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: | 811-22050 | |
Exact name of registrant as specified in charter: | Delaware Enhanced Global Dividend and Income Fund | |
Address of principal executive offices: | 2005 Market Street | |
Philadelphia, PA 19103 | ||
Name and address of agent for service: | David F. Connor, Esq. | |
2005 Market Street | ||
Philadelphia, PA 19103 | ||
Registrants telephone number, including area code: | (800) 523-1918 | |
Date of fiscal year end: | November 30 | |
Date of reporting period: | November 30, 2012 |
Item 1. Reports to Stockholders
Annual Report |
Delaware
Enhanced Global Dividend and Income Fund |
November 30, 2012 | |
The figures in the annual
report for Delaware Enhanced Global Dividend and Income Fund represent
past results, which are not a guarantee of future results. A rise or fall
in interest rates can have a significant impact on bond prices. Funds that
invest in bonds can lose their value as interest rates
rise. | |
Closed-end fund |
Table of contents
Portfolio management review | 1 |
Performance summary | 4 |
Security type/sector and country allocations | 7 |
Statement of net assets | 9 |
Statement of operations | 25 |
Statements of changes in net assets | 26 |
Statement of cash flows | 27 |
Financial highlights | 28 |
Notes to financial statements | 29 |
Report of independent registered public accounting firm | 40 |
Other Fund information | 41 |
Board of trustees/directors and officers addendum | 50 |
About the organization | 52 |
Unless otherwise noted, views expressed herein are current as of Nov. 30, 2012, and subject to change.
Funds are not FDIC insured and are not guaranteed. It is possible to lose the principal amount invested.
Mutual fund advisory services are provided by Delaware Management Company, a series of Delaware Management Business Trust, which is a registered investment advisor. Delaware Investments, a member of Macquarie Group, refers to Delaware Management Holdings, Inc. and its subsidiaries. Macquarie Group refers to Macquarie Group Limited and its subsidiaries and affiliates worldwide.
© 2013 Delaware Management Holdings, Inc.
All third-party marks cited are the property of their respective owners.
Portfolio management review
Delaware Enhanced Global Dividend and
Income Fund
December 11, 2012
Performance preview (for the year ended November 30, 2012) | |||
Delaware Enhanced Global Dividend and Income Fund @ market price | 1-year return | +12.15% | |
Delaware Enhanced Global Dividend and Income Fund @ NAV | 1-year return | +16.85% | |
Lipper Closed-end Global Funds Average @ market price | 1-year return | +12.16% | |
Lipper Closed-end Global Funds Average @ NAV | 1-year return | +10.65% |
Past performance does not guarantee future results.
For complete, annualized performance for Delaware Enhanced Global Dividend and Income Fund, please see the table on page 4.
Index performance returns do not reflect any management fees, transaction costs, or expenses. Indices are unmanaged and one cannot invest directly in an index.
For the fiscal year ended Nov. 30, 2012, Delaware Enhanced Global Dividend and Income Fund returned +16.85% at net asset value and +12.15% at market price (both figures reflect all distributions reinvested). Complete annualized performance information for the Fund is shown in the table on page 4.
Modest improvements in economic conditions
The U.S. economy continued its sluggish but steady growth during the 12 months ended Nov. 30, 2012. While U.S. gross domestic product a measure of the goods and services produced by the nation expanded rapidly in late 2011, growth slowed significantly thereafter. High unemployment continued to be a major challenge, with the countrys jobless rate finishing the Funds fiscal year at 7.9%, still uncomfortably high but notably improved from the 9.0% level at the beginning of this period. (Data: U.S. Commerce Department; U.S. Labor Department.)
Against this backdrop, the U.S. Federal Reserve continued its efforts to stimulate U.S. economic growth by keeping short-term interest rates at a historically low level and initiating a third round of so-called quantitative easing in the form of bond-buying programs. Policy action continued overseas as well, as European officials dealt with a lingering sovereign debt crisis. Many European countries were in recession when the Funds fiscal year drew to a close (source: Bloomberg).
Financial markets respond positively
Encouraged by the aggressive actions of central banks around the world, global financial markets delivered strong returns during the fiscal year, with riskier assets faring particularly well. U.S. equities, as measured by the S&P 500® Index, generated a gain of 16.13%, while global equities, as measured by the MSCI ACWI (All Country World Index), advanced 13.33% (net). Emerging markets lagged their developed-market counterparts, however, with highly variable performance from country to country.
Central bank actions generally helped boost demand for many real estate securities, including real estate investment trusts (REITs), which tend to benefit when financing is readily available. As credit became more accessible throughout the fiscal year, REITs generally responded well, with global REITs gaining 25.06%, as measured by the FTSE EPRA/NAREIT Developed Index.
High yield bonds, as measured by the BofA Merrill Lynch U.S. High Yield Constrained Index, rose 16.57% for the Funds fiscal year. Other income-generating asset classes that gained ground included convertible securities, dividend-paying international equities, and investment grade bonds. (Performance data: Bloomberg.)
A global approach to income
The Funds primary objective is to seek current income, with a secondary objective of capital appreciation. In managing the Fund, we pursue these goals by investing broadly in a range of income-generating securities from around the globe. These include core fixed income holdings (such as Treasury and agency securities), as well as investment grade and high yield corporate bonds, convertible bonds, REITs, large-cap value stocks, convertible preferred stocks, international value stocks, emerging market equities, emerging market debt securities, and international currencies.
As part of the Funds global strategy, we invest at least 40% of the Funds net assets in non-U.S. securities under normal conditions. This includes investments in
Unless otherwise noted, views expressed herein are current as of Nov. 30, 2012, and subject to change.
Portfolio management review
Delaware Enhanced Global Dividend and Income Fund
international equities, global real estate securities, and emerging market bonds. When we consider market conditions to be unfavorable, however, we can shift our tactical allocation below that guideline.
During the Funds fiscal year, we saw additional opportunity in international equities as investor sentiment began to calm somewhat in the wake of global central bank actions, including European Central Bank President Mario Draghis declaration in July 2012 that he would do whatever it takes to save the euro. As of Nov. 30, 2012, international equities amounted to 24% of the Funds total net assets.
The Funds allocation to U.S. large-cap value equity investments was lowered somewhat during the fiscal year. Domestic equities nonetheless provided a solid contribution to Fund performance, and we viewed them favorably at fiscal year end. Within the Funds large-cap value holdings, the consumer discretionary sector was particularly strong. The Funds holdings in the financial sector were likewise beneficial.
Notes on the Funds allocations to other asset types:
With monetary policy around the world driving rates lower, our preferred approach has been twofold:
A consistent management strategy
Our basic strategy remained the same during the Funds fiscal year, just as it has across all performance periods: We continued assembling a diversified collection of income-generating securities that seeks to provide competitive yield, while aiming to achieve greater upside potential than bonds and better downside protection than equities. Diversification, it should be noted, does not protect against losses.
We continued to emphasize reasonably priced securities when making new additions to the Fund. At the same time, we liquidated holdings that we believed had become expensive relative to their return prospects.
A more defensive posture going forward
As the Funds fiscal year came to an end, we believed that U.S. securities especially large-cap value equities had the potential to outperform non-U.S. securities. With European and Asian markets coming off long stretches
2
of positive performance, we believed it was not the right time to take on more risk by investing significantly in these regions.
In general, our overall sense of caution increased as the fiscal year progressed. After three years of strong market returns and proactive economic stimulus by the worlds central banks, we finished the fiscal year with a more defensive outlook, which translated to (1) seeking to avoid securities that we view as having an unfavorable risk-reward balance, (2) selling certain higher-priced securities, and (3) initiating steps to help hedge the portfolios risk. In the months ahead, we will be monitoring market conditions to see if an even more defensive stance may be warranted.
3
Performance summary
Delaware Enhanced Global Dividend and Income Fund
The performance quoted represents past performance and does not guarantee future results. Investment return and principal value of an investment will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance quoted. Please obtain the performance data for the most recent month end by calling 800 523-1918.
Fund performance | |||||||||||
Average annual total returns | |||||||||||
through November 30, 2012 | 1 year | 5 years | Lifetime | ||||||||
At market price (inception date June 29, 2007) | + | 12.15 | % | + | 5.61 | % | + | 1.55 | % | ||
At net asset value (inception date June 29, 2007) | + | 16.85 | % | + | 4.37 | % | + | 3.05 | % |
Diversification may not protect against market risk.
Fixed income securities and bond funds can lose value, and investors can lose principal, as interest rates rise. They also may be affected by economic conditions that hinder an issuers ability to make interest and principal payments on its debt.
The Fund may also be subject to prepayment risk, the risk that the principal of a fixed income security that is held by Fund may be prepaid prior to maturity, potentially forcing the Fund to reinvest that money at a lower interest rate.
High yielding, noninvestment grade bonds (junk bonds) involve higher risk than investment grade bonds.
The Fund may invest in derivatives, which may involve additional expenses and are subject to risk, including the risk that an underlying security or securities index moves in the opposite direction from what the portfolio manager anticipated. A derivative transaction depends upon the counterparties ability to fulfill their contractual obligations.
International investments entail risks not ordinarily associated with U.S. investments including fluctuation in currency values, differences in accounting principles, or economic or political instability in other nations.
If and when the Fund invests in forward foreign currency contracts or uses other investments to hedge against currency risks, the Fund will be subject to special risks, including counterparty risk.
The Fund borrows through a line of credit for purposes of leveraging. Leveraging may result in higher degrees of volatility because the Funds net asset value could be subject to fluctuations in short-term interest rates and changes in market value of portfolio securities attributable to leverage.
Narrowly focused investments may exhibit higher volatility than investments in multiple industry sectors.
REIT investments are subject to many of the risks associated with direct real estate ownership, including changes in economic conditions, credit risk, and interest rate fluctuations.
The Fund performance table above and the Performance of a $10,000 investment graph on page 5 do not reflect the deduction of taxes the shareholder would pay on Fund distributions or redemptions of Fund shares.
Returns reflect the reinvestment of all distributions. Dividends and distributions, if any, are assumed, for the purpose of this calculation to be reinvested at prices obtained under the Funds dividend reinvestment policy. Shares of the Fund were initially offered with a sales charge of 4.50%. Performance since inception does not include the sales charge or any other brokerage commission for purchases made since inception. Past performance is not a guarantee of future results.
Fund basics
As of November 30, 2012
Fund objective |
The Funds primary investment objective is to seek current income. Capital appreciation is a secondary objective. |
Total Fund net assets |
$191 million |
Number of holdings |
767 |
Fund start date |
June 29, 2007 |
NYSE symbol |
DEX |
4
Market price versus net asset
value (see notes below)
Nov. 30, 2011, through Nov. 30, 2012
Starting value (Nov. 30, 2011) | Ending value (Nov. 30, 2012) | ||||
|
Delaware Enhanced Global Dividend and Income Fund @ NAV | $11.35 | $12.02 | ||
|
Delaware Enhanced Global Dividend and Income Fund @ market price | $10.92 | $11.10 |
Past performance is not a guarantee of future results.
Performance of a $10,000
investment
Average annual total returns
from June 29, 2007 (Funds inception) through Nov. 30, 2012
Starting value (June 29, 2007) | Ending value (Nov. 30, 2012) | ||||
|
Delaware Enhanced Global Dividend and Income Fund @ market price | $10,000 | $18,124 | ||
|
Delaware Enhanced Global Dividend and Income Fund @ NAV | $10,000 | $16,625 | ||
|
Lipper Closed-end Global Funds Average @ market price | $10,000 | $9,889 | ||
|
Lipper Closed-end Global Funds Average @ NAV | $10,000 | $9,343 |
The Performance of a $10,000 investment graph assumes $10,000 invested in the Fund on June 29, 2007, and includes the reinvestment of all distributions at market value. The graph assumes $10,000 in the Lipper Closed-end Global Funds Average at market price and at NAV. Performance of the Fund and the Lipper class at market value is based on market performance during the period. Performance of the Fund and Lipper class at NAV is based on the fluctuations in NAV during the period. Delaware Enhanced Global Dividend and Income Fund was initially offered with a sales charge of 4.50%. Performance shown in both graphs above does not include fees, the initial sales charge, or any brokerage commissions for purchases. Investments in the Fund are not available at NAV.
The Lipper Closed-end Global Funds Average represents the average return of closed-end funds that invest at least 25% of their portfolio in securities traded outside of the United States and that may own U.S. securities as well (source: Lipper).
The S&P 500 Index, mentioned on page 1, measures the performance of 500 mostly large-cap stocks weighted by market value, and is often used to represent performance of the U.S. stock market.
Performance summary
Delaware Enhanced Global Dividend and Income Fund
The MSCI ACWI Index, mentioned on page 1, is a free float-adjusted market capitalization index that is designed to measure equity market performance across developed and emerging markets worldwide. Index net return approximates the minimum possible dividend reinvestment, after deduction of withholding tax at the highest possible rate.
The FTSE EPRA/NAREIT Developed Index, mentioned on page 1, tracks the performance of listed real estate companies and real estate investment trusts (REITs) worldwide, based in U.S. dollars.
The BofA Merrill Lynch U.S. High Yield Constrained Index, mentioned on page 1, tracks the performance of U.S. dollardenominated high yield corporate debt publicly issued in the U.S. domestic market, but caps individual issuer exposure at 2% of the benchmark.
Market price is the price an investor would pay for shares of the Fund on the secondary market. NAV is the total value of one fund share, generally equal to a funds net assets divided by the number of shares outstanding.
Past performance is not a guarantee of future results.
6
Security type/sector and country allocations
Delaware Enhanced Global Dividend and
Income Fund
As of November 30,
2012
Sector designations may be different than the sector designations presented in other Fund materials. The sector designations may also represent the investment managers internal sector classifications, which may result in the sector designations for one fund being different than another funds sector designations.
Security type/sector | Percentage of Net Assets | ||||
Common Stock | 59.18 | % | |||
Consumer Discretionary | 7.82 | % | |||
Consumer Staples | 6.62 | % | |||
Diversified REITs | 0.58 | % | |||
Energy | 5.78 | % | |||
Financials | 5.62 | % | |||
Healthcare | 7.10 | % | |||
Healthcare REITs | 0.26 | % | |||
Hotel REITs | 0.43 | % | |||
Industrial REITs | 1.05 | % | |||
Industrials | 7.46 | % | |||
Information Technology | 2.78 | % | |||
Mall REITs | 0.84 | % | |||
Manufactured Housing REITs | 0.22 | % | |||
Materials | 4.71 | % | |||
Mixed REITs | 0.56 | % | |||
Mortgage REITs | 0.28 | % | |||
Multifamily REITs | 0.45 | % | |||
Office REITs | 0.68 | % | |||
Real Estate Management & Development | 0.02 | % | |||
Self-Storage REITs | 0.17 | % | |||
Shopping Center REITs | 0.84 | % | |||
Single Tenant REIT | 0.17 | % | |||
Specialty REITs | 0.63 | % | |||
Telecommunications | 2.70 | % | |||
Utilities | 1.41 | % | |||
Convertible Preferred Stock | 2.40 | % | |||
Exchange-Traded Fund | 0.39 | % | |||
Agency Collateralized Mortgage Obligations | 0.14 | % | |||
Agency Mortgage-Backed Securities | 0.89 | % | |||
Commercial Mortgage-Backed Securities | 0.42 | % | |||
Convertible Bonds | 12.78 | % | |||
Basic Industry | 0.18 | % | |||
Capital Goods | 1.27 | % | |||
Communications | 1.31 | % | |||
Consumer Cyclical | 1.34 | % | |||
Consumer Non-Cyclical | 2.08 | % | |||
Energy | 0.82 | % | |||
Financials | 1.00 | % | |||
Industrials | 0.32 | % | |||
Insurance | 0.20 | % | |||
Real Estate | 0.27 | % | |||
Services | 1.16 | % | |||
Technology | 2.83 | % | |||
Corporate Bonds | 44.32 | % | |||
Automotive | 1.24 | % | |||
Banking | 1.06 | % | |||
Basic Industry | 5.50 | % | |||
Brokerage | 0.03 | % | |||
Capital Goods | 2.60 | % | |||
Communications | 3.88 | % | |||
Consumer Cyclical | 3.24 | % | |||
Consumer Non-Cyclical | 1.34 | % | |||
Energy | 6.73 | % | |||
Financials | 0.88 | % | |||
Healthcare | 3.38 | % | |||
Industrials | 0.02 | % | |||
Insurance | 1.52 | % | |||
Media | 3.67 | % | |||
Natural Gas | 0.12 | % | |||
Real Estate | 0.50 | % | |||
Services | 5.04 | % | |||
Technology | 2.75 | % | |||
Transportation | 0.05 | % | |||
Utilities | 0.77 | % | |||
Non-Agency Asset-Backed Securities | 0.13 | % | |||
Non-Agency Collateralized Mortgage Obligations | 0.09 | % | |||
Senior Secured Loans | 1.81 | % | |||
Sovereign Bonds | 8.54 | % | |||
U.S. Treasury Obligations | 0.46 | % | |||
Leveraged Non-Recourse Security | 0.00 | % | |||
Limited Partnership | 0.32 | % | |||
Residual Interest Trust Certificate | 0.00 | % | |||
Preferred Stock | 0.86 | % | |||
Warrant | 0.00 | % | |||
Short-Term Investments | 2.64 | % | |||
Securities Lending Collateral | 8.05 | % | |||
Total Value of Securities | 143.42 | % | |||
Obligation to Return Securities Lending Collateral | (8.25 | %) | |||
Borrowing Under Line of Credit | (34.48 | %) | |||
Other Liabilities Net of Receivables and Other Assets | (0.69 | %) | |||
Total Net Assets | 100.00 | % |
(continues) 7
Security type/sector and country allocations
Delaware Enhanced Global Dividend and Income Fund
*Country | Percentage of Net Assets | ||||
Australia | 1.41 | % | |||
Austria | 0.23 | % | |||
Barbados | 0.16 | % | |||
Bermuda | 0.79 | % | |||
Brazil | 3.73 | % | |||
British Virgin Island | 0.16 | % | |||
Canada | 4.98 | % | |||
Cayman Islands | 0.83 | % | |||
China | 0.75 | % | |||
Denmark | 0.66 | % | |||
France | 8.14 | % | |||
Germany | 1.85 | % | |||
Hong Kong | 1.65 | % | |||
Indonesia | 3.65 | % | |||
Ireland | 0.68 | % | |||
Israel | 1.39 | % | |||
Japan | 6.55 | % | |||
Jersey | 0.28 | % | |||
Luxembourg | 2.39 | % | |||
Marshall Islands | 0.20 | % | |||
Mexico | 1.51 | % | |||
Multinational | 0.16 | % | |||
Netherlands | 2.10 | % | |||
Norway | 0.01 | % | |||
Panama | 1.37 | % | |||
Poland | 0.35 | % | |||
Republic of Korea | 0.53 | % | |||
Russia | 0.49 | % | |||
Singapore | 0.06 | % | |||
Spain | 0.18 | % | |||
Sweden | 1.36 | % | |||
Switzerland | 2.92 | % | |||
United Kingdom | 7.48 | % | |||
United States | 73.73 | % | |||
Total | 132.73 | % |
* |
Allocation includes all investments except for short-term investments and securities lending collateral. |
The percentage of net assets exceeds 100% because the Fund utilizes a line of credit with The Bank of New York Mellon, as described in Note 9 in Notes to financial statements. The Fund utilizes leveraging techniques in an attempt to obtain a higher return for the Fund. There is no assurance that the Fund will achieve its investment objectives through the use of such techniques.
8
Statement of net assets
Delaware Enhanced Global Dividend and
Income Fund
November 30, 2012
Number of Shares |
Value (U.S. $) | |||||
vCommon Stock 59.18% | ||||||
Consumer Discretionary 7.82% | ||||||
Bayerische Motoren Werke | 13,422 | $ | 1,190,323 | |||
| DIRECTV Class A | 2,250 | 111,825 | |||
Don Quijote | 43,500 | 1,691,447 | ||||
Genuine Parts | 10,800 | 702,972 | ||||
Hyundai Home | ||||||
Shopping Network | 9,042 | 1,014,876 | ||||
Mattel | 18,500 | 693,935 | ||||
Nitori Holdings | 13,904 | 1,034,049 | ||||
PPR | 8,514 | 1,587,851 | ||||
* | Publicis Groupe | 15,657 | 885,676 | |||
Sumitomo Rubber Industries | 61,461 | 724,781 | ||||
Techtronic Industries | 551,500 | 1,085,893 | ||||
Toyota Motor | 55,005 | 2,359,026 | ||||
Yue Yuen Industrial Holdings | 519,500 | 1,819,879 | ||||
14,902,533 | ||||||
Consumer Staples 6.62% | ||||||
Archer-Daniels-Midland | 18,700 | 499,290 | ||||
| Aryzta | 47,431 | 2,397,909 | |||
Carlsberg Class B | 12,908 | 1,256,754 | ||||
Coca-Cola Amatil | 70,650 | 1,013,152 | ||||
ConAgra Foods | 34,500 | 1,030,170 | ||||
Greggs | 107,397 | 827,268 | ||||
Kimberly-Clark | 11,100 | 951,492 | ||||
| Kraft Foods Group | 22,100 | 999,362 | |||
Lorillard | 8,500 | 1,029,860 | ||||
* | Safeway | 55,700 | 953,027 | |||
TESCO | 318,609 | 1,659,452 | ||||
12,617,736 | ||||||
Diversified REITs 0.58% | ||||||
Champion REIT | 125,000 | 62,902 | ||||
* | Investors Real Estate Trust | 10,260 | 87,107 | |||
Lexington Reality Trust | 40,304 | 386,516 | ||||
Mapletree Logistics Trust | 70,000 | 63,657 | ||||
* | Nieuwe Steen Investments | 89 | 712 | |||
Orix JREIT | 17 | 85,077 | ||||
Stockland | 70,059 | 247,879 | ||||
Vornado Realty Trust | 2,361 | 180,451 | ||||
1,114,301 | ||||||
Energy 5.78% | ||||||
Chevron | 5,700 | 602,433 | ||||
CNOOC | 667,000 | 1,426,913 | ||||
ConocoPhillips | 11,700 | 666,198 | ||||
Marathon Oil | 16,300 | 502,855 | ||||
Royal Dutch Shell ADR | 13,700 | 946,396 | ||||
Spectra Energy | 22,400 | 626,080 | ||||
* | Subsea 7 | 70,335 | 1,607,863 | |||
* | Total | 38,803 | 1,941,650 | |||
Total ADR | 19,800 | 993,168 | ||||
Transocean | 27,100 | 1,252,020 | ||||
Williams | 13,500 | 443,340 | ||||
11,008,916 | ||||||
Financials 5.62% | ||||||
Allstate | 24,200 | 979,616 | ||||
AXA | 98,208 | 1,613,798 | ||||
Bank of New York Mellon | 21,700 | 519,498 | ||||
* | Fifth Street Finance | 29,454 | 317,514 | |||
Gallagher (Arthur J.) | 21,900 | 799,788 | ||||
Marsh & McLennan | 19,300 | 679,746 | ||||
Mitsubishi UFJ Financial Group | 391,328 | 1,789,878 | ||||
Nordea Bank | 147,703 | 1,352,028 | ||||
Nordea Bank FDR | 36,812 | 335,610 | ||||
Solar Capital | 8,100 | 185,490 | ||||
Standard Chartered | 57,662 | 1,344,133 | ||||
Travelers | 11,300 | 800,266 | ||||
10,717,365 | ||||||
Healthcare 7.10% | ||||||
Abbott Laboratories | 9,600 | 624,000 | ||||
| Alliance HealthCare Services | 8,445 | 10,472 | |||
AstraZeneca ADR | 14,700 | 698,838 | ||||
Baxter International | 8,000 | 530,160 | ||||
Bristol-Myers Squibb | 23,400 | 763,542 | ||||
Johnson & Johnson | 11,400 | 794,922 | ||||
* | Meda Class A | 49,345 | 508,058 | |||
Merck | 26,400 | 1,169,520 | ||||
Novartis | 30,902 | 1,912,409 | ||||
Pfizer | 41,460 | 1,037,329 | ||||
Sanofi | 23,258 | 2,076,841 | ||||
Sanofi ADR | 17,100 | 763,002 | ||||
Teva Pharmaceutical | ||||||
Industries ADR | 65,600 | 2,646,960 | ||||
13,536,053 | ||||||
Healthcare REITs 0.26% | ||||||
HCP | 1,100 | 49,555 | ||||
Health Care REIT | 1,875 | 110,419 | ||||
Ventas | 5,342 | 340,018 | ||||
499,992 | ||||||
Hotel REITs 0.43% | ||||||
Ashford Hospitality Trust | 61,800 | 559,290 | ||||
DiamondRock Hospitality | 17,600 | 153,824 | ||||
LaSalle Hotel Properties | 1,200 | 28,932 | ||||
Summit Hotel Properties | 9,300 | 81,654 | ||||
823,700 | ||||||
Industrial REITs 1.05% | ||||||
BWP Trust | 60,000 | 133,385 | ||||
* | DCT Industrial Trust | 16,877 | 105,481 | |||
| First Industrial Realty Trust | 63,827 | 842,516 | |||
Goodman Group | 49,447 | 238,428 | ||||
ProLogis | 385 | 13,067 | ||||
STAG Industrial | 35,063 | 660,938 | ||||
1,993,815 |
(continues) 9
Statement of net assets
Delaware Enhanced Global Dividend and Income Fund
Number of Shares |
Value (U.S. $) | |||||
vCommon Stock (continued) | ||||||
Industrials 7.46% | ||||||
Alstom | 28,998 | $ | 1,055,411 | |||
Cie de Saint-Gobain | 17,200 | 686,295 | ||||
Copa Holdings Class A | 13,700 | 1,299,308 | ||||
| Delta Air Lines | 6 | 60 | |||
Deutsche Post | 65,902 | 1,367,913 | ||||
East Japan Railway | 24,961 | 1,638,326 | ||||
| Flextronics International | 7,400 | 42,846 | |||
ITOCHU | 151,202 | 1,511,561 | ||||
Koninklijke Philips Electronics | 51,746 | 1,336,543 | ||||
Northrop Grumman | 9,500 | 633,650 | ||||
Raytheon | 17,500 | 999,775 | ||||
Teleperformance | 77,000 | 2,679,809 | ||||
Waste Management | 29,900 | 973,843 | ||||
14,225,340 | ||||||
Information Technology 2.78% | ||||||
Applied Materials | 74,600 | 800,458 | ||||
* | Canon ADR | 18,900 | 664,902 | |||
| CGI Group Class A | 101,891 | 2,338,667 | |||
Intel | 44,000 | 861,080 | ||||
Microsoft | 24,000 | 638,880 | ||||
5,303,987 | ||||||
Mall REITs 0.84% | ||||||
CBL & Associates Properties | 4,199 | 94,519 | ||||
General Growth Properties | 14,518 | 281,214 | ||||
Macerich | 389 | 21,979 | ||||
Pennsylvania Real Estate | ||||||
Investment Trust | 8,500 | 141,610 | ||||
* | Rouse Properties | 748 | 11,220 | |||
Simon Property Group | 6,908 | 1,050,914 | ||||
1,601,456 | ||||||
Manufactured Housing REITs 0.22% | ||||||
Equity Lifestyle Properties | 2,478 | 162,656 | ||||
Sun Communities | 6,586 | 254,220 | ||||
416,876 | ||||||
Materials 4.71% | ||||||
| AuRico Gold | 184,251 | 1,456,053 | |||
duPont (E.I.) deNemours | 12,600 | 543,564 | ||||
Lafarge | 14,580 | 847,033 | ||||
MeadWestvaco | 20,100 | 621,291 | ||||
Rexam | 254,027 | 1,781,337 | ||||
Rio Tinto | 25,961 | 1,286,652 | ||||
Yamana Gold | 129,764 | 2,445,445 | ||||
8,981,375 | ||||||
Mixed REITs 0.56% | ||||||
* | Digital Realty Trust | 10,200 | 658,307 | |||
Duke Realty | 11,447 | 154,535 | ||||
* | DuPont Fabros Technology | 2,500 | 57,725 | |||
Liberty Property Trust | 4,797 | 167,080 | ||||
PS Business Parks | 400 | 25,796 | ||||
1,063,443 | ||||||
Mortgage REITs 0.28% | ||||||
Chimera Investment | 17,000 | 46,580 | ||||
Starwood Property Trust | 20,900 | 477,774 | ||||
524,354 | ||||||
Multifamily REITs 0.45% | ||||||
Apartment Investment | ||||||
& Management | 15,728 | 394,301 | ||||
Associated Estates Realty | 1,300 | 19,669 | ||||
BRE Properties | 1,000 | 48,650 | ||||
Camden Property Trust | 5,109 | 335,661 | ||||
Equity Residential | 1,200 | 66,612 | ||||
864,893 | ||||||
Office REITs 0.68% | ||||||
* | Alstria Office REIT | 33,657 | 413,345 | |||
Commonwealth Property | ||||||
Office Fund | 105,000 | 111,780 | ||||
* | Government Properties | |||||
Income Trust | 4,752 | 109,534 | ||||
Link REIT | 33,000 | 179,047 | ||||
Mack-Cali Realty | 11,500 | 290,720 | ||||
Parkway Properties | 13,650 | 183,456 | ||||
1,287,882 | ||||||
Real Estate Management & Development 0.02% | ||||||
Cyrela Brazil Realty | 4,100 | 34,203 | ||||
34,203 | ||||||
Self-Storage REITs 0.17% | ||||||
Extra Space Storage | 4,555 | 160,108 | ||||
Public Storage | 1,150 | 161,736 | ||||
321,844 | ||||||
Shopping Center REITs 0.84% | ||||||
*∏ | Charter Hall Retail REIT | 71,117 | 265,725 | |||
* | Corio | 2,685 | 120,316 | |||
Equity One | 1,500 | 31,005 | ||||
First Capital Realty | 2,922 | 54,272 | ||||
Kimco Realty | 12,857 | 247,626 | ||||
Ramco-Gershenson | ||||||
Properties Trust | 19,634 | 262,703 | ||||
Regency Centers | 900 | 42,165 | ||||
Unibail-Rodamco | 1,399 | 328,324 | ||||
Westfield Group | 16,989 | 184,761 | ||||
Westfield Retail Trust | 21,112 | 65,883 | ||||
1,602,780 | ||||||
Single Tenant REIT 0.17% | ||||||
National Retail Properties | 10,537 | 323,697 | ||||
323,697 | ||||||
Specialty REITs 0.63% | ||||||
EPR Properties | 8,736 | 396,178 | ||||
Home Loan Servicing Solution | 32,995 | 645,051 | ||||
Plum Creek Timber | 1,520 | 65,132 | ||||
Potlatch | 1,730 | 67,384 | ||||
Rayonier | 450 | 22,428 | ||||
1,196,173 |
10
Number
of Shares |
Value (U.S. $) | ||||||
vCommon Stock (continued) | |||||||
Telecommunications 2.70% | |||||||
AT&T | 30,500 | $ | 1,040,965 | ||||
= | Century Communications | 125,000 | 0 | ||||
CenturyLink | 16,800 | 652,512 | |||||
France Telecom ADR | 900 | 9,639 | |||||
| GeoEye | 600 | 18,336 | ||||
KDDI | 13,200 | 976,888 | |||||
Mobile TeleSystems ADR | 54,000 | 941,220 | |||||
Verizon Communications | 15,100 | 666,212 | |||||
Vodafone Group | 326,843 | 843,838 | |||||
5,149,610 | |||||||
Utilities 1.41% | |||||||
American Water Works | 800 | 30,536 | |||||
= | Calpine Tracking | 70,000 | 0 | ||||
Edison International | 10,500 | 477,540 | |||||
| GenOn Energy | 150 | 383 | ||||
| Mirant (Escrow) | 50,000 | 0 | ||||
* | National Grid | 122,709 | 1,385,974 | ||||
* | National Grid ADR | 11,500 | 651,360 | ||||
NorthWestern | 3,800 | 131,822 | |||||
2,677,615 | |||||||
Total Common Stock | |||||||
(cost $104,947,961) | 112,789,939 | ||||||
Convertible Preferred Stock 2.40% | |||||||
Aspen Insurance Holdings | |||||||
5.625% exercise price | |||||||
$29.28, expiration | |||||||
date 12/31/49 | 10,874 | 643,945 | |||||
# | Chesapeake Energy 5.75% | ||||||
144A exercise price $27.90, | |||||||
expiration date 12/31/49 | 240 | 213,600 | |||||
El Paso Energy Capital Trust I | |||||||
4.75% exercise price | |||||||
$34.49, expiration | |||||||
date 3/31/28 | 1,950 | 106,782 | |||||
HealthSouth 6.50% | |||||||
exercise price $30.50, | |||||||
expiration date 12/31/49 | 835 | 873,828 | |||||
Huntington Bancshares 8.50% | |||||||
exercise price $11.95, | |||||||
expiration date 12/31/49 | 318 | 394,288 | |||||
MetLife 5.00% | |||||||
exercise price $44.28, | |||||||
expiration date 9/4/13 | 13,000 | 579,670 | |||||
PPL 9.50% | |||||||
exercise price $28.80, | |||||||
expiration date 7/1/13 | 12,650 | 688,034 | |||||
SandRidge Energy 8.50% | |||||||
exercise price $8.01, | |||||||
expiration date 12/31/49 | 2,205 | 222,021 | |||||
Wells Fargo 7.50% | |||||||
exercise price $156.71, | |||||||
expiration date 12/31/49 | 695 | 859,020 | |||||
Total Convertible Preferred Stock | |||||||
(cost $4,337,871) | 4,581,188 | ||||||
Exchange-Traded Fund 0.39% | |||||||
* | iPATH S&P 500 VIX Short-Term | ||||||
Futures ETN | 25,000 | 740,500 | |||||
Total Exchange-Traded Fund | |||||||
(cost $1,178,000) | 740,500 | ||||||
Principal Amount° |
|||||||
Agency Collateralized Mortgage Obligations 0.14% | |||||||
Fannie Mae REMICs | |||||||
Series 2001-50 BA | |||||||
7.00% 10/25/41 | USD | 97,750 | 104,171 | ||||
Series 2003-122 AJ | |||||||
4.50% 2/25/28 | 23,757 | 23,987 | |||||
Freddie Mac | |||||||
Series 2557 WE | |||||||
5.00% 1/15/18 | 52,985 | 56,570 | |||||
Series 3131 MC | |||||||
5.50% 4/15/33 | 31,152 | 31,809 | |||||
Series 3173 PE | |||||||
6.00% 4/15/35 | 55,610 | 57,858 | |||||
Total Agency Collateralized | |||||||
Mortgage Obligations | |||||||
(cost $262,838) | 274,395 | ||||||
Agency Mortgage-Backed Securities 0.89% | |||||||
| Fannie Mae ARM | ||||||
2.715% 10/1/36 | 6,759 | 7,244 | |||||
2.78% 4/1/36 | 11,238 | 12,017 | |||||
2.873% 11/1/35 | 11,767 | 12,608 | |||||
2.883% 10/1/36 | 10,036 | 10,726 | |||||
3.847% 3/1/38 | 15,661 | 16,641 | |||||
6.176% 4/1/36 | 39,736 | 42,567 | |||||
Fannie Mae S.F. 15 yr | |||||||
4.00% 11/1/25 | 136,108 | 147,956 | |||||
5.50% 1/1/23 | 24,984 | 27,065 | |||||
Fannie Mae S.F. 15 yr TBA | |||||||
2.50% 1/1/27 | 79,000 | 82,506 | |||||
3.00% 1/1/27 | 113,000 | 119,052 | |||||
Fannie Mae S.F. 20 yr | |||||||
5.50% 12/1/29 | 1,909 | 2,078 | |||||
Fannie Mae S.F. 30 yr | |||||||
6.50% 6/1/36 | 20,648 | 23,424 | |||||
6.50% 10/1/36 | 13,863 | 15,642 | |||||
6.50% 12/1/37 | 23,359 | 26,494 | |||||
Freddie Mac 6.00% 1/1/17 | 9,837 | 10,042 |
(continues) 11
Statement of net assets
Delaware Enhanced Global Dividend and Income Fund
Principal Amount° |
Value (U.S. $) | ||||||
Agency Mortgage-Backed Securities (continued) | |||||||
| Freddie Mac ARM | ||||||
2.764% 7/1/36 | USD | 9,337 | $ | 9,973 | |||
5.811% 10/1/36 | 18,108 | 19,607 | |||||
Freddie Mac S.F. 15 yr | |||||||
5.00% 6/1/18 | 9,272 | 9,943 | |||||
5.00% 12/1/22 | 47,394 | 51,147 | |||||
Freddie Mac S.F. 30 yr | |||||||
5.00% 1/1/34 | 427,911 | 463,461 | |||||
7.00% 11/1/33 | 33,289 | 39,333 | |||||
9.00% 9/1/30 | 46,372 | 51,207 | |||||
GNMA I S.F. 30 yr | |||||||
7.50% 12/15/23 | 67,856 | 81,095 | |||||
7.50% 1/15/32 | 55,263 | 67,602 | |||||
9.50% 9/15/17 | 56,920 | 65,143 | |||||
12.00% 5/15/15 | 21,692 | 23,585 | |||||
GNMA II S.F. 30 yr | |||||||
6.00% 11/20/28 | 63,702 | 71,852 | |||||
6.50% 2/20/30 | 162,408 | 187,788 | |||||
Total Agency Mortgage-Backed | |||||||
Securities (cost $1,554,898) | 1,697,798 | ||||||
Commercial Mortgage-Backed Securities 0.42% | |||||||
# | American Tower Trust 144A | ||||||
Series 2007-1A AFX | |||||||
5.42% 4/15/37 | 75,000 | 77,465 | |||||
BAML Commercial Mortgage | |||||||
Series 2005-1 A3 | |||||||
4.877% 11/10/42 | 5,662 | 5,660 | |||||
Series 2005-6 A4 | |||||||
5.363% 9/10/47 | 180,000 | 201,314 | |||||
| Bear Stearns Commercial | ||||||
Mortgage Securities | |||||||
Series 2006-PW12 A4 | |||||||
5.894% 9/11/38 | 25,000 | 28,707 | |||||
t | Commercial Mortgage Pass | ||||||
Through Certificates | |||||||
Series 2005-C6 A5A | |||||||
5.116% 6/10/44 | 10,000 | 11,057 | |||||
Goldman Sachs Mortgage | |||||||
Securities II | |||||||
Series 2004-GG2 A6 | |||||||
5.396% 8/10/38 | 60,000 | 63,854 | |||||
Series 2005-GG4 A4A | |||||||
4.751% 7/10/39 | 115,000 | 124,341 | |||||
Series 2006-GG6 A4 | |||||||
5.553% 4/10/38 | 10,000 | 11,295 | |||||
| JPMorgan Chase Commercial | ||||||
Mortgage Securities | |||||||
Series 2005-LDP3 A4A | |||||||
4.936% 8/15/42 | 35,000 | 38,558 | |||||
| Morgan Stanley Capital I | ||||||
Series 2007-T27 A4 | |||||||
5.82% 6/13/42 | 160,000 | 190,443 | |||||
# | Timberstar Trust 144A | ||||||
Series 2006-1A A | |||||||
5.668% 10/15/36 | 25,000 | 28,170 | |||||
WF-RBS Commercial Mortgage | |||||||
Trust Series 2012-C9 A3 | |||||||
2.87% 11/15/45 | 10,000 | 10,311 | |||||
Total Commercial Mortgage- | |||||||
Backed Securities | |||||||
(cost $643,642) | 791,175 | ||||||
Convertible Bonds 12.78% | |||||||
Basic Industry 0.18% | |||||||
Steel Dynamics 5.125% | |||||||
exercise price $17.32, | |||||||
expiration date 6/15/14 | 314,000 | 335,391 | |||||
335,391 | |||||||
Capital Goods 1.27% | |||||||
AAR | |||||||
1.75% exercise price $28.62, | |||||||
expiration date 1/1/26 | 215,000 | 216,075 | |||||
#144A 1.75% | |||||||
exercise price $28.62, | |||||||
expiration date 1/1/26 | 90,000 | 90,450 | |||||
L-3 Communications | |||||||
Holdings 3.00% | |||||||
exercise price $91.21, | |||||||
expiration date 8/1/35 | 868,000 | 876,680 | |||||
# | Owens-Brockway Glass | ||||||
Container 144A 3.00% | |||||||
exercise price $47.47, | |||||||
expiration date 5/28/15 | 1,245,000 | 1,235,663 | |||||
2,418,868 | |||||||
Communications 1.31% | |||||||
# | Alaska Communications | ||||||
Systems Group 144A 6.25% | |||||||
exercise price $10.28, | |||||||
expiration date 4/27/18 | 538,000 | 364,495 | |||||
# | Clearwire Communications | ||||||
144A 8.25% | |||||||
exercise price $7.08, | |||||||
expiration date 11/30/40 | 371,000 | 358,015 | |||||
* | Leap Wireless International | ||||||
4.50% exercise price | |||||||
$93.21, expiration | |||||||
date 7/15/14 | 826,000 | 787,281 | |||||
Rovi 2.625% | |||||||
exercise price $47.36, | |||||||
expiration date 2/10/40 | 363,000 | 362,093 | |||||
SBA Communications 4.00% | |||||||
exercise price $30.38, | |||||||
expiration date 7/22/14 | 274,000 | 632,769 | |||||
2,504,653 |
12
Principal | Value | ||||||
Amount° | (U.S. $) | ||||||
Convertible Bonds (continued) | |||||||
Consumer Cyclical 1.34% | |||||||
ϕ | ArvinMeritor 4.00% | ||||||
exercise price $26.73, | |||||||
expiration date 2/15/27 | USD | 1,493,000 | $ | 1,108,553 | |||
# | Iconix Brand Group 144A | ||||||
2.50% exercise price | |||||||
$30.75, expiration | |||||||
date 5/31/16 | 634,000 | 642,322 | |||||
International Game | |||||||
Technology 3.25% | |||||||
exercise price $19.97, | |||||||
expiration date 5/1/14 | 493,000 | 513,644 | |||||
# | Titan Machinery 144A 3.75% | ||||||
exercise price $43.17, | |||||||
expiration date 4/30/19 | 313,000 | 285,808 | |||||
2,550,327 | |||||||
Consumer Non-Cyclical 2.08% | |||||||
* | Alere 3.00% | ||||||
exercise price $43.98, | |||||||
expiration date 5/15/16 | 705,000 | 664,463 | |||||
Dendreon 2.875% | |||||||
exercise price $51.24, | |||||||
expiration date 1/13/16 | 197,000 | 133,098 | |||||
# | Illumina 144A 0.25% | ||||||
exercise price $83.55, | |||||||
expiration date 3/11/16 | 513,000 | 492,801 | |||||
LifePoint Hospitals 3.50% | |||||||
exercise price $51.79, | |||||||
expiration date 5/14/14 | 870,000 | 895,012 | |||||
Medtronic 1.625% | |||||||
exercise price $53.13, | |||||||
expiration date 4/15/13 | 346,000 | 347,081 | |||||
Mylan 3.75% | |||||||
exercise price $13.32, | |||||||
expiration date 9/10/15 | 261,000 | 550,873 | |||||
NuVasive | |||||||
2.25% exercise price $44.74, | |||||||
expiration date 3/15/13 | 111,000 | 111,139 | |||||
2.75% exercise price $42.13, | |||||||
expiration date 6/30/17 | 890,000 | 763,730 | |||||
3,958,197 | |||||||
Energy 0.82% | |||||||
* | Chesapeake Energy 2.50% | ||||||
exercise price $51.14, | |||||||
expiration date 5/15/37 | 341,000 | 306,048 | |||||
Helix Energy | |||||||
Solutions Group 3.25% | |||||||
exercise price $25.02, | |||||||
expiration date 3/12/32 | 691,000 | 768,737 | |||||
Transocean 1.50% | |||||||
exercise price $158.97, | |||||||
expiration date 12/15/37 | 491,000 | 494,069 | |||||
1,568,854 | |||||||
Financials 1.00% | |||||||
Ares Capital 5.75% | |||||||
exercise price $19.13, | |||||||
expiration date 2/1/16 | 561,000 | 605,529 | |||||
BGC Partners 4.50% | |||||||
exercise price $9.84, | |||||||
expiration date 7/13/16 | 365,000 | 332,606 | |||||
PHH 4.00% | |||||||
exercise price $25.80, | |||||||
expiration date 9/1/14 | 867,000 | 967,248 | |||||
1,905,383 | |||||||
Industrials 0.32% | |||||||
ϕ | General Cable 4.50% | ||||||
exercise price $36.75, | |||||||
expiration date 11/15/29 | 584,000 | 616,120 | |||||
616,120 | |||||||
Insurance 0.20% | |||||||
# | WellPoint 144A 2.75% | ||||||
exercise price $75.57, | |||||||
expiration date 10/15/42 | 374,000 | 389,661 | |||||
389,661 | |||||||
Real Estate 0.27% | |||||||
# | Lexington Realty Trust 144A | ||||||
6.00% exercise price $6.93, | |||||||
expiration date 1/11/30 | 358,000 | 518,876 | |||||
518,876 | |||||||
Services 1.16% | |||||||
Live Nation Entertainment | |||||||
2.875% exercise price | |||||||
$27.14, expiration | |||||||
date 7/14/27 | 1,435,000 | 1,436,794 | |||||
MGM Resorts International | |||||||
4.25% exercise price | |||||||
$18.58, expiration | |||||||
date 4/10/15 | 752,000 | 767,510 | |||||
2,204,304 | |||||||
Technology 2.83% | |||||||
Advanced Micro Devices | |||||||
6.00% exercise price | |||||||
$28.08, expiration | |||||||
date 4/30/15 | 898,000 | 832,895 | |||||
#144A 6.00% | |||||||
exercise price $28.08, | |||||||
expiration date 4/30/15 | 31,000 | 28,753 | |||||
Alcatel-Lucent USA 2.875% | |||||||
exercise price $15.35, | |||||||
expiration date 6/15/25 | 729,000 | 722,621 | |||||
# | Ciena 144A 3.75% | ||||||
exercise price $20.17, | |||||||
expiration date 10/15/18 | 517,000 | 572,254 | |||||
Hologic 2.00% | |||||||
exercise price $31.17, | |||||||
expiration date 2/27/42 | 597,000 | 578,717 |
(continues) 13
Statement of net assets
Delaware Enhanced Global Dividend and Income Fund
Principal | Value | ||||||
Amount° | (U.S. $) | ||||||
Convertible Bonds (continued) | |||||||
Technology (continued) | |||||||
Intel 3.25% | |||||||
exercise price $22.20, | |||||||
expiration date 8/1/39 | USD | 501,000 | $ | 579,281 | |||
Linear Technology 3.00% | |||||||
exercise price $42.07, | |||||||
expiration date 5/1/27 | 959,000 | 997,359 | |||||
* | SanDisk 1.50% | ||||||
exercise price $52.37, | |||||||
expiration date 8/11/17 | 529,000 | 591,158 | |||||
VeriSign 3.25% | |||||||
exercise price $34.37, | |||||||
expiration date 8/15/37 | 424,000 | 494,225 | |||||
5,397,263 | |||||||
Total Convertible Bonds | |||||||
(cost $23,278,232) | 24,367,897 | ||||||
Corporate Bonds 44.32% | |||||||
Automotive 1.24% | |||||||
* | American Axle & Manufacturing | ||||||
7.75% 11/15/19 | 55,000 | 60,775 | |||||
7.875% 3/1/17 | 225,000 | 233,438 | |||||
* | ArvinMeritor 8.125% 9/15/15 | 281,000 | 299,265 | ||||
* | Chrysler Group 8.25% 6/15/21 | 715,000 | 790,968 | ||||
Dana Holding 6.75% 2/15/21 | 119,000 | 127,925 | |||||
Ford Motor Credit | |||||||
12.00% 5/15/15 | 245,000 | 302,575 | |||||
# | International Automotive | ||||||
Components Group 144A | |||||||
9.125% 6/1/18 | 290,000 | 271,150 | |||||
# | Jaguar Land Rover 144A | ||||||
8.125% 5/15/21 | 260,000 | 286,000 | |||||
2,372,096 | |||||||
Banking 1.06% | |||||||
Abbey National Treasury | |||||||
Services 4.00% 4/27/16 | 30,000 | 31,758 | |||||
Bank of America | |||||||
3.75% 7/12/16 | 10,000 | 10,696 | |||||
3.875% 3/22/17 | 10,000 | 10,885 | |||||
* | Barclays Bank 7.625% 11/21/22 | 375,000 | 372,188 | ||||
City National 5.25% 9/15/20 | 15,000 | 16,525 | |||||
| Fifth Third Capital Trust IV | ||||||
6.50% 4/15/37 | 5,000 | 5,031 | |||||
*# | HBOS Capital Funding 144A | ||||||
6.071% 6/29/49 | 659,000 | 543,675 | |||||
HSBC Holdings 4.00% 3/30/22 | 25,000 | 27,529 | |||||
JPMorgan Chase 2.00% 8/15/17 | 5,000 | 5,100 | |||||
PNC Financial Services Group | |||||||
2.854% 11/9/22 | 5,000 | 5,115 | |||||
PNC Funding | |||||||
5.125% 2/8/20 | 30,000 | 35,946 | |||||
5.625% 2/1/17 | 35,000 | 40,675 | |||||
| Regions Financial Trust II | ||||||
6.625% 5/15/47 | 720,000 | 724,367 | |||||
Santander Holdings USA | |||||||
4.625% 4/19/16 | 10,000 | 10,634 | |||||
* | SVB Financial Group | ||||||
5.375% 9/15/20 | 25,000 | 28,429 | |||||
| USB Capital IX 3.50% 10/29/49 | 80,000 | 71,952 | ||||
Wachovia | |||||||
0.71% 10/15/16 | 10,000 | 9,772 | |||||
5.25% 8/1/14 | 20,000 | 21,435 | |||||
5.625% 10/15/16 | 35,000 | 40,342 | |||||
Zions Bancorp | |||||||
4.50% 3/27/17 | 5,000 | 5,256 | |||||
7.75% 9/23/14 | 5,000 | 5,494 | |||||
2,022,804 | |||||||
Basic Industry 5.50% | |||||||
* | AK Steel 7.625% 5/15/20 | 221,000 | 185,088 | ||||
Alcoa | |||||||
5.40% 4/15/21 | 10,000 | 10,577 | |||||
6.75% 7/15/18 | 15,000 | 17,415 | |||||
# | APERAM 144A 7.75% 4/1/18 | 225,000 | 193,500 | ||||
ArcelorMittal | |||||||
*6.125% 6/1/18 | 360,000 | 359,781 | |||||
10.35% 6/1/19 | 15,000 | 17,773 | |||||
Barrick Gold 3.85% 4/1/22 | 15,000 | 16,054 | |||||
Barrick North America Finance | |||||||
4.40% 5/30/21 | 5,000 | 5,548 | |||||
Cabot | |||||||
2.55% 1/15/18 | 15,000 | 15,489 | |||||
3.70% 7/15/22 | 5,000 | 5,138 | |||||
# | Cemex Espana Luxembourg | ||||||
144A 9.25% 5/12/20 | 309,000 | 331,403 | |||||
CF Industries 6.875% 5/1/18 | 25,000 | 30,770 | |||||
CONSOL Energy 8.25% 4/1/20 | 300,000 | 321,750 | |||||
Domtar 4.40% 4/1/22 | 5,000 | 5,147 | |||||
Dow Chemical 8.55% 5/15/19 | 34,000 | 46,074 | |||||
# | Essar Steel Algoma 144A | ||||||
9.375% 3/15/15 | 205,000 | 188,600 | |||||
*# | FMG Resources | ||||||
August 2006 144A | |||||||
6.875% 2/1/18 | 115,000 | 113,706 | |||||
6.875% 4/1/22 | 275,000 | 269,156 | |||||
Georgia-Pacific 8.00% 1/15/24 | 30,000 | 42,539 | |||||
# | HD Supply 144A | ||||||
11.00% 4/15/20 | 355,000 | 411,800 | |||||
Headwaters 7.625% 4/1/19 | 310,000 | 327,825 | |||||
Immucor 11.125% 8/15/19 | 275,000 | 310,063 | |||||
*# | Ineos Group Holdings 144A | ||||||
8.50% 2/15/16 | 790,000 | 778,149 | |||||
# | Inmet Mining 144A | ||||||
8.75% 6/1/20 | 300,000 | 325,500 | |||||
Interface 7.625% 12/1/18 | 205,000 | 221,656 | |||||
International Paper | |||||||
4.75% 2/15/22 | 5,000 | 5,682 | |||||
9.375% 5/15/19 | 5,000 | 6,936 |
14
Principal | Value | |||||||
Amount° | (U.S. $) | |||||||
Corporate Bonds (continued) | ||||||||
Basic Industry (continued) | ||||||||
# | JMC Steel Group 144A | |||||||
8.25% 3/15/18 | USD | 305,000 | $ | 315,675 | ||||
# | Longview Fibre Paper & | |||||||
Packaging 144A | ||||||||
8.00% 6/1/16 | 305,000 | 321,013 | ||||||
# | MacDermid 144A | |||||||
9.50% 4/15/17 | 396,000 | 413,819 | ||||||
# | Masonite International 144A | |||||||
8.25% 4/15/21 | 370,000 | 397,750 | ||||||
Millar Western Forest Products | ||||||||
8.50% 4/1/21 | 225,000 | 198,000 | ||||||
# | Murray Energy 144A | |||||||
10.25% 10/15/15 | 270,000 | 257,850 | ||||||
# | New Gold 144A | |||||||
6.25% 11/15/22 | 380,000 | 389,975 | ||||||
Newell Rubbermaid | ||||||||
2.05% 12/1/17 | 5,000 | 5,029 | ||||||
Norcraft 10.50% 12/15/15 | 186,000 | 186,930 | ||||||
Nortek 8.50% 4/15/21 | 320,000 | 349,600 | ||||||
# | Orion Engineered | |||||||
Carbons Bondco 144A | ||||||||
9.625% 6/15/18 | 320,000 | 348,000 | ||||||
Peabody Energy 6.25% 11/15/21 | 300,000 | 312,750 | ||||||
*# | Perstorp Holding 144A | |||||||
8.75% 5/15/17 | 400,000 | 404,000 | ||||||
# | Ply Gem Industries 144A | |||||||
9.375% 4/15/17 | 185,000 | 195,638 | ||||||
Rio Tinto Finance USA | ||||||||
2.875% 8/21/22 | 20,000 | 20,415 | ||||||
Rockwood Specialties Group | ||||||||
4.625% 10/15/20 | 360,000 | 369,450 | ||||||
# | Ryerson 144A | |||||||
9.00% 10/15/17 | 245,000 | 243,469 | ||||||
11.25% 10/15/18 | 105,000 | 100,144 | ||||||
# | Sappi Papier Holding 144A | |||||||
8.375% 6/15/19 | 405,000 | 430,818 | ||||||
# | Taminco Global Chemical | |||||||
144A 9.75% 3/31/20 | 580,000 | 629,299 | ||||||
Teck Resources | ||||||||
3.00% 3/1/19 | 5,000 | 5,094 | ||||||
3.75% 2/1/23 | 5,000 | 5,042 | ||||||
Vale Overseas 4.375% 1/11/22 | 20,000 | 21,284 | ||||||
10,484,163 | ||||||||
Brokerage 0.03% | ||||||||
Jefferies Group | ||||||||
6.25% 1/15/36 | 5,000 | 5,125 | ||||||
6.45% 6/8/27 | 5,000 | 5,300 | ||||||
Lazard Group 6.85% 6/15/17 | 34,000 | 39,304 | ||||||
49,729 | ||||||||
Capital Goods 2.60% | ||||||||
Anixter 10.00% 3/15/14 | 15,000 | 16,369 | ||||||
Berry Plastics | ||||||||
9.75% 1/15/21 | 217,000 | 247,923 | ||||||
* | 10.25% 3/1/16 | 160,000 | 166,200 | |||||
# | Consolidated Container 144A | |||||||
10.125% 7/15/20 | 385,000 | 411,950 | ||||||
Kratos Defense & | ||||||||
Security Solutions | ||||||||
10.00% 6/1/17 | 275,000 | 301,125 | ||||||
Mueller Water Products | ||||||||
7.375% 6/1/17 | 300,000 | 311,250 | ||||||
Reynolds Group Issuer | ||||||||
8.25% 2/15/21 | 125,000 | 124,688 | ||||||
9.00% 4/15/19 | 310,000 | 320,850 | ||||||
9.875% 8/15/19 | 775,000 | 825,375 | ||||||
# | Sealed Air 144A | |||||||
8.125% 9/15/19 | 70,000 | 78,050 | ||||||
8.375% 9/15/21 | 475,000 | 536,750 | ||||||
# | Spectrum Brands Escrow 144A | |||||||
6.375% 11/15/20 | 75,000 | 78,000 | ||||||
6.625% 11/15/22 | 280,000 | 294,000 | ||||||
# | Votorantim Cimentos 144A | |||||||
7.25% 4/5/41 | 1,118,000 | 1,238,184 | ||||||
4,950,714 | ||||||||
Communications 3.88% | ||||||||
American Tower | ||||||||
4.70% 3/15/22 | 240,000 | 265,623 | ||||||
5.90% 11/1/21 | 30,000 | 35,973 | ||||||
CenturyLink 5.80% 3/15/22 | 210,000 | 222,316 | ||||||
# | Clearwire Communications | |||||||
144A 14.75% 12/1/16 | 180,000 | 225,000 | ||||||
# | Columbus International 144A | |||||||
11.50% 11/20/14 | 270,000 | 302,400 | ||||||
Comcast 4.65% 7/15/42 | 15,000 | 15,965 | ||||||
# | Cox Communications 144A | |||||||
3.25% 12/15/22 | 5,000 | 5,072 | ||||||
Cricket Communications | ||||||||
7.75% 5/15/16 | 130,000 | 138,125 | ||||||
7.75% 10/15/20 | 180,000 | 186,750 | ||||||
# | Crown Castle Towers 144A | |||||||
4.883% 8/15/20 | 30,000 | 34,252 | ||||||
# | Digicel Group 144A | |||||||
8.25% 9/30/20 | 200,000 | 213,500 | ||||||
10.50% 4/15/18 | 330,000 | 366,300 | ||||||
DIRECTV Holdings | ||||||||
3.80% 3/15/22 | 15,000 | 15,340 | ||||||
5.15% 3/15/42 | 5,000 | 5,041 | ||||||
Frontier Communications | ||||||||
7.125% 3/15/19 | 120,000 | 129,900 | ||||||
Hughes Satellite Systems | ||||||||
7.625% 6/15/21 | 280,000 | 313,600 | ||||||
# | Intelsat Jackson Holdings | |||||||
144A 7.25% 10/15/20 | 75,000 | 80,250 | ||||||
Intelsat Luxembourg | ||||||||
11.25% 2/4/17 | 570,000 | 606,337 | ||||||
PIK 11.50% 2/4/17 | 319,784 | 340,570 |
(continues) 15
Statement of net assets
Delaware Enhanced Global Dividend and Income Fund
Principal | Value | ||||||
Amount° | (U.S. $) | ||||||
Corporate Bonds (continued) | |||||||
Communications (continued) | |||||||
Interpublic Group | |||||||
2.25% 11/15/17 | USD | 5,000 | $ | 4,940 | |||
3.75% 2/15/23 | 10,000 | 9,847 | |||||
4.00% 3/15/22 | 15,000 | 15,219 | |||||
Level 3 Communications | |||||||
*#144A 8.875% 6/1/19 | 190,000 | 200,213 | |||||
11.875% 2/1/19 | 345,000 | 395,025 | |||||
# | Level 3 Financing 144A | ||||||
7.00% 6/1/20 | 175,000 | 178,719 | |||||
Qwest 6.75% 12/1/21 | 10,000 | 11,753 | |||||
Satelites Mexicanos | |||||||
9.50% 5/15/17 | 160,000 | 170,800 | |||||
Sprint Capital 8.75% 3/15/32 | 178,000 | 212,265 | |||||
Sprint Nextel | |||||||
8.375% 8/15/17 | 475,000 | 553,374 | |||||
9.125% 3/1/17 | 125,000 | 147,500 | |||||
Telecom Italia Capital | |||||||
5.25% 10/1/15 | 35,000 | 37,144 | |||||
Telefonica Emisiones | |||||||
5.462% 2/16/21 | 20,000 | 20,350 | |||||
Time Warner Cable | |||||||
8.25% 4/1/19 | 20,000 | 26,712 | |||||
# | UPCB Finance VI 144A | ||||||
6.875% 1/15/22 | 150,000 | 162,750 | |||||
Verizon Communications | |||||||
2.45% 11/1/22 | 10,000 | 10,061 | |||||
# | VimpelCom Holdings 144A | ||||||
7.504% 3/1/22 | 275,000 | 300,880 | |||||
# | Vivendi 144A | ||||||
3.45% 1/12/18 | 5,000 | 5,169 | |||||
*6.625% 4/4/18 | 25,000 | 29,383 | |||||
# | Wind Acquisition Finance 144A | ||||||
7.25% 2/15/18 | 535,000 | 532,324 | |||||
11.75% 7/15/17 | 190,000 | 195,225 | |||||
Windstream | |||||||
7.50% 4/1/23 | 235,000 | 243,813 | |||||
7.875% 11/1/17 | 55,000 | 61,188 | |||||
Zayo Group 10.125% 7/1/20 | 320,000 | 360,000 | |||||
7,386,968 | |||||||
Consumer Cyclical 3.24% | |||||||
Amazon.com 2.50% 11/29/22 | 15,000 | 14,959 | |||||
Burlington Coat | |||||||
Factory Warehouse | |||||||
10.00% 2/15/19 | 325,000 | 357,500 | |||||
# | CDR DB Sub 144A | ||||||
7.75% 10/15/20 | 450,000 | 445,499 | |||||
CKE Restaurants 11.375% 7/15/18 | 175,000 | 203,219 | |||||
CVS Caremark 2.75% 12/1/22 | 20,000 | 20,101 | |||||
Darden Restaurants | |||||||
3.35% 11/1/22 | 20,000 | 20,113 | |||||
Dave & Busters 11.00% 6/1/18 | 330,000 | 370,425 | |||||
#^ | Dave & Busters Entertainment | ||||||
144A 10.004% 2/15/16 | 510,000 | 383,138 | |||||
DineEquity 9.50% 10/30/18 | 410,000 | 465,862 | |||||
eBay 4.00% 7/15/42 | 30,000 | 29,361 | |||||
Express 8.75% 3/1/18 | 118,000 | 128,178 | |||||
Historic TW 6.875% 6/15/18 | 25,000 | 31,620 | |||||
# | Landrys 144A 9.375% 5/1/20 | 315,000 | 335,475 | ||||
* | Levi Strauss 7.625% 5/15/20 | 300,000 | 327,375 | ||||
Lowes 3.12% 4/15/22 | 15,000 | 15,903 | |||||
Michaels Stores | |||||||
11.375% 11/1/16 | 95,000 | 99,631 | |||||
# | Pantry 144A 8.375% 8/1/20 | 405,000 | 420,187 | ||||
# | Party City Holdings 144A | ||||||
8.875% 8/1/20 | 435,000 | 463,274 | |||||
* | Quiksilver 6.875% 4/15/15 | 250,000 | 246,563 | ||||
# | QVC 144A 5.125% 7/2/22 | 10,000 | 10,617 | ||||
Rite Aid 9.25% 3/15/20 | 385,000 | 394,625 | |||||
Sealy Mattress | |||||||
*8.25% 6/15/14 | 310,000 | 311,553 | |||||
#144A 10.875% 4/15/16 | 10,000 | 10,900 | |||||
Tops Holding | |||||||
10.125% 10/15/15 | 281,000 | 296,982 | |||||
Toys R Us Property | |||||||
8.50% 12/1/17 | 300,000 | 321,750 | |||||
Walgreen 3.10% 9/15/22 | 15,000 | 15,291 | |||||
Western Union 3.65% 8/22/18 | 10,000 | 10,676 | |||||
# | Wok Acquisition 144A | ||||||
10.25% 6/30/20 | 375,000 | 396,563 | |||||
Wyndham Worldwide | |||||||
4.25% 3/1/22 | 5,000 | 5,185 | |||||
5.625% 3/1/21 | 10,000 | 11,144 | |||||
5.75% 2/1/18 | 5,000 | 5,620 | |||||
6,169,289 | |||||||
Consumer Non-Cyclical 1.34% | |||||||
# | AbbVie 144A 2.90% 11/6/22 | 10,000 | 10,233 | ||||
# | Alphabet Holding PIK 144A | ||||||
7.75% 11/1/17 | 145,000 | 148,263 | |||||
Amgen | |||||||
3.625% 5/15/22 | 10,000 | 10,765 | |||||
3.875% 11/15/21 | 5,000 | 5,517 | |||||
5.375% 5/15/43 | 5,000 | 5,933 | |||||
Boston Scientific 6.00% 1/15/20 | 10,000 | 11,795 | |||||
CareFusion 6.375% 8/1/19 | 65,000 | 78,356 | |||||
Celgene | |||||||
3.25% 8/15/22 | 5,000 | 5,146 | |||||
3.95% 10/15/20 | 15,000 | 16,452 | |||||
Constellation Brands | |||||||
4.625% 3/1/23 | 190,000 | 196,650 | |||||
6.00% 5/1/22 | 290,000 | 333,138 | |||||
Covidien International Finance | |||||||
4.20% 6/15/20 | 20,000 | 22,894 | |||||
* | Dean Foods 7.00% 6/1/16 | 219,000 | 235,973 | ||||
Del Monte 7.625% 2/15/19 | 300,000 | 309,750 |
16
Principal | Value | ||||||
Amount° | (U.S. $) | ||||||
Corporate Bonds (continued) | |||||||
Consumer Non-Cyclical (continued) | |||||||
Energizer Holdings | |||||||
4.70% 5/24/22 | USD | 20,000 | $ | 21,617 | |||
# | Heineken 144A | ||||||
2.75% 4/1/23 | 5,000 | 4,964 | |||||
3.40% 4/1/22 | 15,000 | 15,821 | |||||
# | JBS USA 144A 8.25% 2/1/20 | 290,000 | 302,325 | ||||
# | Kraft Foods Group 144A | ||||||
5.00% 6/4/42 | 20,000 | 22,527 | |||||
Laboratory Corp of America | |||||||
Holdings 2.20% 8/23/17 | 15,000 | 15,498 | |||||
McKesson 2.70% 12/15/22 | 5,000 | 5,061 | |||||
NBTY 9.00% 10/1/18 | 318,000 | 359,339 | |||||
Quest Diagnostics 4.70% 4/1/21 | 5,000 | 5,590 | |||||
Reynolds American | |||||||
3.25% 11/1/22 | 10,000 | 10,195 | |||||
4.75% 11/1/42 | 10,000 | 10,185 | |||||
* | Safeway 4.75% 12/1/21 | 15,000 | 15,577 | ||||
Smithfield Foods | |||||||
6.625% 8/15/22 | 185,000 | 196,563 | |||||
Visant 10.00% 10/1/17 | 145,000 | 126,875 | |||||
# | Woolworths 144A | ||||||
3.15% 4/12/16 | 10,000 | 10,531 | |||||
Zimmer Holdings | |||||||
4.625% 11/30/19 | 30,000 | 34,413 | |||||
2,547,946 | |||||||
Energy 6.73% | |||||||
American Petroleum Tankers | |||||||
Parent 10.25% 5/1/15 | 304,000 | 320,340 | |||||
AmeriGas Finance | |||||||
7.00% 5/20/22 | 300,000 | 328,500 | |||||
Antero Resources Finance | |||||||
9.375% 12/1/17 | 266,000 | 293,930 | |||||
Apache 2.625% 1/15/23 | 10,000 | 10,064 | |||||
Calumet Specialty Products | |||||||
Partners 9.375% 5/1/19 | 455,000 | 492,537 | |||||
Chaparral Energy | |||||||
#144A 7.625% 11/15/22 | 180,000 | 184,050 | |||||
8.25% 9/1/21 | 335,000 | 361,800 | |||||
Chesapeake Energy | |||||||
*6.125% 2/15/21 | 55,000 | 55,963 | |||||
6.625% 8/15/20 | 335,000 | 352,588 | |||||
Chevron 2.355% 12/5/22 | 10,000 | 10,117 | |||||
Comstock Resources | |||||||
7.75% 4/1/19 | 165,000 | 167,063 | |||||
Copano Energy | |||||||
7.125% 4/1/21 | 65,000 | 68,819 | |||||
7.75% 6/1/18 | 199,000 | 210,194 | |||||
Crosstex Energy | |||||||
#144A 7.125% 6/1/22 | 135,000 | 138,375 | |||||
8.875% 2/15/18 | 210,000 | 228,900 | |||||
# | Drill Rigs Holdings 144A | ||||||
6.50% 10/1/17 | 390,000 | 389,025 | |||||
EOG Resources | |||||||
2.625% 3/15/23 | 5,000 | 5,088 | |||||
# | Halcon Resources 144A | ||||||
8.875% 5/15/21 | 250,000 | 259,375 | |||||
# | Helix Energy Solutions 144A | ||||||
9.50% 1/15/16 | 79,000 | 81,271 | |||||
# | Hercules Offshore 144A | ||||||
10.50% 10/15/17 | 547,000 | 583,922 | |||||
# | Hilcorp Energy I 144A | ||||||
8.00% 2/15/20 | 271,000 | 298,100 | |||||
Holly 9.875% 6/15/17 | 206,000 | 225,828 | |||||
# | Holly Energy Partners 144A | ||||||
6.50% 3/1/20 | 85,000 | 89,675 | |||||
# | Key Energy Services 144A | ||||||
6.75% 3/1/21 | 450,000 | 451,125 | |||||
Kodiak Oil & Gas | |||||||
8.125% 12/1/19 | 430,000 | 470,849 | |||||
Laredo Petroleum | |||||||
7.375% 5/1/22 | 75,000 | 81,563 | |||||
9.50% 2/15/19 | 325,000 | 365,625 | |||||
Linn Energy | |||||||
6.50% 5/15/19 | 60,000 | 61,200 | |||||
8.625% 4/15/20 | 241,000 | 264,498 | |||||
MarkWest Energy Partners | |||||||
6.50% 8/15/21 | 270,000 | 294,975 | |||||
Murphy Oil | |||||||
2.50% 12/1/17 | 10,000 | 10,071 | |||||
3.70% 12/1/22 | 5,000 | 5,012 | |||||
Oasis Petroleum 7.25% 2/1/19 | 235,000 | 251,450 | |||||
Occidental Petroleum | |||||||
2.70% 2/15/23 | 5,000 | 5,185 | |||||
Offshore Group Investments | |||||||
11.50% 8/1/15 | 127,000 | 140,018 | |||||
# | PDC Energy 144A | ||||||
7.75% 10/15/22 | 185,000 | 187,775 | |||||
Pemex Project Funding Master | |||||||
Trust 6.625% 6/15/35 | 1,000,000 | 1,269,999 | |||||
Petrobras International Finance | |||||||
3.875% 1/27/16 | 10,000 | 10,646 | |||||
5.375% 1/27/21 | 39,000 | 44,054 | |||||
*# | Petroleos Mexicanos 144A | ||||||
5.50% 6/27/44 | 512,000 | 564,479 | |||||
Pioneer Energy Services | |||||||
9.875% 3/15/18 | 361,000 | 392,588 | |||||
Pride International | |||||||
6.875% 8/15/20 | 20,000 | 25,620 | |||||
Quicksilver Resources | |||||||
9.125% 8/15/19 | 165,000 | 150,975 | |||||
Range Resources 5.00% 8/15/22 | 300,000 | 314,250 | |||||
Regency Energy Partners | |||||||
6.875% 12/1/18 | 200,000 | 218,000 | |||||
# | Samson Investment 144A | ||||||
9.75% 2/15/20 | 440,000 | 467,499 |
(continues) 17
Statement of net assets
Delaware Enhanced Global Dividend and Income Fund
Principal | Value | ||||||
Amount° | (U.S. $) | ||||||
Corporate Bonds (continued) | |||||||
Energy (continued) | |||||||
SandRidge Energy | |||||||
7.50% 3/15/21 | USD | 155,000 | $ | 162,363 | |||
8.125% 10/15/22 | 150,000 | 161,250 | |||||
8.75% 1/15/20 | 10,000 | 10,875 | |||||
SESI 7.125% 12/15/21 | 285,000 | 318,488 | |||||
Shell International Finance | |||||||
2.25% 1/6/23 | 10,000 | 9,969 | |||||
# | Sinopec Group Overseas | ||||||
Development 144A | |||||||
2.75% 5/17/17 | 300,000 | 313,499 | |||||
Statoil 2.45% 1/17/23 | 10,000 | 9,999 | |||||
Talisman Energy 5.50% 5/15/42 | 25,000 | 28,410 | |||||
TNK-BP Finance | |||||||
7.875% 3/13/18 | 400,000 | 486,047 | |||||
Transocean | |||||||
3.80% 10/15/22 | 25,000 | 25,575 | |||||
5.05% 12/15/16 | 20,000 | 22,285 | |||||
Weatherford International | |||||||
4.50% 4/15/22 | 15,000 | 15,382 | |||||
9.625% 3/1/19 | 15,000 | 19,347 | |||||
# | Woodside Finance 144A | ||||||
8.125% 3/1/14 | 15,000 | 16,268 | |||||
8.75% 3/1/19 | 15,000 | 19,943 | |||||
12,822,680 | |||||||
Financials 0.88% | |||||||
E Trade Financial | |||||||
6.375% 11/15/19 | 390,000 | 395,363 | |||||
General Electric Capital | |||||||
5.55% 5/4/20 | 5,000 | 5,966 | |||||
5.625% 5/1/18 | 5,000 | 5,964 | |||||
6.00% 8/7/19 | 95,000 | 116,353 | |||||
# | ILFC E-Capital Trust II 144A | ||||||
6.25% 12/21/65 | 455,000 | 370,825 | |||||
International Lease Finance | |||||||
5.875% 4/1/19 | 330,000 | 341,764 | |||||
6.25% 5/15/19 | 12,000 | 12,750 | |||||
8.75% 3/15/17 | 20,000 | 22,975 | |||||
# | Nuveen Investments 144A | ||||||
9.50% 10/15/20 | 395,000 | 400,925 | |||||
1,672,885 | |||||||
Healthcare 3.38% | |||||||
Air Medical Group Holdings | |||||||
9.25% 11/1/18 | 285,000 | 309,225 | |||||
Alere | |||||||
#144A 7.25% 7/1/18 | 195,000 | 195,975 | |||||
9.00% 5/15/16 | 255,000 | 269,025 | |||||
# | Biomet 144A 6.50% 10/1/20 | 390,000 | 388,050 | ||||
# | CDRT Holding PIK 144A | ||||||
9.25% 10/1/17 | 190,000 | 190,950 | |||||
Community Health Systems | |||||||
7.125% 7/15/20 | 290,000 | 307,038 | |||||
8.00% 11/15/19 | 265,000 | 289,844 | |||||
DaVita HealthCare Partners | |||||||
6.625% 11/1/20 | 300,000 | 324,375 | |||||
# | Fresenius Medical Care | ||||||
US Finance II 144A | |||||||
5.875% 1/31/22 | 300,000 | 323,250 | |||||
HCA 5.875% 3/15/22 | 310,000 | 338,675 | |||||
* | HCA Holdings 7.75% 5/15/21 | 275,000 | 299,750 | ||||
HealthSouth 7.75% 9/15/22 | 54,000 | 59,468 | |||||
# | Hologic 144A 6.25% 8/1/20 | 390,000 | 416,324 | ||||
# | Kinetic Concepts 144A | ||||||
10.50% 11/1/18 | 250,000 | 261,250 | |||||
12.50% 11/1/19 | 215,000 | 204,250 | |||||
# | MultiPlan 144A | ||||||
9.875% 9/1/18 | 428,000 | 476,149 | |||||
Radnet Management | |||||||
10.375% 4/1/18 | 209,000 | 212,658 | |||||
# | Sky Growth Acquisition 144A | ||||||
7.375% 10/15/20 | 590,000 | 584,837 | |||||
# | STHI Holding 144A | ||||||
8.00% 3/15/18 | 275,000 | 300,438 | |||||
Tenet Healthcare 6.25% 11/1/18 | 300,000 | 331,500 | |||||
# | Truven Health Analytics 144A | ||||||
10.625% 6/1/20 | 125,000 | 134,375 | |||||
# | VPI Escrow 144A | ||||||
6.375% 10/15/20 | 220,000 | 234,850 | |||||
6,452,256 | |||||||
Industrials 0.02% | |||||||
Yale University 2.90% 10/15/14 | 45,000 | 47,054 | |||||
47,054 | |||||||
Insurance 1.52% | |||||||
Alleghany 4.95% 6/27/22 | 5,000 | 5,507 | |||||
American International Group | |||||||
6.40% 12/15/20 | 15,000 | 18,421 | |||||
8.175% 5/15/58 | 435,000 | 545,925 | |||||
| Chubb 6.375% 3/29/67 | 15,000 | 16,069 | ||||
# | Highmark 144A | ||||||
4.75% 5/15/21 | 5,000 | 5,165 | |||||
6.125% 5/15/41 | 5,000 | 5,308 | |||||
# | Hub International 144A | ||||||
8.125% 10/15/18 | 450,000 | 469,125 | |||||
* | ING Groep 5.775% 12/29/49 | 725,000 | 682,406 | ||||
# | ING US 144A 5.50% 7/15/22 | 10,000 | 10,894 | ||||
# | Liberty Mutual Group 144A | ||||||
4.95% 5/1/22 | 10,000 | 10,876 | |||||
6.50% 5/1/42 | 10,000 | 11,111 | |||||
7.00% 3/15/37 | 385,000 | 383,075 | |||||
MetLife 6.40% 12/15/36 | 100,000 | 106,737 | |||||
Montpelier Re Holdings | |||||||
4.70% 10/15/22 | 5,000 | 5,146 | |||||
Prudential Financial | |||||||
3.875% 1/14/15 | 35,000 | 37,119 | |||||
WellPoint 3.30% 1/15/23 | 20,000 | 20,621 | |||||
| XL Group 6.50% 12/29/49 | 625,000 | 569,375 | ||||
2,902,880 |
18
Principal | Value | ||||||
Amount° | (U.S. $) | ||||||
Corporate Bonds (continued) | |||||||
Media 3.67% | |||||||
AMC Networks 7.75% 7/15/21 | USD | 205,000 | $ | 233,700 | |||
Cablevision Systems | |||||||
8.00% 4/15/20 | 264,000 | 293,040 | |||||
CCO Holdings | |||||||
5.25% 9/30/22 | 385,000 | 389,812 | |||||
7.00% 1/15/19 | 25,000 | 27,188 | |||||
# | Cequel Communications | ||||||
Escrow 1 144A | |||||||
6.375% 9/15/20 | 175,000 | 180,688 | |||||
Clear Channel Communications | |||||||
9.00% 3/1/21 | 655,000 | 581,312 | |||||
Clear Channel Worldwide | |||||||
Holdings 7.625% 3/15/20 | 390,000 | 383,700 | |||||
# | CSC Holdings 144A | ||||||
6.75% 11/15/21 | 170,000 | 187,850 | |||||
DISH DBS | |||||||
5.875% 7/15/22 | 215,000 | 231,394 | |||||
7.875% 9/1/19 | 200,000 | 237,500 | |||||
Entravision Communications | |||||||
8.75% 8/1/17 | 357,000 | 388,238 | |||||
# | Griffey Intermediate 144A | ||||||
7.00% 10/15/20 | 330,000 | 336,600 | |||||
MDC Partners 11.00% 11/1/16 | 387,000 | 426,667 | |||||
# | Nara Cable Funding 144A | ||||||
8.875% 12/1/18 | 400,000 | 381,000 | |||||
# | Nexstar Broadcasting 144A | ||||||
6.875% 11/15/20 | 290,000 | 292,900 | |||||
# | Nielsen Finance 144A | ||||||
4.50% 10/1/20 | 185,000 | 185,463 | |||||
# | Ono Finance II 144A | ||||||
10.875% 7/15/19 | 390,000 | 345,150 | |||||
# | Sinclair Television Group 144A | ||||||
6.125% 10/1/22 | 385,000 | 403,287 | |||||
# | Unitymedia Hessen 144A | ||||||
5.50% 1/15/23 | 200,000 | 200,000 | |||||
# | Univision Communications | ||||||
144A 8.50% 5/15/21 | 755,000 | 781,424 | |||||
# | UPC Holding 144A | ||||||
9.875% 4/15/18 | 245,000 | 275,319 | |||||
*# | Viacom 144A 4.375% 3/15/43 | 15,000 | 14,583 | ||||
Videotron 9.125% 4/15/18 | 15,000 | 16,088 | |||||
Virgin Media Finance | |||||||
4.875% 2/15/22 | 200,000 | 206,500 | |||||
Walt Disney 2.35% 12/1/22 | 5,000 | 5,031 | |||||
7,004,434 | |||||||
Natural Gas 0.12% | |||||||
El Paso Pipeline Partners | |||||||
Operating 6.50% 4/1/20 | 15,000 | 18,331 | |||||
| Enbridge Energy Partners | ||||||
8.05% 10/1/37 | 25,000 | 28,279 | |||||
Energy Transfer Partners | |||||||
9.70% 3/15/19 | 7,000 | 9,445 | |||||
Enterprise Products Operating | |||||||
7.034% 1/15/68 | 35,000 | 39,504 | |||||
9.75% 1/31/14 | 5,000 | 5,506 | |||||
# | GDF Suez 144A | ||||||
2.875% 10/10/22 | 10,000 | 10,059 | |||||
Kinder Morgan Energy | |||||||
Partners 9.00% 2/1/19 | 20,000 | 26,750 | |||||
Plains All American Pipeline | |||||||
8.75% 5/1/19 | 10,000 | 13,720 | |||||
Sempra Energy 2.875% 10/1/22 | 15,000 | 15,133 | |||||
| TransCanada Pipelines | ||||||
6.35% 5/15/67 | 30,000 | 32,276 | |||||
Williams Partners | |||||||
7.25% 2/1/17 | 20,000 | 24,409 | |||||
223,412 | |||||||
Real Estate 0.50% | |||||||
Alexandria Real Estate Equities | |||||||
4.60% 4/1/22 | 15,000 | 16,175 | |||||
Brandywine Operating | |||||||
Partnership 4.95% 4/15/18 | 15,000 | 16,416 | |||||
BRE Properties 3.375% 1/15/23 | 10,000 | 9,995 | |||||
DDR | |||||||
4.75% 4/15/18 | 5,000 | 5,540 | |||||
7.50% 4/1/17 | 5,000 | 6,023 | |||||
7.875% 9/1/20 | 20,000 | 25,837 | |||||
Digital Realty Trust | |||||||
5.25% 3/15/21 | 20,000 | 22,372 | |||||
5.875% 2/1/20 | 10,000 | 11,607 | |||||
Host Hotels & Resorts | |||||||
*4.75% 3/1/23 | 20,000 | 21,300 | |||||
5.25% 3/15/22 | 300,000 | 330,750 | |||||
Liberty Property 4.125% 6/15/22 | 5,000 | 5,294 | |||||
Mack-Cali Realty | |||||||
2.50% 12/15/17 | 5,000 | 5,017 | |||||
4.50% 4/18/22 | 10,000 | 10,698 | |||||
# | Mattamy Group 144A | ||||||
6.50% 11/15/20 | 390,000 | 391,950 | |||||
National Retail Properties | |||||||
3.80% 10/15/22 | 5,000 | 5,129 | |||||
Regency Centers 5.875% 6/15/17 | 20,000 | 23,312 | |||||
UDR 4.625% 1/10/22 | 15,000 | 16,671 | |||||
# | WEA Finance 144A | ||||||
3.375% 10/3/22 | 10,000 | 10,205 | |||||
4.625% 5/10/21 | 10,000 | 11,186 | |||||
945,477 | |||||||
Services 5.04% | |||||||
*# | Algeco Scotsman Global | ||||||
Finance 144A | |||||||
8.50% 10/15/18 | 750,000 | 778,124 | |||||
Ameristar Casinos | |||||||
7.50% 4/15/21 | 285,000 | 304,950 | |||||
ARAMARK 8.50% 2/1/15 | 173,000 | 175,164 |
(continues) 19
Statement of net assets
Delaware Enhanced Global Dividend and Income Fund
Principal | Value | ||||||
Amount° | (U.S. $) | ||||||
Corporate Bonds (continued) | |||||||
Services (continued) | |||||||
# | Caesars Entertainment | ||||||
Operating 144A | |||||||
8.50% 2/15/20 | USD | 380,000 | $ | 373,350 | |||
Cardtronics 8.25% 9/1/18 | 104,000 | 116,480 | |||||
# | Carlson Wagonlit 144A | ||||||
6.875% 6/15/19 | 290,000 | 304,500 | |||||
# | CEVA Group 144A | ||||||
8.375% 12/1/17 | 450,000 | 441,000 | |||||
CityCenter Holdings PIK | |||||||
10.75% 1/15/17 | 200,000 | 216,500 | |||||
# | Equinox Holdings 144A | ||||||
9.50% 2/1/16 | 261,000 | 277,182 | |||||
# | H&E Equipment Services 144A | ||||||
7.00% 9/1/22 | 335,000 | 355,100 | |||||
Iron Mountain 8.375% 8/15/21 | 140,000 | 155,400 | |||||
Kansas City Southern de Mexico | |||||||
6.125% 6/15/21 | 60,000 | 67,800 | |||||
8.00% 2/1/18 | 227,000 | 251,970 | |||||
M/I Homes 8.625% 11/15/18 | 486,000 | 528,525 | |||||
Meritage Homes 7.00% 4/1/22 | 60,000 | 65,400 | |||||
MGM Resorts International | |||||||
#144A 6.75% 10/1/20 | 215,000 | 217,150 | |||||
7.75% 3/15/22 | 180,000 | 190,350 | |||||
11.375% 3/1/18 | 643,000 | 766,778 | |||||
Monitronics International | |||||||
9.125% 4/1/20 | 140,000 | 144,200 | |||||
NCL 9.50% 11/15/18 | 55,000 | 60,981 | |||||
PHH | |||||||
7.375% 9/1/19 | 205,000 | 223,450 | |||||
9.25% 3/1/16 | 196,000 | 229,075 | |||||
Pinnacle Entertainment | |||||||
7.75% 4/1/22 | 125,000 | 134,375 | |||||
*8.75% 5/15/20 | 58,000 | 63,510 | |||||
Seven Seas Cruises | |||||||
9.125% 5/15/19 | 305,000 | 318,725 | |||||
Standard Pacific 10.75% 9/15/16 | 134,000 | 164,820 | |||||
Swift Services Holdings | |||||||
10.00% 11/15/18 | 370,000 | 408,850 | |||||
# | Taylor Morrison Communities | ||||||
144A 7.75% 4/15/20 | 385,000 | 406,175 | |||||
# | United Air Lines 144A | ||||||
12.00% 11/1/13 | 352,000 | 357,720 | |||||
United Rentals North America | |||||||
#144A 5.75% 7/15/18 | 55,000 | 59,469 | |||||
6.125% 6/15/23 | 70,000 | 72,100 | |||||
#144A 7.625% 4/15/22 | 85,000 | 94,456 | |||||
8.25% 2/1/21 | 255,000 | 286,875 | |||||
9.25% 12/15/19 | 275,000 | 314,188 | |||||
10.25% 11/15/19 | 25,000 | 29,125 | |||||
West 7.875% 1/15/19 | 300,000 | 305,250 | |||||
Wynn Las Vegas 7.75% 8/15/20 | 300,000 | 345,750 | |||||
9,604,817 | |||||||
Technology 2.75% | |||||||
Aspect Software | |||||||
10.625% 5/15/17 | 234,000 | 215,280 | |||||
Avaya | |||||||
9.75% 11/1/15 | 45,000 | 35,888 | |||||
10.125% 11/1/15 | 355,000 | 284,000 | |||||
# | Bombardier 144A | ||||||
5.75% 3/15/22 | 305,000 | 312,625 | |||||
CDW | |||||||
8.50% 4/1/19 | 225,000 | 243,563 | |||||
12.535% 10/12/17 | 215,000 | 231,125 | |||||
Fidelity National Information | |||||||
Services 5.00% 3/15/22 | 300,000 | 315,000 | |||||
First Data 11.25% 3/31/16 | 785,000 | 779,112 | |||||
Fiserv 3.50% 10/1/22 | 10,000 | 10,187 | |||||
GXS Worldwide 9.75% 6/15/15 | 302,000 | 316,345 | |||||
* | iGate 9.00% 5/1/16 | 290,000 | 316,825 | ||||
Infor US 9.375% 4/1/19 | 445,000 | 498,399 | |||||
j2 Global 8.00% 8/1/20 | 585,000 | 605,474 | |||||
# | Legend Acquisition Sub 144A | ||||||
10.75% 8/15/20 | 310,000 | 296,050 | |||||
MagnaChip Semiconductor | |||||||
10.50% 4/15/18 | 276,000 | 311,190 | |||||
Microsoft 2.125% 11/15/22 | 10,000 | 10,003 | |||||
National Semiconductor | |||||||
6.60% 6/15/17 | 20,000 | 24,878 | |||||
Oracle | |||||||
2.50% 10/15/22 | 15,000 | 15,222 | |||||
5.75% 4/15/18 | 5,000 | 6,135 | |||||
# | Seagate Technology | ||||||
International 144A | |||||||
10.00% 5/1/14 | 10,000 | 10,863 | |||||
Symantec 4.20% 9/15/20 | 5,000 | 5,285 | |||||
# | Viasystems 144A 7.875% 5/1/19 | 395,000 | 386,112 | ||||
Xerox 6.35% 5/15/18 | 10,000 | 11,667 | |||||
5,241,228 | |||||||
Transportation 0.05% | |||||||
# | Brambles USA 144A | ||||||
3.95% 4/1/15 | 15,000 | 15,679 | |||||
5.35% 4/1/20 | 15,000 | 16,901 | |||||
# | ERAC USA Finance 144A | ||||||
5.25% 10/1/20 | 35,000 | 40,371 | |||||
# | Penske Truck Leasing 144A | ||||||
3.375% 3/15/18 | 5,000 | 5,011 | |||||
4.875% 7/11/22 | 15,000 | 15,456 | |||||
93,418 | |||||||
Utilities 0.77% | |||||||
AES | |||||||
7.375% 7/1/21 | 135,000 | 150,188 | |||||
8.00% 6/1/20 | 64,000 | 74,240 | |||||
Ameren Illinois 9.75% 11/15/18 | 45,000 | 62,681 |
20
Principal | Value | |||||||
Amount° | (U.S. $) | |||||||
Corporate Bonds (continued) | ||||||||
Utilities (continued) | ||||||||
# | American Transmission | |||||||
Systems 144A | ||||||||
5.25% 1/15/22 | USD | 25,000 | $ | 29,170 | ||||
# | APT Pipelines 144A | |||||||
3.875% 10/11/22 | 5,000 | 5,001 | ||||||
CenterPoint Energy | ||||||||
5.95% 2/1/17 | 13,000 | 15,248 | ||||||
CMS Energy | ||||||||
4.25% 9/30/15 | 10,000 | 10,686 | ||||||
6.25% 2/1/20 | 5,000 | 5,921 | ||||||
Commonwealth Edison | ||||||||
5.80% 3/15/18 | 5,000 | 6,093 | ||||||
Elwood Energy 8.159% 7/5/26 | 193,593 | 200,369 | ||||||
GenOn Energy 9.875% 10/15/20 | 390,000 | 443,626 | ||||||
Great Plains Energy | ||||||||
5.292% 6/15/22 | 15,000 | 16,991 | ||||||
| Integrys Energy Group | |||||||
6.11% 12/1/66 | 15,000 | 15,839 | ||||||
Ipalco Enterprises 5.00% 5/1/18 | 10,000 | 10,324 | ||||||
LG&E and KU Energy | ||||||||
4.375% 10/1/21 | 20,000 | 22,230 | ||||||
# | Niagara Mohawk Power 144A | |||||||
2.721% 11/28/22 | 15,000 | 15,131 | ||||||
Nisource Finance | ||||||||
5.25% 2/15/43 | 10,000 | 10,765 | ||||||
5.80% 2/1/42 | 5,000 | 5,718 | ||||||
Pennsylvania Electric | ||||||||
5.20% 4/1/20 | 25,000 | 29,161 | ||||||
PPL Capital Funding | ||||||||
4.20% 6/15/22 | 5,000 | 5,335 | ||||||
6.70% 3/30/67 | 25,000 | 26,467 | ||||||
PPL Electric Utilities | ||||||||
3.00% 9/15/21 | 10,000 | 10,734 | ||||||
Public Service Oklahoma | ||||||||
5.15% 12/1/19 | 30,000 | 35,425 | ||||||
Puget Energy 6.00% 9/1/21 | 5,000 | 5,619 | ||||||
| Puget Sound Energy | |||||||
6.974% 6/1/67 | 210,000 | 222,838 | ||||||
SCANA 4.125% 2/1/22 | 15,000 | 15,751 | ||||||
| Wisconsin Energy | |||||||
6.25% 5/15/67 | 20,000 | 21,621 | ||||||
Wisconsin Power & Light | ||||||||
2.25% 11/15/22 | 5,000 | 5,004 | ||||||
1,478,176 | ||||||||
Total Corporate Bonds | ||||||||
(cost $79,800,671) | 84,472,426 | |||||||
Non-Agency Asset-Backed Securities 0.13% | ||||||||
Citicorp Residential Mortgage | ||||||||
Securities Series 2006-3 A5 | ||||||||
5.948% 11/25/36 | 100,000 | 90,662 | ||||||
Discover Card Master Trust | ||||||||
Series 2007-A1 A1 | ||||||||
5.65% 3/16/20 | 100,000 | 121,673 | ||||||
| Nissan Master Owner Trust | |||||||
Receivables Series 2012-A A | ||||||||
0.678% 5/15/17 | 25,000 | 25,062 | ||||||
World Financial Network | ||||||||
Credit Card Master Trust | ||||||||
Series 2012-B A | ||||||||
1.76% 5/17/21 | 10,000 | 10,139 | ||||||
Total Non-Agency Asset-Backed | ||||||||
Securities (cost $221,907) | 247,536 | |||||||
Non-Agency Collateralized Mortgage Obligations 0.09% | ||||||||
Citicorp Mortgage Securities | ||||||||
Series 2006-4 3A1 | ||||||||
5.50% 8/25/21 | 5,582 | 5,809 | ||||||
Series 2007-1 2A1 | ||||||||
5.50% 1/25/22 | 21,783 | 21,902 | ||||||
| GSR Mortgage Loan Trust | |||||||
Series 2006-AR1 3A1 | ||||||||
3.889% 1/25/36 | 107,568 | 98,294 | ||||||
| MASTR ARM Trust Series | |||||||
2006-2 4A1 3.41% 2/25/36 | 39,763 | 37,881 | ||||||
Total Non-Agency Collateralized | ||||||||
Mortgage Obligations | ||||||||
(cost $171,388) | 163,886 | |||||||
«Senior Secured Loans 1.81% | ||||||||
BJs Wholesale Club | ||||||||
9.75% 3/29/19 | 75,000 | 77,363 | ||||||
Brock Holdings III | ||||||||
10.00% 2/15/18 | 100,000 | 101,000 | ||||||
Dynegy Power Tranche 1st | ||||||||
Lien 9.25% 8/5/16 | 106,782 | 111,747 | ||||||
Equipower Resources | ||||||||
Holdings Tranche 2nd Lien | ||||||||
10.00% 5/23/19 | 150,000 | 153,625 | ||||||
§@ | GenCorp 9.00% 7/22/13 | 415,000 | 415,000 | |||||
§@ | Silver II Acquisition | |||||||
8.00% 9/25/20 | 630,000 | 630,000 | ||||||
Smart & Final 2nd Lien | ||||||||
10.50% 11/8/20 | 410,000 | 401,800 | ||||||
SUPERVALU Tranche B | ||||||||
8.00% 8/1/18 | 174,563 | 176,477 | ||||||
§@ | Tempur-Pedic International | |||||||
4.75% 9/27/13 | 415,000 | 415,000 | ||||||
§@ | TPC Group 8.25% 8/27/13 | 725,000 | 725,000 | |||||
WideOpenWest Finance 1st | ||||||||
Lien 6.25% 7/17/18 | 244,388 | 247,628 | ||||||
Total Senior Secured Loans | ||||||||
(cost $3,420,044) | 3,454,640 |
(continues) 21
Statement of net assets
Delaware Enhanced Global Dividend and Income Fund
Principal | Value | |||||||
Amount° | (U.S. $) | |||||||
ΔSovereign Bonds 8.54% | ||||||||
Brazil 3.06% | ||||||||
Brazil Government | ||||||||
International | ||||||||
5.625% 1/7/41 | USD | 857,000 | $ | 1,135,525 | ||||
Brazil Notas do Tesouro | ||||||||
Nacional Serie F | ||||||||
10.00% 1/1/17 | BRL | 9,600,000 | 4,698,446 | |||||
5,833,971 | ||||||||
Indonesia 3.65% | ||||||||
Indonesia Government | ||||||||
International | ||||||||
6.625% 2/17/37 | USD | 1,350,000 | 1,839,375 | |||||
Indonesia Treasury Bonds | ||||||||
7.00% 5/15/27 | IDR | 33,900,000,000 | 3,903,863 | |||||
11.00% 11/15/20 | IDR | 8,504,000,000 | 1,213,529 | |||||
6,956,767 | ||||||||
Mexico 0.95% | ||||||||
Mexican Bonos | ||||||||
6.00% 6/18/15 | MXN | 5,735,000 | 456,151 | |||||
8.00% 12/17/15 | MXN | 16,186,500 | 1,358,474 | |||||
1,814,625 | ||||||||
Panama 0.53% | ||||||||
Panama Government | ||||||||
International | ||||||||
6.70% 1/26/36 | USD | 700,000 | 1,001,700 | |||||
1,001,700 | ||||||||
Poland 0.35% | ||||||||
Poland Government | ||||||||
4.00% 10/25/23 | PLN | 624,000 | 197,713 | |||||
5.75% 10/25/21 | PLN | 1,318,000 | 476,016 | |||||
673,729 | ||||||||
Total Sovereign Bonds | ||||||||
(cost $16,108,455) | 16,280,792 | |||||||
U.S. Treasury Obligations 0.46% | ||||||||
U.S. Treasury Bond | ||||||||
3.00% 5/15/42 | USD | 20,000 | 20,922 | |||||
U.S. Treasury Notes | ||||||||
0.625% 11/30/17 | 5,000 | 5,004 | ||||||
*0.75% 10/31/17 | 345,000 | 347,507 | ||||||
*1.625% 11/15/22 | 505,000 | 505,946 | ||||||
Total U.S. Treasury Obligations | ||||||||
(cost $874,068) | 879,379 | |||||||
Leveraged Non-Recourse Security 0.00% | ||||||||
t@# | JPMorgan Fixed Income | |||||||
Pass Through Trust | ||||||||
144A Series 2007-B | ||||||||
0.00% 1/15/87 | 500,000 | 0 | ||||||
Total Leveraged Non-Recourse | ||||||||
Security (cost $425,000) | 0 | |||||||
Number of | ||||||||
Shares | ||||||||
Limited Partnership 0.32% | ||||||||
Brookfield Infrastructure Partners | 5,400 | 183,438 | ||||||
*Lehigh Gas Partners | 22,400 | 433,440 | ||||||
Total Limited Partnership | ||||||||
(cost $607,629) | 616,878 | |||||||
Residual Interest Trust Certificate 0.00% | ||||||||
t@=# | Freddie Mac Auction Pass | |||||||
Through Trust 144A | ||||||||
Series 2007-6 | 150,000 | 0 | ||||||
Total Residual Interest Trust | ||||||||
Certificate (cost $163,257) | 0 | |||||||
Preferred Stock 0.86% | ||||||||
Alabama Power 5.625% | 410 | 10,545 | ||||||
# | Ally Financial 144A 7.00% | 600 | 584,213 | |||||
BB&T 5.85% | 225 | 5,834 | ||||||
| Freddie Mac 6.02% | 34,000 | 50,320 | |||||
| GMAC Capital Trust I 8.125% | 12,000 | 312,600 | |||||
| PNC Financial Services | |||||||
Group 8.25% | 10,000 | 10,214 | ||||||
* | ProLogis 6.75% | 7,050 | 178,577 | |||||
Regions Financial 6.375% | 16,000 | 396,320 | ||||||
Vornado Realty 6.625% | 3,700 | 93,758 | ||||||
Total Preferred Stock | ||||||||
(cost $2,208,141) | 1,642,381 | |||||||
Warrant 0.00% | ||||||||
= | Nieuwe Steen Investments | 100 | 0 | |||||
Total Warrant (cost $0) | 0 | |||||||
Principal | ||||||||
Amount° | ||||||||
Short-Term Investments 2.64% | ||||||||
≠Discount Notes 0.56% | ||||||||
Federal Home Loan Bank | ||||||||
0.10% 1/18/13 | USD | 116,578 | 116,569 | |||||
0.10% 1/23/13 | 581,182 | 581,133 | ||||||
0.13% 2/6/13 | 306,785 | 306,746 | ||||||
0.135% 2/15/13 | 67,493 | 67,483 | ||||||
1,071,931 | ||||||||
Repurchase Agreements 2.08% | ||||||||
Bank of America 0.19%, | ||||||||
dated 11/30/12, to | ||||||||
be repurchased on | ||||||||
12/3/12, repurchase price | ||||||||
$1,417,380 (collateralized | ||||||||
by U.S. government | ||||||||
obligations 0.00%-0.25% | ||||||||
1/3/1311/30/14; market | ||||||||
value $1,445,705) | 1,417,358 | 1,417,358 |
22
Principal | Value | |||||||
Amount° | (U.S. $) | |||||||
Short-Term Investments (continued) | ||||||||
Repurchase Agreements (continued) | ||||||||
BNP Paribas 0.20%, dated | ||||||||
11/30/12, to be repurchased | ||||||||
on 12/3/12, repurchase price | ||||||||
$2,537,685 (collateralized | ||||||||
by U.S. government | ||||||||
obligations 0.25%-2.50% | ||||||||
3/31/1411/30/17; market | ||||||||
value $2,590,323) | USD | 2,537,642 | $ | 2,537,642 | ||||
3,955,000 | ||||||||
Total Short-Term Investments | ||||||||
(cost $5,026,843) | 5,026,931 | |||||||
Total Value of Securities Before Securities | ||||||||
Lending Collateral 135.37% | ||||||||
(cost $245,230,845) | 258,027,741 |
Number of | |||||||
Shares | |||||||
**Securities Lending Collateral 8.05% | |||||||
Investment Companies | |||||||
Delaware Investments | |||||||
Collateral Fund No. 1 | 15,336,446 | 15,336,446 | |||||
@ | Mellon GSL Reinvestment | ||||||
Trust II | 385,685 | 0 | |||||
Total Securities Lending | |||||||
Collateral (cost $15,722,131) | 15,336,446 | ||||||
Total Value of Securities 143.42% | |||||||
(cost $260,952,976) | 273,364,187 | © | |||||
**Obligation to Return Securities | |||||||
Lending Collateral (8.25%) | (15,722,131 | ) | |||||
Borrowing Under Line of Credit (34.48%) | (65,725,000 | ) | |||||
«Other Liabilities Net of Receivables and | |||||||
Other Assets (0.69%) | (1,314,579 | ) | |||||
Net Assets Applicable to 15,863,616 | |||||||
Shares Outstanding; Equivalent to | |||||||
$12.02 Per Share 100.00% | $ | 190,602,477 | |||||
Components of Net Assets at November 30, 2012: | |||||||
Shares of beneficial interest | |||||||
(unlimited authorization no par) | $ | 240,349,384 | |||||
Distributions in excess of net investment income | (1,231,951 | ) | |||||
Accumulated net realized loss | (60,832,855 | ) | |||||
Net unrealized appreciation of investments | |||||||
and derivatives | 12,317,899 | ||||||
Total net assets | $ | 190,602,477 |
v | Securities have been classified by type of business. Classification by country of origin has been presented on page 7 in Security type/sector and country allocations. |
| Non-income producing security. |
* | Fully or partially on loan. |
= | Security is being fair valued in accordance with the Funds fair valuation policy. At November 30, 2012, the aggregate value of fair valued securities was $0, which represented 0.00% of the Funds net assets. See Note 1 in Notes to financial statements. |
∏ | Restricted security. These investments are in securities not registered under the Securities Act of 1933, as amended, and have certain restrictions on resale which may limit their liquidity. At November 30, 2012, the aggregate value of the restricted securities was $265,725, which represents 0.14% of the Funds net assets. |
@ | Illiquid security. At November 30, 2012, the aggregate value of illiquid securities was $2,185,000, which represented 1.15% of the Funds net assets. See Note 12 in Notes to financial statements. |
° | Principal amount shown is stated in the currency in which each security is denominated. |
| Variable rate security. The rate shown is the rate as of November 30, 2012. Interest rates reset periodically. |
# | Security exempt from registration under Rule 144A of the Securities Act of 1933, as amended. At November 30, 2012, the aggregate value of Rule 144A securities was $40,733,966, which represented 21.37% of the Funds net assets. See Note 12 in Notes to financial statements. |
t | Pass Through Agreement. Security represents the contractual right to receive a proportionate amount of underlying payments due to the counterparty pursuant to various agreements related to the rescheduling of obligations and the exchange of certain notes. |
Φ | Step coupon bond. Coupon increases or decreases periodically based on a predetermined schedule. Stated rate in effect at November 30, 2012. |
^ | Zero coupon security. The rate shown is the yield at the time of purchase. |
« | Senior Secured Loans generally pay interest at rates which are periodically redetermined by reference to a base lending rate plus a premium. These base lending rates are generally: (i) the prime rate offered by one or more United States banks, (ii) the lending rate offered by one or more European banks such as the London Inter-Bank Offered Rate (LIBOR), and (iii) the certificate of deposit rate. Senior Secured Loans may be subject to restrictions on resale. Stated rate in effect at November 30, 2012. |
§ | All or a portion of this holding is subject to unfunded loan commitments. See Note 8 in Notes to financial statements. |
Δ | Securities have been classified by country of origin. |
≠ | The rate shown is the effective yield at time of purchase. |
** | See Note 11 in Notes to financial statements for additional information on securities lending collateral. |
© | Includes $16,124,538 of securities loaned. |
« | Includes foreign currency valued at $233,086 with a cost of $234,332. |
(continues) 23
Statement of net assets
Delaware Enhanced Global Dividend and Income Fund
Foreign Currency Exchange Contracts
Unrealized | |||||||||||||||||||
Contracts to | Settlement | Appreciation | |||||||||||||||||
Counterparty | Receive (Deliver) | In Exchange For | Date | (Depreciation) | |||||||||||||||
MNB | EUR | (405,141 | ) | USD | 527,656 | 12/4/12 | $ | 726 | |||||||||||
MNB | EUR | 647,344 | USD | (843,101 | ) | 12/5/12 | (1,151 | ) | |||||||||||
MNB | GBP | (131,449 | ) | USD | 210,240 | 12/5/12 | (354 | ) | |||||||||||
MNB | SGD | (1,124 | ) | USD | 920 | 12/3/12 | | ||||||||||||
$ | (779 | ) |
The use of foreign currency exchange contracts involves elements of market risk and risks in excess of the amounts recognized in the financial statements. The foreign currency exchange contracts presented above represent the Funds total exposure in such contracts, whereas only the net unrealized appreciation (depreciation) is reflected in the Funds net assets.
1See Note 10 in Notes to financial statements.
Summary of
Abbreviations:
ADR American Depositary
Receipt
ARM Adjustable Rate Mortgage
BAML Bank of America Merrill
Lynch
BRL Brazilian Real
ETN Exchange-Traded Note
EUR European
Monetary Unit
FDR Finnish Depositary Receipt
GBP British Pound
Sterling
GNMA Government National Mortgage
Association
IDR Indonesian Rupiah
MASTR Mortgage Asset Securitization
Transactions, Inc.
MNB Mellon National Bank
MXN Mexican Peso
PIK
Pay-in-kind
PLN Polish Zloty
REIT Real Estate Investment
Trust
REMIC Real Estate Mortgage Investment Conduit
S.F. Single
Family
SGD Singapore Dollar
TBA To be announced
USD United States
Dollar
yr Year
See accompanying notes, which are an integral part of the financial statements.
24
Statement of operations
Delaware Enhanced Global Dividend and
Income Fund
Year Ended November 30, 2012
Investment Income: | ||||||||
Dividends | $ | 4,281,462 | ||||||
Interest | 8,546,285 | |||||||
Securities lending income | 150,238 | |||||||
Foreign tax withheld | (171,366 | ) | $ | 12,806,619 | ||||
Expenses: | ||||||||
Management fees | 2,346,418 | |||||||
Reports to shareholders | 153,856 | |||||||
Legal fees | 114,970 | |||||||
Accounting and administration expenses | 96,479 | |||||||
Custodian fees | 60,639 | |||||||
Dividend disbursing and transfer agent fees and expenses | 56,593 | |||||||
Audit and tax | 36,423 | |||||||
NYSE fees | 25,000 | |||||||
Leverage expenses | 17,148 | |||||||
Pricing fees | 16,900 | |||||||
Dues and services | 9,974 | |||||||
Trustees fees | 8,499 | |||||||
Insurance fees | 3,750 | |||||||
Consulting fees | 1,583 | |||||||
Registration fees | 848 | |||||||
Trustees expenses | 561 | |||||||
Total operating expenses (before interest expense) | 2,949,641 | |||||||
Interest expense | 1,042,511 | |||||||
Total operating expenses (after interest expense) | 3,992,152 | |||||||
Net Investment Income | 8,814,467 | |||||||
Net Realized and Unrealized Gain (Loss): | ||||||||
Net realized gain (loss) on: | ||||||||
Investments | 330,046 | |||||||
Foreign currencies | 224,712 | |||||||
Foreign currency exchange contracts | (186,202 | ) | ||||||
Options written | 111,168 | |||||||
Swap contracts | (31,125 | ) | ||||||
Net realized gain | 448,599 | |||||||
Net change in unrealized appreciation (depreciation) of: | ||||||||
Investments | 19,776,490 | |||||||
Foreign currencies | (396,419 | ) | ||||||
Foreign currency exchange contracts | 1,318 | |||||||
Options written | (1,641 | ) | ||||||
Swap contracts | 638 | |||||||
Net change in unrealized appreciation (depreciation) | 19,380,386 | |||||||
Net Realized and Unrealized Gain | 19,828,985 | |||||||
Net Increase in Net Assets Resulting from Operations | $ | 28,643,452 | ||||||
See accompanying notes, which are an integral part of the financial statements. |
25
Statements of changes in net assets
Delaware Enhanced Global Dividend and Income Fund
Year Ended | ||||||||
11/30/12 | 11/30/11 | |||||||
Increase (Decrease) in Net Assets from Operations: | ||||||||
Net investment income | $ | 8,814,467 | $ | 7,832,258 | ||||
Net realized gain | 448,599 | 1,860,359 | ||||||
Net change in unrealized appreciation (depreciation) | 19,380,386 | (6,475,978 | ) | |||||
Net increase in net assets resulting from operations | 28,643,452 | 3,216,639 | ||||||
Dividends and Distributions to Shareholders from:1 | ||||||||
Net investment income | (9,927,316 | ) | (9,958,352 | ) | ||||
Return of capital | (8,242,639 | ) | (6,379,270 | ) | ||||
(18,169,955 | ) | (16,337,622 | ) | |||||
Capital Share Transactions: | ||||||||
Cost of shares reinvested2 | 714,620 | 675,989 | ||||||
Net assets from Fund merger3 | | 31,394,740 | ||||||
Increase in net assets derived from capital share transactions | 714,620 | 32,070,729 | ||||||
Net Increase in Net Assets | 11,188,117 | 18,949,746 | ||||||
Net Assets: | ||||||||
Beginning of year | 179,414,360 | 160,464,614 | ||||||
End of year (including distributions in excess of net investment income of $1,231,951 | ||||||||
and $992,926, respectively) | $ | 190,602,477 | $ | 179,414,360 | ||||
1See Note 4 in Notes to financial statements. | ||||||||
2See Note 6 in Notes to financial statements. | ||||||||
3See Note 7 in Notes to financial statements. |
See accompanying notes, which are an integral part of the financial statements.
26
Statement of cash flows
Delaware Enhanced Global Dividend and
Income Fund
Year Ended November 30, 2012
Net Cash (Including Foreign Currency) Provided by Operating Activities: | ||||
Net increase in net assets resulting from operations | $ | 28,643,452 | ||
Adjustments to reconcile net increase in net assets from | ||||
operations to cash provided by operating activities: | ||||
Amortization of premium and discount on investments purchased | (129,552 | ) | ||
Purchase of investment securities | (147,844,355 | ) | ||
Proceeds from disposition of investment securities | 122,523,298 | |||
Purchase of short-term investment securities, net | 14,064,700 | |||
Net realized gain from investment transactions | (465,153 | ) | ||
Net change in net unrealized appreciation/depreciation of investments | (19,380,386 | ) | ||
Increase in receivable for investments sold | (892,302 | ) | ||
Increase in interest and dividends receivable | (219,437 | ) | ||
Increase in payable for investments purchased | 3,203,143 | |||
Increase in interest payable | 67,666 | |||
Decrease in accrued expenses and other liabilities | (202,854 | ) | ||
Total adjustments | (29,275,232 | ) | ||
Net cash provided by operating activities | (631,780 | ) | ||
Cash Flows Used for Financing Activities: | ||||
Cash dividends and distributions paid | (18,169,955 | ) | ||
Cost of fund shares reinvested | 714,620 | |||
Increase in line of credit payable | 15,000,000 | |||
Net cash used for financing activities | (2,455,335 | ) | ||
Effect of exchange rates on cash | (340,791 | ) | ||
Net decrease in cash | (3,427,906 | ) | ||
Cash at beginning of year | 2,695,867 | |||
Cash at end of year | $ | (732,039 | ) | |
Cash paid for interest expense for leverage | $ | 974,845 |
See accompanying notes, which are an integral part of the financial statements.
27
Financial highlights
Delaware Enhanced Global Dividend and Income Fund
Selected data for each share of the Fund outstanding throughout each period were as follows:
Year Ended | ||||||||||||||||
11/30/12 | 11/30/11 | 11/30/10 | 11/30/09 | 11/30/08 | ||||||||||||
Net asset value, beginning of period | $11.350 | $12.320 | $12.060 | $8.770 | $17.640 | |||||||||||
Income (loss) from investment operations: | ||||||||||||||||
Net investment income1 | 0.557 | 0.587 | 0.568 | 0.685 | 0.769 | |||||||||||
Net realized and unrealized gain (loss) | 1.261 | (0.327 | ) | 0.922 | 3.875 | (7.935 | ) | |||||||||
Total from investment operations | 1.818 | 0.260 | 1.490 | 4.560 | (7.166 | ) | ||||||||||
Less dividends and distributions from: | ||||||||||||||||
Net investment income | (0.627 | ) | (0.750 | ) | (0.918 | ) | (0.668 | ) | (0.644 | ) | ||||||
Return of capital | (0.521 | ) | (0.480 | ) | (0.312 | ) | (0.602 | ) | (1.060 | ) | ||||||
Total dividends and distributions | (1.148 | ) | (1.230 | ) | (1.230 | ) | (1.270 | ) | (1.704 | ) | ||||||
Net asset value, end of period | $12.020 | $11.350 | $12.320 | $12.060 | $8.770 | |||||||||||
Market value, end of period | $11.100 | $10.920 | $12.310 | $12.290 | $6.080 | |||||||||||
Total return based on:2 | ||||||||||||||||
Net asset value | 16.85% | 1.77% | 13.13% | 59.12% | (42.25% | ) | ||||||||||
Market value | 12.15% | (2.01% | ) | 10.92% | 134.96% | (54.14% | ) | |||||||||
Ratios and supplemental data: | ||||||||||||||||
Net assets, end of period (000 omitted) | $190,602 | $179,414 | $160,465 | $156,048 | $113,400 | |||||||||||
Ratio of expenses to average net assets | 2.15% | 1.98% | 1.95% | 2.14% | 1.66% | |||||||||||
Ratio of expenses to adjusted average net assets (before interest expense)3 | 1.19% | 1.28% | 1.22% | 1.26% | 1.24% | |||||||||||
Ratio of interest expense to adjusted average net assets3 | 0.42% | 0.31% | 0.33% | 0.35% | 0.29% | |||||||||||
Ratio of net investment income to average net assets | 4.74% | 4.68% | 4.68% | 6.73% | 5.33% | |||||||||||
Ratio of net investment income to adjusted average net assets3 | 3.57% | 3.76% | 3.73% | 5.06% | 4.91% | |||||||||||
Portfolio turnover | 53% | 72% | 83% | 88% | 97% | |||||||||||
Leverage Analysis: | ||||||||||||||||
Debt outstanding at end of period at par (000 omitted) | $65,725 | $50,725 | $40,000 | $40,000 | $40,000 | |||||||||||
Asset coverage per $1,000 of debt outstanding at end of period | $3,900 | $4,537 | $5,012 | $4,901 | $3,835 |
See accompanying notes, which are an integral part of the financial statements.
28
Notes to financial statements
Delaware Enhanced Global Dividend and
Income Fund
November 30, 2012
Delaware Enhanced Global Dividend and Income Fund (Fund) is organized as a Delaware statutory trust and is a diversified closed-end management investment company under the Investment Company Act of 1940, as amended. The Funds shares trade on the New York Stock Exchange (NYSE) under the symbol DEX.
The primary investment objective of the Fund is to seek current income, with a secondary objective of capital appreciation.
1. Significant Accounting Policies
The following accounting policies are in accordance with U.S. generally accepted accounting principles (U.S. GAAP) and are consistently followed by the Fund.
Security Valuation Equity securities, except those traded on the Nasdaq Stock Market, Inc. (Nasdaq), are valued at the last quoted sales price as of the time of the regular close of the NYSE on the valuation date. Securities traded on the Nasdaq are valued in accordance with the Nasdaq Official Closing Price, which may not be the last sales price. If on a particular day an equity security does not trade, then the mean between the bid and ask prices will be used, which approximates fair value. Securities listed on a foreign exchange are normally valued at the last quoted sales price on the valuation date. U.S. government and agency securities are valued at the mean between the bid and ask prices, which approximates fair value. Debt securities and credit default swap (CDS) contracts are valued based upon valuations provided by an independent pricing service or broker/counterparty and reviewed by management. To the extent current market prices are not available, the pricing service may take into account developments related to the specific security, as well as transactions in comparable securities. Valuations for fixed income securities utilize matrix systems, which reflect such factors as security prices, yields, maturities, and ratings, and are supplemented by dealer and exchange quotations. Swaps prices are derived using daily swap curves and models that incorporate a number of market data factors, such as discounted cash flows, trades and values of the underlying reference instruments. Investment company securities are valued at net asset value per share, as reported by the underlying investment company. Open-end investment companies are valued at their published net asset value. Foreign currency exchange contracts are valued at the mean between the bid and ask price, which approximates fair value. Interpolated values are derived when the settlement date of the contract is an interim date for which quotations are not available. Exchange-traded options are valued at the last reported sale price or, if no sales are reported, at the mean between the last reported bid and ask prices, which approximates fair value. Generally, other securities and assets for which market quotations are not readily available are valued at fair value as determined in good faith under the direction of the Funds Board of Trustees (Board). In determining whether market quotations are readily available or fair valuation will be used, various factors will be taken into consideration, such as market closures or suspension of trading in a security. The Fund may use fair value pricing more frequently for securities traded primarily in non-U.S. markets because, among other things, most foreign markets close well before the Fund values its securities, generally as of 4:00 p.m. Eastern time. The earlier close of these foreign markets gives rise to the possibility that significant events, including broad market moves, government actions or pronouncements, aftermarket trading, or news events may have occurred in the interim. To account for this, the Fund may frequently value foreign securities using fair value prices based on third-party vendor modeling tools (international fair value pricing).
Federal and Foreign Income Taxes No provision for federal income taxes has been made as the Fund intends to continue to qualify for federal income tax purposes as a regulated investment company under Subchapter M of the Internal Revenue Code of 1986, as amended, and make the requisite distributions to shareholders. The Fund evaluates tax positions taken or expected to be taken in the course of preparing the Funds tax returns to determine whether the tax positions are more likely-than-not of being sustained by the applicable tax authority. Tax positions not deemed to meet the more-likely-than-not threshold are recorded as a tax benefit or expense in the current year. Management has analyzed the Funds tax positions taken for all open federal income tax years (November 30, 2009November 30, 2012), and has concluded that no provision for federal income tax is required in the Funds financial statements. In regards to foreign taxes, the Fund only has open tax years in certain foreign countries it invests in back to the inception of the Fund.
Distributions The Fund has implemented a managed distribution policy. Under the policy, the Fund is managed with a goal of generating as much of the distribution as possible from net investment income and short-term capital gains. The balance of the distribution will then come from long-term capital gains to the extent permitted, and if necessary, a return
Notes to financial statements
Delaware Enhanced Global Dividend and Income Fund
1. Significant Accounting Policies (continued)
of capital. Even though the Fund may realize current year capital gains, such gains may be offset, in whole or in part, by the Funds capital loss carryovers from prior years. For federal income tax purposes, the effect of such capital loss carryovers may be to convert (to the extent of such current year gains) what would otherwise be returns of capital into distributions taxable as ordinary income. This tax effect can occur during times of extended market volatility. Under the Regulated Investment Company Modernization Act of 2010 (Act), this tax effect attributable to the Funds capital loss carryovers (the conversion of returns of capital into distributions taxable as ordinary income) will no longer apply to net capital losses of the Fund arising in Fund tax years beginning after November 30, 2012. The actual determination of the source of the Funds distributions can be made only at year end.
Repurchase Agreements The Fund may purchase certain U.S. government securities subject to the counterpartys agreement to repurchase them at an agreed upon date and price. The counterparty will be required on a daily basis to maintain the value of the collateral subject to the agreement at not less than the repurchase price (including accrued interest). The agreements are conditioned upon the collateral being deposited under the Federal Reserve book-entry system with the Funds custodian or a third-party sub-custodian. In the event of default or bankruptcy by the other party to the agreement, retention of the collateral may be subject to legal proceedings. All open repurchase agreements as of the date of this report were entered into on November 30, 2012.
To Be Announced Trades The Fund may contract to purchase securities for a fixed price at a transaction date beyond the customary settlement period (e.g, when issued, delayed delivery, forward commitment, or TBA transactions) consistent with the Funds ability to manage its investment portfolio and meet redemption requests. These transactions involve a commitment by the Fund to purchase securities for a predetermined price or yield with payment and delivery taking place more than three days in the future, or after a period longer than the customary settlement period for that type of security. No interest will be earned by the Fund on such purchases until the securities are delivered; however, the market value may change prior to delivery.
Foreign Currency Transactions Transactions denominated in foreign currencies are recorded at the prevailing exchange rates on the valuation date in accordance with the Funds prospectus. The value of all assets and liabilities denominated in foreign currencies is translated into U.S. dollars at the exchange rate of such currencies against the U.S. dollar daily. Transaction gains or losses resulting from changes in exchange rates during the reporting period or upon settlement of the foreign currency transaction are reported in operations for the current period. The Fund generally isolates that portion of realized gains and losses on investments in debt securities, which is due to changes in foreign exchange rates from that which is due to changes in market prices of debt securities. For foreign equity securities, these changes are included in net realized gain and unrealized gain or loss of investments. The Fund reports certain foreign currency related transactions as components of realized gains (losses) for financial reporting purposes, whereas such components are treated as ordinary income (loss) for federal income tax purposes.
Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the fair value of investments, reported amounts of assets and liabilities and disclosure of contingent 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 and the differences could be material.
Other Expenses directly attributable to the Fund are charged directly to the Fund. Other expenses common to various funds within the Delaware Investments® Family of Funds are generally allocated amongst such funds on the basis of average net assets. Management fees and some other expenses are paid monthly. Security transactions are recorded on the date the securities are purchased or sold (trade date) for financial reporting purposes. Costs used in calculating realized gains and losses on the sale of investment securities are those of the specific securities sold. Dividend income is recorded on the ex-dividend date and interest income is recorded on the accrual basis. Taxable non-cash dividends are recorded as dividend income. Discounts and premiums on debt securities are amortized to interest income over the lives of the respective securities using the effective interest method. Realized gains (losses) on paydowns of asset- and mortgage-backed securities are classified as interest income. Distributions received from investments in Real Estate Investment Trusts
30
(REITs) are recorded as dividend income on the ex-dividend date, subject to reclassification upon notice of the character of such distribution by the issuer. Foreign dividends are also recorded on the ex-dividend date or as soon after the ex-dividend date that the Fund is aware of such dividends, net of all non-rebatable tax withholdings. Withholding taxes on foreign dividends have been recorded in accordance with the Funds understanding of the applicable countrys tax rules and rates.
The Fund may receive earnings credits from its custodian when positive cash balances are maintained, which are used to offset custody fees. There were no earnings credits for the year ended November 30, 2012.
2. Investment Management, Administration Agreements and Other Transactions with Affiliates
In accordance with the terms of its investment management agreement, the Fund pays Delaware Management Company (DMC), a series of Delaware Management Business Trust, and the investment manager, an annual fee of 0.95%, of the adjusted average daily net assets of the Fund. For purposes of the calculation of investment management fees, adjusted average daily net assets excludes the line of credit liability.
Delaware Service Company, Inc. (DSC), an affiliate of DMC, provides fund accounting and financial administration oversight services to the Fund. For these services, the Fund pays DSC fees based on the aggregate daily net assets excluding the line of credit liability of the Delaware Investments® Family of Funds at the following annual rate: 0.0050% of the first $30 billion; and 0.0045% of the next $10 billion; 0.0040% of the next $10 billion; and 0.0025% of aggregate average daily net assets in excess of $50 billion. The fees payable to DSC under the service agreement described above are allocated among all Funds in the Delaware Investments Family of Funds on a relative net asset value basis. For the year ended November 30, 2012, the Fund was charged $12,099 for these services.
At November 30, 2012, the Fund had liabilities payable to affiliates as follows:
Investment management fee payable to DMC | $ | 198,044 |
Fees and expenses payable to DSC | 1,017 | |
Other expenses payable to DMC and affiliates* | 1,663 |
*DMC, as part of its administrative services, pays operating expenses on behalf of the Fund and is reimbursed on a periodic basis. Expenses include items such as printing of shareholder reports, fees for audit, legal and tax services, stock exchange fees, custodian fees and Directors fees. |
As provided in the investment management agreement, the Fund bears the cost of certain legal and tax services, including internal legal and tax services provided to the Fund by DMC and/or its affiliates employees. For the year ended November 30, 2012, the Fund was charged $ 36,501 for internal legal and tax services provided by DMC and/or its affiliates employees.
Trustees fees include expenses accrued by the Fund for each Trustees retainer and meeting fees. Certain officers of DMC and DSC are officers and/or Trustees of the Fund. These officers and Trustees are paid no compensation by the Fund.
3. Investments
For the year ended November 30, 2012, the Fund made purchases of $140,909,504 and sales of $115,971,465 of investment securities other than U.S. government securities and short-term investments. For the year ended November 30, 2012, the Fund made purchases of $6,934,821 and sales of $6,551,833 of long-term U.S. government securities.
At November 30, 2012, the cost of investments for federal income tax purposes was $263,530,905. At November 30, 2012, the net unrealized appreciation was $9,833,282, of which $23,078,095 related to unrealized appreciation of investments and $13,244,813 related to unrealized depreciation of investments.
U.S. GAAP defines fair value as the price that the Fund would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants at the measurement date under current market conditions. A three level hierarchy for fair value measurements has been established based upon the transparency of inputs to the valuation of an asset or liability. Inputs may be observable or unobservable and refer broadly to the assumptions that market
Notes to financial statements
Delaware Enhanced Global Dividend and Income Fund
3. Investments (continued)
participants would use in pricing the asset or liability. Observable inputs reflect the assumptions market participants would use in pricing the asset or liability based on market data obtained from sources independent of the reporting entity. Unobservable inputs reflect the reporting entitys own assumptions about the assumptions that market participants would use in pricing the asset or liability developed based on the best information available under the circumstances. The Funds investment in its entirety is assigned a level based upon the observability of the inputs which are significant to the overall valuation. The three level hierarchy of inputs is summarized below.
Level 1 | inputs are quoted prices in active markets for identical investments (e.g., equity securities, open-end investment companies, futures contracts, exchange-traded options contracts) |
Level 2 | other observable inputs (including, but not limited to: quoted prices for similar assets or liabilities in markets that are active, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the assets or liabilities (such as interest rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks and default rates) or other market-corroborated inputs) (e.g., debt securities, government securities, swap contracts, foreign currency exchange contracts, foreign securities utilizing international fair value pricing broker-quoted securities; fair valued securities) |
Level 3 | inputs are significant unobservable inputs (including the Funds own assumptions used to determine the fair value of investments) (e.g., broker-quoted securities, fair valued securities) |
Level 3 investments are valued using significant unobservable inputs. The Fund may also use an income-based valuation approach in which the anticipated future cash flows of the investment are discounted to calculate fair value. Discounts may also be applied due to the nature or duration of any restrictions on the disposition of the investments. Valuations may also be based upon current market prices of securities that are comparable in coupon, rating, maturity and industry. The derived value of a Level 3 investment may not represent the value which is received upon disposition and this could impact the results of operations.
The following table summarizes the valuation of the Funds investments by fair value hierarchy levels as of November 30, 2012:
Level 1 | Level 2 | Level 3 | Total | |||||||||||
Agency, Asset- & Mortgage-Backed Securities | $ | | $ | 3,174,790 | $ | | $ | 3,174,790 | ||||||
Common Stock | 112,789,939 | | | 112,789,939 | ||||||||||
Convertible Preferred Stock | 1,939,760 | 2,641,428 | | 4,581,188 | ||||||||||
Corporate Debt | | 111,879,963 | 415,000 | 112,294,963 | ||||||||||
Foreign Debt | | 16,280,792 | | 16,280,792 | ||||||||||
Exchange-Traded Fund | 740,500 | | | 740,500 | ||||||||||
U.S. Treasury Obligations | | 879,379 | | 879,379 | ||||||||||
Other | 1,614,512 | 644,747 | | 2,259,259 | ||||||||||
Short-Term Investments | | 5,026,931 | | 5,026,931 | ||||||||||
Securities Lending Collateral | | 15,336,446 | | 15,336,446 | ||||||||||
Total | $ | 117,084,711 | $ | 155,864,476 | $ | 415,000 | $ | 273,364,187 | ||||||
Foreign Currency Exchange Contracts | $ | | $ | (779 | ) | $ | | $ | (779 | ) |
The securities that have been deemed worthless on the statement of net assets are considered to be Level 3 securities in this table.
A reconciliation of Level 3 investments is presented when the Fund has a significant amount of Level 3 investments at the beginning, interim or end of the period in relation to net assets.
During the year ended November 30, 2012, there were no transfers between Level 1 investments, Level 2 investments or Level 3 investments that had a significant impact to the Fund. This does not include transfers between Level 1 investments and Level 2 investments due to the Fund utilizing international fair value pricing during the year. International Fair Value
32
pricing uses other observable market-based inputs in place of the closing exchange price due to the events occurring after the close of the exchange or market on which the investment is principally traded in accordance with the Fair Valuation Procedures described in Note 1, causing a change in classification between levels. The Funds policy is to recognize transfers between levels at the beginning of the reporting period.
Management has determined not to provide additional disclosure on Level 3 inputs under ASU No. 2011-04 since the Level 3 investments are not considered significant to the Funds net assets at the end of the period.
4. Dividend and Distribution Information
Income and long-term capital gain distributions are determined in accordance with federal income tax regulations, which may differ from U.S. GAAP. Additionally, distributions from net gains on foreign currency transactions and net short-term gains on sales of investment securities are treated as ordinary income for federal income tax purposes. The tax character of dividends and distributions paid during the years ended November 30, 2012 and 2011 was as follows:
Year Ended | |||||
11/30/12 | 11/30/11 | ||||
Ordinary income | $ | 9,927,316 | $ | 9,958,352 | |
Return of capital | 8,242,639 | 6,379,270 | |||
Total | $ | 18,169,955 | $ | 16,337,622 |
5. Components of Net Assets on a Tax Basis
As of November 30, 2012, the components of net assets on a tax basis were as follows:
Shares of beneficial interest | $ | 240,349,384 | |
Capital loss carryforwards | (59,453,692 | ) | |
Other temporary differences | (34,689 | ) | |
Unrealized appreciation | 9,741,474 | ||
Net assets | $ | 190,602,477 |
The differences between book basis and tax basis components of net assets are primarily attributable to tax deferral of losses on wash sales, tax deferral of losses on straddle, contingent payment debt instruments, mark-to-market of foreign currency exchange contracts, partnership income, tax preferred securities, market discount and premium on debt instruments and unrealized gain on passive foreign investment companies.
For financial reporting purposes, capital accounts are adjusted to reflect the tax character of permanent book/tax differences. Reclassifications are primarily due to tax treatment of gain (loss) on foreign currency transactions, dividends and distributions, contingent payment debt instruments, CDS contracts, foreign capital gain taxes, market discount and premium on certain debt instruments, passive foreign investment companies, net operating losses, tax preferred securities, and paydowns of asset- and mortgage-backed securities. Results of operations and net assets were not affected by these reclassifications. For the year ended November 30, 2012, the Fund recorded the following reclassifications:
Distributions in excess of net investment income | $ | 9,116,463 | |
Accumulated net realized loss | (644,705 | ) | |
Paid-in capital | (8,471,758 | ) |
For federal income tax purposes, capital loss carryforwards may be carried forward and applied against future capital gains. $156,432 was utilized on November 30, 2012. Capital loss carryforwards remaining at November 30, 2012, if not utilized in future years, will expire as follows: $3,221,272 expires in 2015, $33,984,198 expires in 2016 and $22,248,222 expires in 2017.
On December 22, 2010, the Act was enacted, which changed various technical rules governing the tax treatment of regulated investment companies. The changes were generally effective for taxable years beginning after the date of enactment. Under the Act, the Fund is permitted to carry forward capital losses incurred in taxable years beginning after
Notes to financial statements
Delaware Enhanced Global Dividend and Income Fund
5. Components of Net Assets on a Tax Basis (continued)
the date of enactment for an unlimited period. However, any losses incurred during those future taxable years will be required to be utilized prior to the losses incurred in pre-enactment taxable years, which carry an expiration date. As a result of this ordering rule, pre-enactment capital loss carryforwards may be more likely to expire unused. Additionally, post-enactment capital loss carryforwards will retain their character as either short-term or long-term capital losses rather than being considered all short-term as permitted under previous regulation.
6. Capital Stock
Shares obtained under the Funds dividend reinvestment plan are purchased by the Funds transfer agent, Computershare Shareowner Services LLC (Computershare), in the open market if the shares of the Fund are trading at a discount to the Funds net asset value on the dividend payment date. However, the dividend reinvestment plan provides that if the shares of the Fund are trading at a premium to the Funds net asset value on the dividend payment date, the Fund will issue shares to shareholders of record at net asset value. During the year ended November 30, 2012, the Fund issued 60,489 shares for $714,620 under the Funds dividend reinvestment plan because the Fund was trading at a premium to net asset value on the respective dividend payment dates. During the year ended November 30, 2011, the Fund issued 52,357 shares for $675,989 under the Funds dividend reinvestment plan because the Fund was trading at a premium to net asset value on the respective dividend payment dates.
7. Fund Merger
As of the close of business on October 21, 2011, the Fund acquired all of the assets of the Delaware Investments® Global Dividend and Income Fund Inc., (Acquired Fund), a closed-end investment management company, in exchange for the shares of the Fund (Acquiring Fund) pursuant to a Plan and Agreement of Reorganization (Reorganization). The shareholders of the Acquired Fund received shares of the Acquiring Fund equal to the aggregate net asset value of shares in the Acquired Fund prior to the Reorganization, as shown in the following table:
Acquiring Fund | Acquired Fund | ||||
Shares | Shares | Value | |||
2,725,926 | 4,789,889 | $31,394,740 |
The Reorganization was treated as a non-taxable event and, accordingly, the Acquired Funds basis in securities acquired reflected historical cost basis as of the date of transfer. The net assets, net unrealized depreciation, distributions in excess of net investment income, and accumulated net realized loss of the Acquired Fund as of the close of business on October 21, 2011, were as follows:
Net assets | $ | 31,394,740 | |
Distributions in excess of net investment income | 150,321 | ||
Accumulated net realized loss | (8,258,081 | ) | |
Net unrealized depreciation | (405,624 | ) |
The net assets of the Acquiring Fund before the acquisition were $150,504,258. The net assets of the Acquiring Fund immediately following the acquisition were $181,898,998.
Assuming that the acquisition had been completed on December 1, 2010, the beginning of the Acquiring Funds reporting period, the Acquiring Funds pro forma results of operations for the year ended November 30, 2011, were as follows:
Net investment income | $ | 8,721,735 | |
Net realized gain on investments and foreign currencies | 2,940,655 | ||
Change in unrealized depreciation and foreign currencies | (7,495,108 | ) | |
Net increase in net assets resulting from operations | 4,167,282 |
34
Because the combined investment portfolios have been managed as a single integrated portfolio since the acquisition was completed, it is not practicable to separate the amounts of revenue and earnings of the Acquired Fund that have been included in the Funds statement of operations since the close of business on October 21, 2011.
8. Unfunded Commitments
The Fund may invest in floating rate loans. In connection with these investments, the Fund may also enter into unfunded corporate loan commitments (commitments). Commitments may obligate the Fund to furnish temporary financing to a borrower until permanent financing can be arranged. In connection with these commitments, the Fund earns a commitment fee, typically set as a percentage of the commitment amount.
As of November 30, 2012, the Fund had the following unfunded loan commitments:
Borrower | Unfunded Loan Commitment | |||
GenCorp | $ | 415,000 | ||
Silver II Acquisition | 630,000 | |||
Tempur-Pedic International | 415,000 | |||
TPC Group | 725,000 |
9. Line of Credit
Effective June 27, 2012, the Fund borrowed money pursuant to a $67,000,000 Credit Agreement with BNY Mellon that expires on June 26, 2013. Prior to June 27, 2012, the Fund was a party to a $67,000,000 Credit Agreement with BNY Mellon which had substantially similar terms. Depending on market conditions, the amount borrowed by the Fund pursuant to the Credit Agreement may be reduced or possibly increased in the future.
At November 30, 2012, the Fund had two loans outstanding under the Credit Agreement. The par value of one loan outstanding was $40,000,000 at a variable interest rate of 1.75%. The par value of the other loan outstanding was $25,725,000 at a variable interest rate of 1.16%. During the year ended November 30, 2012, the average daily balance of loans outstanding was $ 60,929,918 at a weighted average interest rate of approximately 1.71%.
Interest on borrowings is based on a variable short-term rate plus an applicable margin. The commitment fee under the Credit Agreement is computed at a rate of 0.20% per annum on the unused balance and is reflected in leverage expenses on the statement of operations. Under the prior Credit Agreement the commitment fee was calculated at a rate of 0.25% on the unused balance. The loans are collateralized by the Funds portfolio.
10. Derivatives
U.S. GAAP requires disclosures that enable investors to understand: 1) how and why an entity uses derivatives; 2) how they are accounted for; and 3) how they affect an entitys results of operations and financial position.
Foreign Currency Exchange Contracts The Fund may enter into foreign currency exchange contracts as a way of managing foreign exchange rate risk. The Fund may enter into these contracts to fix the U.S. dollar value of a security that it has agreed to buy or sell for the period between the date the trade was entered into and the date the security is delivered and paid for. The Fund may also use these contracts to hedge the U.S. dollar value of securities it already owns that are denominated in foreign currencies. The change in value is recorded as an unrealized gain or loss. When the contract is closed, a realized gain or loss is recorded equal to the difference between the value of the contract at the time it was opened and the value at the time it was closed.
The use of foreign currency exchange contracts does not eliminate fluctuations in the underlying prices of the securities, but does establish a rate of exchange that can be achieved in the future. Although foreign currency exchange contracts limit the risk of loss due to an unfavorable change in the value of the hedged currency, they also limit any potential gain that might result should the value of the currency change favorably. In addition, the Fund could be exposed to risks if the counterparties to the contracts are unable to meet the terms of its contracts. The Funds maximum risk of loss from counterparty credit risk is the value of their currency exchanged with the counterparty. The risk is generally mitigated by having a netting arrangement between the Fund and the counterparty and by the posting of collateral by the counterparty to the Fund to cover the Funds exposure to the counterparty.
Notes to financial statements
Delaware Enhanced Global Dividend and Income Fund
10. Derivatives (continued)
Options Contracts During the year ended November 30, 2012, the Fund entered into options contracts in the normal course of pursuing its investment objective. The Fund may buy or write options contracts for any number of reasons, including without limitation: to manage the Funds exposure to changes in securities prices and foreign currencies; as an efficient means of adjusting the Funds overall exposure to certain markets; to protect the value of portfolio securities; and as a cash management tool. The Fund may buy or write call or put options on securities, futures, swaps, swaptions, financial indices, and foreign currencies. When the Fund buys an option, a premium is paid and an asset is recorded and adjusted on a daily basis to reflect the current market value of the options purchased. When the Fund writes an option, a premium is received and a liability is recorded and adjusted on a daily basis to reflect the current market value of the options written. Premiums received from writing options that expire unexercised are treated by the Fund on the expiration date as realized gains. The difference between the premium received and the amount paid on effecting a closing purchase transaction, including brokerage commissions, is treated as realized gain or loss. If a call option is exercised, the premium is added to the proceeds from the sale of the underlying security in determining whether the Fund has a realized gain or loss. If a put option is exercised, the premium reduces the cost basis of the securities purchased by the Fund. The Fund, as writer of an option, bears the market risk of an unfavorable change in the price of the security underlying the written option. When writing options, the Fund is subject to minimal counterparty risk because the counterparty is only obligated to pay premiums and does not bear the market risk of an unfavorable market change.
Transactions in options written during the year ended November 30, 2012 for the Fund were as follows:
Number of | |||||||
Contracts | Premiums | ||||||
Options outstanding at November 30, 2011 | 120 | $ | 2,241 | ||||
Options written | 1,590 | 220,477 | |||||
Options expired | (1,210 | ) | (124,810 | ) | |||
Options terminated in closing purchase transactions | (500 | ) | (97,908 | ) | |||
Options outstanding at November 30, 2012 | | $ | |
Swap Contracts The Fund may enter into CDS contracts in the normal course of pursuing its investment objective. The Fund may enter into CDS contracts in order to hedge against a credit event, to enhance total return or to gain exposure to certain securities or markets. The Fund will not be permitted to enter into any swap transactions unless, at the time of entering into such transactions, the unsecured long-term debt of the actual counterparty combined with any credit enhancements, is rated at least BBB- by S&P or Baa3 by Moodys or is determined to be of equivalent quality by the manager.
Credit Default Swaps. A CDS contract is a risk-transfer instrument through which one party (purchaser of protection) transfers to another party (seller of protection) the financial risk of a credit event (as defined in the CDS agreement), as it relates to a particular reference security or basket of securities (such as an index). In exchange for the protection offered by the seller of protection, the purchaser of protection agrees to pay the seller of protection a periodic amount at a stated rate that is applied to the notional amount of the CDS contract. In addition, an upfront payment may be made or received by the Series in connection with an unwinding or assignment of a CDS contract. Upon the occurrence of a credit event, the seller of protection would pay the par (or other agreed-upon) value of the reference security (or basket of securities) to the counterparty. Credit events generally include, among others, bankruptcy, failure to pay, and obligation default.
During the year ended November 30, 2012, the Fund entered into CDS contracts as a purchaser and seller of protection. Periodic payments (receipts) on such contracts are accrued daily and recorded as unrealized losses (gains) on swap contracts. Upon payment (receipt), such amounts are recorded as realized losses (gains) on swap contracts. Upfront payments made or received in connection with CDS contracts are amortized over the expected life of the CDS contracts as unrealized losses (gains) on swap contracts. The change in value of CDS contracts is recorded as unrealized appreciation or depreciation daily. A realized gain or loss is recorded upon a credit event (as defined in the CDS agreement) or the maturity or termination of the agreement.
36
CDS contracts may involve greater risks than if the Fund had invested in the reference obligation directly. CDS contracts are subject to general market risk, liquidity risk, counterparty risk and credit risk. The Funds maximum risk of loss from counterparty credit risk, either as the seller of protection or the buyer of protection, is the fair value of the contract. This risk is mitigated by having a netting arrangement between the Fund and the counterparty and by the posting of collateral by the counterparty to the Fund to cover the Funds exposure to the counterparty.
Swaps Generally. The value of open swaps may differ from that which would be realized in the event the Fund terminated its position in the agreement. Risks of entering into these contracts include the potential inability of the counterparty to meet the terms of the contracts. This type of risk is generally limited to the amount of favorable movement in the value of the underlying security, instrument or basket of instruments, if any, at the day of default. Risks also arise from potential losses from adverse market movements and such losses could exceed the unrealized amounts shown on the statement of net assets. At the year ended November 30, 2012, there were no open swap contracts.
Derivatives Generally. The table below summarizes the average balance of derivative holdings by the Fund during the year ended November 30, 2012.
Long Derivative Volume |
Short Derivative Volume | |||||||
Foreign currency exchange contracts (average cost) | USD | 220,828 | USD | 484,256 | ||||
Options contracts (average notional value) | | 7,735 | ||||||
Swap contracts (average notional value)* | | 8,182 | ||||||
EUR | 153,557 | EUR | |
* | Long represents buying protection and short represents selling protection. |
11. Securities Lending
The Fund, along with other funds in the Delaware Investments® Family of Funds, may lend its securities pursuant to a security lending agreement (Lending Agreement) with BNY Mellon. At the time a security is loaned, the borrower must post collateral equal to the required percentage of the market value of the loaned security, including any accrued interest. The required percentage is: (i) 102% with respect to U.S. securities and foreign securities that are denominated and payable in U.S. dollars; and (ii) 105% with respect to foreign securities. With respect to each loan, if on any business day the aggregate market value of securities collateral plus cash collateral held is less than the aggregate market value of the securities which are the subject of such loan, the borrower will be notified to provide additional collateral by the end of the following business day which, together with the collateral already held, will be not less than the applicable initial collateral requirements for such security loan. If the aggregate market value of securities collateral and cash collateral held with respect to a security loan exceeds the applicable initial collateral requirement, upon request of the borrower BNY Mellon must return enough collateral to the borrower by the end of the following business day to reduce the value of the remaining collateral to the applicable initial collateral requirement for such security loan. As a result of the foregoing, the value of the collateral held with respect to a loaned security may be temporarily more or less than the value of the security on loan.
Cash collateral received is generally invested in the Delaware Investments Collateral Fund No. 1 (Collective Trust) established by BNY Mellon for the purpose of investment on behalf of funds managed by DMC that participate in BNY Mellons securities lending program. The Collective Trust may invest in U.S. government securities and high quality corporate debt, asset-backed and other money market securities and in repurchase agreements collateralized by such securities, provided that the Collective Trust will generally have a dollar-weighted average portfolio maturity of 60 days or less. In October 2008, BNY Mellon transferred certain distressed securities from the Funds previous collateral investment pool into the Mellon GSL Reinvestment Trust II. The Fund can also accept U.S. government securities and letters of credit (non-cash collateral) in connection with securities loans. In the event of default or bankruptcy by the lending agent, realization and/or retention of the collateral may be subject to legal proceedings. In the event the borrower fails to return
(continues) 37
Notes to financial statements
Delaware Enhanced Global Dividend and Income Fund
11. Securities Lending (continued)
loaned securities and the collateral received is insufficient to cover the value of the loaned securities and provided such collateral shortfall is not the result of investment losses, the lending agent has agreed to pay the amount of the shortfall to the Fund or, at the discretion of the lending agent, replace the loaned securities. The Fund continues to record dividends or interest, as applicable, on the securities loaned and is subject to changes in value of the securities loaned that may occur during the term of the loan. The Fund has the right under the Lending Agreement to recover the securities from the borrower on demand. With respect to security loans collateralized by non-cash collateral, the Fund receives loan premiums paid by the borrower. With respect to security loans collateralized by cash collateral, the earnings from the collateral investments are shared among the Fund, the security lending agent and the borrower. The Fund records security lending income net of allocations to the security lending agent and the borrower.
The Collective Trust used for the investment of cash collateral received from borrowers of securities seeks to maintain a net asset value per unit of $1.00, but there can be no assurance that it will always be able to do so. The Fund may incur investment losses as a result of investing securities lending collateral in the Collective Trust or another collateral investment pool. This could occur if an investment in a collateral investment pool defaulted or if it were necessary to liquidate assets in the collateral investment pool to meet returns on outstanding security loans at a time when the collateral investment pools net asset value per unit was less than $1.00. Under those circumstances, the Fund may not receive an amount from the collateral investment pool that is equal in amount to the collateral the Fund would be required to return to the borrower of the securities and the Fund would be required to make up for this shortfall.
At November 30, 2012, the value of securities on loan was $16,124,538, for which the Fund received collateral, comprised of non-cash collateral (U.S. government securities) valued at $975,351 and cash collateral of $15,722,131. At November 30, 2012, the value of invested collateral was $15,336,446. Investments purchased with cash collateral are presented on the statement of net assets under the caption Securities Lending Collateral.
12. Credit and Market Risks
The Fund borrows through its line of credit for purposes of leveraging. Leveraging may result in higher degrees of volatility because the Funds net asset value could be subject to fluctuations in short-term interest rates and changes in market value of portfolio securities attributable to the leverage.
Some countries in which the Fund may invest require governmental approval for the repatriation of investment income, capital or the proceeds of sales of securities by foreign investors. In addition, if there is deterioration in a countrys balance of payments or for other reasons, a country may impose temporary restrictions on foreign capital remittances abroad.
The securities exchanges of certain foreign markets are substantially smaller, less liquid and more volatile than the major securities markets in the United States. Consequently, acquisition and disposition of securities by the Fund may be inhibited. In addition, a significant portion of the aggregate market value of securities listed on the major securities exchanges in emerging markets is held by a smaller number of investors. This may limit the number of shares available for acquisition or disposition by the Fund.
The Fund invests a portion of its assets in high yield fixed income securities, which are securities rated BB or lower by Standard & Poors and Ba or lower by Moodys Investors Service, or similarly rated by another nationally recognized statistical rating organization. Investments in these higher yielding securities are generally accompanied by a greater degree of credit risk than higher rated securities. Additionally, lower rated securities may be more susceptible to adverse economic and competitive industry conditions than investment grade securities.
The Fund invests in fixed income securities whose value is derived from an underlying pool of mortgages or consumer loans. The value of these securities is sensitive to changes in economic conditions, including delinquencies and/or defaults, and may be adversely affected by shifts in the markets perception of the issuers and changes in interest rates. Investors receive principal and interest payments as the underlying mortgages and consumer loans are paid back. Some of these securities are collateralized mortgage obligations (CMOs). CMOs are debt securities issued by U.S. government agencies or by financial institutions and other mortgage lenders, which are collateralized by a pool of mortgages held under an indenture. Prepayment of mortgages may shorten the stated maturity of the obligations and can result in a loss of
38
premium, if any has been paid. Certain of these securities may be stripped (securities which provide only the principal or interest feature of the underlying security). The yield to maturity on an interest-only CMO is extremely sensitive not only to changes in prevailing interest rates, but also to the rate of principal payments (including prepayments) on the related underlying mortgage assets. A rapid rate of principal payments may have a material adverse effect on the Funds yield to maturity. If the underlying mortgage assets experience greater than anticipated prepayments of principal, the Fund may fail to fully recoup its initial investment in these securities even if the securities are rated in the highest rating categories.
The Fund invests in REITs and is subject to some of the risks associated with that industry. If the Fund holds real estate directly as a result of defaults or receives rental income directly from real estate holdings, its tax status as a regulated investment company may be jeopardized. There were no direct real estate holdings during the year ended November 30, 2012. The Funds REIT holdings are also affected by interest rate changes, particularly if the REITs it holds use floating rate debt to finance their ongoing operations.
The Fund may invest up to 10% of its net assets in illiquid securities, which may include securities with contractual restrictions on resale, securities exempt from registration under Rule 144A of the Securities Act of 1933, as amended, and other securities which may not be readily marketable. The relative illiquidity of these securities may impair the Fund from disposing of them in a timely manner and at a fair price when it is necessary or desirable to do so. While maintaining oversight, the Funds Board has delegated to DMC, the day-to-day functions of determining whether individual securities are liquid for purposes of the Funds limitation on investments in illiquid securities. Securities eligible for resale pursuant to Rule 144A, which are determined to be liquid, are not subject to the 10% limit on investments in illiquid securities. Rule 144A and illiquid securities have been identified on the statement of net assets.
13. Contractual Obligations
The Fund enters into contracts in the normal course of business that contain a variety of indemnifications. The Funds maximum exposure under these arrangements is unknown. However, the Fund has not had prior claims or losses pursuant to these contracts. Management has reviewed the Funds existing contracts and expects the risk of loss to be remote.
14. Subsequent Events
Management has determined that no material events or transactions occurred subsequent to November 30, 2012 that would require recognition or disclosure in the Funds financial statements.
39
Report of independent
registered public
accounting firm
To the Board of Trustees and Shareholders
of
Delaware Enhanced Global Dividend and Income Fund:
In our opinion, the accompanying statement of net assets and the related statements of operations, of changes in net assets and of cash flows and the financial highlights present fairly, in all material respects, the financial position of Delaware Enhanced Global Dividend and Income Fund (the Fund) at November 30, 2012, the results of its operations and its cash flows for the year then ended, the changes in its net assets for each of the two years in the period then ended and the financial highlights for each of the three years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as financial statements) are the responsibility of the Funds management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at November 30, 2012 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion. The financial highlights for the year ended November 30, 2009 and each of the periods prior were audited by other independent accountants whose report dated January 21, 2010 expressed an unqualified opinion on those statements.
PricewaterhouseCoopers,
LLP
Philadelphia, Pennsylvania
January 18, 2013
40
Other Fund information
(Unaudited)
Delaware Enhanced Global Dividend and Income Fund
Proxy results
Annual meeting
The Fund held its Annual Meeting of Shareholders on August 22, 2012. At the Annual Meeting, the Funds shareholders elected nine Directors. The results of the voting at the meeting were as follows:
Shares | Shares | No Ballot | |||||
Nominee | Voted For | Withheld | Received | ||||
Patrick P. Coyne | 14,276,393 | 607,250 | 953,648 | ||||
Thomas L. Bennett | 14,251,516 | 632,127 | 953,648 | ||||
John A. Fry | 14,216,992 | 666,651 | 953,648 | ||||
Anthony D. Knerr | 14,225,998 | 657,644 | 953,648 | ||||
Lucinda S. Landreth | 14,258,096 | 625,546 | 953,648 | ||||
Ann R. Leven* | 14,236,588 | 647,054 | 953,648 | ||||
Frances A. Sevilla-Sacasa | 14,207,777 | 675,865 | 953,648 | ||||
Janet L. Yeomans | 14,259,894 | 623,748 | 953,648 | ||||
J. Richard Zecher | 14,291,096 | 592,546 | 953,648 |
* | Effective August 31, 2012, Ms. Leven resigned as a Trustee of the Fund. Joseph W. Chow and Thomas K. Whitford were appointed as Trustees of the Fund effective January 1, 2013. Messrs. Chow and Whitford will be subject to shareholder election at a meeting in August 2013. |
Changes to portfolio management team
Paul A. Matlack, Craig C. Dembek, and John P. McCarthy were appointed co-portfolio managers of the Fund on December 4, 2012. Messrs. Matlack, Dembek, and McCarthy joined Babak Bob Zenouzi, Damon J. Andres, Wayne A. Anglace, Liu-Er Chen, Thomas H. Chow, Roger A. Early, Edward A. Ned Gray, and D. Tysen Nutt in making day-to-day decisions for the Fund.
On December 4, 2012, the Fund announced that Kevin P. Loome would no longer serve as a co-portfolio manager of the Fund.
Fund management
Babak Bob Zenouzi
Senior Vice President, Chief Investment Officer Real Estate
Securities and Income Solutions (RESIS)
Bob Zenouzi is the lead manager for the real estate securities and income solutions (RESIS) group at Delaware Investments, which includes the team, its process, and its institutional and retail products, which he created during his prior time with the firm. He also focuses on opportunities in Japan, Singapore, and Malaysia for the firms global REIT product. Additionally, he serves as lead portfolio manager for the firms Dividend Income products, which he helped to create in the 1990s. He is also a member of the firms asset allocation committee, which is responsible for building and managing multi-asset class portfolios. He rejoined Delaware Investments in May 2006 as senior portfolio manager and head of real estate securities. In his first term with the firm, he spent seven years as an analyst and portfolio manager, leaving in 1999 to work at Chartwell Investment Partners, where from 1999 to 2006 he was a partner and senior portfolio manager on Chartwells Small-Cap Value portfolio. He began his career with The Boston Company, where he held several positions in accounting and financial analysis. Zenouzi earned a masters degree in finance from Boston College and a bachelors degree from Babson College. He is a member of the National Association of Real Estate Investment Trusts and the Urban Land Institute.
Damon J. Andres, CFA
Vice President, Senior Portfolio Manager
Damon J. Andres, who joined Delaware Investments in 1994 as an analyst, currently serves as a portfolio manager for the firms real estate securities and income solutions (RESIS) group. He also serves as a portfolio manager for the firms Dividend Income products. From 1991 to 1994, he performed investment-consulting services as a consulting associate with Cambridge Associates. Andres earned a bachelors degree in business administration with an emphasis in finance and accounting from the University of Richmond.
(continues) 41
Other Fund
information
(Unaudited)
Delaware Enhanced Global Dividend and Income Fund
Fund management (continued)
Wayne A. Anglace, CFA
Vice President, Senior Portfolio Manager, Research
Analyst
Wayne A. Anglace currently serves as a senior portfolio manager for the firms convertible bond strategies. Anglace also serves as a research analyst for the firms taxable fixed income portfolio team with specific responsibilities for the healthcare sector. Prior to joining the firm in March 2007 as a research analyst and trader, he spent more than two years as a research analyst at Gartmore Global Investments for its convertible bond strategy. From 2000 to 2004, Anglace worked in private client research at Deutsche Bank Alex. Brown in Baltimore where he focused on equity research, and he started his financial services career with Ashbridge Investment Management in 1999. Prior to moving to the financial industry, Anglace worked as a professional civil engineer. He earned his bachelors degree in civil engineering from Villanova University and an MBA with a concentration in finance from Saint Josephs University, and he is a member of the CFA Society of Philadelphia.
Liu-Er Chen, CFA
Senior Vice President, Chief Investment Officer Emerging
Markets and Healthcare
Liu-Er Chen heads the firms global Emerging Markets team, and he is also the portfolio manager for Delaware Healthcare Fund, which launched in September 2007. Prior to joining Delaware Investments in September 2006 in his current position, he spent nearly 11 years at Evergreen Investment Management Company, where he most recently worked as managing director and senior portfolio manager. He co-managed the Evergreen Emerging Markets Growth Fund from 1999 to 2001, and became the Funds sole manager in 2001. He was also the sole manager of the Evergreen Health Care Fund since its inception in 1999. Chen began his career at Evergreen in 1995 as an analyst covering Asian and global healthcare stocks, before being promoted to portfolio manager in 1998. Prior to his career in asset management, Chen worked for three years in sales, marketing, and business development for major American and European pharmaceutical and medical device companies. He is licensed to practice medicine in China and has experience in medical research at both the Chinese Academy of Sciences and Cornell Medical School. He holds an MBA with a concentration in management from Columbia Business School.
Thomas H. Chow, CFA
Senior Vice President, Senior Portfolio Manager
Thomas H. Chow is a member of the firms taxable fixed income portfolio management team, with primary responsibility for portfolio construction and strategic asset allocation in credit exposures. He is the lead portfolio manager for Delaware Corporate Bond Fund and Delaware Extended Duration Bond Fund, as well as several institutional mandates. His experience includes significant exposure to asset liability management strategies, and credit risk opportunities including high yield mutual funds and strategies. Prior to joining Delaware Investments in 2001 as a portfolio manager working on the Lincoln General Account, he was a trader of high grade and high yield securities, and was involved in the portfolio management of high yield collateralized bond obligations (CBOs) and insurance portfolios at SunAmerica/AIG from 1997 to 2001. Before that, he was an analyst, trader, and portfolio manager at Conseco Capital Management from 1989 to 1997. Chow received a bachelors degree in business analysis from Indiana University, and he is a Fellow of Life Management Institute.
Craig C. Dembek, CFA
Senior Vice President, Co-Head of Credit Research, Senior
Research Analyst
Craig C. Dembek is a senior research analyst on the firms taxable fixed income team with primary responsibility for banks, brokers, insurance companies, and real estate investment trusts (REITs), as well as oversight for other sectors. He rejoined the firm in March 2007. During his previous time at Delaware Investments, from April 1999 to January 2001, he was a senior investment grade credit analyst. Most recently, he spent four years at Chartwell Investment Partners as a senior fixed income analyst and Turner Investment Partners as a senior fixed income analyst and portfolio manager. Dembek also spent two years at Stein, Roe & Farnham as a senior fixed income analyst. Earlier in his career, he worked for two years as a lead bank analyst at the Federal Reserve Bank of Boston. Dembek earned a bachelors degree in finance from Michigan State University and an MBA with a concentration in finance from the University of Vermont.
42
Roger A. Early, CPA, CFA,
CFP
Senior Vice President, Co-Chief Investment
Officer Total Return Fixed Income Strategy
Roger A. Early rejoined Delaware Investments in March 2007 as a member of the firms taxable fixed income portfolio management team, with primary responsibility for portfolio construction and strategic asset allocation. During his previous time at the firm, from 1994 to 2001, he was a senior portfolio manager in the same area, and he left Delaware Investments as head of its U.S. investment grade fixed income group. In recent years, Early was a senior portfolio manager at Chartwell Investment Partners and Rittenhouse Financial and was the chief investment officer for fixed income at Turner Investments. Prior to joining Delaware Investments in 1994, he worked for more than 10 years at Federated Investors where he managed more than $25 billion in mutual fund and institutional portfolios in the short-term and investment grade markets. He left the firm as head of institutional fixed income management. Earlier in his career, he held management positions with the Federal Reserve Bank, PNC Financial, Touche Ross, and Rockwell International. Early earned his bachelors degree in economics from The Wharton School of the University of Pennsylvania and an MBA with concentrations in finance and accounting from the University of Pittsburgh. He is a member of the CFA Society of Philadelphia.
Edward A. Ned Gray, CFA
Senior Vice President, Chief Investment Officer Global and
International Value Equity
Ned Gray manages the Global and International Value Equity strategies and has worked with the investment team for more than 20 years. Prior to joining Delaware Investments in June 2005 in his current position, Gray worked with the team as a portfolio manager at Arborway Capital and Thomas Weisel Partners. At ValueQuest/TA, which he joined in 1987, Gray was a senior investment professional with responsibilities for portfolio management, security analysis, quantitative research, performance analysis, global research, back office/investment information systems integration, trading, and client and consultant relations. Prior to ValueQuest, he was a research analyst at the Center for Competitive Analysis. Gray received his bachelors degree in history from Reed College and a master of arts in law and diplomacy, in international economics, business and law from Tufts Universitys Fletcher School of Law and Diplomacy.
Paul A. Matlack, CFA
Senior Vice President, Senior Portfolio Manager, Fixed Income
Strategist
Paul A. Matlack is a strategist and senior portfolio manager for the firms fixed income team. Matlack rejoined the firm in May 2010. During his previous time at Delaware Investments, from September 1989 to October 2000, he was senior credit analyst, senior portfolio manager, and left the firm as co-head of the high yield group. Most recently, he worked at Chartwell Investment Partners from September 2003 to April 2010 as senior portfolio manager in fixed income, where he managed core, core plus, and high yield strategies. Prior to that, Matlack held senior roles at Turner Investment Partners, PNC Bank, and Mellon Bank. He earned a bachelors degree in international relations from the University of Pennsylvania and an MBA with a concentration in finance from George Washington University.
John P. McCarthy, CFA
Senior Vice President, Co-Head of Credit Research, Senior
Research Analyst
John P. McCarthy is a senior research analyst on the firms taxable fixed income team, responsible for industrials, autos, auto parts, metals, and mining. He rejoined Delaware Investments in March 2007 after he worked in the firms fixed income area from 1990 to 2000 as a senior high yield analyst and high yield trader, and from 2001 to 2002 as a municipal bond trader. Most recently, he was a senior high yield analyst/trader at Chartwell Investment Partners. McCarthy earned a bachelors degree in business administration from Babson College, and he is a member of the CFA Society of Philadelphia.
(continues) 43
Other Fund
information
(Unaudited)
Delaware Enhanced Global Dividend and Income Fund
Fund management (continued)
D. Tysen Nutt Jr.
Senior Vice President, Senior Portfolio Manager, Team
Leader
D. Tysen Nutt Jr. is senior portfolio manager and team leader for the firms Large-Cap Value team. Before joining Delaware Investments in 2004 as senior vice president and senior portfolio manager, Nutt led the U.S. Active Large-Cap Value team within Merrill Lynch Investment Managers, where he managed mutual funds and separate accounts for institutions and private clients. He departed Merrill Lynch Investment Managers as a managing director. Prior to joining Merrill Lynch Investment Managers in 1994, Nutt was with Van Deventer & Hoch where he managed large-cap value portfolios for institutions and private clients. He began his investment career at Dean Witter Reynolds, where he eventually became vice president, investments. Nutt earned his bachelors degree from Dartmouth College, and he is a member of the New York Society of Security Analysts and the CFA Institute.
Changes to the Funds investment policies regarding swap counterparties
In May 2012, the Funds Board of Directors approved the following change in investment policies regarding swap counterparties:
Effective May 31, 2012, the Fund will not be permitted to enter into any swap transaction unless, at the time of entering into such transaction, the unsecured long-term debt of the actual counterparty, combined with any credit enhancements, is rated at least BBB- by S&P or Baa3 by Moodys or is determined to be of equivalent credit quality by the Manager.
44
Distribution information
Shareholders were sent monthly notices from the Fund that set forth estimates, on a book basis, of the source or sources from which monthly distributions were paid. Subsequently, certain of these estimates have been corrected in part. Listed below is a written statement of the sources of these monthly distributions on a book basis.
Investment | Long Term Capital | ||||||||||||||||||
Income | Return of Capital | Gain/(Loss) | Total Distribution | ||||||||||||||||
Month | Per Share | per Share | per Share | Amount per Share | |||||||||||||||
December 2011 | $ | 0.0466 | $ | 0.0559 | $ | | $ | 0.1025 | |||||||||||
January 2012 | $ | 0.0307 | $ | 0.0718 | | $ | 0.1025 | ||||||||||||
February 2012 | $ | 0.0410 | $ | 0.0615 | | $ | 0.1025 | ||||||||||||
March 2012 | $ | 0.0533 | $ | 0.0492 | | $ | 0.1025 | ||||||||||||
April 2012 | $ | 0.0381 | $ | 0.0644 | | $ | 0.1025 | ||||||||||||
May 2012 | $ | 0.0809 | $ | 0.0216 | | $ | 0.1025 | ||||||||||||
June 2012 | $ | 0.0617 | $ | 0.0408 | | $ | 0.1025 | ||||||||||||
July 2012 | $ | 0.0349 | $ | 0.0676 | | $ | 0.1025 | ||||||||||||
August 2012 | $ | 0.0442 | $ | 0.0583 | | $ | 0.1025 | ||||||||||||
September 2012 | $ | 0.0501 | $ | 0.0249 | | $ | 0.0750 | ||||||||||||
October 2012 | $ | 0.0393 | $ | 0.0357 | | $ | 0.0750 | ||||||||||||
November 2012 | $ | 0.0440 | $ | 0.0310 | | $ | 0.0750 | ||||||||||||
Total | $ | 0.5648 | $ | 0.5827 | $ | | $ | 1.1475 |
Please note that the information in the preceding chart is for book purposes only. Shareholders should be aware that the tax treatment of distributions may differ from their book treatment. The tax treatment of distributions will be set forth in a Form 1099-DIV.
Dividend reinvestment plan
The Fund offers an automatic dividend reinvestment plan. The following is a restatement of the plan description in the Funds prospectus:
Unless the registered owner of the Funds common shares elects to receive cash by contacting the Plan Agent (as defined below), all dividends declared for your common shares of the Fund will be automatically reinvested by Computershare Shareowner Services LLC (the Plan Agent), agent for shareholders in administering the Funds Dividend Reinvestment Plan (the Plan), in additional common shares of the Fund. If a registered owner of common shares elects not to participate in the Plan, you will receive all dividends in cash paid by check mailed directly to you (or, if the shares are held in street or other nominee name, then to such nominee) by the Plan Agent, as dividend disbursing agent. You may elect not to participate in the Plan and to receive all dividends in cash by sending written instructions or by contacting the Plan Agent, as dividend disbursing 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 contacting the Plan Agent before the dividend record date; otherwise such termination or resumption will be effective with respect to any subsequently declared dividend or other distribution. Some brokers may automatically elect to receive cash on your behalf and may re-invest that cash in additional common shares of the Fund for you. If you wish for all dividends declared on your common shares of the Fund to be automatically reinvested pursuant to the Plan, please contact your broker.
The Plan Agent will open an account for each common shareholder under the Plan in the same name in which such shareholders common shares are registered. Whenever the Fund declares a dividend or other distribution (together, a dividend) payable in cash, non-participants in the Plan will receive cash and participants in the Plan will receive the equivalent in common shares. The common shares will be acquired by the Plan Agent for the participants accounts, depending upon the circumstances described below, either (i) through receipt of additional unissued but authorized common shares from the Fund (newly issued common shares) or (ii) by purchase of outstanding common shares on the open market (open-market purchases) on the New York Stock Exchange or elsewhere.
(continues) 45
Other Fund information
(Unaudited)
Delaware Enhanced Global Dividend and Income Fund
Dividend reinvestment plan (continued)
If, on the payment date for any dividend, the market price per common share plus estimated brokerage commissions is greater than the net asset value per common share (such condition being referred to herein as market premium), the Plan Agent will invest the dividend amount in newly issued common shares, including fractions, on behalf of the participants. The number of newly issued common shares to be credited to each participants account will be determined by dividing the dollar amount of the dividend by the net asset value per common share on the payment date; provided that, if the net asset value per common share is less than 95% of the market price per common share on the payment date, the dollar amount of the dividend will be divided by 95% of the market price per common share on the payment date.
If, on the payment date for any dividend, the net asset value per common share is greater than the market value per common share plus estimated brokerage commissions (such condition being referred to herein as market discount), the Plan Agent will invest the dividend amount in common shares acquired on behalf of the participants in open-market purchases.
In the event of a market discount on the payment date for any dividend, the Plan Agent will have until the last business day before the next date on which the common shares trade on an ex-dividend basis or 30 days after the payment date for such dividend, whichever is sooner (the last purchase date), to invest the dividend amount in common shares acquired in open-market purchases. It is contemplated that the Fund will pay monthly dividends. Therefore, the period during which open-market purchases can be made will exist only from the payment date of each dividend through the date before the next ex-dividend date. If, before the Plan Agent has completed its open-market purchases, the market price of a common share exceeds the net asset value per common share, the average per common share purchase price paid by the Plan Agent may exceed the net asset value of the common shares, resulting in the acquisition of fewer common shares than if the dividend had been paid in newly issued common shares on the dividend payment date. Because of the foregoing difficulty with respect to open market purchases, 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 a market premium during the purchase period, the Plan Agent may cease making open-market purchases and may invest the uninvested portion of the dividend amount in newly issued common shares at the net asset value per common share at the close of business on the last purchase date; provided that, if the net asset value per common share is less than 95% of the market price per common share on the payment date, the dollar amount of the dividend will be divided by 95% of the market price per common share on the payment 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. Common shares in the account of each Plan participant will be held by the Plan Agent on behalf of the Plan participant, and each shareholder 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 under 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 common shares certified from time to time by the record shareholders name and held for the account of beneficial owners who participate in the Plan.
There will be no brokerage charges with respect to common shares issued directly by the Fund. However, each participant will pay a pro rata share of brokerage commissions incurred in connection with open-market purchases. The automatic reinvestment of dividends will not relieve participants of any U.S. federal, state or local income tax that may be payable (or required to be withheld) on such dividends. Participants that request a sale of shares through the Plan Agent are subject to a $15.00 sales fee and a brokerage commission of $.12 per share sold.
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 Computershare Shareowner Services LLC, P.O. Box 358035, Pittsburgh, PA 15252-8035; telephone: 866 437-0252.
46
Board consideration of Delaware Enhanced Global Dividend and Income Fund investment advisory agreement
At a meeting held on August 2123, 2012 (the Annual Meeting), the Board of Directors (the Board), including a majority of disinterested or independent Directors, approved the renewal of the Investment Advisory Agreement for Delaware Enhanced Global Dividend and Income Fund (the Fund). In making its decision, the Board considered information furnished at regular quarterly Board meetings, including reports detailing Fund performance, investment strategies and expenses, as well as information prepared specifically in connection with the renewal of the investment advisory and sub-advisory contracts. Information furnished specifically in connection with the renewal of the Investment Advisory Agreement with Delaware Management Company (DMC) included materials provided by DMC and its affiliates (Delaware Investments) concerning, among other things, the nature, extent and quality of services provided to the Fund, the costs of such services to the Fund, economies of scale and the financial condition and profitability of Delaware Investments. In addition, in connection with the Annual Meeting, reports were provided in May 2012 and included independent historical and comparative reports provided by Lipper, Inc., an independent statistical compilation organization (Lipper). The Lipper reports compared the Funds investment performance and expenses with those of other comparable mutual funds. The Independent Directors reviewed and discussed the Lipper reports with independent legal counsel to the Independent Directors. The Board requested and received information regarding DMCs policy with respect to advisory fee levels and its breakpoint philosophy; the structure of portfolio manager compensation; the investment managers profitability; comparative client fee information; and any constraints or limitations on the availability of securities in certain investment styles, which had in the past year inhibited, or which were likely in the future to inhibit, DMCs ability to invest fully in accordance with Fund policies.
In considering information relating to the approval of the Funds advisory agreement, the Independent Directors received assistance and advice from and met separately with independent legal counsel to the Independent Directors. Although the Board gave attention to all information furnished, the following discussion identifies, under separate headings, the primary factors taken into account by the Board during its contract renewal considerations.
Nature, Extent and Quality of Service. The Board considered the services provided by Delaware Investments to the Fund and its shareholders. In reviewing the nature, extent and quality of services, the Board considered reports furnished to it throughout the year, which covered matters such as the relative performance of the Fund, compliance of portfolio managers with the investment policies, strategies and restrictions for the Fund, compliance by DMC (Management) personnel with the Code of Ethics adopted throughout the Delaware Investments® Family of Funds complex and adherence to fair value pricing procedures as established by the Board. The Board was pleased with the current staffing of the Funds investment advisor and the emphasis placed on research in the investment process. The Board recognized DMCs receipt of several industry distinctions. The Board gave favorable consideration to DMCs efforts to control expenditures while maintaining service levels committed to Fund matters. The Board was satisfied with the nature, extent and quality of the overall services provided by Delaware Investments.
Investment Performance. The Board placed significant emphasis on the investment performance of the Fund in view of the importance of investment performance to shareholders. Although the Board gave appropriate consideration to performance reports and discussions with portfolio managers at Board meetings throughout the year, the Board gave particular weight to the Lipper reports furnished for the Annual Meeting. The Lipper reports prepared for the Fund showed the investment performance of its shares in comparison to a group of similar funds as selected by Lipper (the Performance Universe). A fund with the highest performance ranked first, and a fund with the lowest ranked last. The highest/best performing 25% of funds in the Performance Universe make up the first quartile; the next 25%, the second quartile; the next 25%, the third quartile; and the lowest/worst performing 25% of funds in the Performance Universe make up the fourth quartile. Comparative annualized performance for the Fund was shown for the past one- and three-year periods ended March 31, 2012. The Boards objective is that the Funds performance for the periods considered be at or above the median of its Performance Universe. The following paragraph summarizes the performance results for the Fund and the Boards view of such performance.
The Performance Universe for the Fund consisted of the Fund and all non-leveraged closed-end global funds as selected by Lipper. The Lipper report comparison showed that the Funds total return for the one- and three-year periods was in the second quartile. The Board was satisfied with performance.
(continues) 47
Other Fund information
(Unaudited)
Delaware Enhanced Global Dividend and Income Fund
Board consideration of Delaware Enhanced Global Dividend and Income Fund investment advisory agreement (continued)
Comparative Expenses. The Board considered expense comparison data for the Delaware Investments Family of Funds. Management provided the Board with information on pricing levels and fee structures for the Fund as of its most recently completed fiscal year. The Board also focused on the comparative analysis of effective management fees and total expense ratios of the Fund versus effective management fees and expense ratios of a group of similar closed-end funds as selected by Lipper (the Expense Group). In reviewing comparative costs, the Funds contractual management fee and the actual management fee incurred by the Fund were compared with the contractual management fees (assuming all funds in the Expense Group were similar in size to the Fund) and actual management fees (as reported by each fund) within the Expense Group, taking into account any applicable breakpoints and fee waivers. The Funds total expenses were also compared with those of its Expense Group. The Board considered fees paid to Delaware Investments for non-management services. The Boards objective is to limit the Funds total expense ratio to be competitive with that of the Expense Group. The following paragraph summarizes the expense results for the Fund and the Boards view of such expenses.
The expense comparisons for the Fund showed that its actual management fee was in the quartile with the second highest expenses of its Expense Group and its total expenses were in the quartile with the highest expenses of its Expense Group. The Funds total expenses were not in line with the Boards objective. In evaluating total expenses, the Board considered the Funds recent reorganization. The Board was satisfied with Managements efforts to improve the Funds total expense ratio and bring it in line with the Boards objective.
Management Profitability. The Board considered the level of profits, if any, realized by Delaware Investments in connection with the operation of the Fund. In this respect, the Board reviewed the Investment Management profitability analysis that addressed the overall profitability of Delaware Investments business in providing management and other services to each of the individual funds and the Delaware Investments Family of Funds as a whole. Specific attention was given to the methodology followed in allocating costs for the purpose of determining profitability. Management stated that the level of profits of Delaware Investments, to a certain extent, reflects recent operational cost savings and efficiencies initiated by Delaware Investments. The Board considered Delaware Investments efforts to improve services provided to Fund shareholders and to meet additional regulatory and compliance requirements resulting from recent industry-wide Securities and Exchange Commission initiatives. The Board also considered the extent to which Delaware Investments might derive ancillary benefits from fund operations, including the potential for procuring additional business as a result of the prestige and visibility associated with its role as service provider to the Delaware Investments Family of Funds and the benefits from allocation of fund brokerage to improve trading efficiencies. The Board found that the management fees were reasonable in light of the services rendered and the profitability of Delaware Investments.
Economies of Scale. As a closed-end fund, the Fund does not issue shares on a continuous basis. Fund assets increase only to the extent that the values of the underlying securities in the Fund increase. Accordingly, the Board determined that the Fund was not likely to experience significant economies of scale due to asset growth and, therefore, a fee schedule with breakpoints to pass the benefit of economies of scale on to shareholders was not likely to provide the intended effect.
Tax Information
The information set forth below is for the Funds fiscal year as required by federal income tax laws. Shareholders, however, must report distributions on a calendar year basis for income tax purposes, which may include distributions for portions of two fiscal years of a fund. Accordingly, the information needed by shareholders for income tax purposes will be sent to them in January of each year. Please consult your tax advisor for proper treatment of this information.
All designations are based on financial information available as of the date of this annual report and, accordingly are subject to change. For any and all items requiring designation, it is the intention of the Fund to designate the maximum amount permitted under the Internal Revenue Code and the regulations thereunder.
48
For the fiscal year ended November 30, 2012, the Fund designates distributions paid during the year as follows:
(A) | ||||||
Ordinary | (B) | |||||
Income | Return | Total | (C) | |||
Distributions* | of Capital | Distributions | Qualifying | |||
(Tax Basis) | (Tax Basis) | (Tax Basis) | Dividends1 | |||
54.64% | 45.36% | 100.00% | 10.71% |
(A) and (B) are based on a percentage of the Funds total distributions.
(C) is based on a percentage of the Funds ordinary income distributions.
1 Qualifying dividends represent dividends which qualify for the corporate dividends received deduction.
49
Board of trustees/directors
and
officers addendum
Delaware Investments® Family of Funds
A fund is governed by a Board of Trustees/Directors (Trustees), which has oversight responsibility for the management of a funds business affairs. Trustees establish procedures and oversee and review the performance of the investment manager and others who perform services for the fund. The independent fund trustees, in particular, are advocates for shareholder interests. Each trustee has served in that capacity since he or she was elected to or appointed to the Board of Trustees, and will continue to serve until his or her retirement or the election of a new trustee in his or her place. The following is a list of the Trustees and Officers with certain background and related information.
Number of | |||||
Portfolios in Fund | Other | ||||
Name, | Complex Overseen | Directorships | |||
Address, | Position(s) | Length of | Principal Occupation(s) | by Trustee | Held by |
and Birth Date | Held with Fund(s) | Time Served | During Past 5 Years | or Officer | Trustee or Officer |
Interested Trustees | |||||
Patrick P. Coyne1 | Chairman, | Chairman and Trustee | Patrick P. Coyne has served in | 71 | Director and Audit |
2005 Market Street | President, | since August 16, 2006 | various executive capacities | Committee Member | |
Philadelphia, PA | Chief Executive | at different times at | Kaydon Corp. | ||
19103 | Officer, and | President and | Delaware Investments.2 | ||
Trustee | Chief Executive Officer | Board of Governors | |||
April 1963 | since August 1, 2006 | Member Investment | |||
Company Institute (ICI) | |||||
Independent Trustees | |||||
Thomas L. Bennett | Trustee | Since | Private Investor | 71 | Director |
2005 Market Street | March 2005 | (March 2004Present) | Bryn Mawr | ||
Philadelphia, PA | Bank Corp. (BMTC) | ||||
19103 | (20072011) | ||||
October 1947 | |||||
John A. Fry | Trustee | Since | President | 71 | Board of Governors |
2005 Market Street | January 2001 | Drexel University | Member NASDAQ | ||
Philadelphia, PA | (August 2010Present) | OMX PHLX LLC | |||
19103 | |||||
President | Director and Audit | ||||
May 1960 | Franklin & Marshall College | Committee Member | |||
(June 2002July 2010) | Community Health | ||||
Systems | |||||
Director Ecore | |||||
International | |||||
(20092010) | |||||
Director Allied | |||||
Barton Securities | |||||
Holdings (20052008) | |||||
Anthony D. Knerr | Trustee | Since | Managing Director | 71 | None |
2005 Market Street | April 1990 | Anthony Knerr & Associates | |||
Philadelphia, PA | (Strategic Consulting) | ||||
19103 | (1990Present) | ||||
December 1938 | |||||
Lucinda S. Landreth | Trustee | Since | Private Investor | 71 | None |
2005 Market Street | March 2005 | (2004Present) | |||
Philadelphia, PA | |||||
19103 | |||||
June 1947 |
50
Number of | |||||
Portfolios in Fund | Other | ||||
Name, | Complex Overseen | Directorships | |||
Address, | Position(s) | Length of | Principal Occupation(s) | by Trustee | Held by |
and Birth Date | Held with Fund(s) | Time Served | During Past 5 Years | or Officer | Trustee or Officer |
Independent Trustees (continued) | |||||
Frances A. Sevilla-Sacasa | Trustee | Since | Chief Executive Officer | 71 | Trust Manager |
2005 Market Street | September 2011 | Banco Itaú Europa | Camden Property | ||
Philadelphia, PA | International | Trust (since August 2011) | |||
19103 | (since April 2012) | ||||
January 1956 | Executive Advisor to Dean | ||||
(August 2011March 2012) | |||||
and Interim Dean | |||||
(January 2011July 2011) | |||||
University of Miami | |||||
School of Business | |||||
Administration | |||||
President U.S. Trust, | |||||
Bank of America Private | |||||
Wealth Management | |||||
(Private Banking) | |||||
(July 2007December 2008) | |||||
Janet L. Yeomans | Trustee | Since | Vice President and Treasurer | 71 | Director, Audit |
2005 Market Street | April 1999 | (January 2006July 2012) | Committee Member | ||
Philadelphia, PA | Vice President Mergers & Acquisitions | and Investment | |||
19103 | (January 2003January 2006), and | Committee Member | |||
Vice President and Treasurer | Okabena Company | ||||
July 1948 | (July 1995January 2003) | ||||
3M Corporation | Chair 3M Investment | ||||
Management Company | |||||
(January 2005July 2012) | |||||
J. Richard Zecher | Trustee | Since | Founder | 71 | Director and Compensation |
2005 Market Street | March 2005 | Investor Analytics | Committee Member | ||
Philadelphia, PA | (Risk Management) | Investor Analytics | |||
19103 | (May 1999Present) | ||||
Director | |||||
July 1940 | Founder | Oxigene, Inc. | |||
P/E Investments | (20032008) | ||||
(Hedge Fund) | |||||
(September 1996Present) | |||||
Officers | |||||
David F. Connor | Vice President, | Vice President since | David F. Connor has served as | 71 | None3 |
2005 Market Street | Deputy General | September 2000 | Vice President and Deputy | ||
Philadelphia, PA | Counsel, and Secretary | and Secretary | General Counsel of | ||
19103 | since | Delaware Investments | |||
October 2005 | since 2000. | ||||
December 1963 | |||||
Daniel V. Geatens | Vice President | Treasurer | Daniel V. Geatens has served | 71 | None3 |
2005 Market Street | and Treasurer | since | in various capacities at | ||
Philadelphia, PA | October 2007 | different times at | |||
19103 | Delaware Investments. | ||||
October 1972 | |||||
David P. OConnor | Executive Vice | Executive Vice President | David P. OConnor has served in | 71 | None3 |
2005 Market Street | President, | since February 2012; | various executive and legal | ||
Philadelphia, PA | General Counsel, | Senior Vice President | capacities at different times | ||
19103 | and Chief | October 2005February 2012; | at Delaware Investments. | ||
Legal Officer | General Counsel and | ||||
February 1966 | Chief Legal Officer | ||||
since | |||||
October 2005 | |||||
Richard Salus | Senior | Chief Financial | Richard Salus has served in | 71 | None3 |
2005 Market Street | Vice President | Officer since | various executive capacities | ||
Philadelphia, PA | and | November 2006 | at different times at | ||
19103 | Chief Financial | Delaware Investments. | |||
Officer | |||||
October 1963 |
51
About the organization
This annual report is for the information of Delaware Enhanced Global Dividend and Income Fund shareholders. The figures in this report represent past results that are not a guarantee of future results. The return and principal value of an investment in the Fund will fluctuate so that shares, when sold, may be worth more or less than their original cost.
Notice is hereby given in accordance with Section 23(c) of the Investment Company Act of 1940 that the Fund may, from time to time, purchase shares of its common stock on the open market at market prices.
Board of Directors Patrick P.
Coyne Thomas L.
Bennett John A.
Fry Anthony D.
Knerr Lucinda S.
Landreth Frances A.
Sevilla-Sacasa Janet L.
Yeomans J. Richard
Zecher Audit committee member |
Affiliated officers
David F.
Connor Daniel V.
Geatens David P.
OConnor Richard
Salus The Fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission (SEC) for the first and third quarters of each fiscal year on Form N-Q. The Funds Forms N-Q, as well as a description of the policies and procedures that the Fund uses to determine how to vote proxies (if any) relating to portfolio securities are available without charge (i) upon request, by calling 800 523-1918; (ii) on the Funds website at delawareinvestments.com; and (iii) on the SECs website at sec.gov. The Funds Forms N-Q may be reviewed and copied at the SECs Public Reference Room in Washington, DC; information on the operation of the Public Reference Room may be obtained by calling 800 SEC-0330. Information (if any) regarding how the Fund voted proxies relating to portfolio securities during the most recently disclosed 12-month period ended June 30 is available without charge (i) through the Funds website at delawareinvestments.com; and (ii) on the SECs website at sec.gov. |
Contact information Investment
manager Principal office of
the Fund Independent
registered public Registrar and stock
transfer Website Delaware Investments, a member of Macquarie Group, refers to Delaware Management Holdings, Inc. and its subsidiaries. Macquarie Group refers to Macquarie Group Limited and its subsidiaries and affiliates worldwide. Your reinvestment
options |
Item 2. Code of Ethics
The registrant has adopted a code of ethics that applies to the registrants principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these individuals are employed by the registrant or a third party. A copy of the registrants Code of Business Ethics has been posted on the Delaware Investments Internet Web site at www.delawareinvestments.com. Any amendments to the Code of Business Ethics, and information on any waiver from its provisions granted by the registrant, will also be posted on this Web site within five business days of such amendment or waiver and will remain on the Web site for at least 12 months.
Item 3. Audit Committee Financial Expert
The registrants Board of Trustees/Directors has determined that certain members of the registrants Audit Committee are audit committee financial experts, as defined below. For purposes of this item, an audit committee financial expert is a person who has the following attributes:
a. An understanding of generally accepted accounting principles and financial statements;
b. The ability to assess the general application of such principles in connection with the accounting for estimates, accruals, and reserves;
c. Experience preparing, auditing, analyzing, or evaluating financial statements that present a breadth and level of complexity of accounting issues that are generally comparable to the breadth and complexity of issues that can reasonably be expected to be raised by the registrants financial statements, or experience actively supervising one or more persons engaged in such activities;
d. An understanding of internal controls and procedures for financial reporting; and
e. An understanding of audit committee functions.
An audit committee financial expert shall have acquired such attributes through:
a. Education and experience as a principal financial officer, principal accounting officer, controller, public accountant, or auditor or experience in one or more positions that involve the performance of similar functions;
b. Experience actively supervising a principal financial officer, principal accounting officer, controller, public accountant, auditor, or person performing similar functions;
c. Experience overseeing or assessing the performance of companies or public accountants with respect to the preparation, auditing, or evaluation of financial statements; or
d. Other relevant experience.
The registrants Board of Trustees/Directors has also determined that each member of the registrants Audit Committee is independent. In order to be independent for purposes of this item, the Audit Committee member may not: (i) other than in his or her capacity as a member of the Board of Trustees/Directors or any committee thereof, accept directly or indirectly any consulting, advisory or other compensatory fee from the issuer; or (ii) be an interested person of the registrant as defined in Section 2(a)(19) of the Investment Company Act of 1940.
The names of the audit committee financial experts on the registrants Audit Committee are set forth below:
Thomas L. Bennett1
John A. Fry
Frances A. Sevilla-Sacasa
Janet L. Yeomans
Item 4. Principal Accountant Fees and Services
(a) Audit fees.
The aggregate fees billed for services provided to the registrant by its independent auditors for the audit of the registrants annual financial statements and for services normally provided by the independent auditors in connection with statutory and regulatory filings or engagements were $19,240 for the fiscal year ended November 30, 2012.
_______________________
1 The instructions to Form N-CSR require disclosure on the relevant experience of persons who qualify as audit committee financial experts based on other relevant experience. The Board of Trustees/Directors has determined that Mr. Bennett qualifies as an audit committee financial expert by virtue of: his education and Chartered Financial Analyst designation; his experience as a credit analyst, portfolio manager and the manager of other credit analysts and portfolio managers; and his prior service on the audit committees of public companies.
The aggregate fees billed for services provided to the registrant by its independent auditors for the audit of the registrants annual financial statements and for services normally provided by the independent auditors in connection with statutory and regulatory filings or engagements were $25,734 for the fiscal year ended November 30, 2011.
(b) Audit-related fees.
The aggregate fees billed by the registrants independent auditors for services relating to the performance of the audit of the registrants financial statements and not reported under paragraph (a) of this Item were $0 for the fiscal year ended November 30, 2012.
The aggregate fees billed by the registrants independent auditors for services relating to the performance of the audit of the financial statements of the registrants investment adviser and other service providers under common control with the adviser and that relate directly to the operations or financial reporting of the registrant were $685,000 for the registrants fiscal year ended November 30, 2012. The percentage of these fees relating to services approved by the registrants Audit Committee pursuant to the de minimis exception from the pre-approval requirement in Rule 2-01(c)(7)(i)(C) of Regulation S-X was 0%. These audit-related services were as follows: year end audit procedures; group reporting and subsidiary statutory audits.
The aggregate fees billed by the registrants independent auditors for services relating to the performance of the audit of the registrants financial statements and not reported under paragraph (a) of this Item were $0 for the fiscal year ended November 30, 2011.
The aggregate fees billed by the registrants independent auditors for services relating to the performance of the audit of the financial statements of the registrants investment adviser and other service providers under common control with the adviser and that relate directly to the operations or financial reporting of the registrant were $593,000 for the registrants fiscal year ended November 30, 2011. The percentage of these fees relating to services approved by the registrants Audit Committee pursuant to the de minimis exception from the pre-approval requirement in Rule 2-01(c)(7)(i)(C) of Regulation S-X was 0%. These audit-related services were as follows: year end audit procedures; reporting up and subsidiary statutory audits.
(c) Tax fees.
The aggregate fees billed by the registrants independent auditors for tax-related services provided to the registrant were $2,750 for the fiscal year ended November 30, 2012. The percentage of these fees relating to services approved by the registrants Audit Committee pursuant to the de minimis exception from the pre-approval requirement in Rule 2-01(c)(7)(i)(C) of Regulation S-X was 0%. These tax-related services were as follows: review of income tax returns and review of annual excise distribution calculations.
The aggregate fees billed by the registrants independent auditors for tax-related services provided to the registrants investment adviser and other service providers under common control with the adviser and that relate directly to the operations or financial reporting of the registrant were $0 for the registrants fiscal year ended November 30, 2012.
The aggregate fees billed by the registrants independent auditors for tax-related services provided to the registrant were $2,950 for the fiscal year ended November 30, 2011. The percentage of these fees relating to services approved by the registrants Audit Committee pursuant to the de minimis exception from the pre-approval requirement in Rule 2-01(c)(7)(i)(C) of Regulation S-X was 0%. These tax-related services were as follows: review of income tax returns and review of annual excise distribution calculations.
The aggregate fees billed by the registrants independent auditors for tax-related services provided to the registrants investment adviser and other service providers under common control with the adviser and that relate directly to the operations or financial reporting of the registrant were $0 for the registrants fiscal year ended November 30, 2011.
(d) All other fees.
The aggregate fees billed for all services provided by the independent auditors to the registrant other than those set forth in paragraphs (a), (b) and (c) of this Item were $0 for the fiscal year ended November 30, 2012.
The aggregate fees billed for all services other than those set forth in paragraphs (b) and (c) of this Item provided by the registrants independent auditors to the registrants adviser and other service providers under common control with the adviser and that relate directly to the operations or financial reporting of the registrant were $0 for the registrants fiscal year ended November 30, 2012. The percentage of these fees relating to services approved by the registrants Audit Committee pursuant to the de minimis exception from the pre-approval requirement in Rule 2-01(c)(7)(i)(C) of Regulation S-X was 0%.
The aggregate fees billed for all services provided by the independent auditors to the registrant other than those set forth in paragraphs (a), (b) and (c) of this Item were $0 for the fiscal year ended November 30, 2011.
The aggregate fees billed for all services other than those set forth in paragraphs (b) and (c) of this Item provided by the registrants independent auditors to the registrants adviser and other service providers under common control with the adviser and that relate directly to the operations or financial reporting of the registrant were $25,000 for the registrants fiscal year ended November 30, 2011. The percentage of these fees relating to services approved by the registrants Audit Committee pursuant to the de minimis exception from the pre-approval requirement in Rule 2-01(c)(7)(i)(C) of Regulation S-X was 0%. These other services were as follows: attest examination of management's assertion to the controls in place at the transfer agent to be in compliance with Rule 17ad-13(a)(3) of the Securities Exchange Act of 1934.
(e) The registrants Audit Committee has established pre-approval policies and procedures as permitted by Rule 2-01(c)(7)(i)(B) of Regulation S-X (the Pre-Approval Policy) with respect to services provided by the registrants independent auditors. Pursuant to the Pre-Approval Policy, the Audit Committee has pre-approved the services set forth in the table below with respect to the registrant up to the specified fee limits. Certain fee limits are based on aggregate fees to the registrant and other registrants within the Delaware Investments® Family of Funds.
Service | Range of Fees |
Audit Services |
|
Statutory audits or financial audits for new Funds |
up to $25,000 per Fund |
Services associated with SEC registration statements (e.g., Form N-1A, Form N-14, etc.), periodic reports and other documents filed with the SEC or other documents issued in connection with securities offerings (e.g., comfort letters for closed-end Fund offerings, consents), and assistance in responding to SEC comment letters |
up to $10,000 per Fund |
Consultations by Fund management as to the accounting or disclosure treatment of transactions or events and/or the actual or potential impact of final or proposed rules, standards or interpretations by the SEC, FASB, or other regulatory or standard-setting bodies (Note: Under SEC rules, some consultations may be considered audit-related services rather than audit services) |
up to $25,000 in the aggregate |
Audit-Related Services |
|
Consultations by Fund management as to the accounting or disclosure treatment of transactions or events and /or the actual or potential impact of final or proposed rules, standards or interpretations by the SEC, FASB, or other regulatory or standard-setting bodies (Note: Under SEC rules, some consultations may be considered audit services rather than audit-related services) |
up to $25,000 in the aggregate |
Tax Services |
|
U.S. federal, state and local and international tax planning and advice (e.g., consulting on statutory, regulatory or administrative developments, evaluation of Funds tax compliance function, etc.) |
up to $25,000 in the aggregate |
U.S. federal, state and local tax compliance (e.g., excise distribution reviews, etc.) |
up to $5,000 per Fund |
Review of federal, state, local and international income, franchise and other tax returns |
up to $5,000 per Fund |
Under the Pre-Approval Policy, the Audit Committee has also pre-approved the services set forth in the table below with respect to the registrants investment adviser and other entities controlling, controlled by or under common control with the investment adviser that provide ongoing services to the registrant (the Control Affiliates) up to the specified fee limit. This fee limit is based on aggregate fees to the investment adviser and its Control Affiliates.
Service | Range of Fees |
Non-Audit Services |
|
Services associated with periodic reports and other documents filed with the SEC and assistance in responding to SEC comment letters |
up to $10,000 in the aggregate |
The Pre-Approval Policy requires the registrants independent auditors to report to the Audit Committee at each of its regular meetings regarding all services initiated since the last such report was rendered, including those services authorized by the Pre-Approval Policy.
(f) Not applicable.
(g) The aggregate non-audit fees billed by the registrants independent auditors for services rendered to the registrant and to its investment adviser and other service providers under common control with the adviser were $10,867,923 and $5,228,766 for the registrants fiscal years ended November 30, 2012 and November 30, 2011, respectively.
(h) In connection with its selection of the independent auditors, the registrants Audit Committee has considered the independent auditors provision of non-audit services to the registrants investment adviser and other service providers under common control with the adviser that were not required to be pre-approved pursuant to Rule 2-01(c)(7)(ii) of Regulation S-X. The Audit Committee has determined that the independent auditors provision of these services is compatible with maintaining the auditors independence.
Item 5. Audit Committee of Listed Registrants
The registrant has a separately-designated standing Audit Committee established in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934. The members of the registrants Audit Committee are Thomas L. Bennett, Joseph W. Chow, John A. Fry, Frances A. Sevilla-Sacasa and Janet L. Yeomans.
Item 6. Investments
(a) Included as part of report to shareholders filed under Item 1 of this Form N-CSR.
(b) Divestment of securities in accordance with Section 13(c) of the Investment Company Act of 1940.
Not applicable.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies
The registrant has formally delegated to its investment adviser(s) (the Adviser) the responsibility for making all proxy voting decisions in relation to portfolio securities held by the registrant. If and when proxies need to be voted on behalf of the registrant, the Adviser will vote such proxies pursuant to its Proxy Voting Policies and Procedures (the Procedures). The Adviser has established a Proxy Voting Committee (the Committee) which is responsible for overseeing the Advisers proxy voting process for the registrant. One of the main responsibilities of the Committee is to review and approve the Procedures to ensure that the Procedures are designed to allow the Adviser to vote proxies in a manner consistent with the goal of voting in the best interests of the registrant.
In order to facilitate the actual process of voting proxies, the Adviser has contracted with Institutional Shareholder Services (ISS), a wholly owned subsidiary of RiskMetrics Group (RiskMetrics), which is a subsidiary of MSCI Inc., to analyze proxy statements on behalf of the registrant and other Adviser clients and vote proxies generally in accordance with the Procedures. The Committee is responsible for overseeing ISS/RiskMetricss proxy voting activities. If a proxy has been voted for the registrant, ISS/RiskMetrics will create a record of the vote. By no later than August 31 of each year, information (if any) regarding how the registrant voted proxies relating to portfolio securities during the most recently disclosed 12-month period ended June 30 is available without charge (i) through the registrants website at www.delawareinvestments.com; and (ii) on the Commissions website at www.sec.gov.
The Procedures contain a general guideline that recommendations of company management on an issue (particularly routine issues) should be given a fair amount of weight in determining how proxy issues should be voted. However, the Adviser will normally vote against managements position when it runs counter to its specific Proxy Voting Guidelines (the Guidelines), and the Adviser will also vote against managements recommendation when it believes that such position is not in the best interests of the registrant.
As stated above, the Procedures also list specific Guidelines on how to vote proxies on behalf of the registrant. Some examples of the Guidelines are as follows: (i) generally vote for shareholder proposals asking that a majority or more of directors be independent; (ii) generally vote against proposals to require a supermajority shareholder vote; (iii) votes on mergers and acquisitions should be considered on a case-by-case basis, determining whether the transaction enhances shareholder value; (iv) generally vote against proposals at companies with more than one class of common stock to increase the number of authorized shares of the class that has superior voting rights; (v) generally vote re-incorporation proposals on a case-by-case basis; (vi) votes with respect to equity-based compensation plans are generally determined on a case-by-case basis; and (vii) generally vote for proposals requesting reports on the level of greenhouse gas emissions from a companys operations and products.
Because the registrant has delegated proxy voting to the Adviser, the registrant is not expected to encounter any conflict of interest issues regarding proxy voting and therefore does not have procedures regarding this matter. However, the Adviser does have a section in its Procedures that addresses the possibility of conflicts of interest. Most proxies which the Adviser receives on behalf of the registrant are voted by ISS/RiskMetrics in accordance with the Procedures. Because almost all registrant proxies are voted by ISS/RiskMetrics pursuant to the pre-determined Procedures, it normally will not be necessary for the Adviser to make an actual determination of how to vote a particular proxy, thereby largely eliminating conflicts of interest for the Adviser during the proxy voting process. In the very limited instances where the Adviser is considering voting a proxy contrary to ISS/RiskMetricss recommendation, the Committee will first assess the issue to see if there is any possible conflict of interest involving the Adviser or affiliated persons of the Adviser. If a member of the Committee has actual knowledge of a conflict of interest, the Committee will normally use another independent third party to do additional research on the particular proxy issue in order to make a recommendation to the Committee on how to vote the proxy in the best interests of the registrant. The Committee will then review the proxy voting materials and recommendation provided by ISS/RiskMetrics and the independent third party to determine how to vote the issue in a manner which the Committee believes is consistent with the Procedures and in the best interests of the registrant.
Item 8. Portfolio Managers of Closed-End Management Investment Companies
Other Accounts
Managed
The following chart lists certain
information about types of other accounts for which each Fund manager is
primarily responsible as of November 30, 2012. Any accounts managed in a
personal capacity appear under Other Accounts along with the other accounts
managed on a professional basis. The personal account information is current as
of June 30, 2012.
No. of Accounts with | Total Assets in Accounts | |||
No. of | Total Assets | Performance- | with Performance- | |
Accounts | Managed | Based Fees | Based Fees | |
Damon J. Andres | ||||
Registered Investment | 9 | $1.5 billion | 0 | $0 |
Companies | ||||
Other Pooled Investment | 0 | $0 | 0 | $0 |
Vehicles | ||||
Other Accounts | 7 | $272.6 million | 0 | $0 |
Wayne A. Anglace | ||||
Registered Investment | 3 | $683.5 million | 0 | $0 |
Companies | ||||
Other Pooled Investment | 0 | $0 | 0 | $0 |
Vehicles | ||||
Other Accounts | 28 | $312.3 million | 0 | $0 |
Liu-Er Chen | ||||
Registered Investment | 9 | $3.1 billion | 0 | $0 |
Companies | ||||
Other Pooled Investment | 0 | $0 | 0 | $0 |
Vehicles | ||||
Other Accounts | 17 | $2.7 billion | 0 | $0 |
Thomas H. Chow | ||||
Registered Investment | 12 | $20.9 billion | 0 | $0 |
Companies | ||||
Other Pooled Investment | 0 | $0 | 0 | $0 |
Vehicles | ||||
Other Accounts | 12 | $4.3 billion | 0 | $0 |
Craig C. Dembek | ||||
Registered Investment | 0 | $0 | 0 | $0 |
Companies | ||||
Other Pooled Investment | 0 | $0 | 0 | $0 |
Vehicles | ||||
Other Accounts | 2 | Less than $1 million | 0 | $0 |
Roger A. Early | ||||
Registered Investment | 17 | $25.7 billion | 0 | $0 |
Companies | ||||
Other Pooled Investment | 0 | $0 | 0 | $0 |
Vehicles | ||||
Other Accounts | 46 | $6.3 billion | 2 | $841.0 million |
Edward Gray | ||||
Registered Investment | 5 | $910.6 million | 0 | $0 |
Companies | ||||
Other Pooled Investment | 0 | $0 | 0 | $0 |
Vehicles | ||||
Other Accounts | 9 | $537.4 million | 0 | $0 |
Paul A. Matlack | ||||
Registered Investment | 1 | $14.8 million | 0 | $0 |
Companies | ||||
Other Pooled Investment | 0 | $0 | 0 | $0 |
Vehicles | ||||
Other Accounts | 2 | Less than $1 million | 0 | $0 |
John P. McCarthy | ||||
Registered Investment | 0 | $0 | 0 | $0 |
Companies | ||||
Other Pooled Investment | 0 | $0 | 0 | $0 |
Vehicles | ||||
Other Accounts | 2 | Less than $1 million | 0 | $0 |
D. Tysen Nutt | ||||
Registered Investment | 7 | $3.3 billion | 0 | $0 |
Companies | ||||
Other Pooled Investment | 0 | $0 | 0 | $0 |
Vehicles | ||||
Other Accounts | 35 | $4.7 billion | 1 | $1.7 billion |
Babak Zenouzi | ||||
Registered Investment | 16 | $2.8 billion | 0 | $0 |
Companies | ||||
Other Pooled Investment | 0 | $0 | 0 | $0 |
Vehicles | ||||
Other Accounts | 6 | $272.8 million | 0 | $0 |
DESCRIPTION OF MATERIAL CONFLICTS OF
INTEREST
Individual portfolio managers may perform investment management services
for other funds or accounts similar to those provided to the Funds and the
investment action for such other fund or account and the Funds may differ. For
example, an account or fund may be selling a security, while another account or
Fund may be purchasing or holding the same security. As a result, transactions
executed for one fund or account may adversely affect the value of securities
held by another fund, account or Fund. Additionally, the management of multiple
other funds or accounts and the Funds may give rise to potential conflicts of
interest, as a portfolio manager must allocate time and effort to multiple funds
or accounts and the Funds. A portfolio manager may discover an investment
opportunity that may be suitable for more than one account or fund. The
investment opportunity may be limited, however, so that all funds or accounts
for which the investment would be suitable may not be able to participate. The
Manager has adopted procedures designed to allocate investments fairly across
multiple funds or accounts.
Three of the accounts managed by the portfolio managers have a performance-based fee. This compensation structure presents a potential conflict of interest. The portfolio manager has an incentive to manage this account so as to enhance its performance, to the possible detriment of other accounts for which the investment manager does not receive a performance-based fee.
A portfolio managers management of personal accounts also may present certain conflicts of interest. While Delawares code of ethics is designed to address these potential conflicts, there is no guarantee that it will do so.
Compensation
Structure
Each portfolios managers compensation
consists of the following:
Base Salary Each named portfolio manager receives a fixed base salary. Salaries are determined by a comparison to industry data prepared by third parties to ensure that portfolio manager salaries are in line with salaries paid at peer investment advisory firms.
Bonus (Mr. Nutt only) Each named portfolio manager is eligible to receive an annual cash bonus. The bonus pool is determined by the revenues associated with the products a portfolio manager manages. Delaware keeps a percentage of the revenues and the remaining percentage of revenues (minus appropriate expenses associated with relevant product and the investment management team) create the "bonus pool" for the product. Various members of the team have the ability to earn a percentage of the bonus pool with the most senior contributor generally having the largest share. The pool is allotted based on subjective factors and objective factors. The primary objective factor is the one-year, three-year and five-year performance of the funds managed relative to the performance of the appropriate Lipper peer groups and the performance of institutional composites relative to the appropriate indices. Three-year and five-year performance is weighted more heavily and there is no objective award for a fund whose performance falls below the 50th percentile for a given time period.
Individual allocations of the bonus pool are based on individual performance measurements, both objective and subjective, as determined by senior management.
(Mr. Andres and Mr. Zenouzi only) Each named portfolio manager is eligible to receive an annual cash bonus. The bonus pool is determined by the revenues associated with the products a portfolio manager manages. Delaware keeps a percentage of the revenues and the remaining percentage of revenues (minus appropriate expenses associated with relevant product and the investment management team) create the "bonus pool" for the product. Various members of the team have the ability to earn a percentage of the bonus pool with the most senior contributor generally having the largest share. The pool is allotted based on subjective factors (50%) and objective factors (50%). The primary objective factor is the one-year, three-year and five-year performance of the funds managed relative to the performance of the appropriate Lipper peer groups and the performance of institutional composites relative to the appropriate indices. Three-year and five-year performance is weighed more heavily and there is no objective award for a fund whose performance falls below the 50th percentile for a given time period.
Individual allocations of the bonus pool are based on individual performance measurements, both objective and subjective, as determined by senior management.
(Mr. Gray only) Each named portfolio manager is eligible to receive an annual cash bonus. The bonus pool is determined by the revenues associated with the products a portfolio manager manages. Delaware keeps a percentage of the revenues and the remaining percentage of revenues (minus appropriate expenses associated with relevant product and the investment management team) create the "bonus pool" for the product. Various members of the team have the ability to earn a percentage of the bonus pool with the most senior contributor generally having the largest share. The pool is allotted based on subjective factors (50%) and objective factors (50%). The primary objective factor is the one-year, three-year and five-year performance of the funds managed relative to the performance of the appropriate Lipper peer groups and the performance of institutional composites relative to the appropriate indices. Three-year and five-year performance are weighted more heavily and there is no objective award for a fund whose performance falls below the 50th percentile for a given time period.
Individual allocations of the bonus pool are based on individual performance measurements, both objective and subjective, as determined by senior management.
(Mr. Chen only) The portfolio manager is eligible to receive an annual cash bonus. The bonus pool is determined by the revenues associated with the products the portfolio manager manages. Delaware keeps a percentage of the revenues and the remaining percentage of revenues (minus appropriate expenses associated with relevant product and the investment management team) create the "bonus pool" for the product. Various members of the team have the ability to earn a percentage of the bonus pool with the most senior contributor generally having the largest share. The pool is allotted based on subjective factors (50%) and objective factors (50%). The primary objective factor is the one-year, three-year and five-year performance of the funds managed relative to the performance of the appropriate Lipper peer groups and the performance of institutional composites relative to the appropriate indices. Three-year and five-year performance are weighted more heavily and there is no objective award for a fund whose performance falls below the 50th percentile for a given time period.
Individual allocations of the bonus pool are based on individual performance measurements, both objective and subjective, as determined by senior management.
(Mr. Anglace, Mr. Chow, Mr. Dembek, Mr. Early, Mr. Matlack and Mr. McCarthy only) An objective component is added to the bonus for each manager that is reflective of account performance relative to an appropriate peer group or database. The following paragraph describes the structure of the non-guaranteed bonus.
Each portfolio manager is eligible to receive an annual cash bonus, which is based on quantitative and qualitative factors. There is one pool for bonus payments for the fixed income department. The amount of the pool for bonus payments is determined by assets managed (including investment companies, insurance product-related accounts and other separate accounts), management fees and related expenses (including fund waiver expenses) for registered investment companies, pooled vehicles, and managed separate accounts. Generally, 60%-75% of the bonus is quantitatively determined. For more senior portfolio managers, a higher percentage of the bonus is quantitatively determined. For investment companies, each manager is compensated according the Funds Lipper or Morningstar peer group percentile ranking on a one-year, three-year, and five-year basis, with longer-term performance more heavily weighted. For managed separate accounts the portfolio managers are compensated according to the composite percentile ranking against the BNY Mellon, eVestment Alliance, and Callan Associates databases (or similar sources of relative performance data) on a one-year, three-year, and five-year basis, with longer term performance more heavily weighted. There is no objective award for a fund that falls below the 50th percentile, but incentives reach maximum potential at the top 25th-30th percentile. There is a sliding scale for investment companies that are ranked above the 50th percentile. The remaining 25%-40% portion of the bonus is discretionary as determined by Delaware Investments and takes into account subjective factors.
For new and recently transitioned portfolio managers, the compensation may be weighted more heavily towards a portfolio managers actual contribution and ability to influence performance, rather than longer-term performance. Management intends to move the compensation structure towards longer-term performance for these portfolio managers over time.
Incentive Unit Plan - Portfolio managers may be awarded incentive unit awards (Awards) relating to the underlying shares of common stock of Delaware Management Holdings, Inc. issuable pursuant to the terms of the Delaware Investments Incentive Unit Plan (the Plan) adopted on November 30, 2010. Awards are no longer granted under the Delaware Investments U.S., Inc. 2009 Incentive Compensation Plan or the Amended and Restated Delaware Investments U.S., Inc. Incentive Compensation Plan, which was established in 2001.
The Plan was adopted in order to: assist the Manager in attracting, retaining, and rewarding key employees of the company; enable such employees to acquire or increase an equity interest in the company in order to align the interest of such employees and the Manager; and provide such employees with incentives to expend their maximum efforts. Subject to the terms of the Plan and applicable award agreements, Awards typically vest in 25% increments on a four-year schedule, and shares of common stock underlying the Awards are issued after vesting. The fair market value of the shares of Delaware Management Holdings, Inc., is normally determined as of each March 31, June 30, September 30 and December 31 by an independent appraiser. Generally, a stockholder may put shares back to the company during the put period communicated in connection with the applicable valuation.
Other Compensation - Portfolio managers may also participate in benefit plans and programs available generally to all employees.
Item 9. Purchases of Equity Securities by Closed-End Management Investment Companies and Affiliated Purchasers
Not applicable.
Item 10. Submission of Matters to a Vote of Security Holders
Not applicable.
Item 11. Controls and Procedures
The registrants principal executive officer and principal financial officer have evaluated the registrants disclosure controls and procedures within 90 days of the filing of this report and have concluded that they are effective in providing reasonable assurance that the information required to be disclosed by the registrant in its reports or statements filed under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission.
There were no significant changes in the registrants internal control over financial reporting that occurred during the second fiscal quarter of the period covered by the report to stockholders included herein (i.e., the registrants fourth fiscal quarter) that have materially affected, or are reasonably likely to materially affect, the registrants internal control over financial reporting.
Item 12. Exhibits | ||
(a) | (1) | Code of Ethics |
Not applicable. | ||
(2) | Certifications of Principal Executive Officer and Principal Financial Officer pursuant to Rule 30a-2 under the Investment Company Act of 1940 are attached hereto as Exhibit 99.CERT. | |
(3) | Written solicitations to purchase securities pursuant to Rule 23c-1 under the Securities Exchange Act of 1934. | |
Not applicable. | ||
(b) | Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 are furnished herewith as Exhibit 99.906CERT. |
/s/ PATRICK P. COYNE | |
By: | Patrick P. Coyne |
Title: | Chief Executive Officer |
Date: | February 1, 2013 |
/s/ PATRICK P. COYNE | |
By: | Patrick P. Coyne |
Title: | Chief Executive Officer |
Date: | February 1, 2013 |
/s/ RICHARD SALUS | |
By: | Richard Salus |
Title: | Chief Financial Officer |
Date: | February 1, 2013 |