UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
________
FORM N-CSR
________
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)
________
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: MAY 31, 2003
ITEM 1. REPORTS TO STOCKHOLDERS.
CHARTWELL DIVIDEND AND INCOME FUND, INC.
SEMI-ANNUAL REPORT TO SHAREHOLDERS DATED
MAY 31, 2003
[Logo Omitted]
CHARTWELL
INVESTMENT
PARTNERS
[GRAPHIC OMITTED]
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CHARTWELL DIVIDEND AND INCOME FUND, INC. MAY 31, 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 Chartwell Dividend and Income 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. MAY 31, 2003
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LETTER TO SHAREHOLDERS
DEAR SHAREHOLDERS,
The last six months have proven to be an exceptionally volatile, but ultimately
profitable time period for shareholders of the Chartwell Dividend and Income
Fund. The successful completion of the war in Iraq, the passage of major
investor tax relief and improving corporate earnings trends have fueled the
market advance from the lows established in early March. At the same time, bond
investments, especially high yield bonds, have also rallied sharply. It is the
first time in many months that both of the Fund's major asset classes, stocks
and high-yield bonds, rallied together.
The Fund ended this period at a price of $8.50, a 5.3% premium to net asset
value (NAV) of $8.07. Over the last six months, the Fund has traded at a low of
$7.09 and ended the period on May 31st at its high of $8.50. For the past six
months, the total stock market return to shareholders was 24.6%. The NAV return
of the Fund was 15.5%. This compares to the S&P 500, which was up 3.9%, and the
Merrill Lynch High Yield Cash Pay Index, which was up 15.8%. We were very happy
with both the market returns and NAV returns of the Fund during the past six
months. Since inception, the Fund has now beaten the S&P 500 on a total return
basis.
[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
TOTAL RETURN SINCE FUND INCEPTION (JUNE 29, 1998)
Total Return
S&P 500 -9.0%
CWF -4.0%
Annualized Return
S&P 500 -1.9%
CWF -0.8%
*Stock market return assumes reinvestment of gross dividends.
We remain optimistic for the remainder of 2003 although that must be tempered by
the recent run-up in valuations in both the equity and high-yield markets.
Corporate profits are growing and neither inflation nor deflation appear to be
checking the economy. Although there can be no guarantees, we believe there is
room for positive returns during the remainder of 2003.
3
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CHARTWELL
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CHARTWELL DIVIDEND AND INCOME FUND, INC. MAY 31, 2003
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As you can see, the yield on the S&P 500 is very attractive versus the current
yield on Treasury bonds.
[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
DIVIDEND YIELD/10-YEAR T-BOND YIELD
S&P INDEX WITH OPERATING EPS (SPX) PRICE 982.3
7/30/93 0.49
8/27/93 0.51
9/24/93 0.52
10/29/93 0.51
11/26/93 0.48
12/31/93 0.49
1/28/94 0.48
2/25/94 0.46
3/25/94 0.43
4/29/94 0.41
5/27/94 0.40
6/24/94 0.41
7/29/94 0.41
8/26/94 0.39
9/30/94 0.39
10/28/94 0.37
11/25/94 0.38
12/30/94 0.38
1/27/95 0.38
2/24/95 0.39
3/31/95 0.39
4/28/95 0.39
5/26/95 0.42
6/30/95 0.42
7/28/95 0.39
8/25/95 0.40
9/29/95 0.40
10/27/95 0.42
11/24/95 0.41
12/29/95 0.43
1/26/96 0.42
2/23/96 0.38
3/29/96 0.36
4/26/96 0.35
5/31/96 0.33
6/28/96 0.33
7/26/96 0.35
8/30/96 0.33
9/27/96 0.33
10/25/96 0.33
11/29/96 0.33
12/27/96 0.32
1/31/97 0.30
2/28/97 0.30
3/28/97 0.29
4/25/97 0.29
5/30/97 0.28
6/27/97 0.27
7/25/97 0.28
8/29/97 0.28
9/26/97 0.28
10/31/97 0.30
11/28/97 0.29
12/26/97 0.30
1/30/98 0.30
2/27/98 0.27
3/27/98 0.26
4/24/98 0.26
5/29/98 0.27
6/26/98 0.26
7/31/98 0.27
8/28/98 0.31
9/25/98 0.34
10/30/98 0.33
11/27/98 0.29
12/25/98 0.28
1/29/99 0.28
2/26/99 0.26
3/26/99 0.25
4/30/99 0.24
5/28/99 0.23
6/25/99 0.21
7/30/99 0.21
8/27/99 0.21
9/24/99 0.23
10/29/99 0.20
11/26/99 0.19
12/31/99 0.17
1/28/00 0.18
2/25/00 0.19
3/31/00 0.18
4/28/00 0.18
5/26/00 0.18
6/30/00 0.18
7/28/00 0.18
8/25/00 0.18
9/29/00 0.19
10/27/00 0.20
11/24/00 0.21
12/29/00 0.23
1/26/01 0.22
2/23/01 0.25
3/30/01 0.28
4/27/01 0.24
5/25/01 0.22
6/29/01 0.24
7/27/01 0.26
8/31/01 0.29
9/28/01 0.33
10/26/01 0.32
11/30/01 0.29
12/28/01 0.26
1/25/02 0.28
2/22/02 0.31
3/29/02 0.26
4/26/02 0.30
5/31/02 0.30
6/28/02 0.34
7/26/02 0.43
8/30/02 0.43
9/27/02 0.53
10/25/02 0.44
11/29/02 0.41
12/27/02 0.49
1/31/03 0.47
2/28/03 0.51
3/28/03 0.47
4/25/03 0.46
5/30/03 0.50
6/27/03 0.46
High-yield bond spreads have great momentum and plenty of room on a historical
basis for improvement. In addition, high-yield bonds are still inexpensive on a
historical basis. Below, you can see that the yield on high-yield bonds minus
the yield on Treasury bonds is still at a high level.
[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
SPREAD: HI YIELD CORP/US T-BOND 10-YEAR
7/30/93 4
8/27/93 4.28
9/24/93 4.42
10/29/93 4.32
11/26/93 3.98
12/31/93 3.79
1/28/94 3.64
2/25/94 3.23
3/25/94 3.16
4/29/94 3.42
5/27/94 3.48
6/24/94 3.22
7/29/94 3.55
8/26/94 3.49
9/30/94 3.2
10/28/94 3.14
11/25/94 3.41
12/30/94 3.42
1/27/95 3.58
2/24/95 3.54
3/31/95 3.53
4/28/95 3.37
5/26/95 3.61
6/30/95 3.83
7/28/95 3.51
8/25/95 3.71
9/29/95 3.85
10/27/95 3.87
11/24/95 3.96
12/29/95 4.12
1/26/96 3.93
2/23/96 3.59
3/29/96 3.45
4/26/96 3.37
5/31/96 3.02
6/28/96 3.19
7/26/96 3.1
8/30/96 2.92
9/27/96 2.94
10/25/96 3.1
11/29/96 3.29
12/27/96 3.11
1/31/97 2.92
2/28/97 2.76
3/28/97 2.66
4/25/97 2.58
5/30/97 2.4
6/27/97 2.39
7/25/97 2.44
8/29/97 2.27
9/26/97 2.34
10/31/97 2.71
11/28/97 2.61
12/26/97 2.72
1/30/98 2.68
2/27/98 2.66
3/27/98 2.52
4/24/98 2.56
5/29/98 2.81
6/26/98 3.06
7/31/98 3.14
8/28/98 4.57
9/25/98 5.42
10/30/98 5.86
11/27/98 5.09
12/25/98 5.16
1/29/99 5.26
2/26/99 4.93
3/26/99 4.91
4/30/99 4.4
5/28/99 4.5
6/25/99 4.31
7/30/99 4.51
8/27/99 4.59
9/24/99 4.89
10/29/99 4.95
11/26/99 4.74
12/31/99 4.36
1/28/00 4.46
2/25/00 4.85
3/31/00 5.78
4/28/00 5.72
5/26/00 6.16
6/30/00 6.1
7/28/00 6.05
8/25/00 6.34
9/29/00 6.52
10/27/00 7.42
11/24/00 8.03
12/29/00 8.67
1/26/01 7.48
2/23/01 7.17
3/30/01 7.51
4/27/01 7.31
5/25/01 6.73
6/29/01 7.29
7/27/01 7.44
8/31/01 7.2
9/28/01 8.94
10/26/01 8.48
11/30/01 7.42
12/28/01 7.27
1/25/02 7.05
2/22/02 7.14
3/29/02 6.1
4/26/02 6.05
5/31/02 6.28
6/28/02 7.95
7/26/02 8.82
8/30/02 8.57
9/27/02 9.51
10/25/02 9.6
11/29/02 7.94
12/27/02 8.04
1/31/03 7.31
2/28/03 7.42
3/28/03 6.73
4/25/03 5.68
5/30/03 5.85
6/27/03 5.06
4
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CHARTWELL
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CHARTWELL DIVIDEND AND INCOME FUND, INC. MAY 31, 2003
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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. Her associate, Andrew S. Toburen, who has been managing high yield
securities for the Advisor since June, 1999, will continue to manage the fixed
income portfolio. It is expected that Mr. Toburen will be elected an officer of
the Fund at the July 16, 2003 Board Meeting. We thank you for your continuing
support of our portfolio management team and 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
EQUITIES FIXED INCOME
Doster J. Esh Christine F. Williams
PORTFOLIO ANALYST PORTFOLIO MANAGER
EQUITY AND CONVERTIBLE SECURITIES FIXED INCOME
5
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CHARTWELL
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CHARTWELL DIVIDEND AND INCOME FUND, INC. MAY 31, 2003
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FIXED INCOME RESULTS
CWF (as a % of total investments)
[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
Equities
48%
Utilities
5%
REITS
7%
Bond
40%
[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
FIXED INCOME PERFORMANCE
CWF
12.66%
ML HY
Cash Pay Index
15.84%
After five years of below average returns, high yield corporate bonds turned a
corner in the fall of 2002. Recent performance has been strong, with the Merrill
Lynch High Yield Cash Pay Index returning 15.84% for the six months ending May
31, 2003. The high yield portion of the Fund underperformed the index, largely
due to our higher quality bias.
Spreads (i.e. the yield premium over Treasuries) tightened 196 basis points over
the last six months. Falling interest rates provided another pillar of support
for the rally. At the end of May, the yield on the 10-year Treasury note was at
a forty year low of 3.35% and the high yield market's yield stood at 9.25%, the
lowest level in five years. However, by historical standards, spreads remain
wide at 590 basis points.
[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
HIGH YIELD PREMIUM OVER TREASURERS ("SPREAD")
Source: Merrill Lynch, Bloomberg, through (5/31/03)
Nov-94 321
Dec-94 319
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-98 315
Jul-98 314
Aug-98 484
Sep-98 558
Oct-98 602
Nov-98 511
Dec-98 537
Jan-99 528
Feb-99 485
Mar-99 487
Apr-99 440
May-99 449
Jun-99 450
Jul-99 429
Aug-99 454
Sep-99 479
Oct-99 492
Nov-99 461
Dec-99 444
Jan-00 453
Feb-00 489
Mar-00 579
Apr-00 593
May-00 614
Jun-00 612
Jul-00 614
Aug-00 637
Sep-00 661
Oct-00 754
Nov-00 870
Dec-00 878
Jan-01 732
Feb-01 721
Mar-01 754
Apr-01 732
May-01 694
Jun-01 733
Jul-01 737
Aug-01 724
Sep-01 911
Oct-01 859
Nov-01 742
Dec-01 726
Jan-02 687
Feb-02 710
Mar-02 609
Apr-02 588
May-02 631
Jun-02 774
Jul-02 869
Aug-02 876
Sep-02 959
Oct-02 965
Nov-02 786
Dec-02 789
Jan-03 734
Feb-03 743
Mar-03 676
Apr-03 547
May-03 590
After peaking at over 10.0% a year ago, default rates are still falling.
According to Moody's Investors Service, the trailing twelve month default rate
at the end of May was 6.4%. In addition, Moody's forecasts the default rate to
fall to 6.2% over the next year. While still high by historical standards, the
declining default rate has been a primary factor behind the narrowing risk
premium in the high yield market.
6
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CHARTWELL
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CHARTWELL DIVIDEND AND INCOME FUND, INC. MAY 31, 2003
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[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
LTM HIGH YIELD DEFAULT RATE (SOurce: Moody's)
May 01 8.00
June 01 8.35
July 01 8.75
August 01 9.25
September 01 9.50
October 01 10.125
November 01 10.25
December 01 10.60
January 02 10.80
February 02 10.70
March 02 10.50
April 02 10.40
May 02 10.60
June 02 10.30
July 02 10.20
August 02 10.00
September 02 9.80
October 02 9.30
November 02 8.90
December 02 8.50
January 03 7.70
February 03 7.80
March 03 7.00
April 03 6.75
May 03 6.40
As the economy stabilized, we expected lower quality issuers to outperform
higher quality issuers. What we did not expect was the enormous disparity in
performance by credit quality. The triple-C-rated subset of the high yield
market returned 36.1% for the last six months, versus only 11.9% for the
double-B-rated portion of the market. Industries dominated by triple-C-rated
issuers, such as Utilities and Telecommunications, outperformed strongly, while
Steel was the only industry to post a negative return. Positions in HEALTHSOUTH
and FLEMING, both of which have been sold, were a drag on the Fund's
performance. On the plus side, the Fund scored winning investments in
MADISON RIVER COMMUNICATIONS, NEXTEL COMMUNICATIONS, AES CORP, and CALPINE.
[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
HIGH YIELD PERFORMANCE BY CREDIT QUALITY
(11/31/02 - 5/31/03), source: Merrill Lynch)
CCC Index 36.1%
B Index 13.6%
BB Index 11.9%
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CHARTWELL
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CHARTWELL DIVIDEND AND INCOME FUND, INC. MAY 31, 2003
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OUTLOOK:
We continue to be optimistic about the outlook for high yield bonds. At a micro
level, most financially leveraged companies remain intent on reducing their debt
levels. In addition, while interest rates have been low for some time, only
recently have the low rates been reflected meaningfully in corporate borrowing
costs (through tighter spreads). Lower debt levels and lower borrowing costs
tend to result in healthier credit profiles. Although no one can predict the
future, we believe we are in the middle of an improving credit cycle where
spreads are poised to tighten further. In this environment, the market's 9.25%
yield is attracting investor attention. Thus far in 2003, fund flows into public
high yield mutual funds have already exceeded the inflows for all of 2002.
Recent additions to the fixed income portion of the Fund include GEORGIA
PACIFIC, TRW AUTOMOTIVE, and WILLIAMS COMPANIES. The common investment themes in
these new positions are strong market shares, solid cash flows, and management
teams committed to reducing debt and improving their credit profile. Our goal
for the fixed income portion of the Fund is to provide consistent returns,
characterized by a high level of current income. As always, rigorous fundamental
credit research will be the key to uncovering superior investment opportunities
in the high yield bond market.
8
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CHARTWELL
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CHARTWELL DIVIDEND AND INCOME FUND, INC. MAY 31, 2003
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EQUITY RETURNS
CWF (as a % of total investments)
[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
Equities
48%
Bonds
40%
REITs
7%
Utilities
5%
[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
COMMON STOCK RETURNS
SIX MONTHS ENDING MAY 21, 2003
CWF Equities
7.6%
S&P 500
3.9%
Dow Jones
Industrial Average
0.7%
Equity markets were up for the six months ending 5/31/03. The war in Iraq was
concluded with much media coverage and anxiety. Congress passed an extremely
beneficial tax bill which should help equity income investors. Corporate
governance and integrity of management are now among the first issues that
investors address, trends that will benefit shareholders.
The performance of the primary sectors within the equity portion of the Fund are
highlighted below. Within the Energy sector, the Fund held positions in MARATHON
and OCCIDENTAL PETROLEUM, two U.S. domestic integrated oil firms that benefited
from higher oil prices and refining margins. Consumer Staples were also a strong
area during the period, fueled largely by the position in tobacco companies such
as ALTRIA GROUP and CAROLINA GROUP. While these companies are under political
and legal scrutiny, they generate large cash flows and each pays a substantial
dividend. On the negative side, within Consumer Cyclicals the Fund had poor
results in holding shares of STANLEY WORKS, the maker of Stanley brand tools,
and GENERAL MOTORS. Both stocks were sold based upon their losing market shares
to competitors and questionable balance sheet characteristics. Finally, Basic
Materials was simply an underperforming group hampered by high oil and gas input
costs and low demand for basic products such as aluminum and chemicals.
The best stocks within the Fund during the period were FANNIE MAE (FNM),
CAROLINA GROUP (CG), INTERNATIONAL BUSINESS MACHINES (IBM), FLEET BOSTON
FINANCIAL (FBF), and MASCO (MAS). The worst stocks in the portfolio were STANLEY
WORKS (SWK), CHUBB (CB), and ABBOTT LABORATORIES (ABT). Happily, this solid
performance led the Fund to positive results.
9
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CHARTWELL
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CHARTWELL DIVIDEND AND INCOME FUND, INC. MAY 31, 2003
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OUTLOOK:
We believe that the underlying fundamentals of the market continue to look
attractive as measured by the S&P 500 Index. Earnings are expected to grow 10%
this year and 14% next year according to the most recent estimates. The forward
price/earnings ratio is at 16.7x, which is roughly in-line with its historical
average over the last twenty years. In addition, there is a tremendous amount of
money still in money market and checking accounts earning virtually nothing.
Many individuals are shocked when they check the interest they are earning in
CDs and savings accounts. In addition, there is a perception of a safer
investment climate after the Iraqi war and better corporate governance. In
addition, the recently passed tax legislation encourages investment, especially
in dividend paying stocks. Combining the reasonable valuation, improving
earnings prospects, excess liquidity and beneficial tax changes we are still
excited about the prospects for good returns in certain areas during the rest of
the year. We will continue to focus on high quality companies with strong income
production. Especially in today's environment, we hope our investment strategy
will provide satisfactory returns for our investors.
10
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CHARTWELL
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CHARTWELL DIVIDEND AND INCOME FUND, INC. MAY 31, 2003
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UTILITY RESULTS
CWF (as a % of total investments)
[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
Equities
48%
Bonds
40%
REITS
7%
Utilities
5%
[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
UTILITY RETURNS
SIX-MONTHS ENDING MAY 31, 2003
S&P Utility Sector
20.4%
CWF Utilities
17.1%
Utility stocks had an strong six months, ending the period up more than 17%.
Both traditional, heavily regulated utilities and companies focused on less
certain unregulated businesses did extremely well. The valuations that we saw
six months ago, along with exceptional dividend yields that will be further
helped by beneficial tax treatment, propelled the group upward. In addition,
high leverage and questionable liquidity, along with severe rating agency
inquiry, had previously been a dark cloud hanging over the sector and is now
lifting. When RELIANT RESOURCES, a major operator in the deregulated power
production business, received an extension of its bank funding, it marked the
turning point for the whole group.
Most of the news on individual stocks is quite good. Among our best stocks was
TEPPCO PARTNERS (TPP), a major transporter of refined petroleum products and
petroleum gases, which came from a previously depressed price and benefited from
good volumes. Also helping the Fund was KINDER MORGAN PARTNERS (KMP), which also
owns an extensive array of gas and oil transportation and storage facilities.
Finally, EXELON (EXC), our neighborhood power company here in Berwyn,
Pennsylvania, provided very strong returns based on high power prices, good
finances and steady operation of their nuclear and other power facilities. The
only utility which really disappointed us was KEYSPAN ENERGY (KSE). In January,
KSE diluted earnings expectations by selling equity on the open market in order
to improve its balance sheet, a move the market did not expect. The stock has
recovered most of its ground since the equity sale, but still provided just
mediocre results during the last six months.
Many of the high-yielding, heavily regulated stocks are presently trading at the
top of their valuation ranges, which is only a modest discount to the broad
markets. We are shifting our focus to those companies who are mending their
balance sheets, reducing capital expenditures and increasing cash flow, such as
DUKE ENERGY. We also are looking at heavily regulated utilities which are still
in the lower end of their valuation range. Overall, because of the recent run-up
in most of the stocks, we are not adding to positions currently, but continue to
hold shares in quality stocks which pay strong dividends.
11
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CHARTWELL DIVIDEND AND INCOME FUND, INC. MAY 31, 2003
--------------------------------------------------------------------------------
REAL ESTATE INVESTMENT TRUSTS
CWF (as a % of total investments)
[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
Equities
48%
Bonds
40%
REITs
7%
Utilities
5%
[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
REIT Returns
SIX-MONTHS ENDING MAY 31, 2003
Morgan Stanley
REIT Index
12.2%
CWF REITs
12.3%
Unexpectedly, Real Estate Investment Trusts ("REITs") continued to outperform
the broad markets during the period. We attribute this to the investing public's
need for high yielding securities as an alternative to extremely low yielding
Treasuries. Even as the markets improved, the usually defensive REIT sector
continued to exhibit strong positive returns. Many of these stocks are not
trading on individual fundamentals such as cash flow and value versus underlying
real estate fundamentals. The Fund is maintaining its position in select REITs
with either exceptional cash flow characteristics or inexpensive prices, but is
not carrying an aggressive weight in the sector.
The following were the best stocks in the REIT portfolio: DUKE REALTY (DRE), a
diversified manager of office, industrial and retail properties; iStar Financial
(SFI), which provides mortgage and structured financing to other real estate
investors; and BOSTON PROPERTIES (BXP), one of the largest providers of major
metropolitan area office space in the United States. Hurting the portfolio were
HEALTHCARE REALTY TRUST (HR) and RECKSON ASSOCIATES (RA). HR fell in early March
on concerns that Healthsouth, a major tenent, would not pay its rents due to
investigations or impropriety at that company. HR has since recovered its
losses. RA, an office and industrial real estate owner/operator in the New York
area, has fallen under concerns they may not maintain their current dividend
payout. That stock too has largely recovered.
12
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CHARTWELL DIVIDEND AND INCOME FUND, INC. MAY 31, 2003
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UTILIZATION OF LEVERAGE
The Chartwell Dividend and Income Fund has utilized leverage through the
issuance of commercial paper. As of May 31, 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.
13
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CHARTWELL DIVIDEND AND INCOME FUND, INC. MAY 31, 2003
--------------------------------------------------------------------------------
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.
14
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CHARTWELL DIVIDEND AND INCOME FUND, INC. MAY 31, 2003
--------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (UNAUDITED)
NUMBER OF MARKET
SHARES VALUE
--------- ------------
COMMON STOCK--75.2%
AEROSPACE & DEFENSE--1.0%
Northrop Grumman Corporation......................... 15,000 $ 1,319,250
------------
AUTOMOTIVE--0.0%
General Motors Corporation........................... 400 14,132
------------
BANKS--8.4%
AmSouth Bancorporation............................... 50,760 1,132,963
Bank of America Corporation.......................... 21,000 1,558,200
Comerica, Inc........................................ 40,570 1,877,174
FleetBoston Financial Corporation.................... 106,600 3,152,162
HSBC Holdings Plc.................................... 13,240 784,735
Synovus Financial Corporation........................ 46,000 1,049,720
Washington Mutual, Inc............................... 35,000 1,427,300
------------
10,982,254
------------
CHEMICALS--0.8%
E.I. Du Pont de Nemours & Company.................... 25,000 1,053,500
------------
COMMUNICATIONS--1.0%
SBC Communications, Inc.............................. 52,735 1,342,633
------------
COMPUTER SERVICES--4.1%
International Business Machines Corporation.......... 60,000 5,282,400
------------
CONTAINERS & PACKAGING--0.8%
Newell Rubbermaid, Inc............................... 35,000 997,500
------------
ELECTRICAL SERVICES--3.8%
Cinergy Corporation.................................. 34,800 1,320,312
DQE, Inc............................................. 60,000 986,400
Duke Energy Corporation.............................. 68,168 1,321,096
Exelon Corporation................................... 14,000 802,200
Progress Energy, Inc................................. 12,000 564,600
------------
4,994,608
------------
FINANCIAL SERVICES--8.8%
Alliance Capital Management Holdings LP.............. 75,000 2,625,000
Citigroup, Inc....................................... 64,336 2,639,063
Fannie Mae........................................... 55,300 4,092,200
Freddie Mac.......................................... 20,000 1,196,200
Morgan Stanley....................................... 20,940 958,005
------------
11,510,468
------------
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
15
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CHARTWELL
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CHARTWELL DIVIDEND AND INCOME FUND, INC. MAY 31, 2003
--------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED)
NUMBER OF MARKET
SHARES VALUE
--------- ------------
COMMON STOCK (CONTINUED)
FOOD, BEVERAGE & TOBACCO--5.8%
Altria Group, Inc.................................... 60,700 $ 2,506,910
ConAgra Foods, Inc................................... 50,000 1,213,500
General Mills, Inc................................... 21,000 982,380
HJ Heinz Company..................................... 30,000 992,100
Loews Corporation - Carolina Group................... 74,430 1,872,659
------------
7,567,549
------------
GAS/NATURAL GAS--3.3%
AmeriGas Partners LP................................. 15,200 400,368
KeySpan Corporation.................................. 30,000 1,056,600
Kinder Morgan Energy Partners LP..................... 45,000 1,769,850
Northern Border Partners Limited..................... 26,600 1,079,960
------------
4,306,778
------------
HOUSEHOLD FURNITURE & FIXTURES--1.4%
Masco Corporation.................................... 75,000 1,845,000
------------
INSURANCE--10.1%
ACE Limited.......................................... 110,580 4,036,170
AON Corporation...................................... 30,000 769,800
Hartford Financial Services Group, Inc............... 68,000 3,171,520
Lincoln National Corporation......................... 57,072 1,986,105
St. Paul Companies................................... 44,935 1,643,722
Travelers Property Casualty Corporation,
Class A........................................... 97,390 1,590,379
------------
13,197,696
------------
METALS--0.0%
Alcoa, Inc........................................... 2,200 54,142
------------
OFFICE FURNITURE & FIXTURES--3.5%
3M Company........................................... 15,000 1,897,050
Pitney Bowes, Inc.................................... 70,000 2,688,700
------------
4,585,750
------------
PAPER & PAPER PRODUCTS--1.4%
International Paper Company.......................... 22,000 806,740
MeadWestvaco Corporation............................. 40,000 1,001,600
------------
1,808,340
------------
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
16
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CHARTWELL DIVIDEND AND INCOME FUND, INC. MAY 31, 2003
--------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED)
NUMBER OF MARKET
SHARES VALUE
--------- ------------
COMMON STOCK (CONTINUED)
PETROLEUM & FUEL PRODUCTS--5.7%
ConocoPhillips....................................... 22,902 $ 1,236,021
Diamond Offshore Drilling, Inc....................... 38,930 885,268
Exxon Mobil Corporation.............................. 38,000 1,383,200
Marathon Oil Corporation............................. 40,000 1,029,200
Occidental Petroleum Corporation..................... 50,000 1,687,000
TEPPCO Partners LP................................... 34,800 1,190,160
Tri-Union Development Corporation(a)................. 590 --
Tribo Petroleum Corporation, Private Company,
Parent of Tri-union Development(a)................ 1,000 --
------------
7,410,849
------------
PHARMACEUTICALS--3.1%
Abbott Laboratories.................................. 13,500 601,425
Bristol-Myers Squibb Company......................... 47,300 1,210,880
Wyeth................................................ 50,000 2,192,500
------------
4,004,805
------------
PROFESSIONAL SERVICES--0.8%
Halliburton Company.................................. 45,000 1,074,150
------------
REAL ESTATE INVESTMENT TRUSTS--11.0%
Boston Properties, Inc............................... 30,000 1,257,600
BRE Properties, Class A.............................. 19,500 628,290
CarrAmerica Realty Corporation....................... 32,600 905,628
Duke Realty Corporation.............................. 108,820 3,088,312
Equity Office Properties Trust....................... 40,800 1,097,928
Healthcare Realty Trust, Inc......................... 62,587 1,818,152
iStar Financial, Inc................................. 50,000 1,650,000
Mack-Cali Realty Corporation......................... 27,682 951,430
Reckson Associates Realty Corporation................ 80,000 1,620,000
SL Green Realty Corporation.......................... 39,200 1,353,968
------------
14,371,308
------------
TESTING LABORATORIES--0.4%
Monsanto Company..................................... 26,000 521,300
------------
TOTAL COMMON STOCK (COST $90,542,472) 98,244,412
------------
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
17
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CHARTWELL DIVIDEND AND INCOME FUND, INC. MAY 31, 2003
--------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED)
PRINCIPAL MARKET
AMOUNT VALUE
--------- ------------
NON-CONVERTIBLE BONDS--61.8%
AEROSPACE & DEFENSE--0.9%
Sequa Corporation
9.000%, 08/01/09.................................. $1,100,000 $ 1,133,000
------------
AIRCRAFT--0.2%
Atlas Air, Inc.
10.750%, 08/01/05................................. 950,000 223,250
------------
APPAREL/TEXTILES--1.2%
Levi Strauss & Co.
11.625%, 01/15/08................................. 1,330,000 1,143,800
Phillips Van Heusen+
8.125%, 05/01/13.................................. 405,000 417,150
------------
1,560,950
------------
AUTOMOTIVE--3.0%
Advanced Accessory Systems Company+
10.750%, 06/15/11................................. 1,275,000 1,306,875
Collins & Aikman Products
10.750%, 12/31/11................................. 1,055,000 912,575
TRW Automotive, Inc.+
11.000%, 02/15/13................................. 1,580,000 1,655,050
------------
3,874,500
------------
BANKS--1.1%
Western Financial
9.625%, 05/15/12.................................. 1,330,000 1,389,850
------------
BROADCASTING, NEWSPAPERS & ADVERTISING--1.7%
Charter Communications Holdings, LLC
10.750%, 10/01/09................................. 1,480,000 1,087,800
EchoStar DBS Corporation
10.375%, 10/01/07................................. 1,010,000 1,119,838
------------
2,207,638
------------
BUILDING & CONSTRUCTION SUPPLIES--3.4%
Atrium Companies, Inc., Series B
10.500%, 05/01/09 1,180,000 1,259,650
Georgia-Pacific Corporation+
8.875%, 02/01/10.................................. 1,010,000 1,055,450
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
18
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CHARTWELL DIVIDEND AND INCOME FUND, INC. MAY 31, 2003
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SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED)
PRINCIPAL MARKET
AMOUNT VALUE
---------- ------------
NON-CONVERTIBLE BONDS (CONTINUED)
Integrated Electrical Services, Inc., Series C
9.375%, 02/01/09.................................. $1,180,000 $ 1,203,600
MMI Products, Inc., Series B
11.250%, 04/15/07................................. 1,180,000 902,700
------------
4,421,400
------------
CHEMICALS--2.1%
FMC Corporation
10.250%, 11/01/09................................. 780,000 879,450
Lyondell Chemical Company
9.500%, 12/15/08.................................. 1,130,000 1,087,625
Rhodia SA+
8.875%, 06/01/11.................................. 780,000 787,800
------------
2,754,875
------------
CONSUMER PRODUCTS--0.7%
American Achievement Corporation, Series B
11.625%, 01/01/07................................. 800,000 869,000
------------
CONTAINERS & PACKAGING--3.9%
Crown Euro Holdings SA+
9.500%, 03/01/11.................................. 1,130,000 1,183,675
Owens-Brockway Glass Container, Inc.
8.750%, 11/15/12.................................. 1,170,000 1,250,438
Pliant Corporation
13.000%, 06/01/10................................. 1,250,000 1,143,750
Pliant Corporation
11.125%, 09/01/09................................. 840,000 869,400
US Can Corporation, Series B
12.375%, 10/01/10................................. 1,000,000 705,000
------------
5,152,263
------------
ELECTRICAL EQUIPMENT--1.8%
Juno Lighting, Inc.
11.875%, 07/01/09................................. 1,500,000 1,601,250
Knowles Electronics, Inc.
13.125%, 10/15/09................................. 1,000,000 820,000
------------
2,421,250
------------
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
19
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CHARTWELL DIVIDEND AND INCOME FUND, INC. MAY 31, 2003
--------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED)
PRINCIPAL MARKET
AMOUNT VALUE
---------- ------------
NON-CONVERTIBLE BONDS (CONTINUED)
ENERGY--4.0%
Bluewater Finance Limited
10.250%, 02/15/12................................. $1,080,000 $ 1,096,200
Frontier Oil Corporation
11.750%, 11/15/09................................. 1,500,000 1,657,500
Lone Star Technologies, Series B
9.000%, 06/01/11.................................. 850,000 884,000
Tri-Union Development Corporation(e)
12.500%, 06/01/06................................. 846,000 423,000
Tri-Union Development Corporation, Series AI(e)
12.500%, 06/01/06................................. 62,500 31,250
Vintage Petroleum
9.750%, 06/30/09.................................. 1,010,000 1,083,225
------------
5,175,175
------------
ENTERTAINMENT--2.9%
Alliance Atlantis Communications, Inc.
13.000%, 12/15/09................................. 1,580,000 1,809,100
Muzak LLC+
10.000%, 02/15/09................................. 350,000 360,500
Royal Caribbean Cruises
8.750%, 02/02/11.................................. 780,000 787,800
Town Sports International+
9.625%, 04/15/11.................................. 860,000 898,700
------------
3,856,100
------------
ENVIRONMENTAL SERVICES--0.6%
Allied Waste North America, Series B
8.500%, 12/01/08.................................. 760,000 803,700
------------
FINANCIAL SERVICES--1.8%
H&E Equipment Finance
11.125%, 06/15/12................................. 1,280,000 1,113,600
United Rentals, Inc., Series B
10.750%, 04/15/08................................. 1,150,000 1,230,500
------------
2,344,100
------------
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
20
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CHARTWELL DIVIDEND AND INCOME FUND, INC. MAY 31, 2003
--------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED)
PRINCIPAL MARKET
AMOUNT VALUE
---------- ------------
NON-CONVERTIBLE BONDS (CONTINUED)
FOOD, BEVERAGE & TOBACCO--0.8%
Land O'Lakes, Inc.
8.750%, 11/15/11.................................. $1,330,000 $ 1,004,150
------------
HOTELS & LODGING--2.0%
Intrawest Corporation
9.750%, 08/15/08.................................. 1,050,000 1,086,750
Resort International Hotel and Casino
11.500%, 03/15/09................................. 1,680,000 1,533,000
------------
2,619,750
------------
HOUSEHOLD PRODUCTS--0.7%
Interface, Inc.
10.375%, 02/01/10................................. 970,000 856,025
------------
MACHINERY--0.5%
Better Minerals & Aggregates Company
13.000%, 09/15/09................................. 1,000,000 685,000
------------
MEDICAL--0.9%
Res-Care, Inc.
10.625%, 11/15/08................................. 1,280,000 1,171,200
------------
METALS--2.0%
Century Aluminum Company
11.750%, 04/15/08................................. 380,000 389,500
Euramax International PLC
11.250%, 10/01/06................................. 1,250,000 1,293,750
Wolverine Tube, Inc.
10.500%, 04/01/09................................. 900,000 967,500
------------
2,650,750
------------
MISCELLANEOUS INDUSTRIAL--2.0%
Foamex Capital Corporation
10.750%, 04/01/09................................. 1,060,000 853,300
International Wire Group, Inc.
11.750%, 06/01/05................................. 1,500,000 1,042,500
Tekni-Plex, Inc., Series B
12.750%, 06/15/10................................. 780,000 768,300
------------
2,664,100
------------
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
21
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CHARTWELL DIVIDEND AND INCOME FUND, INC. MAY 31, 2003
--------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED)
PRINCIPAL MARKET
AMOUNT VALUE
---------- ------------
NON-CONVERTIBLE BONDS (CONTINUED)
PHARMACEUTICALS--0.8%
Matria Healthcare, Series B
11.000%, 05/01/08................................. $1,080,000 $ 1,090,800
------------
PRINTING & PUBLISHING--3.5%
Mail-Well I Corporation
9.625%, 03/15/12.................................. 1,140,000 1,174,200
MDC Corporation, Inc.
10.500%, 12/01/06................................. 850,000 884,000
Vertis, Inc., Series B
10.875%, 06/15/09................................. 1,230,000 1,193,100
Von Hoffman Corporation
10.250%, 03/15/09................................. 1,230,000 1,273,050
------------
4,524,350
------------
REAL ESTATE--3.5%
CB Richard Ellis Service
11.250%, 06/15/11................................. 850,000 888,250
LNR Property Corporation
10.500%, 01/15/09................................. 1,180,000 1,264,075
Tech Olympic USA, Inc.
9.000%, 07/01/10.................................. 1,030,000 1,076,350
WCI Communities, Inc.
10.625%, 02/15/11................................. 1,190,000 1,291,150
------------
4,519,825
------------
REAL ESTATE INVESTMENT TRUSTS--1.2%
Felcor Lodging LP
9.500%, 09/15/08.................................. 780,000 780,000
MeriStar Hospitality
10.500%, 06/15/09................................. 855,000 835,762
------------
1,615,762
------------
RESTAURANTS--0.9%
Sbarro, Inc.
11.000%, 09/15/09................................. 1,180,000 1,147,550
------------
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
22
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CHARTWELL DIVIDEND AND INCOME FUND, INC. MAY 31, 2003
--------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED)
PRINCIPAL MARKET
AMOUNT VALUE
---------- ------------
NON-CONVERTIBLE BONDS (CONTINUED)
RETAIL--2.9%
Autonation, Inc.
9.000%, 08/01/08.................................. $1,130,000 $ 1,237,350
Mothers Work, Inc.
11.250%, 08/01/10................................. 1,380,000 1,504,200
Sonic Automotive, Inc., Series D
11.000%, 08/01/08................................. 1,000,000 1,060,000
------------
3,801,550
------------
SEMI-CONDUCTORS/INSTRUMENTS--3.0%
AMI Semiconductor, Inc.+
10.750%, 02/01/13................................. 1,230,000 1,356,075
ASAT Finance LLC
12.500%, 11/01/06................................. 487,500 392,437
ON Semiconductor Corporation
13.000%, 05/15/08................................. 1,000,000 975,000
Solectron Corporation
9.625%, 02/15/09.................................. 1,130,000 1,220,400
------------
3,943,912
------------
TELEPHONES & TELECOMMUNICATIONS--2.3%
Madison River Financial
13.250%, 03/01/10................................. 1,500,000 1,440,000
Nextel Communications
9.375%, 11/15/09.................................. 980,000 1,055,950
Pac-West Telecommunications, Inc.
13.500%, 02/01/09................................. 1,000,000 535,000
------------
3,030,950
------------
TRANSPORTATION--1.8%
General Maritime Corporation+
10.000%, 03/15/13................................. 1,080,000 1,158,300
Pacer International, Inc., Series B
11.750%, 06/01/07................................. 1,180,000 1,258,175
------------
2,416,475
------------
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
23
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CHARTWELL DIVIDEND AND INCOME FUND, INC. MAY 31, 2003
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SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED)
PRINCIPAL AMOUNT/
NUMBER OF MARKET
SHARES VALUE
---------- ------------
NON-CONVERTIBLE BONDS (CONTINUED)
TRUCKING--1.0%
North American Van Lines
13.375%, 12/01/09................................. $1,180,000 $ 1,274,400
------------
UTILITIES--2.7%
AES Corporation
9.500%, 06/01/09.................................. 1,680,000 1,604,400
Calpine Corporation
8.750%, 07/15/07.................................. 1,330,000 937,650
TNP Enterprises, Inc., Series B
10.250%, 04/01/10................................. 1,105,000 1,060,800
------------
3,602,850
------------
TOTAL NON-CONVERTIBLE BONDS
(COST $81,536,320) ............................... 80,806,450
------------
PREFERRED STOCK--0.7%
CHEMICALS--0.2%
Rhone-Poulenc, Series A.............................. 10,620 270,598
------------
GAS/NATURAL GAS--0.3%
TransCanada Pipeline................................. 14,905 386,039
------------
INSURANCE--0.2%
Hartford Financial Services Group, Inc............... 5,000 259,850
------------
TOTAL PREFERRED STOCK (COST $907,218) ............... 916,487
------------
WARRANTS--0.0%
Dayton Superior Corporation(a)(b)+................... 1,500 15
NTELOS, Inc.(a)(c)(e)................................ 1,000 --
Pliant Corporation(a)(d)+............................ 1,500 1,688
------------
TOTAL WARRANTS (COST $62,448) ....................... 1,703
------------
TOTAL INVESTMENTS--137.7%
(COST $173,048,458) .............................. 179,969,052
------------
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
24
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CHARTWELL DIVIDEND AND INCOME FUND, INC. MAY 31, 2003
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SCHEDULE OF INVESTMENTS (UNAUDITED) (CONCLUDED)
WRITTEN MARKET
CONTRACTS VALUE
---------- -------------
COVERED CALL OPTIONS WRITTEN--(1.8)%
3M Company Jun. 125 Call............................. (150) $ (48,000)
Abbott Laboratories Jun. 45 Call..................... (130) (10,400)
ACE Limited Jun. 35 Call............................. (300) (43,500)
Bank of America Corporation Aug. 75 Call............. (110) (23,100)
Bank of America Corporation Jun. 75 Call............. (100) (8,500)
Bristol-Myers Squibb Company Jun. 25 Call............ (473) (52,030)
Citigroup, Inc. Jun. 40 Call......................... (320) (56,000)
Diamond Offshore Drilling Jun. 22.5 Call............. (389) (29,175)
Duke Energy Corporation Jul.15 Call.................. (680) (306,000)
Exelon Corporation Jul. 55 Call...................... (140) (39,200)
Fannie Mae Jun. 75 Call.............................. (550) (55,000)
FleetBoston Financial Corporation Jul. 27.5 Call..... (1,000) (250,000)
Halliburton Company Jul. 25 Call..................... (450) (29,250)
Hartford Financial Services Group, Inc.
Jun. 40 Call...................................... (165) (109,725)
International Business Machines Corporation
Jun. 85 Call...................................... (200) (80,000)
International Business Machines Corporation
Jun. 90 Call...................................... (400) (46,000)
Lincoln National Corporation Jul. 35 Call............ (570) (65,550)
Marathon Oil Corporation Jul. 22.5 Call.............. (400) (120,000)
Masco Corporation Jun. 22.5 Call..................... (350) (77,000)
Monsanto Corporation Jul. 20 Call.................... (260) (23,400)
Occidental Petroleum Corporation Aug. 30 Call........ (500) (185,000)
Pitney Bowes, Inc. Jul. 35 Call...................... (700) (245,000)
SBC Communications, Inc. Jul. 25 Call................ (500) (67,500)
St. Paul Companies Jun. 35 Call...................... (400) (64,000)
Travelers Property Casualty Corporation
Jun. 15 Call...................................... (450) (61,875)
Travelers Property Casualty Corporation
Sept. 17.5 Call................................... (500) (25,000)
Wyeth Jun. 40 Call................................... (500) (195,000)
------------
TOTAL COVERED CALL OPTIONS WRITTEN
(PREMIUM RECEIVED $1,008,415) .................... (2,315,205)
------------
OTHER LIABILITIES IN EXCESS OF OTHER ASSETS--(35.9)% (46,927,742)
------------
NET ASSETS--100% .................................... $130,726,105
============
+ 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 May 31, 2003, these
securities amounted to $11,050,677 or 8.5% of net assets.
(a) Non-income producing security.
(b) 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.
(c) Each warrant entitles the holder to purchase 1.8 shares of common stock at
an exercise price of $47.58 per share. The warrants are exercisable until
8/15/10.
(d) 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
6/01/10.
(e) Securities 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 securities as of May 31, 2003 was
$454,250.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
25
----
CHARTWELL
--------------------------------------------------------------------------------
CHARTWELL DIVIDEND AND INCOME FUND, INC. MAY 31, 2003
--------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
AS OF MAY 31, 2003 (UNAUDITED)
ASSETS:
Investments, at value (cost $173,048,458) (Note 1).............. $179,969,052
Cash............................................................ 127,587
Interest receivable............................................. 2,504,987
Receivable for securities sold.................................. 1,154,850
Receivable for reinvestment of dividends........................ 179,824
Dividends receivable............................................ 281,451
Prepaid expenses and other assets............................... 20,051
------------
Total assets............................................... 184,237,802
------------
LIABILITIES:
Commercial paper (Note 4)....................................... 49,961,178
Options written, at value (premiums received--
$1,008,415) (Note 1)......................................... 2,315,205
Payable for securities purchased................................ 906,600
Payable for investment management fees (Note 2)................. 128,071
Payable for administration fees (Note 2)........................ 15,067
Accrued expenses and other liabilities.......................... 185,576
------------
Total liabilities.......................................... 53,511,697
------------
NET ASSETS...................................................... $130,726,105
============
NET ASSETS CONSIST OF:
Common Stock, $0.01 par value
(authorized 100,000,000 shares)............................ $ 162,059
Additional paid-in capital................................... 209,544,089
Distributions in excess of net investment income............. (2,931,563)
Accumulated net realized losses on
investments and options.................................... (81,662,284)
Net unrealized appreciation on investments and options....... 5,613,804
------------
NET ASSETS...................................................... $130,726,105
============
NET ASSET VALUE PER SHARE:
$130,726,105 / 16,205,930 shares of
Common Stock issued and outstanding........................ $ 8.07
============
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
26
----
CHARTWELL
--------------------------------------------------------------------------------
CHARTWELL DIVIDEND AND INCOME FUND, INC. MAY 31, 2003
--------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED
MAY 31, 2003 (UNAUDITED)
INVESTMENT INCOME: (NOTE 1)
Interest........................................................ $ 4,857,172
Dividends ...................................................... 1,820,605
------------
Total investment income.................................... 6,677,777
------------
EXPENSES:
Investment management fees (Note 2)............................. 803,918
Commercial paper fees........................................... 112,511
Professional fees............................................... 94,827
Administration fees (Note 2).................................... 84,623
Printing and shareholder reports................................ 51,949
Registration fees............................................... 20,397
Custodian fees.................................................. 19,017
Transfer agent fees............................................. 19,002
Directors' fees and expenses.................................... 9,543
Pricing fees.................................................... 2,729
Other operating expenses........................................ 17,970
------------
Total operating expenses..................................... 1,236,486
Interest expense................................................ 351,061
------------
Total expenses............................................... 1,587,547
------------
Less:
Investment management fees waived (Note 2)................. (84,623)
------------
Net expenses............................................... 1,502,924
------------
NET INVESTMENT INCOME...................................... 5,174,853
------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: (NOTE 1)
Net realized loss on investments................................ (5,470,120)
Net realized gain on call options written....................... 1,187,717
Change in net unrealized appreciation on investments
and options................................................... 16,804,353
------------
Net realized and unrealized gain on investments
and options.................................................. 12,521,950
------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS............ $ 17,696,803
============
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
27
----
CHARTWELL
--------------------------------------------------------------------------------
CHARTWELL DIVIDEND AND INCOME FUND, INC. MAY 31, 2003
--------------------------------------------------------------------------------
STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED
MAY 31, 2003 (UNAUDITED)
INCREASE (DECREASE) IN CASH
Cash flows provided from (used for) operating activities:
Interest and dividends received.............................. $ 6,739,887
Operating expenses paid...................................... (1,054,726)
Interest paid................................................ (423,758)
Reinvestment of dividends.................................... (179,824)
Purchase of long-term portfolio investments.................. (70,679,704)
Proceeds from sale of long-term portfolio investments........ 68,999,684
Net premiums received from written options transactions...... 1,862,028
------------
Net cash provided from operating activities................ 5,263,587
------------
Cash flows provided from (used for) financing activities:
Net cash provided from commercial paper issuance............. (335,139)
Cash dividends paid to shareholders.......................... (7,256,517)
------------
Net cash used for financing activities..................... (7,591,656)
------------
Net decrease in cash............................................ (2,328,069)
Cash at beginning of period.................................. 2,455,656
------------
Cash at end of period........................................ $ 127,587
============
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............ $ 17,696,803
------------
Accretion of Market Discount................................. (157,652)
Increase in investments...................................... (2,330,269)
Net realized loss on investments and options................. 4,282,403
Net change in unrealized appreciation
on investments and options................................ (16,804,353)
Decrease in receivable for securities sold................... 1,819,617
Increase in receivable for reinvestment of dividends (179,824)
Decrease in interest and dividend receivable................. 272,470
Increase in interest paid.................................... 423,758
Increase in commercial paper discount........................ (72,697)
Decrease in other assets..................................... 6,755
Increase in payable for securities purchased................. 216,194
Increase in accrued expenses and other liabilities 90,382
------------
Total adjustments.......................................... (12,433,216)
------------
Net cash provided from operating activities.................. $ 5,263,587
============
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
28
----
CHARTWELL
--------------------------------------------------------------------------------
CHARTWELL DIVIDEND AND INCOME FUND, INC. MAY 31, 2003
--------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
FOR THE SIX FOR THE
MONTHS ENDED YEAR ENDED
MAY 31, 2003 NOVEMBER 30,
(UNAUDITED) 2002
------------ ------------
OPERATIONS:
Net investment income....................... $ 5,174,853 $ 10,541,868
Net realized loss on investments............... (5,470,120) (32,558,701)
Net realized gain on call options written...... 1,187,717 3,208,389
Change in net unrealized appreciation on
investments and options...................... 16,804,353 8,318
------------ ------------
Net increase (decrease) in net assets
resulting from operations...................... 17,696,803 (18,800,126)
------------ ------------
DIVIDENDS AND DISTRIBUTIONS TO
SHAREHOLDERS FROM:
Net investment income.......................... (8,059,348) 10,544,215)
Tax return of capital.......................... -- (7,287,730)
------------ ------------
Net decrease in net assets resulting from
dividends and distributions.................... (8,059,348) (17,831,945)
------------ ------------
CAPITAL STOCK TRANSACTIONS:
Reinvestment of dividends resulting in the
issuance of Common Stock transactions.......... 1,002,503 2,579,638
------------ ------------
Net increase in net assets resulting from
Common Stock transactions...................... 1,002,503 2,579,638
------------ ------------
Total increase (decrease) in net assets........... 10,639,958 (34,052,433)
------------ ------------
NET ASSETS:
Beginning of period............................ 120,086,147 154,138,580
------------ ------------
End of period.................................. $130,726,105 $120,086,147
============ ============
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
29
----
CHARTWELL
--------------------------------------------------------------------------------
CHARTWELL DIVIDEND AND INCOME FUND, INC. MAY 31, 2003
--------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
FOR THE
SIX MONTHS FOR THE
ENDED YEAR ENDED
THE FOLLOWING PER SHARE DATA AND RATIOS HAVE MAY 31, 2003 NOVEMBER 30,
BEEN DERIVED FROM INFORMATION PROVIDED IN THE (UNAUDITED) 2002
FINANCIAL STATEMENTS ------------ -----------
NET ASSET VALUE, BEGINNING OF PERIOD ................ $ 7.47 $ 9.76
-------- --------
INCOME GAIN (LOSS) FROM INVESTMENT OPERATIONS: (1)
Net investment income ............................. 0.32 0.66
Net realized and unrealized gain (loss) on
investment transactions ......................... 0.78 (1.83)
-------- --------
Total from investment operations ................ 1.10 (1.17)
-------- --------
LESS DIVIDENDS AND DISTRIBUTIONS:
Dividends from net investment income .............. (0.50) (0.66)
Tax return of capital ............................. -- (0.46)
-------- --------
Total dividends and distributions ............... (0.50) (1.12)
-------- --------
NET ASSET VALUE, END OF PERIOD ...................... $ 8.07 $ 7.47
======== ========
MARKET VALUE, END OF PERIOD ......................... $ 8.50 $ 7.27
======== ========
TOTAL RETURN BASED ON: (2)
Net asset value ................................... 15.53% (13.50)%
======== ========
Market value ...................................... 24.63% (22.12)%
======== ========
RATIOS AND SUPPLEMENTAL DATA: (3)
Net assets, end of period (000 omitted) ........... $130,726 $120,086
======== ========
Total expenses including waiver of fees ........... 2.51% 2.81%
Total expenses excluding waiver of fees ........... 2.65% 2.86%
Total operating expenses including waiver
of fees (4) ................................... 0.87% 1.81%
Total operating expenses excluding waiver
of fees (4) ................................... 1.01% 1.86%
Commercial paper expenses ......................... 0.39% 1.00%
Net investment income including waiver of fees .... 8.64% 7.64%
Portfolio turnover ................................ 40% 102%
LEVERAGE ANALYSIS:
Aggregate amount outstanding at end of period
(000 omitted) ................................... $ 50,000 $ 50,000
Average daily balance of amortized cost of
commercial paper outstanding (000 omitted) ...... $ 49,916 $ 56,250
Asset coverage per $1,000 at end of period ........ $ 3,684 $ 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.
30
----
CHARTWELL
--------------------------------------------------------------------------------
CHARTWELL DIVIDEND AND INCOME FUND, INC. MAY 31, 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.
31
----
CHARTWELL
--------------------------------------------------------------------------------
CHARTWELL DIVIDEND AND INCOME FUND, INC. MAY 31, 2003
--------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (CONCLUDED)
FOR THE
PERIOD FROM
FOR THE JUNE 29,
YEAR ENDED 1998* TO
NOVEMBER 30, NOVEMBER 30,
1999 1998
----------- ----------
NET ASSET VALUE, BEGINNING OF PERIOD ................ $ 4.17 $ 14.96+
-------- --------
INCOME GAIN (LOSS) FROM INVESTMENT OPERATIONS: (1)
Net investment income ............................. 0.88 0.40
Net realized and unrealized loss on
investment transactions ......................... (1.27) (0.78)
-------- --------
Total loss from investment operations ........... (0.39) (0.38)
-------- --------
LESS DIVIDENDS AND DISTRIBUTIONS:
Dividends from net investment income .............. (0.86) (0.41)
Distributions from realized short-term gains ...... (0.03) --
Tax return of capital ............................. (0.35) --
-------- --------
Total dividends and distributions ............... (1.24) (0.41)
-------- --------
NET ASSET VALUE, BEGINNING OF PERIOD ................ $ 12.54 $ 14.17
======== ========
MARKET VALUE, BEGINNING OF PERIOD ................... $ 10.50 $ 14.19
======== ========
TOTAL RETURN BASED ON: (2)
Net asset value ................................... (2.47)% (2.48)%
======== ========
Market value ...................................... (18.44)% (2.62)%
======== ========
RATIOS AND SUPPLEMENTAL DATA: (3)
Net assets, end of period (000 omitted) ........... $194,859 $219,152
======== ========
Total expenses .................................... 2.03% 1.32%(5)
Total operating expenses (4) ...................... 1.35% 1.35%(5)
Commercial paper expenses ......................... 0.68% N/A
Net investment incomes ............................ 6.51% 6.99%(5)
Portfolio turnover ................................ 119% 27%
LEVERAGE ANALYSIS:
Aggregate amount outstanding at end of period
(000 omitted) ................................... $ 60,000 N/A
Average daily balance of amortized cost of
commercial paper outstanding (000 omitted) ...... $ 59,690 N/A
Asset coverage per $1,000 at end of period ........ $ 4,378 N/A
---------
* Commencement of operations.
+ Net of offering costs of $0.04 charged to paid-in capital with respect to
issuance of common shares. (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.
32
----
CHARTWELL
--------------------------------------------------------------------------------
CHARTWELL DIVIDEND AND INCOME FUND, INC. MAY 31, 2003
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
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 (the "Act"), as amended, 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 a cash and cash
equivalent on the statement of assets and liabilities. Amounts so invested are
generally available on the same business day.
33
----
CHARTWELL
--------------------------------------------------------------------------------
CHARTWELL DIVIDEND AND INCOME FUND, INC. MAY 31, 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.
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.
34
----
CHARTWELL
--------------------------------------------------------------------------------
CHARTWELL DIVIDEND AND INCOME FUND, INC. MAY 31, 2003
--------------------------------------------------------------------------------
NOTE 2. INVESTMENT MANAGEMENT, ADMINISTRATION 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 agreed to
limit the investment management fee paid to it by the Fund to 0.85% of the
Fund's Managed Assets effective July 1, 2002. 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 $250 for each meeting attended, plus $1,000 per
year for audit committee members and an additional fee of $250 per year for the
chairman of the audit committee.
For the six months ended May 31, 2003, the Fund incurred a legal expense of
$68,895, to Drinker Biddle & Reath LLP, counsel for the Fund. A partner of the
firm is an officer of the Fund.
NOTE 3. PURCHASE AND SALES OF INVESTMENTS
For the six months ended May 31, 2003 purchases and sales of investments,
excluding short-term investments, totaled $70,574,058 and $66,361,822,
respectively.
35
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CHARTWELL
--------------------------------------------------------------------------------
CHARTWELL DIVIDEND AND INCOME FUND, INC. MAY 31, 2003
--------------------------------------------------------------------------------
The following table summarizes the Fund's call options written for the six
months ended May 31, 2003.
NUMBER OF
CONTRACTS PREMIUMS
--------- ----------
Options outstanding November 30, 2002 ....... 6,324 $ 726,799
Options written ............................. 37,082 3,273,526
Options expired ............................. (18,502) (1,719,839)
Options exercised ........................... (4,474) (442,998)
Options closed .............................. (9,743) (829,073)
------ ----------
Options outstanding May 31, 2003 ............ 10,687 $1,008,415
====== ==========
NOTE 4. COMMERCIAL PAPER
As of May 31, 2003, $50,000,000 of commercial paper was outstanding with an
amortized cost of $49,961,178. The average discount rate of commercial paper
outstanding at May 31, 2003 was 1.38%. The average daily balance of commercial
paper outstanding for the six months ended May 31, 2003 was $49,915,884 at a
weighted average discount rate of 1.61%. The maximum face amount of commercial
paper outstanding at any time during the six months ended May 31, 2003, was
$60,000,000. 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 0.15% per annum on the unused balance.
During the six months ended May 31, 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
16,205,930 shares of common stock outstanding at May 31, 2003, the Manager owned
11,487 shares.
For the six months ended May 31, 2003 and the year ended November 30, 2002 the
Fund issued 133,167 and 275,201 shares respectively, in connection with the
Fund's dividend reinvestment plan.
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
36
----
CHARTWELL
--------------------------------------------------------------------------------
CHARTWELL DIVIDEND AND INCOME FUND, INC. MAY 31, 2003
--------------------------------------------------------------------------------
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.
The following summarizes the capital loss carryforwards as of May 31, 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
Under the current tax law, capital and currency losses realized after October
31, 2002 are deferred and treated as occurring on the first day of the following
fiscal year. For fiscal year ended November 30, 2002, the Fund elected to defer
capital losses occurring between November 1, 2002 and November 30, 2002 in the
amount of $230,595.
For Federal income tax purposes, the cost of securities owned at May 31, 2003,
and the net realized gains or losses on securities sold for the period were
different from 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 and aggregate gross unrealized appreciation and depreciation on investments
and options, held by the Fund at May 31, 2003 were as follows:
Federal Tax Cost ................................ $172,040,043
------------
Gross unrealized appreciation ................... 14,913,322
Gross unrealized depreciation ................... (9,299,518)
------------
Net unrealized appreciation ..................... $ 5,613,804
============
37
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CHARTWELL
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CHARTWELL DIVIDEND AND INCOME FUND, INC. MAY 31, 2003
--------------------------------------------------------------------------------
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
----------------- ------- ----------- ------------ --------------
June 2, 2003 June 17, 2003 June 19, 2003 June 30, 2003 $0.0833
July 1, 2003 July 15, 2003 July 17, 2003 July 31, 2003 $0.0833
August 1, 2003 August 19, 2003 August 21, 2003 August 29, 2003 $0.0833
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.
38
----
CHARTWELL
--------------------------------------------------------------------------------
CHARTWELL DIVIDEND AND INCOME FUND, INC. MAY 31, 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
39
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CHARTWELL
--------------------------------------------------------------------------------
CHARTWELL DIVIDEND AND INCOME FUND, INC. MAY 31, 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
40
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CHARTWELL
--------------------------------------------------------------------------------
CHARTWELL DIVIDEND AND INCOME FUND, INC. MAY 31, 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 six-months ended
May 31, 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
Leverage of $60 million in commercial paper was initially sold by the Fund on
July 28, 1999. Through May 31, 2003, interest paid on the commercial paper
ranged from 1.37% to 6.75%. As of May 31, 2003, the Fund had $20 million
outstanding at 1.40% per annum maturing on June 2, 2003, and $30 million at
1.37% per annum maturing on July 7, 2003. All interest rates include fees due to
the broker-dealer. The Fund must experience an annual return of 0.42% to cover
interest payments on the commercial paper.
41
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CHARTWELL
--------------------------------------------------------------------------------
CHARTWELL DIVIDEND AND INCOME FUND, INC. MAY 31, 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 .................... -14.42% -7.50% 0.58% 6.35% 13.27%
Assumes $130 million assets attributable to common shareholders; $50 million
aggregate leverage with an average interest rate of 1.50%. 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
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
42
----
CHARTWELL
--------------------------------------------------------------------------------
NOTES
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
CHARTWELL DIVIDEND AND INCOME FUND, INC. MAY 31, 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 ACCOUNTANTS
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.
The accompanying financial statements as of May 31, 2003 were not audited and
accordingly, no opinion is expressed on them.
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.
Not applicable -- only effective for annual reports with periods ending on or
after July 15, 2003.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not applicable -- only effective for annual reports with periods ending on or
after July 15, 2003.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not applicable -- only effective for annual reports with periods ending on or
after December 15, 2003.
ITEMS 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable for semi-annual financial statements.
ITEM 6. (RESERVED)
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable for semi-annual financial statements.
ITEM 8. (RESERVED)
ITEM 9. CONTROLS AND PROCEDURES.
(a) The registrant's Principal Executive Officer and Principal Financial
Officer, 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 material information relating to the
registrant, including its consolidated subsidiaries, is made known to them by
others within those entities, particularly during the period in which this
report is being prepared. Further, in their opinion, 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) At the date of filing this Form N-CSR, the registrants Principal Executive
Officer and Principal Financial Officer are aware of no significant changes in
the registrant's internal controls or in other factors that could significantly
affect these controls subsequent to the date of our evaluation, including any
corrective actions with regard to significant deficiencies and material
weaknesses.
ITEMS 10. EXHIBITS.
File the exhibits listed below as part of this Form. Letter or number the
exhibits in the sequence indicated.
(a) Any code of ethics, or amendment thereto, that is the subject of the
disclosure required by Item 2, to the extent that the registrant intends to
satisfy the Item 2 requirements through filing of an exhibit: Not applicable.
(b) A separate certification for the principal executive officer and principal
financial officer of the registrant as required by Rule 30a-2 under the
Investment Company Act of 1940, as amended (17 CFR 270.30a-2) are filed
herewith. Officer certifications required by Section 906 of the Sarbanes-Oxley
Act of 2002 also accompany this filing as an Exhibit.
--------------------------------------------------------------------------------
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
Date: 08/01/03
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
Date: 08/01/03
By (Signature and Title)* /s/ G. Gregory Hagar
---------------------
G. Gregory Hagar, Vice President and CFO
Date: 08/01/03
* Print the name and title of each signing officer under his or her signature.