UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM N-Q
QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS OF
REGISTERED MANAGEMENT INVESTMENT COMPANY
Investment Company Act file number: 811-7460
Exact name of registrant as specified in charter: Delaware Investments
Dividend and
Income Fund, Inc.
Address of principal executive offices: 2005 Market Street
Philadelphia, PA 19103
Name and address of agent for service: Richelle S. Maestro, Esq.
2005 Market Street
Philadelphia, PA 19103
Registrant's telephone number, including area code: (800) 523-1918
Date of fiscal year end: November 30
Date of reporting period: August 31, 2004
ITEM 1. SCHEDULE OF INVESTMENTS.
SCHEDULE OF INVESTMENTS (UNAUDITED)
DELAWARE INVESTMENTS DIVIDEND AND INCOME FUND, INC.
---------------------------------------------------
August 31, 2004
NUMBER OF MARKET
SHARES VALUE
COMMON STOCK - 82.10%
Automobiles & Automotive Parts - 2.58%
General Motors 39,900 $ 1,648,269
Goodrich (B.F.) 76,400 2,426,464
-----------
4,074,733
-----------
Banking, Finance & Insurance - 13.72%
*American Home Mortgage Investment 98,400 2,678,448
Bank of America 53,400 2,401,932
+#Fieldstone Investments 144A 100,000 1,625,000
*Friedman Billings Ramsey Group Class A 95,495 1,800,081
J.P. Morgan Chase 44,700 1,769,226
MBNA 108,100 2,609,534
Mellon Financial 85,100 2,455,986
Morgan Stanley 57,300 2,906,829
Sunset Financial Resources 94,400 959,104
Wells Fargo 41,900 2,461,625
-----------
21,667,765
-----------
Cable, Media & Publishing - 0.11%
+XM Satellite Radio Class A 6,500 178,555
-----------
178,555
-----------
Chemicals - 2.71%
Dow Chemical 100,000 4,281,000
-----------
4,281,000
-----------
Computers & Technology - 2.46%
+Intuit 50,700 2,144,103
Pitney Bowes 40,000 1,742,400
-----------
3,886,503
-----------
Consumer Products - 1.21%
Procter & Gamble 34,000 1,902,980
-----------
1,902,980
-----------
Electronics & Electrical Equipment - 2.34%
Emerson Electric 25,000 1,556,250
General Electric 65,100 2,134,629
-----------
3,690,879
-----------
Energy - 4.46%
ChevronTexaco 28,000 2,730,000
Exxon Mobil 40,000 1,844,000
Kerr-McGee 45,300 2,390,934
*+Petroleum Geo-Services ADR 1,989 78,026
-----------
7,042,960
-----------
Food, Beverage & Tobacco - 6.23%
Anheuser-Busch 49,900 2,634,720
General Mills 58,900 2,783,025
Kellogg 47,500 1,994,050
PepsiCo 48,600 2,430,000
-----------
9,841,795
-----------
Healthcare & Pharmaceuticals - 5.56%
Abbott Laboratories 35,000 1,459,150
Merck & Co. 30,800 1,385,076
Pfizer 59,400 1,940,598
+Tenet Healthcare 177,400 1,848,508
Wyeth 58,800 2,150,316
-----------
8,783,648
-----------
Investment Companies - 1.79%
*Gladstone Capital 120,300 2,825,847
-----------
2,825,847
-----------
Leisure, Lodging & Entertainment - 1.58%
+Jameson Inns 1,427,500 2,498,125
-----------
2,498,125
-----------
Mortgage REIT's - 1.96%
+HomeBanc Corporate 91,000 759,850
*+MortgageIT Holdings 187,000 2,337,500
-----------
3,097,350
-----------
Paper & Forest Products - 1.81%
International Paper 40,000 1,600,800
Weyerhaeuser 20,000 1,250,200
-----------
2,851,000
-----------
Real Estate - 25.12%
AMB Property 63,300 2,364,255
Apartment Investment & Management 23,700 841,350
BRE Properties Class A 48,100 1,797,497
Camden Property Trust 15,700 739,156
Duke Realty 83,900 2,852,600
Equity Office Properties Trust 92,400 2,638,944
General Growth Properties 113,538 3,425,441
+#KKR Financial 144A 182,600 1,826,000
Liberty Property Trust 60,270 2,438,524
+#Medical Properties Trust 144A 35,000 350,000
Pan Pacific Retail Properties 59,200 3,160,688
Prentiss Properties Trust 73,572 2,700,828
Ramco-Gershenson Properties 114,300 3,088,386
Reckson Associates Realty 83,420 2,452,548
Simon Property Group 89,200 4,990,740
Starwood Hotels & Resorts Worldwide 76,200 3,368,040
Sun Communities 16,000 624,000
-----------
39,658,997
-----------
Retail - 0.13%
*+Kmart Holdings 2,750 210,705
-----------
210,705
-----------
Technology/Semiconductors - 1.00%
Intel 74,200 1,579,718
-----------
1,579,718
-----------
Telecommunications - 4.16%
Alltel 63,500 3,470,275
BCE 148,900 3,100,098
-----------
6,570,373
-----------
Utilities - 3.17%
Dominion Resources 36,600 2,374,974
FPL Group 38,000 2,629,600
-----------
5,004,574
-----------
TOTAL COMMON STOCK (cost $108,627,822) 129,647,507
===========
CONVERTIBLE PREFERRED STOCK - 5.60%
Aerospace & Defense - 0.68%
Northrop Grumman 7.25% 10,500 1,076,985
-----------
1,076,985
-----------
Banking, Finance & Insurance - 1.11%
Chubb 7.00% 15,000 410,850
National Australia Bank Units 7.875% 40,000 1,344,000
-----------
1,754,850
-----------
Consumer Products - 1.47%
Newell Financial Trust I 5.25% 52,600 2,320,975
-----------
2,320,975
-----------
Environmental Services - 0.59%
Allied Waste Industries 6.25% 16,200 937,980
-----------
937,980
-----------
Real Estate - 0.84%
Crescent Real Estate 6.75% 62,600 1,320,860
-----------
1,320,860
-----------
Telecommunications - 0.91%
Lucent Technologies Capital Trust I 7.75% 1,300 1,433,328
-----------
1,433,328
-----------
TOTAL CONVERTIBLE PREFERRED STOCK (cost $9,545,050) 8,844,978
===========
PREFERRED STOCK - 6.52%
Leisure, Lodging & Entertainment - 0.95%
WestCoast Hospitality Capital Trust 9.50% 58,000 1,501,040
-----------
1,501,040
-----------
Real Estate - 4.58%
*Equity Inns Series B 8.75% 35,700 953,904
LaSalle Hotel Properties 10.25% 113,200 3,107,340
Ramco-Gershenson Properties 9.50% 40,000 1,080,000
*SL Green Realty 7.625% 80,000 2,092,504
-----------
7,233,748
-----------
Utilities - 0.99%
Public Service Enterprise Group 10.25% 27,200 1,562,443
-----------
1,562,443
-----------
TOTAL PREFERRED STOCK (cost $9,564,940) 10,297,231
===========
PRINCIPAL
AMOUNT
CONVERTIBLE BONDS - 5.22%
Computers & Technology - 0.35%
#Mercury Interactive 144A 4.75% 7/1/07 $550,000 545,188
---------
545,188
---------
Leisure, Lodging & Entertainment - 0.43%
#Regal Entertainment 144A 3.75% 5/15/08 550,000 679,938
---------
679,938
---------
Miscellaneous - 0.23%
#Tyco International Group 144A 2.75% 1/15/18 250,000 360,625
---------
360,625
---------
Real Estate - 0.81%
Meristar Hospitality 9.50% 4/1/10 1,100,000 1,284,250
---------
1,284,250
---------
Retail - 1.68%
#Gap 144A 5.75% 3/15/09 1,825,000 2,272,124
#Saks 144A 2.00% 3/15/24 425,000 380,906
---------
2,653,030
---------
Telecommunications - 1.02%
#Nextel Partners 144A 1.50% 11/15/08 800,000 1,612,000
---------
1,612,000
---------
Transportation & Shipping - 0.12%
#Expressjet Holdings 144A 4.25% 8/1/23 200,000 186,750
---------
186,750
---------
Utilities - 0.58%
#Centerpoint Energy 144A 3.75% 5/15/23 800,000 916,000
---------
916,000
---------
TOTAL CONVERTIBLE BONDS (cost $6,498,688) 8,237,781
=========
BONDS - 33.52%
Aerospace & Defense - 0.24%
Armor Holdings 8.25% 8/15/13 $350,000 379,750
---------
379,750
---------
Automobiles & Automotive Parts - 0.73%
Adesa 7.625% 6/15/12 300,000 304,500
*++Advanced Accessory Holdings 13.25% 12/15/11 600,000 261,000
Advanced Accessory Systems 10.75% 6/15/11 200,000 191,000
*#Collins & Aikman Products 144A 12.875% 8/24/12 400,000 401,000
&Venture Holdings Trust 12.00% 6/1/09 425,000 2,656
---------
1,160,156
---------
Banking, Finance & Insurance - 0.99%
*#E*TRADE Financial 144A 8.00% 6/15/11 440,000 451,000
#Farmers Exchange Capital 144A 7.20% 7/15/48 350,000 356,325
Finova Group 7.50% 11/15/09 283,500 142,813
#LaBranche 144A 11.00% 5/15/12 375,000 380,625
#Refco Finance 144A 9.00% 8/1/12 215,000 223,600
---------
1,554,363
---------
Building & Materials - 0.59%
Interline Brands 11.50% 5/15/11 480,000 531,600
#Lone Star Industries 144A 8.85% 6/15/05 300,000 310,211
*Standard Pacific 7.75% 3/15/13 90,000 95,175
---------
936,986
---------
Business Services - 0.30%
Brickman Group 11.75% 12/15/09 275,000 319,000
#Language Line 144A 11.125% 6/15/12 150,000 152,250
---------
471,250
---------
Cable, Media & Publishing - 4.75%
American Media Operation 10.25% 5/1/09 200,000 210,750
#Atlantic Broadband Finance 144A 9.375% 1/15/14 615,000 582,713
++Avalon Cable 11.875% 12/1/08 283,595 300,610
#Cablevision Systems 144A 8.00% 4/15/12 550,000 566,500
++Charter Communications 12.125% 1/15/12 875,000 516,250
Charter Communications Holdings 10.75% 10/1/09 750,000 633,749
*CSC Holdings 10.50% 5/15/16 500,000 571,250
Dex Media West/Finance 9.875% 8/15/13 240,000 277,200
*#Hollinger 144A 12.875% 3/1/11 130,000 149,013
*Lodgenet Entertainment 9.50% 6/15/13 425,000 466,438
Mediacom Broadband 11.00% 7/15/13 950,000 1,033,124
PEI Holdings 11.00% 3/15/10 400,000 466,000
Rogers Cablesystems 10.00% 3/15/05 500,000 520,000
#Sheridan Acquisition 144A 10.25% 8/15/11 325,000 347,750
#Warner Music Group 144A 7.375% 4/15/14 385,000 385,000
XM Satellite Radio 12.00% 6/15/10 403,000 464,458
---------
7,490,805
---------
Chemicals - 1.93%
*#BCP Caylux Holdings 144A 9.625% 6/15/14 510,000 550,162
#Borden US Finance/Nova Scotia Finance 144A 9.00% 7/15/14 195,000 201,825
*#Huntsman 144A 11.50% 7/15/12 200,000 206,000
Huntsman International 10.125% 7/1/09 425,000 439,875
*Lyondell Chemical 9.875% 5/1/07 250,000 264,688
*#Nalco 144A 8.875% 11/15/13 275,000 298,031
*Rhodia 8.875% 6/1/11 525,000 446,250
&Solutia 6.72% 10/15/37 700,000 437,500
Witco 6.875% 2/1/26 250,000 210,625
---------
3,054,956
---------
Computers & Technology - 0.61%
Activant Solutions 10.50% 6/15/11 165,000 172,425
*Chippac International 12.75% 8/1/09 485,000 518,950
#Stratus Technologies 144A 10.375% 12/1/08 300,000 271,500
---------
962,875
---------
Consumer Services - 0.09%
Corrections Corporation of America 9.875% 5/1/09 125,000 140,156
---------
140,156
---------
Energy - 1.66%
Bluewater Finance 10.25% 2/15/12 375,000 399,375
#Dynegy Holdings 144A 10.125% 7/15/13 900,000 1,017,000
#Hilcorp Energy/Finance 144A 10.50% 9/1/10 400,000 445,000
Petroleum Geo-Services
8.00% 11/5/06 200,159 205,663
10.00% 11/5/10 374,909 404,902
#^Secunda International 144A 9.76% 9/1/12 155,000 153,450
---------
2,625,390
---------
Environmental Services - 0.77%
*#Clean Harbors 144A 11.25% 7/15/12 295,000 308,275
#Geo Sub 144A 11.00% 5/15/12 410,000 362,850
IESI 10.25% 6/15/12 500,000 542,500
---------
1,213,625
---------
Food, Beverage & Tobacco - 1.90%
B&G Foods 9.625% 8/1/07 925,000 942,343
Chiquita Brands International 10.56% 3/15/09 450,000 489,938
#Commonwealth Brands 144A 10.625% 9/1/08 460,000 488,750
#Gold Kist 144A 10.25% 3/15/14 175,000 193,375
#Le-Natures 144A 10.00% 6/15/13 465,000 488,250
#Standard Commercial 144A 8.00% 4/15/12 390,000 393,900
---------
2,996,556
---------
Healthcare & Pharmaceuticals - 1.16%
*Ameripath 10.50% 4/1/13 490,000 504,700
Province Healthcare 7.50% 6/1/13 455,000 511,875
Universal Hospital Service 10.125% 11/1/11 290,000 295,800
#US Oncology 144A 10.75% 8/15/14 490,000 518,175
---------
1,830,550
---------
Industrial Machinery - 0.30%
Aearo 8.25% 4/15/12 200,000 206,000
*Foster Wheeler 6.75% 11/15/05 275,000 273,625
---------
479,625
---------
Leisure, Lodging & Entertainment - 2.50%
Ameristar Casinos 10.75% 2/15/09 405,000 458,663
Boyd Gaming 9.25% 8/1/09 575,000 630,343
*Mandalay Resort Group 10.25% 8/1/07 360,000 405,450
MGM Mirage 9.75% 6/1/07 350,000 389,375
Penn National Gaming 8.875% 3/15/10 260,000 286,000
Prime Hospitality 8.375% 5/1/12 200,000 231,000
Royal Caribbean Cruises 7.25% 3/15/18 550,000 566,500
++#Town Sports International 144A 11.00% 2/1/14 725,000 351,625
Wheeling Island Gaming 10.125% 12/15/09 590,000 628,350
---------
3,947,306
---------
Metals & Mining - 0.51%
AK Steel 7.75% 6/15/12 255,000 240,975
*#Ispat Inland 144A 9.75% 4/1/14 530,000 568,425
---------
809,400
---------
Packaging & Containers - 0.94%
*AEP Industries 9.875% 11/15/07 275,000 281,875
++#Consolidated Container 144A 10.75% 6/15/09 205,000 165,025
Pliant 11.125% 9/1/09 275,000 296,313
*Portola Packaging 8.25% 2/1/12 400,000 350,000
Radnor Holdings 11.00% 3/15/10 175,000 147,875
*#^Radnor Holdings 144A 8.35% 4/15/09 235,000 236,175
---------
1,477,263
---------
Paper & Forest Products - 3.03%
Abitibi-Consolidated 6.95% 12/15/06 275,000 286,344
*Bowater 9.00% 8/1/09 670,000 749,372
*Buckeye Technologies 8.00% 10/15/10 265,000 263,013
Fort James 7.75% 11/15/23 1,125,000 1,184,062
*#Newark Group 144A 9.75% 3/15/14 450,000 438,750
#Port Townsend Paper 144A 11.00% 4/15/11 450,000 461,250
Potlatch 12.50% 12/1/09 475,000 579,984
Smurfit Capital Funding 7.50% 11/20/25 850,000 820,250
---------
4,783,025
---------
Real Estate - 0.52%
BF Saul 7.50% 3/1/14 125,000 125,625
Tanger Properties
7.875% 10/24/04 300,000 303,000
9.125% 2/15/08 350,000 385,000
---------
813,625
---------
Restaurants - 0.78%
&Avado Brands 9.75% 6/1/06 230,000 85,100
Denny's 12.75% 9/30/07 300,000 322,500
O'Charleys 9.00% 11/1/13 430,000 455,800
Perkins Family Restaurants 10.125% 12/15/07 20,000 20,950
*#VICORP Restaurants 144A 10.50% 4/15/11 345,000 350,175
---------
1,234,525
---------
Retail - 1.11%
J Crew Operating 10.375% 10/15/07 485,000 497,125
*#Jean Coutu Group 144A 8.50% 8/1/14 300,000 303,750
*Office Depot 10.00% 7/15/08 480,000 566,400
*Petco Animal Supplies 10.75% 11/1/11 195,000 221,325
Remington Arms 10.50% 2/1/11 175,000 161,875
---------
1,750,475
---------
Telecommunications - 2.17%
Alaska Communications Systems 9.875% 8/15/11 400,000 402,000
*Centennial Cellular Operating 10.125% 6/15/13 475,000 490,438
*Cincinnati Bell 8.375% 1/15/14 555,000 493,950
Citizens Communications 8.50% 5/15/06 75,000 80,813
#iPCS Escrow 144A 11.50% 5/1/12 200,000 210,500
MCI
5.908% 5/1/07 250,000 246,563
6.688% 5/1/09 225,000 212,625
MetroPCS 10.75% 10/1/11 225,000 240,750
#Qwest Services 144A 14.00% 12/15/10 500,000 583,749
US Unwired 10.00% 6/15/12 450,000 463,500
---------
3,424,888
---------
Textiles, Apparel & Furniture - 0.60%
Interface 10.375% 2/1/10 350,000 395,500
Warnaco 8.875% 6/15/13 500,000 555,000
---------
950,500
---------
Transportation & Shipping - 1.62%
#Horizon Lines 144A 9.00% 11/1/12 400,000 422,000
*Hornbeck Offshore Services 10.625% 8/1/08 250,000 276,250
*Kansas City Southern Railway 9.50% 10/1/08 300,000 327,000
Ocean Rig Norway 10.25% 6/1/08 325,000 324,594
OMI 7.625% 12/1/13 285,000 287,850
Seabulk International 9.50% 8/15/13 500,000 523,750
Stena 9.625% 12/1/12 355,000 396,269
---------
2,557,713
---------
Utilities - 3.72%
Avista 9.75% 6/1/08 500,000 592,500
*Calpine
8.25% 8/15/05 70,000 68,600
10.50% 5/15/06 365,000 344,925
#Calpine 144A 8.75% 7/15/13 530,000 416,050
*Edison Mission Energy 9.875% 4/15/11 200,000 230,500
El Paso Natural Gas 7.625% 8/1/10 200,000 214,000
El Paso Production Holding 7.75% 6/1/13 550,000 543,125
Elwood Energy 8.159% 7/5/26 159,031 158,236
Midland Funding II 11.75% 7/23/05 60,226 64,582
Midwest Generation
8.30% 7/2/09 500,000 512,500
8.75% 5/1/34 425,000 453,688
&Mirant Americas Generation 7.625% 5/1/06 400,000 335,000
*#NRG Energy 144A 8.00% 12/15/13 550,000 580,250
Orion Power Holdings 12.00% 5/1/10 250,000 313,750
PSEG Energy Holdings 7.75% 4/16/07 250,000 266,875
Reliant Resources 9.50% 7/15/13 250,000 277,500
Tennessee Gas Pipeline 8.375% 6/15/32 350,000 369,250
#&USGen New England 144A 7.459% 1/2/15 250,000 138,750
----------
5,880,081
----------
TOTAL BONDS (cost $52,107,774) 52,925,844
==========
MUNICIPAL BONDS - 0.14%
New Jersey Economic Development Authority Special Facility
Authority Continental Airlines Project 6.25% 9/15/29 300,000 219,705
----------
TOTAL MUNICIPAL BONDS (cost $254,528) 219,705
==========
NUMBER OF
SHARES
WARRANTS - 0.00%
*+#Solutia 144A 650 7
==========
TOTAL WARRANTS (cost $55,294) 7
==========
PRINCIPAL
AMOUNT
U.S. TREASURY OBLIGATIONS - 0.68%
@U.S. Treasury Bills 1.22% 9/9/04 $1,070,000 1,069,683
-----------
TOTAL U.S. TREASURY OBLIGATIONS (cost $1,069,683) 1,069,683
===========
TOTAL MARKET VALUE OF SECURITIES BEFORE
SECURITIES LENDING COLLATERAL - 133.78%
(cost $187,723,706) 211,242,736
===========
SECURITIES LENDING COLLATERAL+++ - 13.13%
Abbey National 1.19% 10/15/04 401,650 404,873
Banc of America Securities 1.58% 9/1/04 4,481,853 4,481,853
Bank of America 1.65% 10/29/04 853,009 853,012
Barclays 1.92% 1/31/05 170,541 170,602
CDC IXIS 1.49% 11/12/04 682,577 682,410
Citicorp 1.55% 9/21/04 852,274 851,543
Credit Suisse First Boston 1.60% 12/13/04 682,598 682,410
Deutsche Bank Financial 1.63% 2/22/05 170,499 170,689
Fifth Third Bank 1.53% 9/15/04 853,014 853,012
General Electric Capital
1.59% 10/25/04 290,080 290,219
1.62% 2/3/05 255,795 256,143
1.63% 10/4/04 255,919 256,025
Goldman Sachs Group
1.74% 12/8/04 400,916 400,916
1.80% 12/21/04 392,329 392,386
HBOS Treasury Services PLC 1.62% 10/29/04 853,036 853,012
ING Bank Geneva 1.10% 9/30/04 682,573 682,410
Merrill Lynch Mortgage Capital 1.66% 10/12/04 682,410 682,410
Morgan Stanley
1.64% 3/10/05 682,487 682,410
1.72% 9/30/05 170,307 170,602
Proctor & Gamble 1.53% 9/30/05 853,336 853,012
Rabobank 1.62% 3/2/05 853,036 852,851
Royal Bank of Canada 1.57% 6/27/05 853,020 852,799
Societe Generale New York
1.57% 6/14/05 428,065 427,924
1.65% 12/8/04 682,303 682,324
Union Bank of Switzerland 1.13% 12/20/04 854,258 853,012
Wachovia Bank NA 1.63% 11/15/04 682,369 682,557
Wells Fargo Bank 1.57% 9/30/05 853,513 853,012
Wilmington Trust 1.44% 9/8/04 853,019 853,012
------------
TOTAL SECURITIES LENDING COLLATERAL (cost $20,727,440) 20,727,440
============
TOTAL MARKET VALUE OF SECURITIES - 146.91%
(cost $208,451,146) 231,970,176**
OBLIGATION TO RETURN SECURITIES LENDING COLLATERAL - (13.13%)+++ (20,727,440)
COMMERCIAL PAPER PAYABLE (PAR $55,000,000) - (34.76) (54,890,167)
RECEIVABLES AND OTHER ASSETS NET OF LIABILITIES (SEE NOTES) - 0.98% 1,553,233
============
NET ASSETS APPLICABLE TO 12,876,300 SHARES OUTSTANDING - 100.00% $157,905,802
============
*Fully or partially on loan.
**Includes $20,510,171 of securities loaned.
#Securities exempt from registration under Rule 144A of the Securities Act of
1933. See Note 5 in "Notes."
+Non-income producing security for the period ended August 31, 2004.
++Step coupon bond.
+++See Note 3 in "Notes."
&Non-income producing security. Security is currently in default.
^Variable Rate Notes - the interest rate shown is the rate as of August 31,
2004.
@U.S. Treasury Bills are traded on a discount basis; the interest rate shown is
the effective yield at the time of purchase by the Fund.
SUMMARY OF ABBREVIATIONS:
ADR - American Depositary Receipts
REIT - Real Estate Investment Trust
________________________________________________________________________________
NOTES
1. SIGNIFICANT ACCOUNTING POLICIES
The following accounting policies are in accordance with U.S. generally accepted
accounting principals and are consistently followed by Delaware Investments
Dividend and Income Fund, Inc. (the "Fund"). The Fund's shares trade on the New
York Stock Exchange under the symbol DDF.
SECURITY VALUATION - Equity securities, except those traded on the Nasdaq Stock
Market, Inc. (NASDAQ), are valued at the last quoted sales price as of the time
of the regular close of the New York Stock Exchange (NYSE) on the valuation
date. Securities traded on the NASDAQ are valued in accordance with the NASDAQ
Official Closing Price, which may not be the last sales price. If on a
particular day an equity security does not trade, then the mean between the bid
and the asked prices will be used. U.S. Government and agency securities are
valued at the mean between the bid and asked prices. Long-term debt securities
are valued by an independent pricing service and such prices are believed to
reflect the fair value of such securities. Short-term debt securities having
less than 60 days to maturity are valued at amortized cost, which approximates
market value. Other securities and assets for which market quotations are not
readily available are valued at fair value as determined in good faith under the
direction of the Fund's Board of Directors. In determining whether market
quotations are readily available or fair valuation will be used, various factors
will be taken into consideration, such as market closures, or with respect to
foreign securities, aftermarket trading or significant events after local market
trading (e.g., government actions or pronouncements, trading volume or
volatility on markets, exchanges among dealers, or news events).
FEDERAL INCOME TAXES - The Fund intends to continue to qualify for federal
income tax purposes as a regulated investment company and make the requisite
distributions to shareholders. Accordingly, no provision for federal income
taxes has been made in the financial statements.
DISTRIBUTIONS - The Fund has a managed distribution policy. Under the policy,
the Fund declares and pays monthly distributions and is managed with a goal of
generating as much of the distribution as possible from ordinary income (net
investment income and short-term capital gains). The balance of the distribution
then comes from long-term capital gains and, if necessary, a return of capital.
The current annualized rate is $0.96 per share. The Fund continues to evaluate
its monthly distribution in light of ongoing economic and market conditions and
may change the amount of the monthly distributions in the future. For the eight
months ended August 31, 2004, the Fund paid dividends totaling $0.64 per share
and as of August 31, 2004, it is estimated that 35.6% of the dividends represent
a return of capital. The actual determination of the source of the Fund's
dividends can be made only at year-end.
BORROWINGS - The Fund issues short-term commercial paper at a discount from par.
The discount is amortized as interest expense over the life of the commercial
paper using the straight-line method (See Note 3).
USE OF ESTIMATES - The preparation of financial statements in conformity with
accounting principles generally accepted in the United States 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.
OTHER - Expenses common to all funds within the Delaware Investments Family of
Funds are allocated amongst the funds on the basis of average net assets.
Management fees and some other expenses are paid monthly. Security transactions
are recorded on the date the securities are purchased or sold (trade date).
Costs used in calculating realized gains and losses on the sale of investment
securities are those of the specific securities sold. Dividend income is
recorded on the ex-dividend date and interest income is recorded on the accrual
basis. Discounts and premiums are amortized to interest income over the lives of
the respective securities. Distributions received from investments in Real
Estate Investment Trusts are recorded as dividend income on ex-dividend date,
subject to reclassification upon notice of the character of such distribution by
the issuer.
2. INVESTMENTS
At August 31, 2004, the cost of investments for federal income tax purposes has
been estimated since the final tax characteristics cannot be determined until
fiscal year end. At August 31, 2004, the aggregate cost of investments and gross
unrealized appreciation (depreciation) for the Fund for federal income tax
purposes was as follows:
AGGREGATE COST OF INVESTMENTS $187,863,528
------------
Aggregate unrealized appreciation 30,798,587
Aggregate unrealized depreciation (7,419,379)
------------
Net unrealized appreciation $ 23,379,208
------------
For federal income tax purposes, at November 30, 2003, capital loss
carryforwards of $24,106,870 may be carried forward and applied against future
capital gains. Such capital loss carryforwards expire as follows:
Year of expiration Amount
------------------ -----------
2009 $ 6,557,294
2010 15,759,675
2011 1,789,901
3. COMMERCIAL PAPER
As of August 31, 2004, $55,000,000 (par value) of commercial paper was
outstanding with an amortized cost of $54,890,167. The weighted average discount
rate of commercial paper outstanding at August 31, 2004, was 1.41%. The average
daily balance of commercial paper outstanding during the period ended August 31,
2004, was $54,893,405 at a weighted discount rate of 1.18%. The maximum amount
of commercial paper outstanding at any time during the period was $55,000,000.
In conjunction with the issuance of the commercial paper, the Fund entered into
a line of credit arrangement with J.P. Morgan Chase for $30,000,000 with a
scheduled termination date of January 6, 2005. Interest on borrowings is based
on market rates in effect at the time of borrowing. The commitment fee is
computed at the rate of 0.15% per annum on the unused balance. During the period
ended August 31, 2004, there were no borrowings under this arrangement.
4. SECURITIES LENDING
The Fund, along with other funds in the Delaware Investments Family of Funds,
may lend its securities pursuant to a security lending agreement (Lending
Agreement) with J.P. Morgan Chase. Initial security loans made pursuant to the
Lending Agreement are required to be secured by U.S. government obligations
and/or cash collateral not less than 102% of the market value of the securities
issued in the United States and 105% of the market value of securities issued
outside the United States. With respect to each loan, if the aggregate market
value of the collateral held on any business day is less than the aggregate
market value of the securities which are the subject of such loan, the borrower
will be notified to provide additional collateral not less than the applicable
collateral requirements. Cash collateral received is invested in fixed income
securities, with a weighted average maturity not to exceed 90 days, rated in one
of the top two tiers by Standard & Poor's Ratings Group or Moody's Investors
Service, Inc. or repurchase agreements collateralized by such securities.
However, in the event of default or bankruptcy by the lending agent, realization
and/or retention of the collateral may be subject to legal proceedings. In the
event the borrower fails to return loaned securities and the collateral received
is insufficient to cover the value of the loaned securities and provided such
collateral shortfall is not the result of investment losses, the lending agent
has agreed to pay the amount of the shortfall to the Fund, or at the discretion
of the lending agent, replace the loaned securities. The Fund continues to
record dividends on the securities loaned and is subject to change in fair value
of the securities loaned that may occur during the term of the loan. The Fund
has the right under the Lending Agreement to recover the securities from the
borrower on demand. The security lending agent and the borrower retain a portion
of the earnings from the collateral investments. The Fund records security
lending income net of such allocation.
At August 31, 2004, the market value of securities on loan was $20,510,171, for
which cash collateral was received and invested in accordance with the Lending
Agreement. Such investments are presented on the Schedule of Investments under
the caption "Securities Lending Collateral."
5. CREDIT AND MARKET RISKS
The Fund invests in high-yield fixed income securities, which carry ratings of
BB or lower by Standard & Poor's Ratings Group and Ba or lower by Moody's
Investors Service, Inc. Investments in these higher yielding securities are
generally 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 10% of its total assets in illiquid securities, which
may include securities with contractual restrictions on resale, securities
exempt from registration under Rule 144A of the Securities Act of 1933, as
amended, and other securities which may not be readily marketable. The relative
illiquidity of these securities may impair the Fund from disposing of them in a
timely manner and at a fair price when it is necessary or desirable to do so.
The Fund invests in real estate investment trusts (REITs) and is subject to some
of the risks associated with that industry. If the Fund holds real estate
directly as a result of defaults or receives rental income directly from real
estate holdings, its tax status as a regulated investment company may be
jeopardized. There were no direct holdings during the period ended August 31,
2004. The Fund's REIT holdings are also affected by interest rate changes,
particularly if the REITs it holds use floating rate debt to finance their
ongoing operations.
ITEM 2. CONTROLS AND PROCEDURES.
The registrant's principal executive officer and principal financial
officer have evaluated the registrant's disclosure controls and procedures
within 90 days of the filing of this report and have concluded that they are
effective in providing reasonable assurance that the information required to be
disclosed by the registrant in its reports or statements filed under the
Securities Exchange Act of 1934 is recorded, processed, summarized and reported
within the time periods specified in the rules and forms of the Securities and
Exchange Commission.
There were no significant changes in the registrant's internal control
over financial reporting that occurred during the registrant's last fiscal
quarter (the registrant's second fiscal half-year in the case of an annual
report) that have materially affected, or are reasonably likely to materially
affect, the registrant's internal control over financial reporting.
ITEM 3. EXHIBITS.
File as exhibits as part of this Form a separate certification for each
principal executive officer and principal financial officer of the registrant as
required by Rule 30a-2(a) under the Act (17 CFR 270.30a-2(a)), exactly as set
forth below:
CERTIFICATION
-------------
I, Jude T. Driscoll, certify that:
1. I have reviewed this report on Form N-Q of Delaware Investments Dividend
and Income Fund, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement
of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered
by this report;
3. Based on my knowledge, the schedules of investments included in this
report fairly present in all material respects the investments of the
registrant as of the end of the fiscal quarter for which the report is
filed;
4. The registrant's other certifying officer(s) and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Rule 30a-3(c) under the Investment Company Act of 1940) and
internal control over financial reporting (as defined in Rule 30a-3(d)
under the Investment Company Act of 1940) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the
registrant, including its consolidated subsidiaries, is made known
to us by others within those entities, particularly during the
period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused
such internal control over financial reporting to be designed under
our supervision, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally
accepted accounting principles;
(c) Evaluated the effectiveness of the registrant's disclosure controls
and procedures and presented in this report our conclusions about
the effectiveness of the disclosure controls and procedures, as of a
date within 90 days prior to the filing date of this report, based
on such evaluation; and
(d) Disclosed in this report any change in the registrant's internal
control over financial reporting that occurred during the
registrant's most recent fiscal quarter that has materially
affected, or is reasonably likely to materially affect, the
registrant's internal control over financial reporting; and
5. The registrant's other certifying officer(s) and I have disclosed to the
registrant's auditors and the audit committee of the registrant's board
of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design
or operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant's ability to
record, process, summarize, and report financial information; and
(b) Any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal control over financial reporting.
JUDE T. DRISCOLL
--------------------------
By: Jude T. Driscoll
Title: Chairman
Date: 10/29/04
--------------------
CERTIFICATION
-------------
I, Joseph H. Hastings, certify that:
1. I have reviewed this report on Form N-Q of Delaware Investments Dividend
and Income Fund, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement
of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered
by this report;
3. Based on my knowledge, the schedules of investments included in this
report fairly present in all material respects the investments of the
registrant as of the end of the fiscal quarter for which the report is
filed;
4. The registrant's other certifying officer(s) and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Rule 30a-3(c) under the Investment Company Act of 1940) and
internal control over financial reporting (as defined in Rule 30a-3(d)
under the Investment Company Act of 1940) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the
registrant, including its consolidated subsidiaries, is made known
to us by others within those entities, particularly during the
period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused
such internal control over financial reporting to be designed under
our supervision, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally
accepted accounting principles;
(c) Evaluated the effectiveness of the registrant's disclosure controls
and procedures and presented in this report our conclusions about
the effectiveness of the disclosure controls and procedures, as of a
date within 90 days prior to the filing date of this report, based
on such evaluation; and
(d) Disclosed in this report any change in the registrant's internal
control over financial reporting that occurred during the
registrant's most recent fiscal quarter that has materially
affected, or is reasonably likely to materially affect, the
registrant's internal control over financial reporting; and
5. The registrant's other certifying officer(s) and I have disclosed to the
registrant's auditors and the audit committee of the registrant's board
of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design
or operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant's ability to
record, process, summarize, and report financial information; and
(b) Any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal control over financial reporting.
JOSEPH H. HASTINGS
-------------------------------
By: Joseph H. Hastings
Title: Chief Financial Officer
Date: 10/29/04
------------------------
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.
DELAWARE INVESTMENTS DIVIDEND AND INCOME FUND, INC.
JUDE T. DRISCOLL
-------------------------------
By: Jude T. Driscoll
Title: Chairman
Date: 10/29/04
------------------------
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.
JUDE T. DRISCOLL
-------------------------------
By: Jude T. Driscoll
Title: Chairman
Date: 10/29/04
------------------------
JOSEPH H. HASTINGS
-------------------------------
By: Joseph H. Hastings
Title: Chief Financial Officer
Date: 10/29/04
------------------------