interest payments on the commercial paper.
39
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CHARTWELL
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CHARTWELL DIVIDEND AND INCOME FUND, INC. NOVEMBER 30, 2003
- --------------------------------------------------------------------------------
The following table explains the potential effects of leverage on the equity
returns of common shareholders:
Assumed return on portfolio
(net of expenses) .............. -10.00% -5.00% 0.00% 5.00% 10.00%
Corresponding return to common
stockholder .................... -14.33% -7.40% -0.48% 6.44% 13.37%
Assumes $130 million assets attributable to common shareholders; $50 million
aggregate leverage with an average interest rate of 1.25%. All figures appearing
above are hypothetical returns generated to assist investors in understanding
the effects of leverage. Actual returns may be greater or less than those
appearing in the table.
SUPPLEMENTAL PROXY INFORMATION (UNAUDITED)
The Annual Meeting of Shareholders of the Chartwell Dividend and Income Fund,
Inc. was held on April 16, 2003 at the offices of PFPC Inc., 400 Bellevue
Parkway, Wilmington, Delaware. The description of the proposal and number of
shares voted at the meeting are as follows:
- --------------------------------------------------------------------------------
VOTES VOTES VOTES
FOR AGAINST WITHHELD
- --------------------------------------------------------------------------------
To elect the following
directors to serve as Class
I directors for a three-
year term expiring in 2006: Kenneth F. Herlihy 11,490,803 -- 263,148
C. Warren Ormerod 11,509,224 -- 217,727
HOW TO OBTAIN A COPY OF THE FUND'S PROXY VOTING POLICIES
A description of the policies and procedures that are used by the Fund's
investment adviser to vote proxies relating to the Fund's portfolio securities
is available (1) without charge, upon request, by calling [toll-free number]
(866) 585-6552; and (2) as an exhibit to the Fund's annual report on Form N-CSR
which is available on the website of the U.S. Securities and Exchange Commission
at http://www.sec.gov.
40
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CHARTWELL DIVIDEND AND INCOME FUND, INC. NOVEMBER 30, 2003
- --------------------------------------------------------------------------------
DIRECTOR AND OFFICER INFORMATION (UNAUDITED)
The business and affairs of the Fund are managed under the direction of the
Fund's Board of Directors and the Fund's officers appointed by the Board of
Directors. The tables below present information about each Director and officer
of the Fund. The Directors of each class serve for terms of three years or, when
filling a vacancy, for the remainder of the full term of the class of Directors
in
DIRECTORS OF THE FUND
TERM OF
POSITION(S) OFFICE AND
NAME, ADDRESS, HELD WITH LENGTH OF
AND AGE THE FUND TIME SERVED
- --------------------------------------------------------------------------------
DISINTERESTED DIRECTORS
C. Warren Ormerod Director Term Expires 2006
67 yrs. old (Since 2001)
- --------------------------------------------------------------------------------
George W. Grosz Director Term Expires 2005
66 yrs. old (Since 2000)
- --------------------------------------------------------------------------------
Kenneth F. Herlihy Director Term Expires 2006
74 yrs. old (Since 1998)
- --------------------------------------------------------------------------------
INTERESTED DIRECTORS*
Winthrop S. Jessup Director, Term Expires 2005
58 yrs. old Chairman (Since 1998)
and President
- --------------------------------------------------------------------------------
Bernard P. Schaffer Director and Term Expires 2004
59 yrs. old Vice President (Since 1998)
- --------------------------------------------------------------------------------
* These directors are considered to be "interested persons' of the Fund as
defined in the Investment Company Act of 1940 because they are partners in the
investment adviser (Chartwell Investment Partners, L.P.) and are officers of
the Fund.
42
----
CHARTWELL
- --------------------------------------------------------------------------------
CHARTWELL DIVIDEND AND INCOME FUND, INC. NOVEMBER 30, 2003
- --------------------------------------------------------------------------------
which the vacancy occurred and until their successors have been duly elected and
qualified. Officers of the Fund are elected by the Board of Directors and,
subject to the earlier termination of office, each officer holds office for the
term of one year and until his or her successor is elected and qualified. Unless
otherwise noted, the business address of each Officer and Director is c/o
Chartwell Investment Partners, 1235 Westlakes Drive, Suite 400, Berwyn,
Pennsylvania 19312.
NUMBER OF
PORTFOLIOS
IN THE FUND
PRINCIPAL OCCUPATION(S) COMPLEX OVERSEEN OTHER DIRECTORSHIPS
DURING PAST 5 YEARS BY DIRECTOR HELD BY BOARD MEMBER
- --------------------------------------------------------------------------------
Chairman and Managing Director, 1 None
NorthStar Asset Management (since 2000).
Managing Partner, Stratton Management
Company (1992-2000). Executive Vice
President, Continental Bancorp (1968-1992).
- --------------------------------------------------------------------------------
President and CEO of Meridian Asset 1 FBR National Bank & Trust
Management Co. (1994-1996); Consultant Company (since 2001);
(since 1996), Director, FBR Family of Funds Guardian Trust FSB
(1998-2001). (a wholly owned subsidiary
of Guardian Life Insurance
Company of America)
(since 1999).
- --------------------------------------------------------------------------------
Sculptor, who has worked 1 None
since his retirement from the
mutual fund industry in 1987.
- --------------------------------------------------------------------------------
Partner, Chartwell Investment Partners, 1 Georgia Banking Company
L.P. and Chartwell G.P., Inc. (since 1997); (since 1998).
and various positions with Delaware
Management Company, Inc. and certain
affiliated companies (1977-1997).
- --------------------------------------------------------------------------------
Partner and Portfolio Manager of 1 None
Chartwell Investment Partners, L.P.
and Partner of Chartwell G.P., Inc.
(since 1997).
- --------------------------------------------------------------------------------
43
----
CHARTWELL
- --------------------------------------------------------------------------------
CHARTWELL DIVIDEND AND INCOME FUND, INC. NOVEMBER 30, 2003
- --------------------------------------------------------------------------------
DIRECTOR AND OFFICER INFORMATION (UNAUDITED)
(CONTINUED)
TERM OF
POSITION(S) OFFICE AND
NAME, ADDRESS, HELD WITH LENGTH OF
AND AGE THE FUND TIME SERVED
- --------------------------------------------------------------------------------
OFFICERS OF THE FUND
Winthrop S. Jessup Chairman of the Board, (Since 1998)
58 yrs. old President and Director
- --------------------------------------------------------------------------------
Bernard P. Schaffer Vice President and (Since 1998)
59 yrs. old Director
- --------------------------------------------------------------------------------
Kevin A. Melich Vice President (Since 1998)
61 yrs. old
- --------------------------------------------------------------------------------
Timothy J. Riddle Vice President (Since 1998)
48 yrs. old and Treasurer
- --------------------------------------------------------------------------------
G. Gregory Hagar Vice President (Since 1998)
35 yrs. old
- --------------------------------------------------------------------------------
Andrew Toburen Vice President (Since 2003)
32 yrs. old
- --------------------------------------------------------------------------------
Michael P. Malloy Secretary (Since 1998)
44 yrs. old
One Logan Square
18th and Cherry Streets
Philadelphia, Pennsylvania 19103
- --------------------------------------------------------------------------------
Maria E. Pollack Assistant (Since 1998)
58 yrs. old Secretary
- --------------------------------------------------------------------------------
44
----
CHARTWELL
- --------------------------------------------------------------------------------
CHARTWELL DIVIDEND AND INCOME FUND, INC. NOVEMBER 30, 2003
- --------------------------------------------------------------------------------
PRINCIPAL OCCUPATION(S)
DURING PAST 5 YEARS
- ------------------------------------------------------------------------------------------
Partner, Chartwell Investment Partners, L.P. and Chartwell G.P., Inc. (since 1997);
and various positions with Delaware Management Company, Inc. and certain affiliated
companies (1977-1997).
- ------------------------------------------------------------------------------------------
Partner and Portfolio Manager of Chartwell Investment Partners, L.P. and Partner
of Chartwell G.P., Inc. (since 1997).
- ------------------------------------------------------------------------------------------
Managing Partner and Portfolio Manager of Chartwell Investment Partners, L.P. and
Chartwell G.P., Inc. (since 1997).
- ------------------------------------------------------------------------------------------
Partner of Chartwell Investment Partners L.P. and of Chartwell G.P., Inc. (since 1997).
- ------------------------------------------------------------------------------------------
Partner, Chief Financial Officer of Chartwell Investment Partners L.P. (since 1997).
- ------------------------------------------------------------------------------------------
Fixed Income Portfolio Manager for Chartwell Investment Partners L.P. (since 1997).
- ------------------------------------------------------------------------------------------
Partner in the law firm of Drinker Biddle & Reath LLP (since 1993).
- ------------------------------------------------------------------------------------------
Director of Client Administration for Chartwell Investment Partners L.P. (since 1997).
- ------------------------------------------------------------------------------------------
45
----
CHARTWELL
- --------------------------------------------------------------------------------
CHARTWELL DIVIDEND AND INCOME FUND, INC. NOVEMBER 30, 2003
- --------------------------------------------------------------------------------
NOTES TO SHAREHOLDERS (UNAUDITED)
For shareholders that do not have an November 30, 2003 tax year end, this notice
is for informational purposes only. For shareholders with an November 30, 2003
tax year end, please consult your tax advisor as to the pertinence of this
notice. For the fiscal year ended November 30, 2003, the Fund is designating the
following items with regard to distributions paid during the year.
LONG-TERM LONG LONG
(20% RATE) (18% RATE) ORDINARY QUALIFYING
CAPITAL GAIN CAPITAL GAIN INCOME TAX-EXEMPT TOTAL QUALIFYING DIVIDEND
DISTRIBUTION DISTRIBUTION DISTRIBUTIONS INTEREST DISTRIBUTIONS DIVIDENDS(1) INCOME(2)
CHARTWELL
DIVIDEND
AND INCOME
FUND, INC. 0.00% 0.00% 100.00% 0.00% 100.00% 37.28% 18.48%
(1)Qualifying dividends represent dividends which qualify for the corporate
dividends received deduction.
(2)The percentage in this column represents the amount of "Qualifying Dividend
Income" as created by the Jobs and Growth Tax Relief Reconciliation Act of
2003 and is reflected as a percentage of "Ordinary Income Distributions". It is
the intention of the Fund to designate the maximum amount permitted by the law.
The information reported herein may differ from the information and
distributions taxable to the shareholders for the calendar year ending December
31, 2003. Complete information will be computed and reported in conjunction with
your Form 1099-DIV.
46
----
CHARTWELL
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NOTES
- --------------------------------------------------------------------------------
CHARTWELL DIVIDEND AND INCOME FUND, INC. NOVEMBER 30, 2003
- --------------------------------------------------------------------------------
DIRECTORS
Winthrop S. Jessup, Chairman
George W. Grosz
Kenneth F. Herlihy
C. Warren Ormerod
Bernard P. Schaffer
OFFICERS
Winthrop S. Jessup, President
Bernard P. Schaffer, Vice President
Kevin A. Melich, Vice President
Timothy J. Riddle, Vice President and Treasurer
G. Gregory Hagar, Vice President
Andrew S. Toburen, Vice President
Michael P. Malloy, Secretary
Maria E. Pollack, Assistant Secretary
INVESTMENT MANAGER
Chartwell Investment Partners, L.P.
1235 Westlakes Drive, Suite 400
Berwyn, PA 19312
ADMINISTRATOR
SEI Investments Global Funds Services
One Freedom Valley Drive
Oaks, PA 19456
CUSTODIAN
Wachovia Bank, N.A.
125 South Broad Street
Philadelphia, PA 19109
TRANSFER AGENT
PFPC Inc.
P.O. Box 43027
Providence, RI 02940-3027
INDEPENDENT AUDITORS
PricewaterhouseCoopers LLP
Two Commerce Square, Suite 1700
2001 Market Street
Philadelphia, PA 19103-7042
LEGAL COUNSEL
Drinker Biddle & Reath LLP
One Logan Square
18th & Cherry Streets
Philadelphia, PA 19103
This report, including the financial statements herein, is transmitted to the
shareholders of Chartwell Dividend and Income Fund, Inc. It is not a prospectus,
circular or representation intended for use in the purchase of shares of the
Fund or any securities mentioned in the report. Past performance results should
not be considered a representation of future performance. Statements and other
information contained in this report are as dated and are subject to change.
Notice is hereby given in accordance with Section 23(c) of the Investment
Company Act of 1940 that the Fund may purchase, from time to time, shares of its
common stock in the open market.
ITEM 2. CODE OF ETHICS.
(a) The registrant has adopted a code of ethics that applies to
the its principal executive officer and principal financial
officer. A copy of the registrant's code of ethics is filed
herewith.
(b) Not applicable.
(c) During the period covered by this report, there were no
amendments to the code of ethics referred to in 2(a) above.
(d) During the period covered by this report, there were no
waivers to the provisions of the code of ethics referred to in
2(a) above.
(e) Not applicable.
(f) (a) The registrant's Code of Ethics is attached as an Exhibit
hereto.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
As of the end of the period covered by the report, the registrant's Board of
Directors has determined that it does not have an audit committee financial
expert serving on its audit committee, as defined in Item 3 to Form N-CSR.
However, the registrant's Board of Directors determined that, although none of
its members meet the technical definition of an audit committee financial
expert, the Audit Committee members have sufficient experience and financial
expertise to carry out their responsibilities and address any issues that are
likely to come before the Committee, including but not limited to the evaluation
of the registrant's financial statements, supervision of the registrant's
preparation of its financial statements, and oversight of the work of the
registrant's independent auditors.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not applicable - only effective for annual reports for periods ending on or
after December 15, 2003.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable - only applicable for annual reports covering periods ending on
or after the earlier of (i) the registrant's first annual shareholder meeting
after January 15, 2004 or (ii) October 31, 2004.
ITEM 6. [RESERVED]
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
The registrant has delegated the voting of proxies relating to its voting
securities to its investment adviser, Chartwell Investment Partners, L.P. (the
"Adviser"), subject to the general oversight by the registrant's Board of
Directors. The registrant expects the Adviser to vote proxies related to the
registrant's portfolio securities for which it has voting authority consistent
with the registrant's best economic interests. The Adviser has adopted its own
Proxy Voting Policies and Procedures which address, among other things,
conflicts of interests that may arise between the interests of the registrant
and the interests of the Adviser and its affiliates. A description of the
Adviser's Proxy Voting Policies and Procedures is included as an Exhibit hereto.
CHARTWELL INVESTMENT PARTNERS
PROXY VOTING POLICIES AND PROCEDURES
ADOPTED APRIL 11, 1997
AS AMENDED JUNE 24, 2003
PURPOSE. Chartwell Investment Partners ("Chartwell") has adopted these Proxy
Voting Policies and Procedures ("Policies") to seek to ensure that it exercises
voting authority on behalf of Chartwell clients in a manner consistent with the
best interests of each client and its agreement with the client.
SCOPE. These Policies apply where clients have delegated the authority and
responsibility to Chartwell to decide how to vote proxies. Chartwell does not
accept or retain authority to vote proxies in accordance with individual client
guidelines. Clients that wish to arrange to vote proxies in accordance with
their own guidelines may elect to do so at any time by notifying Chartwell.
Chartwell generally will follow these Policies if asked to make recommendations
about proxy voting to clients who request that advice but have not delegated
proxy voting responsibility to Chartwell.
GUIDING PRINCIPLES. Chartwell believes that voting proxies in the best interests
of each client means making a judgment as to what voting decision is most likely
to maximize total return to the client as an investor in the securities being
voted, and casting the vote accordingly. For this reason, Chartwell's evaluation
of the possible impact of a proxy vote on the economic interests of company
shareholders similarly situated to Chartwell's clients will be the primary
factor governing Chartwell's proxy voting decisions.
USE OF INDEPENDENT PROXY VOTING SERVICE. Chartwell has retained Institutional
Shareholder Services, Inc., ("ISS") an independent proxy voting service, to
assist it in analyzing specific proxy votes with respect to securities held by
Chartwell clients and to handle the mechanical aspects of casting votes.
Historically, Chartwell has placed substantial reliance on ISS' analyses and
recommendations and generally gives instructions to ISS to vote proxies in
accordance with ISS' recommendations, unless Chartwell reaches a different
conclusion than ISS about how a particular matter should be voted. ISS proxy
voting recommendations typically are made available to Chartwell about a week
before the proxy must be voted, and are reviewed and monitored by members of the
Proxy Voting Committee (and, in certain cases, by Chartwell portfolio managers),
with a view to determining whether it is in the best interests of Chartwell's
clients to vote proxies as recommended by ISS, or whether client proxies should
be voted on a particular proposal in another manner.
ADMINISTRATION OF POLICIES. Chartwell has established a Proxy Voting Committee
to oversee and administer the voting of proxies on behalf of clients, comprised
of approximately five representatives of the firm's compliance and operations
departments. The Committee's responsibilities include reviewing and updating
these Policies as may be appropriate from time to time; identifying and
resolving any material conflicts of interest on the part of Chartwell or its
personnel that may affect particular proxy votes; evaluating and monitoring,
1
on an ongoing basis, the analyses, recommendations and other services provided
by ISS or another third party retained to assist Chartwell in carrying out its
proxy voting responsibilities; when deemed appropriate by the Committee,
consulting with Chartwell portfolio managers and investment professionals on
particular proposals or categories of proposals presented for vote; and
determining when and how client proxies should be voted other than in accordance
with the general rules and criteria set forth in Chartwell's Proxy Voting
Guidelines or with the recommendations of ISS or another independent proxy
voting service retained by Chartwell..
CONFLICTS OF INTEREST. It is Chartwell's policy not to exercise its authority to
decide how to vote a proxy if there is a material conflict of interest between
Chartwell's interests and the interests of the client that owns the shares to be
voted that could affect the vote on that matter. To seek to identify any such
material conflicts, a representative of the Proxy Voting Committee screens all
proxies and presents any potential conflicts identified to the Committee for
determination of whether the conflict exists and if so, whether it is material.
Conflicts of interest could result from a variety of circumstances, including,
but not limited to, significant personal relationships between executive
officers of an issuer and Chartwell personnel, a current or prospective
investment adviser-client relationship between an issuer or a pension plan
sponsored by an issuer and Chartwell, a significant ownership interest by
Chartwell or its personnel in the issuer and various other business, personal or
investment relationships. Generally, a current or prospective adviser-client
relationship will not be considered material for these purposes if the net
advisory revenues to Chartwell have not in the most recent fiscal year and are
not expected in the current fiscal year to exceed _ of 1 percent of Chartwell's
annual advisory revenue.
In the event the Committee determines that there is a material conflict of
interest that may affect a particular proxy vote, Chartwell will NOT make the
decision how to vote the proxy in accordance with these Policies unless the
Policies specify how votes shall be cast on that particular type of matter,
i.e., "for" or "against" the proposal. Where the Policies provide that the
voting decision will be made on a "case-by-case" basis, Chartwell will either
request the client to make the voting decision, or the vote will be cast in
accordance with the recommendations of ISS or another independent proxy voting
service retained by Chartwell for that purpose. Chartwell also will not provide
advice to clients on proxy votes without first disclosing any material conflicts
to the client requesting such advice.
WHEN CHARTWELL DOES NOT VOTE PROXIES. Chartwell may not vote proxies respecting
client securities in certain circumstances, including, but not limited to,
situations where (a) the securities are no longer held in a client's account;
(b) the proxy and other relevant materials are not received in sufficient time
to allow analysis or an informed vote by the voting deadline; (c) Chartwell
concludes that the cost of voting the proxy will exceed the expected potential
benefit to the client; or (d) the securities have been loaned out pursuant to a
client's securities lending program and are unavailable to vote.
PROXY VOTING GUIDELINES
Generally, Chartwell votes all proxies in accordance with the following
guidelines. These guidelines may be changed or supplemented from time to time.
Votes on matters not covered
2
by these guidelines will be determined in accordance with the principles set
forth above. Client guidelines may be inconsistent with these guidelines and may
cause Chartwell to vote differently for different clients on the same matter.
I. THE BOARD OF DIRECTORS
A. DIRECTOR NOMINEES IN UNCONTESTED ELECTIONS
Vote on a CASE-BY-CASE basis for director nominees, examining the following
factors:
o long-term corporate performance record of the company's stock relative
to a market index;
o composition of board and key board committees;
o nominee's attendance at meetings (past two years);
o nominee's investment in the company;
o whether a retired CEO of the company sits on the board; and
o whether the board chairman is also serving as the company's CEO.
In certain cases, and when information is readily available, we also review:
o corporate governance provisions and takeover activity;
o board decisions regarding executive pay;
o board decisions regarding majority-supported shareholder proposals in
back-to-back years;
o director compensation;
o number of other board seats held by nominee; and
o interlocking directorships.
B. CHAIRMAN AND CEO ARE THE SAME PERSON
Vote on a CASE-BY-CASE basis proposals that would require the positions of
chairman and CEO to be held by different persons. Voting decisions will take
into account whether or not most of the following factors are present:
o designated lead director, appointed from the ranks of the independent
board members with clearly delineated duties;
o majority of independent directors;
o all-independent key committees;
o committee chairpersons nominated by the independent directors;
o CEO performance is reviewed annually by a committee of outside
directors;
o Established governance guidelines.
C. MAJORITY OF INDEPENDENT DIRECTORS
Vote on a CASE-BY-CASE basis proposals that the board be comprised of a majority
of independent directors.
3
Vote FOR proposals that request that the board audit, compensation and/or
nominating committees include independent directors exclusively.
D. STOCK OWNERSHIP REQUIREMENTS
Vote AGAINST proposals requiring directors to own a minimum amount of company
stock in order to qualify as a director, or to remain on the board.
E. TERM OF OFFICE
Vote AGAINST proposals to limit the tenure of outside directors.
F. DIRECTOR AND OFFICER INDEMNIFICATION AND LIABILITY PROTECTION
Vote on a CASE-BY-CASE basis proposals concerning director and officer
indemnification and liability protection.
Vote AGAINST proposals to limit or eliminate entirely director and officer
liability for monetary damages for violating the duty of care.
Vote AGAINST indemnification proposals that would expand coverage beyond just
legal expenses to include coverage for acts or omissions, such as gross
negligence or worse, that are more serious violations of fiduciary obligations
than mere carelessness.
Vote FOR only those proposals that provide such expanded coverage in cases when
a director's or officer's legal defense was unsuccessful if: (1) the director or
officer was found to have acted in good faith and in a manner that he reasonably
believed was in the best interests of the company, AND (2) only if the
director's legal expenses would be covered.
G. CHARITABLE CONTRIBUTIONS
Vote AGAINST proposals to eliminate, direct or otherwise restrict charitable
contributions.
II. PROXY CONTESTS
A. DIRECTOR NOMINEES IN CONTESTED ELECTIONS
Vote on a CASE-BY-CASE basis when the election of directors is contested,
examining the following factors:
o long-term financial performance of the company relative to its
industry;
o management's track record;
o background to the proxy contest;
o qualifications of director nominees (both slates);
4
o evaluation of what each side is offering shareholders, as well as the
likelihood that the proposed objectives and goals can be met; and
o stock ownership positions of director nominees.
B. REIMBURSE PROXY SOLICITATION EXPENSES
Vote on a CASE-BY-CASE basis proposals to provide full reimbursement of expenses
for dissidents waging a proxy contest.
III. AUDITORS
RATIFYING AUDITORS
Vote FOR proposals to ratify auditors, unless it appears that: an auditor has a
financial interest in or association with the company that impairs the auditor's
independence; or there is reason to believe that the independent auditor has
rendered an opinion which is neither accurate nor indicative of the company's
financial position.
Vote AGAINST auditors and WITHHOLD votes from Audit Committee members if:
Non-audit ("all other") fees > audit and audit-related fees +
permissible tax fees
o AUDIT FEES (includes statutory audits, comfort letters, attest
services, consents, and review of filings with SEC)
o AUDIT-RELATED FEES (includes employee benefit plan audits, due
diligence related to M&A, audits in connection with acquisitions,
internal control reviews, consultation on financial accounting and
reporting standards)
o TAX FEES* [includes tax compliance (tax returns, claims for refunds
and tax payment planning) and tax consultation and planning
(assistance with tax audits and appeals, tax advice relating to M&A,
employee benefit plans and requests for rulings or technical advice
from taxing authorities)]
o ALL OTHER FEES
Vote on a CASE-BY-CASE basis proposals asking companies to prohibit their
auditors from engaging in non-audit services (or capping the level of non-audit
services) taking into account
o Whether the non-audit fees are excessive (per the formula above) and
o Whether the company has policies and procedures in place to limit
non-audit services or otherwise prevent conflicts of interest.
Vote FOR proposals asking for audit firm rotation unless the rotation period is
so short (less than five years) that it would be unduly burdensome to the
company.
5
IV. PROXY CONTEST DEFENSES
A. BOARD STRUCTURE: STAGGERED VS. ANNUAL ELECTIONS
Vote AGAINST proposals to classify the board.
Vote FOR proposals to repeal classified boards and to elect all directors
annually.
B. SHAREHOLDER ABILITY TO REMOVE DIRECTORS
Vote AGAINST proposals that provide that directors may be removed ONLY for
cause.
Vote FOR proposals to restore shareholder ability to remove directors with or
without cause.
Vote AGAINST proposals that provide that only continuing directors may elect
replacements to fill board vacancies.
Vote FOR proposals that permit shareholders to elect directors to fill board
vacancies.
C. CUMULATIVE VOTING
Vote AGAINST proposals to eliminate cumulative voting.
Vote FOR proposals to permit cumulative voting.
D. SHAREHOLDER ABILITY TO CALL SPECIAL MEETINGS
Vote AGAINST proposals to restrict or prohibit shareholder ability to call
special meetings.
Vote FOR proposals that remove restrictions on the right of shareholders to act
independently of management.
E. SHAREHOLDER ABILITY TO ACT BY WRITTEN CONSENT
Vote AGAINST proposals to restrict or prohibit shareholder ability to take
action by written consent.
Vote FOR proposals to allow or make easier shareholder action by written
consent.
F. SHAREHOLDER ABILITY TO ALTER THE SIZE OF THE BOARD
Vote FOR proposals that seek to fix the size of the board.
Vote AGAINST proposals that give management the ability to alter the size of the
board without shareholder approval.
6
V. TENDER OFFER DEFENSES
A. POISON PILLS
Vote FOR proposals that ask a company to submit its poison pill for shareholder
ratification.
Vote on a CASE-BY-CASE basis proposals to redeem a company's poison pill.
Vote on a CASE-BY-CASE basis management proposals to ratify a poison pill.
B. FAIR PRICE PROVISIONS
Vote on a CASE-BY-CASE basis when examining fair price proposals, taking into
consideration whether the shareholder vote requirement embedded in the provision
is no more than a majority of disinterested shares.
Vote FOR proposals to lower the shareholder vote requirement in existing fair
price provisions.
C. GREENMAIL
Vote FOR proposals to adopt anti-greenmail charter or bylaw amendments or
otherwise restrict a company's ability to make greenmail payments.
Vote on a CASE-BY-CASE basis anti-greenmail proposals when they are bundled with
other charter or bylaw amendments.
D. PALE GREENMAIL
Vote on a CASE-BY-CASE basis restructuring plans that involve the payment of
pale greenmail.
E. UNEQUAL VOTING RIGHTS
Vote AGAINST dual class exchange offers.
Vote AGAINST dual class recapitalizations.
F. SUPERMAJORITY SHAREHOLDER VOTE REQUIREMENT TO AMEND THE CHARTER OR BYLAWS
Vote AGAINST management proposals to require a supermajority shareholder vote to
approve charter and bylaw amendments.
7
Vote FOR proposals to lower supermajority shareholder vote requirements for
charter and bylaw amendments.
G. SUPERMAJORITY SHAREHOLDER VOTE REQUIREMENT TO APPROVE MERGERS
Vote AGAINST management proposals to require a supermajority shareholder vote to
approve mergers and other significant business combinations.
Vote FOR proposals to lower supermajority shareholder vote requirements for
mergers and other significant business combinations.
H. WHITE SQUIRE PLACEMENTS
Vote FOR proposals to require approval of blank check preferred stock issues for
other than general corporate purposes.
VI. MISCELLANEOUS GOVERNANCE PROVISIONS
A. CONFIDENTIAL VOTING
Vote FOR proposals that request corporations to adopt confidential voting, use
independent tabulators and use independent inspectors of election as long as the
proposals include clauses for proxy contests as follows: In the case of a
contested election, management is permitted to request that the dissident group
honor its confidential voting policy. If the dissidents agree, the policy
remains in place. If the dissidents do not agree, the confidential voting policy
is waived.
Vote FOR management proposals to adopt confidential voting.
B. EQUAL ACCESS
Vote FOR proposals that would allow significant company shareholders equal
access to management's proxy material in order to evaluate and propose voting
recommendations on proxy proposals and director nominees, and in order to
nominate their own candidates to the board.
C. BUNDLED PROPOSALS
Vote on a CASE-BY-CASE basis bundled or "conditioned" proxy proposals. In the
case of items that are conditioned upon each other, we examine the benefits and
costs of the packaged items. In instances when we believe the joint effect of
the conditioned items is not in shareholders' best interests, we vote against
the proposals. If the combined effect is positive, we support such proposals.
8
D. SHAREHOLDER ADVISORY COMMITTEES
Vote on a CASE-BY-CASE basis proposals to establish a shareholder advisory
committee.
VII. CAPITAL STRUCTURE
A. COMMON STOCK AUTHORIZATION
Vote on a CASE-BY-CASE basis proposals to increase the number of shares of
common stock authorized for issue.
Vote AGAINST proposed common stock authorizations that increase the existing
authorization by more than 100% unless a clear need for the excess shares is
presented by the company.
B. STOCK DISTRIBUTIONS: SPLITS AND DIVIDENDS
Vote FOR management proposals to increase common share authorization for a stock
split, provided that the split does not result in an increase of authorized but
unissued shares of more than 100% after giving effect to the shares needed for
the split.
C. REVERSE STOCK SPLITS
Vote FOR management proposals to implement a reverse stock split, provided that
the reverse split does not result in an increase of authorized but unissued
shares of more than 100% after giving effect to the shares needed for the
reverse split.
D. BLANK CHECK PREFERRED AUTHORIZATION
Vote FOR proposals to create blank check preferred stock in cases when the
company expressly states that the stock will not be used as a takeover defense
or carry superior voting rights.
Vote on a CASE-BY-CASE basis proposals that would authorize the creation of new
classes of preferred stock with unspecified voting, conversion, dividend and
distribution, and other rights.
Vote on a CASE-BY-CASE basis proposals to increase the number of authorized
blank check preferred shares.
9
E. PROPOSALS REGARDING BLANK CHECK PREFERRED STOCK
Vote FOR proposals to have blank check preferred stock placements, other than
those shares issued for the purpose of raising capital or making acquisitions in
the normal course of business, submitted for shareholder ratification.
F. ADJUST PAR VALUE OF COMMON STOCK
Vote FOR management proposals to reduce the par value of common stock.
G. PREEMPTIVE RIGHTS
Vote on a CASE-BY-CASE basis proposals to create or abolish preemptive rights.
In evaluating proposals on preemptive rights, we look at the size of a company
and the characteristics of its shareholder base.
H. DEBT RESTRUCTURINGS
Vote on a CASE-BY-CASE basis proposals to increase common and/or preferred
shares and to issue shares as part of a debt restructuring plan. We consider the
following issues:
o DILUTION - How much will ownership interest of existing shareholders be
reduced, and how extreme will dilution to any future earnings be?
o CHANGE IN CONTROL - Will the transaction result in a change in control of
the company?
o BANKRUPTCY - Is the threat of bankruptcy, which would result in severe
losses in shareholder value, the main factor driving the debt
restructuring?
Generally, we approve proposals that facilitate debt restructurings unless there
are clear signs of self-dealing or other abuses.
I. SHARE REPURCHASE PROGRAMS
Vote FOR management proposals to institute open-market share repurchase plans in
which all shareholders may participate on equal terms.
VIII. EXECUTIVE AND DIRECTOR COMPENSATION
In general, we vote on a CASE-BY-CASE basis on executive and director
compensation plans, with the view that viable compensation programs reward the
creation of stockholder wealth by having a high payout sensitivity to increases
in shareholder value.
In evaluating a pay plan, we measure its dilutive effect both on shareholder
wealth and on voting power. We value equity-based compensation along with cash
components of pay. We estimate the present value of short- and long-term
incentives, derivative awards, and
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cash/bonus compensation - which enables us to assign a dollar value to the
amount of potential shareholder wealth transfer.
Our vote is based, in part, on a comparison of company-specific adjusted
allowable dilution cap and a weighted average estimate of shareholder wealth
transfer and voting power dilution. Administrative features are also factored
into our vote. For example, our policy is that the plan should be [administered]
DO YOU MEAN OVERSEEN? WHO WOULD BE DISINTERESTED OTHER THAN THE INDEPENDENT
DIRECTORS, AND THEY SHOULDN'T BE ADMINISTERING. by a committee of [disinterested
persons] independent directors; insiders should not serve on compensation
committees.
Other factors, such as repricing underwater stock options without shareholder
approval, would cause us to vote against a plan. Additionally, in some cases we
would vote against a plan deemed unnecessary.
A. OBRA-RELATED COMPENSATION PROPOSALS
_ AMENDMENTS THAT PLACE A CAP ON ANNUAL GRANT OR AMEND ADMINISTRATIVE FEATURES
Vote FOR plans that simply amend shareholder-approved plans to include
administrative features or place a cap on the annual grants any one participant
may receive to comply with the provisions of Section 162(m) of OBRA.
_ AMENDMENTS TO ADDED PERFORMANCE-BASED GOALS
Vote FOR amendments to add performance goals to existing compensation plans to
comply with the provisions of Section 162(m) of OBRA.
_ AMENDMENTS TO INCREASE SHARES AND RETAIN TAX DEDUCTIONS UNDER OBRA
Votes on amendments to existing plans to increase shares reserved and to qualify
the plan for favorable tax treatment under the provisions of Section 162(m)
should be evaluated on a CASE-BY-CASE basis.
_ APPROVAL OF CASH OR CASH-AND-STOCK BONUS PLANS
Vote FOR cash or cash-and-stock bonus plans to exempt the compensation from
taxes under the provisions of Section 162(m) of OBRA.
B. PROPOSALS TO LIMIT EXECUTIVE AND DIRECTOR PAY
Vote on a CASE-BY-CASE basis all proposals that seek additional disclosure of
executive and director pay information.
Vote on a CASE-BY-CASE basis all other proposals that seek to limit executive
and director pay.
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Vote FOR proposals to expense options, unless the company has already publicly
committed to expensing options by a specific date.
C. GOLDEN AND TIN PARACHUTES
Vote FOR proposals to have golden and tin parachutes submitted for shareholder
ratification.
Vote on a CASE-BY-CASE basis all proposals to ratify or cancel golden or tin
parachutes.
D. EMPLOYEE STOCK OWNERSHIP PLANS (ESOPS)
Vote FOR proposals that request shareholder approval in order to implement an
ESOP or to increase authorized shares for existing ESOPs, except in cases when
the number of shares allocated to the ESOP is "excessive" (i.e., generally
greater than 5% of outstanding shares).
E. 401(K) EMPLOYEE BENEFIT PLANS
Vote FOR proposals to implement a 401(k) savings plan for employees.
IX. STATE OF INCORPORATION
A. VOTING ON STATE TAKEOVER STATUTES
Vote on a CASE-BY-CASE basis proposals to opt in or out of state takeover
statutes (including control share acquisition statutes, control share cash-out
statutes, freezeout provisions, fair price provisions, stakeholder laws, poison
pill endorsements, severance pay and labor contract provisions, anti-greenmail
provisions, and disgorgement provisions).
B. VOTING ON REINCORPORATION PROPOSALS
Vote on a CASE-BY-CASE basis proposals to change a company's state of
incorporation.
X. MERGERS AND CORPORATE RESTRUCTURINGS
A. MERGERS AND ACQUISITIONS
Vote on a CASE-BY-CASE basis proposals related to mergers and acquisitions,
taking into account at least the following:
o anticipated financial and operating benefits;
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o offer price (cost vs. premium);
o prospects of the combined companies;
o how the deal was negotiated; and
o changes in corporate governance and their impact on shareholder rights.
B. CORPORATE RESTRUCTURING
Vote on a CASE-BY-CASE basis proposals related to a corporate restructuring,
including minority squeezeouts, leveraged buyouts, spin-offs, liquidations and
asset sales.
C. SPIN-OFFS
Vote on a CASE-BY-CASE basis proposals related to spin-offs depending on the tax
and regulatory advantages, planned use of sale proceeds, market focus, and
managerial incentives.
D. ASSET SALES
Vote on a CASE-BY-CASE basis proposals related to asset sales after considering
the impact on the balance sheet/working capital, value received for the asset,
and potential elimination of diseconomies.
E. LIQUIDATIONS
Vote on a CASE-BY-CASE basis proposals related to liquidations after reviewing
management's efforts to pursue other alternatives, appraisal value of assets,
and the compensation plan for executives managing the liquidation.
F. APPRAISAL RIGHTS
Vote FOR proposals to restore, or provide shareholders with, rights of
appraisal.
G. CHANGING CORPORATE NAME
Vote FOR changing the corporate name.
XI. MUTUAL FUND PROXIES
A. ELECTION OF TRUSTEES
Vote on trustee nominees on a CASE-BY-CASE basis.
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B. INVESTMENT ADVISORY AGREEMENT
Vote on investment advisory agreements on a CASE-BY-CASE basis.
C. FUNDAMENTAL INVESTMENT RESTRICTIONS
Vote on amendments to a fund's fundamental investment restrictions on a
CASE-BY-CASE basis.
D. DISTRIBUTION AGREEMENTS
Vote on distribution agreements on a CASE-BY-CASE basis.
XII. SOCIAL AND ENVIRONMENTAL ISSUES
In general we ABSTAIN from voting on shareholder social and environmental
proposals, on the basis that their impact on share value can rarely be
anticipated with any high degree of confidence.
In most cases, however, we vote for proposals that seek additional disclosure or
reports, particularly when it appears companies have not adequately addressed
shareholders' social and environmental concerns.
In determining our vote on social and environmental proposals, we also analyze
the following factors:
o whether adoption of the proposal would have either a positive or negative
impact on the company's short-term or long-term share value;
o the percentage of sales, assets and earnings affected;
o the degree to which the company's stated position on the issues could
affect its reputation or sales, or leave it vulnerable to boycott or
selective purchasing;
o whether the issues presented should be dealt with through government or
company-specific action;
o whether the company has already responded in some appropriate manner to the
request embodied in a proposal;
o whether the company's analysis and voting recommendation to shareholders is
persuasive;
o what other companies have done in response to the issue;
o whether the proposal itself is well framed and reasonable;
o whether implementation of the proposal would achieve the objectives sought
in the proposal; and
o whether the subject of the proposal is best left to the discretion of the
board.
The following list includes some of the social and environmental issues to which
this analysis is applied:
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o energy and environment
o South Africa
o Northern Ireland
o military business
o maquiladora standards and international operations policies
o world debt crisis
o equal employment opportunity and discrimination
o animal rights
o product integrity and marketing
o human resources issues
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ITEM 8. [RESERVED]
ITEM 9. CONTROLS AND PROCEDURES.
(a) The certifying officers, whose certifications are included herewith, have
evaluated the registrant's disclosure controls and procedures within 90 days of
the filing date of this report. In their opinion, based on their evaluation, the
registrant's disclosure controls and procedures are adequately designed, and are
operating effectively to ensure, that information required to be disclosed by
the registrant in the reports it files or submits under the Securities Exchange
Act of 1934 is recorded, processed, summarized and reported within the time
periods specified in the Securities and Exchange Commission's rules and forms.
(b) There were no changes in the registrant's internal control over financial
reporting that occurred during the registrant's last fiscal half-year that has
materially affected, or is reasonably likely to materially affect, the
registrant's internal control over financial reporting.
ITEM 10. EXHIBITS.
(a)(1) The code of ethics that is the subject of disclosure under Item 2 hereof
is attached hereto.
(a)(2) 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.
(b) Officer certifications as required by Rule 30a-2(b) under the Investment
Company Act of 1940, as amended (17 CFR 270.30a-2(b)) also accompany this filing
as an Exhibit.
(c) The proxy voting policies and procedures of Chartwell Investment Partners,
L.P., the Fund's investment adviser, are attached hereto.
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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: February 3, 2004
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: February 3, 2004
By (Signature and Title)* /s/ G. Gregory Hagar
--------------------
G. Gregory Hagar, Vice President
(principal financial officer)
Date: February 3, 2004
* Print the name and title of each signing officer under his or her signature.