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: February 28, 2005
ITEM 1. SCHEDULE OF INVESTMENTS.
SCHEDULE OF INVESTMENTS (Unaudited)
DELAWARE INVESTMENTS DIVIDEND AND INCOME FUND, INC.
---------------------------------------------------
February 28, 2005
NUMBER OF MARKET
SHARES VALUE
COMMON STOCK- 77.60%
Automobiles & Automotive Parts - 2.50%
*General Motors 39,900 $ 1,423,233
Goodrich (B.F.) 76,400 2,829,092
-----------
4,252,325
-----------
Banking, Finance & Insurance - 8.30%
Bank of America 53,400 2,491,110
J.P. Morgan Chase 44,700 1,633,785
MBNA 108,100 2,742,497
Mellon Financial 85,100 2,440,668
Morgan Stanley 57,300 3,235,730
Wells Fargo 26,400 1,567,632
-----------
14,111,422
-----------
Building & Materials - 0.09%
*+Foster Wheeler 8,434 151,388
-----------
151,388
-----------
Chemicals - 4.19%
Dow Chemical 63,700 3,513,055
duPont (E.I.) deNemours 67,700 3,608,410
-----------
7,121,465
-----------
Computers & Technology - 3.40%
Intel 74,200 1,779,316
+Intuit 50,700 2,169,960
Pitney Bowes 40,000 1,834,400
-----------
5,783,676
-----------
Consumer Products - 1.06%
Procter & Gamble 34,000 1,805,060
-----------
1,805,060
-----------
Electronics & Electrical Equipment - 2.32%
Emerson Electric 25,000 1,658,000
General Electric 65,100 2,291,520
-----------
3,949,520
-----------
Energy - 5.69%
ChevronTexaco 56,000 3,476,480
Exxon Mobil 40,000 2,532,400
Kerr-McGee 45,300 3,517,998
*+Petroleum Geo-Services ADR 1,989 142,943
-----------
9,669,821
-----------
Food, Beverage & Tobacco - 5.98%
Anheuser-Busch 49,900 2,367,755
General Mills 58,900 3,084,593
Kellogg 47,500 2,090,000
PepsiCo 48,600 2,617,596
-----------
10,159,944
-----------
Healthcare REIT's - 0.21%
+#Medical Properties Trust 144A 35,000 350,000
-----------
350,000
-----------
Healthcare & Pharmaceuticals - 4.66%
Abbott Laboratories 35,000 1,609,650
Pfizer 75,200 1,977,008
+Tenet Healthcare 177,400 1,935,434
Wyeth 58,800 2,400,216
-----------
7,922,308
-----------
Industrial REIT's - 1.45%
AMB Property 63,300 2,457,306
-----------
2,457,306
-----------
Investment Companies - 1.74%
*Gladstone Capital 120,300 2,959,380
-----------
2,959,380
-----------
Leisure, Lodging & Entertainment - 1.61%
Starwood Hotels & Resorts Worldwide 47,900 2,741,796
-----------
2,741,796
-----------
Mall REIT's - 4.42%
General Growth Properties 113,538 3,962,476
Simon Property Group 57,300 3,550,308
-----------
7,512,784
-----------
Manufactured Housing REIT's - 0.33%
Sun Communities 16,000 560,640
-----------
560,640
-----------
Media - 0.07%
*+XM Satellite Radio Holdings Class A 3,500 115,360
-----------
115,360
-----------
Mortgage REIT's - 8.60%
*American Home Mortgage Investment 98,400 3,065,160
Fieldstone Investment 100,000 1,500,000
*Friedman Billings Ramsey Group Class A 95,495 1,771,432
+#KKR Financial 144A 182,600 1,917,300
*MortgageIT Holdings 187,000 3,225,750
+#Peoples Choice 144A 176,700 1,767,000
Saxon Capital 30,100 540,596
Sunset Financial Resources 84,800 826,800
-----------
14,614,038
-----------
Multifamily REIT's - 1.26%
BRE Properties Class A 32,500 1,274,000
*+Education Realty Trust 50,900 860,210
-----------
2,134,210
-----------
Office/Industrial REIT's - 3.04%
Duke Realty 83,900 2,657,952
Liberty Property Trust 60,270 2,498,794
-----------
5,156,746
-----------
Office REIT's - 4.73%
Equity Office Properties Trust 92,400 2,787,709
Prentiss Properties Trust 73,572 2,581,641
Reckson Associates Realty 87,420 2,670,681
-----------
8,040,031
-----------
Paper & Forest Products - 0.88%
International Paper 40,000 1,494,000
-----------
1,494,000
-----------
Retail - 0.09%
*+Kmart Holding 1,550 151,079
-----------
151,079
-----------
Retail Strip Centers REIT's - 1.61%
Ramco-Gershenson Properties 96,400 2,728,120
-----------
2,728,120
-----------
Telecommunications - 6.04%
Alltel 63,500 3,632,200
*BCE 148,900 3,490,216
+Fairpoint Communications 180,000 3,132,000
-----------
10,254,416
-----------
Utilities - 3.33%
Dominion Resources 36,600 2,636,298
*FPL Group 38,000 3,015,300
-----------
5,651,598
-----------
TOTAL COMMON STOCK (COST $105,987,765) 131,848,433
===========
CONVERTIBLE PREFERRED STOCK- 4.97%
Banking, Finance & Insurance - 1.43%
Chubb 7.00% 15,000 446,850
Lehman Brothers Holdings 6.25% 16,000 452,000
National Australia Bank Units 7.875% 40,000 1,532,000
-----------
2,430,850
-----------
Consumer Products - 1.45%
Newell Financial Trust I 5.25% 52,600 2,452,475
-----------
2,452,475
-----------
Environmental Services - 0.45%
Allied Waste Industries 6.25% 16,200 771,768
-----------
771,768
-----------
Diversified REIT's - 0.82%
Crescent Real Estate 6.75% 62,600 1,392,850
-----------
1,392,850
-----------
Telecommunications - 0.82%
Lucent Technologies Capital Trust I 7.75% 1,300 1,392,463
----------
1,392,463
----------
TOTAL CONVERTIBLE PREFERRED STOCK (COST $8,895,050) 8,440,406
==========
PREFERRED STOCKS- 6.29%
Leisure, Lodging & Entertainment - 0.91%
WestCoast Hospitality Capital Trust 9.50% 58,000 1,548,600
----------
1,548,600
----------
Lodging REIT's - 2.40%
Equity Inns Series B 8.75% 35,700 946,050
LaSalle Hotel Properties 10.25% 113,200 3,129,980
----------
4,076,030
----------
Office REIT's - 1.21%
SL Green Realty 7.625% 80,000 2,050,000
----------
2,050,000
----------
Retail Strip Center REIT's - 0.66%
Ramco-Gershenson Properties 9.50% 40,000 1,126,200
----------
1,126,200
----------
Utilities - 1.11%
Public Service Enterprise Group 10.25% 27,200 1,879,520
----------
1,879,520
----------
TOTAL PREFERRED STOCKS (COST $9,564,868) 10,680,350
==========
PRINCIPAL
AMOUNT
COMMERCIAL MORTGAGE-BACKED SECURITIES - 0.26%
#Meristar Commercial Mortgage Trust Series 1999-C1 C 144A 8.29% 3/3/16 $400,000 438,262
----------
TOTAL COMMERCIAL MORTGAGE-BACKED SECURITIES (COST $445,969) 438,262
==========
CONVERTIBLE BONDS- 4.42%
Capital Goods - Manufacturing - 0.22%
#Tyco International Group 144A 2.75% 1/15/18 250,000 371,563
----------
371,563
----------
Consumer Cyclical - 2.92%
#Gap 144A 5.75% 3/15/09 1,825,000 2,429,530
Meristar Hospitality 9.50% 4/1/10 1,100,000 1,401,125
#Regal Entertainment Group 144A 3.75% 5/15/08 550,000 715,000
#Saks 144A 2.00% 3/15/24 425,000 419,688
----------
4,965,343
----------
Computers & Technology - 0.63%
#Mercury Interactive 144A 4.75% 7/1/07 550,000 557,563
#Sybase Convertible 144A 1.75% 2/22/25 500,000 505,000
----------
1,062,563
----------
Transportation & Shipping - 0.11%
#ExpressJet Holdings 144A 4.25% 8/1/23 200,000 189,250
----------
189,250
----------
Utilities - 0.54%
*#CenterPoint Energy 144A 3.75% 5/15/23 800,000 916,000
----------
916,000
----------
TOTAL CONVERTIBLE BONDS (COST $6,205,188) 7,504,719
==========
CORPORATE BONDS- 36.81%
Basic Materials - 4.85%
Abitibi-Consolidated 6.95% 12/15/06 400,000 414,000
*#BCP Caylux Holdings 144A 9.625% 6/15/14 200,000 232,000
#Boise Cascade 144A 7.125% 10/15/14 495,000 525,938
Bowater 9.50% 10/15/12 295,000 344,916
Fort James 7.75% 11/15/23 925,000 1,105,374
*#Huntsman 144A 7.375% 1/1/15 425,000 453,688
*Lyondell Chemical 9.875% 5/1/07 250,000 261,250
MDP Acquisitions 9.625% 10/1/12 555,000 617,437
*Nalco 8.875% 11/15/13 275,000 305,250
#Novelis 144A 7.25% 2/15/15 300,000 312,000
#Port Townsend Paper 144A 11.00% 4/15/11 450,000 454,500
Potlatch 12.50% 12/1/09 475,000 575,908
#PQ 144A 7.50% 2/15/13 160,000 166,600
*Rhodia 8.875% 6/1/11 545,000 568,163
Smurfit Capital Funding 7.50% 11/20/25 500,000 507,500
+Solutia 6.72% 10/15/37 700,000 551,250
Tembec Industries 8.50% 2/1/11 600,000 603,000
Witco 6.875% 2/1/26 250,000 238,750
----------
8,237,524
----------
Capital Goods - Manufacturing - 3.55%
Aearo 8.25% 4/15/12 200,000 211,000
*AEP Industries 9.875% 11/15/07 375,000 382,969
Allied Waste North America 9.25% 9/1/12 375,000 416,250
Anchor Glass 11.00% 2/15/13 275,000 285,313
Armor Holdings 8.25% 8/15/13 400,000 446,000
#Buhrmann US 144A 7.875% 3/1/15 125,000 126,563
*Cenveo 7.875% 12/1/13 225,000 210,375
#DRS Technologies 144A 6.875% 11/1/13 100,000 105,500
*Foster Wheeler 10.359% 9/15/11 206,250 227,391
Geo Subordinate 11.00% 5/15/12 450,000 469,124
*#Graham Packaging 144A 9.875% 10/15/14 305,000 330,163
#Hydrochem Industrial Services 144A 9.25% 2/15/13 445,000 454,456
#IMCO Recycling 144A 9.00% 11/15/14 425,000 448,375
Interline Brands 11.50% 5/15/11 421,000 477,834
Moog 6.25% 1/15/15 200,000 206,000
@Mueller Holdings 14.75% 4/15/14 550,000 400,125
*#Owens-Brockway 144A 6.75% 12/1/14 200,000 206,000
#Park-Ohio Industries 144A 8.375% 11/15/14 225,000 225,000
Radnor Holdings
[CHECK MARK]9.41% 4/15/09 235,000 241,463
*11.00% 3/15/10 175,000 154,875
----------
6,024,776
----------
Consumer Cyclical - 6.42%
#Accuride 144A 8.50% 2/1/15 300,000 310,500
Adesa 7.625% 6/15/12 250,000 266,875
@Advanced Accessory Holdings 13.25% 12/15/11 250,000 101,250
*Advanced Accessory Systems 10.75% 6/15/11 450,000 418,500
Ameristar Casinos 10.75% 2/15/09 670,000 747,887
Argosy Gaming 9.00% 9/1/11 75,000 83,813
+Avado Brands 9.75% 6/1/06 230,000 58,650
Boyd Gaming 9.25% 8/1/09 761,000 816,172
Caesars Entertainment 9.375% 2/15/07 150,000 164,250
*#Carrols 144A 9.00% 1/15/13 300,000 318,000
*Collins & Aikman Products 10.75% 12/31/11 360,000 343,800
*#Cooper-Standard 144A 7.00% 12/15/12 100,000 99,000
*#Denny's 144A 10.00% 10/1/12 300,000 327,750
Gaylord Entertainment 8.00% 11/15/13 325,000 353,844
Interface 10.375% 2/1/10 350,000 407,750
#Landry's Restaurant 144A 7.50% 12/15/14 520,000 522,600
#Loehmanns Capital 144A 13.00% 10/1/11 75,000 74,625
#Lone Star Industries 144A 8.85% 6/15/05 300,000 303,919
*Mandalay Resort Group 10.25% 8/1/07 35,000 39,550
MGM MIRAGE 9.75% 6/1/07 275,000 305,938
O'Charleys 9.00% 11/1/13 430,000 471,925
Penn National Gaming
8.875% 3/15/10 850,000 927,562
11.125% 3/1/08 600,000 636,359
Perkins Family Restaurants 10.125% 12/15/07 20,000 20,500
*Royal Caribbean Cruises 7.25% 3/15/18 350,000 393,750
#Six Flags 144A 9.625% 6/1/14 65,000 61,263
@Town Sports International 11.00% 2/1/14 320,000 184,000
#Uno Restaurant 144A 10.00% 2/15/11 300,000 307,500
+Venture Holdings 12.00% 6/1/09 425,000 531
Warnaco 8.875% 6/15/13 500,000 553,750
Wheeling Island Gaming 10.125% 12/15/09 525,000 572,250
#Wynn Las Vegas 144A 6.625% 12/1/14 700,000 701,749
----------
10,895,813
----------
Consumer Non-Cyclical - 3.94%
*Ameripath 10.50% 4/1/13 295,000 308,275
#Commonwealth Brands 144A 10.625% 9/1/08 460,000 492,200
Corrections Corporation of America 9.875% 5/1/09 175,000 193,594
Cott Beverages 8.00% 12/15/11 75,000 80,906
*Great Atlantic & Pacific Tea 7.75% 4/15/07 225,000 227,531
#Knowledge Learn 144A 7.75% 2/1/15 215,000 217,150
#Le-Natures 144A 10.00% 6/15/13 550,000 610,500
National Beef Packing 10.50% 8/1/11 325,000 341,250
Pilgrims Pride 9.625% 9/15/11 410,000 457,150
Province Healthcare 7.50% 6/1/13 875,000 979,999
#Rite Aid 144A 7.50% 1/15/15 350,000 348,250
Seminis Vegetable Seeds 10.25% 10/1/13 375,000 450,938
*True Temper Sports 8.375% 9/15/11 395,000 382,163
Universal Hospital Services 10.125% 11/1/11 420,000 436,800
#US Oncology 144A 10.75% 8/15/14 440,000 508,200
*@Vanguard Health 11.25% 10/1/15 545,000 399,213
#Warner Chilcott 144A 8.75% 2/1/15 250,000 261,250
----------
6,695,369
----------
Energy - 2.88%
Bluewater Finance 10.25% 2/15/12 390,000 432,900
CMS Energy 9.875% 10/15/07 250,000 280,625
#Dynegy Holdings 144A 10.125% 7/15/13 900,000 1,030,500
El Paso Natural Gas 7.625% 8/1/10 200,000 218,000
El Paso Production Holding 7.75% 6/1/13 550,000 592,625
#Hilcorp Energy 144A 10.50% 9/1/10 400,000 457,000
#Inergy Finance 144A 6.875% 12/15/14 250,000 255,000
Petroleum Geo-Services
8.00% 11/5/06 200,159 204,913
10.00% 11/5/10 524,909 608,894
[CHECK MARK]#Secunda International 144A 10.66% 9/1/12 245,000 245,000
#Stone Energy 144A 6.75% 12/15/14 150,000 151,500
Tennessee Gas Pipeline 8.375% 6/15/32 350,000 413,875
----------
4,890,832
----------
Finance - 1.39%
#America Real Estate 144A 7.125% 2/15/13 325,000 330,688
BF Saul REIT 7.50% 3/1/14 125,000 130,156
*#E*Trade Financial 144A 8.00% 6/15/11 475,000 515,374
#Farmers Exchange Capital 144A 7.20% 7/15/48 250,000 263,320
FINOVA Group 7.50% 11/15/09 835,500 373,886
LaBranche & Company 11.00% 5/15/12 275,000 297,688
Midland Funding II 11.75% 7/23/05 60,226 62,092
Tanger Properties 9.125% 2/15/08 350,000 393,750
----------
2,366,954
----------
Media - 5.36%
+Adelphia Communications 8.125% 7/15/06 525,000 446,250
American Media Operation 10.25% 5/1/09 200,000 209,000
Avalon Cable 11.875% 12/1/08 504,168 526,225
#Charter Communications 144A 5.875% 11/16/09 165,000 162,525
Charter Communications Holdings 10.75% 10/1/09 1,425,000 1,236,187
CSC Holdings
7.25% 7/15/08 245,000 262,456
8.125% 8/15/09 215,000 240,263
*10.50% 5/15/16 550,000 618,750
Dex Media West 9.875% 8/15/13 125,000 144,063
Insight Midwest 10.50% 11/1/10 850,000 928,624
*Lodgenet Entertainment 9.50% 6/15/13 425,000 473,875
Mediacom Capital
*8.50% 4/15/08 750,000 766,875
9.50% 1/15/13 325,000 340,438
Nextmedia Operating 10.75% 7/1/11 275,000 307,313
PEI Holdings 11.00% 3/15/10 500,000 594,375
Rogers Cablesystems 10.00% 3/15/05 700,000 707,000
Sheridan Acquisition 10.25% 8/15/11 325,000 353,438
#Warner Music Group 144A 7.375% 4/15/14 190,000 202,350
XM Satellite Radio 12.00% 6/15/10 500,000 593,750
----------
9,113,756
----------
Technology - 0.33%
#Magnachip Semiconductor 144A 8.00% 12/15/14 300,000 317,250
Stratus Technologies 10.375% 12/1/08 250,000 250,000
----------
567,250
----------
Telecommunications - 3.77%
[CHECK MARK]#AirGate PCS 144A 6.41% 10/15/11 175,000 182,438
*Alaska Communications Systems Holdings 9.875% 8/15/11 324,000 352,350
Centennial Cellular Operating 10.125% 6/15/13 315,000 366,975
*Cincinnati Bell 8.375% 1/15/14 625,000 649,218
@Inmarsat Finance 10.375% 11/15/12 450,000 342,563
#Intelsat Bermuda 144A 8.625% 1/15/15 500,000 536,250
iPCS 11.50% 5/1/12 200,000 233,000
#Iwo Escrow 144A
[CHECK MARK]6.32% 1/15/12 75,000 78,000
@10.75% 1/15/15 75,000 49,500
MCI
6.908% 5/1/07 250,000 256,250
7.688% 5/1/09 500,000 528,125
MetroPCS 10.75% 10/1/11 225,000 243,000
*#New Skies Satellite 144A 9.125% 11/1/12 325,000 339,625
#Qwest 144A 7.875% 9/1/11 115,000 126,213
#Qwest Services 144A 14.00% 12/15/10 525,000 626,062
Rural Cellular 9.875% 2/1/10 100,000 106,000
#Telcordia Technologies 144A 8.875% 3/1/13 200,000 207,500
*#UbiquiTel Operating 144A 9.875% 3/1/11 200,000 227,000
[CHECK MARK]US LEC 10.67% 10/1/09 225,000 226,688
US Unwired 10.00% 6/15/12 500,000 569,999
#Valor Telecom 144A 7.75% 2/15/15 145,000 151,163
-----------
6,397,919
-----------
Transportation - 1.59%
@#H-Lines Finance Holding 144A 11.00% 4/1/13 395,000 297,731
#Horizon Lines 144A 9.00% 11/1/12 175,000 190,094
*Kansas City Southern Railway 9.50% 10/1/08 400,000 447,000
OMI 7.625% 12/1/13 430,000 446,125
Seabulk International 9.50% 8/15/13 500,000 553,750
Stena AB 9.625% 12/1/12 350,000 399,000
#Ultrapetrol 144A 9.00% 11/24/14 375,000 364,219
-----------
2,697,919
-----------
Utilities - 2.73%
Avista 9.75% 6/1/08 500,000 574,536
*Calpine 10.50% 5/15/06 365,000 361,350
[CHECK MARK]#Calpine 144A 8.41% 7/15/07 221,625 199,463
Elwood Energy 8.159% 7/5/26 219,203 249,259
Midwest Generation
8.30% 7/2/09 500,000 535,000
8.75% 5/1/34 425,000 489,813
+Mirant Americas Generation 7.625% 5/1/06 400,000 457,000
*#NRG Energy 144A 8.00% 12/15/13 430,000 477,300
Orion Power Holdings 12.00% 5/1/10 250,000 313,750
PSE&G Energy Holdings 7.75% 4/16/07 250,000 264,375
Reliant Energy 9.50% 7/15/13 250,000 282,500
#Texas Genco 144A 6.875% 12/15/14 250,000 268,125
+#USGen New England 144A 7.459% 1/2/15 250,000 169,375
-----------
4,641,846
-----------
TOTAL CORPORATE BONDS (COST $60,441,620) 62,529,958
===========
MUNICIPAL BONDS- 0.08%
New Jersey Economic Development Authority Special Facility
Revenue (Continental Airlines Project) 6.25% 9/15/29 (AMT) 170,000 135,335
-----------
TOTAL MUNICIPAL BONDS (COST $144,267) 135,335
-----------
U.S. TREASURY OBLIGATIONS- 0.74%
^U.S. Treasury Bill 2.282% 3/24/05 1,265,000 1,263,046
-----------
TOTAL U.S. TREASURY OBLIGATIONS (COST $1,263,046) 1,263,046
===========
NUMBER OF
SHARES
WARRANTS- 0.00%
+#Solutia144A, exercise price $7.59, expiration date 7/15/09 650 7
-
TOTAL WARRANTS (COST $55,294) 7
-
TOTAL MARKET VALUE OF SECURITIES BEFORE SECURITIES
LENDING COLLATERAL - 131.17% (COST $193,003,067) 222,840,516
===========
PRINCIPAL
AMOUNT
SECURITIES LENDING COLLATERAL - 14.40%***
Short-Term Investments
Abbey National 2.64% 1/13/06 $598,806 599,172
ABN AMRO Amsterdam 2.55% 3/22/05 807,123 807,114
Bank of Nova Scotia 2.69% 3/29/05 242,126 242,118
Bank of the West 2.57% 3/2/06 807,240 807,114
Barclays London 2.54% 3/10/05 813,296 813,188
Barclays New York 2.62% 6/1/05 80,690 80,685
Bayerische Landesbank 2.61% 3/31/06 806,853 807,114
Bear Stearns
2.65% 1/17/06 161,406 161,532
2.68% 3/18/05 726,697 726,863
Beta Finance 2.51% 3/21/05 177,047 176,801
Calyon 2.57% 4/19/05 807,087 807,073
Citigroup Global Markets 2.70% 3/7/05 871,680 871,683
Credit Swiss First Boston New York 2.56% 12/29/05 169,456 169,507
Fortis Bank 2.54% 3/22/05 807,125 807,114
Goldman Sachs 2.77% 2/28/06 887,648 887,825
IXIS Corporate & Investment Bank 2.55% 3/22/05 807,123 807,114
Lehman Holdings 2.70% 12/23/05 807,184 808,079
Marshall & Ilsley Bank 2.51% 12/29/05 807,197 807,162
Merrill Lynch Mortgage Capital
2.73% 4/5/05 64,569 64,569
2.73% 4/12/05 807,114 807,114
Morgan Stanley
2.65% 3/1/05 2,144,412 2,144,412
2.71% 3/10/05 645,687 645,691
2.71% 3/31/06 161,145 161,423
2.81% 2/28/06 80,711 80,711
Nordea Bank New York 2.57% 5/13/05 807,097 807,059
Pfizer 2.55% 3/31/06 774,829 774,829
Proctor & Gamble 2.42% 3/31/06 807,114 807,114
Rabobank, New York 2.63% 3/2/05 807,064 807,064
Royal Bank of Canada 2.61% 6/27/05 807,150 807,033
Sigma Finance 2.57% 9/30/05 758,703 758,562
Societe Generale London 2.43% 3/7/05 161,424 161,423
Societe Generale New York 2.56% 6/14/05 729,049 728,954
Sun Trust Bank 2.61% 8/5/05 403,608 403,514
UBS Securities 2.64% 3/1/05 1,614,228 1,614,228
Washington Mutual 2.60% 4/1/05 887,852 887,825
Wells Fargo 2.56% 3/31/06 807,157 807,114
-------------
TOTAL SECURITIES LENDING COLLATERAL (COST $24,455,897) 24,455,897
=============
TOTAL MARKET VALUE OF SECURITIES - 145.57% (COST $217,458,964) 247,296,413**
OBLIGATION TO RETURN SECURITIES LENDING COLLATERAL - (14.40%)*** (24,455,897)
COMMERCIAL PAPER PAYABLE (PAR $55,000,000) - (32.30%) (54,877,014)
RECEIVABLES AND OTHER ASSETS NET OF LIABILITIES (SEE NOTES) - 1.13% 1,921,009
------------
NET ASSETS APPLICABLE TO 12,876,300 SHARES OUTSTANDING;
EQUIVALENT TO $13.19 PER SHARE - 100.00% $169,884,511
============
@Step Coupon Bond. Indicates security that has a zero coupon that remains in
effect until a predetermined date at which time the stated interest rate
becomes effective.
#Security 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 February 28, 2005.
^Zero coupon bond. The interest rate shown is the yield at the time of purchase.
*Fully or partially on loan.
**Includes $24,010,320 of securities loaned.
+Non-income producing security. Security is currently in default.
[CHECK MARK]Variable Rate Notes. The interest rate shown is the rate as of
February 28, 2005.
***See Note #4 in "Notes."
SUMMARY OF ABBREVIATIONS:
ADR - American Depositary Receipts
AMT - Subject to Alternative Minimum Tax
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 the Delaware Investments
Dividend and Income Fund, Inc. (the "Fund").
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.
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. Premiums and discounts on non-convertible debt
securities 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 February 28, 2005, 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 February 28, 2005, 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 $193,040,057
------------
Aggregate unrealized appreciation 36,183,087
Aggregate unrealized depreciation (6,382,628)
------------
Net unrealized appreciation $ 29,800,459
------------
For federal income tax purposes, at November 30, 2004, capital loss
carryforwards of $15,214,564 may be carried forward and applied against future
capital gains. Such capital loss carryforwards expire as follows: $13,424,663
expires in 2010 and $1,789,901 expires in 2011.
3. COMMERCIAL PAPER
As of February 28, 2005, $55,000,000 (par value) of commercial paper was
outstanding with an amortized cost of $54,877,014. The weighted average discount
rate of commercial paper outstanding at February 28, 2005, was 2.59%. The
average daily balance of commercial paper outstanding during the period ended
February 28, 2005, was $54,830,788 at a weighted discount rate of 1.69%. 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 5, 2006. 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 February 28, 2005 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. 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 February 28, 2005, the market value of securities on loan was $24,010,320 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 a portion of its assets 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. At
February 28, 2005, 144A securities represented approximately 16.78% of total
assets. 144A securities comprising 0.00% of total assets have been determined to
be illiquid securities under the Fund's Liquidity Procedures. While maintaining
oversight, the Board of Trustees has delegated to the investment adviser the
day-to-day functions of determining whether individual Rule 144A securities are
liquid for purposes of a fund's limitation on investments in illiquid assets.
Illiquid securities, if any, have been denoted on the Schedule of Investments.
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. 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: 4/26/05
CERTIFICATION
I, Michael P. Bishof, 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.
MICHAEL P. BISHOF
--------------------------------
By: Michael P. Bishof
Title: Chief Financial Officer
Date: 4/25/05
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: 4/26/05
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: 4/26/05
MICHAEL P. BISHOF
------------------------------
By: Michael P. Bishof
Title: Chief Financial Officer
Date: 4/25/05