NPORT-EX 2 dnif_nport.htm DIVIDEND AND INCOME EX-FILE
 
DIVIDEND AND INCOME FUND
 
 
SCHEDULE OF PORTFOLIO INVESTMENTS
 
 
September 30, 2020
 
 
(Unaudited)
 
     
 Shares
 
Value
 
Common Stocks (111.25%)
 
 
Automotive Dealers and Gasoline Service Stations (2.87%)
 
                   4,200
AutoZone, Inc. (a)
 $                   4,946,088
     
 
Automotive Repair, Services, and Parking (2.06%)
 
10,000
AMERCO
                      3,559,800
     
 
Building Materials, Hardware, Garden Supply, and Mobile Home Dealers (5.95%)
 
15,000
The Home Depot, Inc.
                      4,165,650
                 42,500
Tractor Supply Company
                      6,091,950
   
                    10,257,600
     
 
Business Services (9.45%)
 
                   6,100
Accenture plc
1,378,539
                      727
Alphabet Inc. Class A (a)
1,065,491
                 40,522
BG Staffing, Inc.
343,221
                 85,000
eBay Inc.
4,428,500
                 50,000
Kforce Inc.
1,608,500
                 65,000
Robert Half International Inc.
                      3,441,100
                 23,000
United Rentals, Inc. (a)
                      4,013,500
   
16,278,851
     
 
Chemical and Allied Products (9.34%)
 
                 16,000
Amgen Inc.
                      4,066,560
                   4,900
Biogen Inc. (a)
                      1,390,032
                 22,500
Celanese Corporation
                      2,417,625
35,000
LyondellBasell Industries N.V.  Class A
                      2,467,150
80,000
Roche Holding Ltd. ADR
                      3,424,800
                 37,000
Westlake Chemical Corporation
                      2,339,140
   
                    16,105,307
     
 
Coal Mining (1.63%)
 
165,000
Warrior Met Coal, Inc.
                      2,818,200
     
 
Communications (3.61%)
 
                 65,000
AMC Networks Inc. Class A (a)
1,606,150
               100,000
Comcast Corporation
4,626,000
   
                      6,232,150
     
 
Depository Institutions (6.79%)
 
                 40,000
Citigroup Inc.
                      1,724,400
               140,000
Citizens Financial Group, Inc.
                      3,539,200
                 20,500
Signature Bank Corp.
                      1,701,295
                 70,000
U.S. Bancorp
                      2,509,500
                 95,000
Wells Fargo & Company
                      2,233,450
   
                    11,707,845
     
 
Educational Services (2.23%)
 
                 48,000
Grand Canyon Education, Inc. (a)
                      3,837,120
     
 
Electronic and Other Electrical Equipment and Components, except Computer Equipment (10.33%)
 
               106,000
Intel Corporation
                      5,488,680
                 82,500
Methode Electronics, Inc.
                      2,351,250
                 45,000
Skyworks Solutions, Inc.
6,547,500
                 24,000
Texas Instruments Incorporated
                      3,426,960
   
17,814,390
     
 
Food and Kindred Products (4.75%)
 
                 35,000
Medifast, Inc.
                      5,755,750
                 41,000
Tyson Foods, Inc.
                      2,438,680
   
                      8,194,430
     
 
General Merchandise Stores (2.50%)
 
                 20,600
Dollar General Corporation
                      4,318,172
     
 
Heavy Construction other than Building Construction Contractors (0.95%)
 
39,000
MasTec, Inc. (a)
                      1,645,800
     
 
Home Furniture, Furnishings, and Equipment Stores (2.52%)
 
                 48,000
Williams-Sonoma, Inc.
                      4,341,120
     
 
Industrial and Commercial Machinery and Computer Equipment (3.36%)
 
                   6,600
Arista Networks, Inc. (a)
                      1,365,738
                 21,000
Cummins Inc.
                      4,434,360
   
                      5,800,098
     
 
Insurance Carriers (7.63%)
 
               100,000
Essent Group Ltd.
                      3,701,000
               106,000
NMI Holdings, Inc. (a)
                      1,886,800
                 35,000
Prudential Financial, Inc.
                      2,223,200
                 78,000
Radian Group Inc.
                      1,139,580
                 13,500
UnitedHealth Group Incorporated
                      4,208,895
   
                    13,159,475
     
 
Metal Mining (1.17%)
 
33,500
Rio Tinto plc
2,023,065
     
 
Motor Freight Transportation and Warehousing (1.54%)
 
                 21,000
J.B. Hunt Transport Services, Inc.
                      2,653,980
     
 
Non-Depository Credit Institutions (5.01%)
 
                 17,000
Credit Acceptance Corporation (a)
                      5,756,880
                 50,000
Discover Financial Services
                      2,889,000
   
                      8,645,880
     
 
Oil and Gas Extraction (2.07%)
 
               206,000
Cabot Oil & Gas Corporation
                      3,576,160
     
 
Paper and Allied Products (1.77%)
 
                 28,000
Packaging Corporation of America
                      3,053,400
     
 
Petroleum Refining and Related Industries (1.33%)
 
120,000
Valvoline Inc.
2,284,800
     
 
Primary Metal Industries (1.30%)
 
                 78,000
Steel Dynamics, Inc.
                      2,233,140
     
 
Security and Commodity Brokers, Dealers, Exchanges, and Services (7.43%)
 
18,000
Ameriprise Financial, Inc.
                      2,773,980
4,700
BlackRock, Inc.
                      2,648,685
                 45,000
SEI Investments Company
                      2,282,400
                 39,876
T. Rowe Price Group, Inc.
                      5,112,901
   
12,817,966
     
 
Tobacco Products (1.70%)
 
                 39,000
Philip Morris International Inc.
                      2,924,610
     
 
Transportation by Air (3.71%)
 
                 65,000
Alaska Air Group, Inc.
                      2,380,950
                 19,700
Allegiant Travel Company
                      2,360,060
                 44,000
Southwest Airlines Co.
                      1,650,000
   
                      6,391,010
     
 
Transportation Equipment (8.25%)
 
                 18,000
Honeywell International Inc.
2,962,980
                   7,000
Huntington Ingalls Industries, Inc.
                         985,250
                 22,500
LCI Industries
                      2,391,525
                   8,000
Lockheed Martin Corporation
                      3,066,240
                 53,000
Magna International Inc.
                      2,424,750
                 32,500
Oshkosh Corporation
2,388,750
   
                    14,219,495
     
 
Total common stocks (Cost $170,282,122)
                  191,839,952
     
 Principal
   
 Amount
   
 
Corporate Bonds and Notes (0.20%)
 
 
Electric Services (0.20%)
 
               327,392
Elwood Energy LLC, 8.159%, 7/5/26  (Cost $330,701)
                         347,854
     
     
 Shares
   
 
Reorganization Interests (0.00%)
 
               813,527
Penson Technologies LLC Units (a) (b) (Cost $ 0)
0
     
 
Master Limited Partnership (0.37%)
 
 
Electric, Gas, and Sanitary Services (0.37%)
 
                 40,000
Enterprise Products Partners L.P. Units (Cost $374,214)
                         631,600
     
     
 
Preferred Stocks (0.39%)
 
 
Holding and other Investment Offices (0.39%)
 
                 15,000
Ashford Hospitality Trust, Inc., 7.50 % Series H
                           60,450
                 15,000
Cedar Realty Trust, Inc., 6.50% Series C
                         266,250
                   2,812
Hersha Hospitality Trust 6.50% Series E
                           40,437
                 35,000
Pennsylvania Real Estate Investment Trust, 6.875% Series D
                         177,800
                   9,000
Washington Prime Group Inc., 7.50% Series H
                           81,630
                   5,000
Washington Prime Group Inc., 6.875% Series I
                           44,000
     
 
Total preferred stocks (Cost $1,742,738 )
                         670,567
     
 
Total investments (Cost $172,729,775) (112.21%) (c)
                  193,489,973
 
Liabilities in excess of cash and other assets (-12.21%)
                  (21,053,066)
     
 
Net assets (100.00%)
 $               172,436,907
     
     
(a) Non-income producing.
 
(b) Illiquid and/or restricted security that has been fair valued.
 
(c) The Fund's total investment portfolio value of $193,489,973 has been pledged as collateral for borrowings under the Fund's credit facility.  As of September 30, 2020 there was $22,936,500 in outstanding borrowing.



Notes to Schedule of Portfolio Investments (Unaudited)

Valuation of Investments
Portfolio securities are valued by various methods depending on the primary market or exchange on which they trade. Most equity securities for which the primary market is in the United States are usually valued at the official closing price, last sale price or, if no sale has occurred, at the closing bid price. Most equity securities for which the primary market is outside the United States are usually valued using the official closing price or the last sale price in the principal market in which they are traded. If the last sale price on the local exchange is unavailable, the last evaluated quote or closing bid price normally is used. In the event of an unexpected closing of the primary market or exchange, a security may continue to trade on one or more other markets, and the price as reflected on those other trading venues may be more reflective of the security’s value than an earlier price from the primary market or exchange. Accordingly, Dividend and Income Fund (the “Fund”) may seek to use these additional sources of pricing data or information when prices from the primary market or exchange are unavailable, or are earlier and less representative of current market value. Certain debt securities may be priced through pricing services that may utilize a matrix pricing system which takes into consideration factors such as yields, prices, maturities, call features, and ratings on comparable securities or according to prices quoted by a securities dealer that offers pricing services. Open end investment companies are valued at their net asset value. Foreign securities markets may be open on days when the U.S. markets are closed. For this reason, the value of any foreign securities owned by the Fund could change on a day when shareholders cannot buy or sell shares of the Fund. Securities for which market quotations are not readily available or reliable and other assets may be valued as determined in good faith by the Investment Manager under the direction of or pursuant to procedures approved by the Fund’s Board of Trustees, called “fair value pricing.” Due to the inherent uncertainty of valuation, fair value pricing values may differ from the values that would have been used had a readily available or reliable market quotation for the securities existed. These differences in valuation could be material. A security’s valuation may differ depending on the method used for determining value. The use of fair value pricing by the Fund may cause the net asset value of its shares to differ from the net asset value that would be calculated using market prices. A fair value price is an estimate and there is no assurance that such price will be at or close to the price at which a security is next quoted or traded.

Value Measurements
Inputs to valuation methods are prioritized by a three level hierarchy as follows:
 
• Level 1 - unadjusted quoted prices in active markets for identical assets or liabilities including securities actively traded on a securities exchange.
 
• Level 2 -  observable inputs other than quoted prices included in level 1 that are observable for the asset or liability which may include quoted prices for similar instruments, interest rates, prepayment speeds, credit risk, yield curves, default rates, and similar data.
 
• Level 3 - unobservable inputs for the asset or liability including the Fund’s own assumptions about the assumptions a market participant would use in valuing the asset or liability.

The availability of observable inputs can vary from security to security and is affected by a wide variety of factors including, for example, the type of security, whether the security is new and not yet established in the marketplace, the liquidity of markets for the security, and other characteristics particular to the security. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised in determining fair value is greatest for investments categorized in level 3. The inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, the level in the fair value hierarchy within which the fair value measurement falls in its entirety is determined based on the lowest level input that is significant to the fair value measurement in its entirety. The inputs and methodology used for valuing investments are not necessarily an indication of the risk associated with investing in those securities.
 
The following is a description of the valuation techniques applied to the Fund’s major categories of assets and liabilities measured at fair value on a recurring basis:
 
Equity securities (common and preferred stock) – Most publicly traded equity securities are valued normally at the most recent official closing price, last sale price, evaluated quote, or closing bid price. To the extent these securities are actively traded and valuation adjustments are not applied, they may be categorized in level 1 of the fair value hierarchy. Equities on inactive markets or valued by reference to similar instruments may be categorized in level 2.
 
Corporate bonds and notes – The fair value of corporate bonds and notes are normally estimated using various techniques which may consider, among other things, recently executed transactions in securities of the issuer or comparable issuers, market price quotations (where observable), bond spreads, and fundamental data relating to the issuer. Although most corporate bonds and notes may be categorized in level 2 of the fair value hierarchy, in instances where lower relative weight is placed on transaction prices, quotations, or similar observable inputs, they may be categorized in level 3.
 
Restricted and/or illiquid securities – Restricted and/or illiquid securities for which quotations are not readily available or reliable may be valued with fair value pricing as determined in good faith by the Investment Manager under the direction of or pursuant to procedures approved by the Fund’s Board of Trustees. Restricted securities issued by publicly traded companies are generally valued at a discount to similar publicly traded securities. Restricted or illiquid securities issued by nonpublic entities may be valued by reference to comparable public entities or fundamental data relating to the issuer or both or similar inputs. Depending on the relative significance of valuation inputs, these instruments may be categorized in either level 2 or level 3 of the fair value hierarchy.
 
The following is a summary of the inputs used as of September 30, 2020 in valuing the Fund’s assets. Refer to the Schedule of Portfolio Investments for detailed information on specific investments.


Assets
Level 1
Level 2
Level 3
Total
Investments, at value
       
 
Common stocks
$   191,839,952
$          -
$          -
$ 191,839,952
 
Corporate bonds and notes
            -
         347,854
            -
          347,854
 
Reorganization interests
            -
               -
           0
                     0
 
Master limited partnerships
            631,600
               -
            -
           631,600
 
Preferred stocks
 
            670,567
               -
            -
           670,567
Total investments, at value
$   193,142,119
      $   347,854
$          0
$ 193,489,973

There were no securities transferred from level 1 on December 31, 2019 to level 2 on September 30, 2020.

There were no transfers into or out of level 3 assets during the period.

The Investment Manager, under the direction of the Fund’s Board of Trustees, considers various valuation approaches for valuing assets categorized within level 3 of the fair value hierarchy. The factors used in determining the value of such assets may include, but are not limited to: the discount applied due to the private nature of the asset; the type of the security; the size of the asset; the initial cost of the security; the existence of any contractual restrictions on the security’s disposition; the price and extent of public trading in similar securities of the issuer or of comparable companies; quotations or evaluated prices from broker-dealers and/or pricing services; information obtained from the issuer or analysts; an analysis of the company’s or issuer’s financial statements; or an evaluation of the forces that influence the issuer and the market in which the asset is purchased and sold. Significant changes in any of those inputs in isolation may result in a significantly lower or higher fair value measurement. The pricing of all fair value assets is normally reported to the Fund’s Board of Trustees. As of September 30, 2020, these investments did not have a material impact on the Fund’s net assets and, therefore, disclosure of unobservable inputs used in formulating valuations is not presented.
 
Cost for Federal Income Tax Purposes
As of September 30, 2020, for federal income tax purposes, subject to change, the aggregate cost of securities was $172,729,775 and net unrealized depreciation was $20,760,198, comprised of gross unrealized appreciation of $35,116,840 and gross unrealized depreciation of $14,356,642. The aggregate cost of investments for tax purposes will depend upon the Fund’s investment experience during the entirety of its fiscal year and may be subject to changes based on tax regulations.

Illiquid and Restricted Securities 
The Fund owns securities which have a limited trading market and/or certain restrictions on trading and, therefore, may be illiquid and/or restricted. Such securities have been valued using fair value pricing. Due to the inherent uncertainty of valuation, fair value pricing values may differ from the values that would have been used had a readily available market for the securities existed. These differences in valuation could be material. Illiquid and/or restricted securities owned as of September 30, 2020 were as follows:

 
Acquisition Date
Cost
Value
Penson Technologies LLC
      3/08/12
$0
$0
Percent of net assets
 
0%
0%


Market and Credit Risks
The Fund may invest in below investment grade securities (commonly referred to as “junk” bonds). Below investment grade securities are regarded as being predominantly speculative as to the issuer's ability to make payments of principal and interest. The risks associated with acquiring the securities of such issuers generally are greater than is the case with higher rated securities. For example, during an economic downturn or a sustained period of rising interest rates, issuers of below investment grade securities may be more likely to experience financial stress, especially if such issuers are highly leveraged. During periods of economic downturn, such issuers may not have sufficient revenues to meet their interest payment obligations. The issuer's ability to service its debt obligations also may be adversely affected by specific issuer developments, the issuer's inability to meet specific projected business forecasts, or the unavailability of additional financing. Therefore, there can be no assurance that in the future there will not exist a higher default rate relative to the rates currently existing in the market for below investment grade securities. The risk of loss due to default by the issuer is significantly greater for the holders of below investment grade securities because such securities may be unsecured and may be subordinate to other creditors of the issuer. The relative illiquidity of some of these 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.

Foreign Securities Risk
Investments in the securities of foreign issuers involve special risks which include changes in foreign exchange rates and the possibility of future adverse political, tax, and economic developments which could adversely affect the value of such securities. Moreover, securities of foreign issuers and securities traded in foreign markets may be less liquid and their prices more volatile than those of U.S. issuers and markets. In addition, in certain foreign countries, there is the possibility of expropriation or confiscatory taxation, political, or social instability, or diplomatic developments that could affect U.S. investments in the securities of issuers domiciled in those countries.


Coronavirus (COVID-19) Pandemic
During the first quarter of 2020, the World Health Organization declared COVID-19 to be a public health emergency. COVID-19 has led to increased short-term market volatility and may have adverse long-term effects on U.S. and world economies and markets in general. COVID-19 may adversely impact the Funds ability to achieve their investment objectives. Because of the uncertainties on valuation, the global economy and business operations, values reflected in these financial statements may materially differ from the value received upon actual sales of those investments. The extent of the impact on the performance of the Funds and their investments will depend on future developments, including, but not limited to, the duration and spread of the COVID19 outbreak, related restrictions and advisories, and the effects on the financial markets and economy overall, all of which are highly uncertain and cannot be predicted.