-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Buq8msHW6Y2KWNf/8Nl2Xk7uTQZdPOlmBAFo/D/uXBdWDB/EAOqEY+J0RVicQTkw KXFhpDrSepNuAdHHqSu3Yg== 0000928816-99-000038.txt : 19990205 0000928816-99-000038.hdr.sgml : 19990205 ACCESSION NUMBER: 0000928816-99-000038 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19981130 FILED AS OF DATE: 19990204 FILER: COMPANY DATA: COMPANY CONFORMED NAME: DELAWARE GROUP GLOBAL DIVIDEND & INCOME FUND INC CENTRAL INDEX KEY: 0000916713 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] IRS NUMBER: 232753201 STATE OF INCORPORATION: MD FISCAL YEAR END: 1130 FILING VALUES: FORM TYPE: N-30D SEC ACT: SEC FILE NUMBER: 811-08246 FILM NUMBER: 99521613 BUSINESS ADDRESS: STREET 1: 1818 MARKET STREET CITY: PHILADELPHIA STATE: PA ZIP: 19103 BUSINESS PHONE: 2157512926 MAIL ADDRESS: STREET 1: 2005 MARKET STREET STREET 2: P O BOX 9011 CITY: PHILADELPHIA STATE: PA ZIP: 19103 N-30D 1 ANNUAL REPORT Global Dividend and Income Fund service and guidance [GRAPHIC OMITTED: PHOTO OF TWO MEN AND A WOMAN IN DISCUSSION] [GRAPHIC OMITTED: PHOTO OF A COMPUTER KEYBOARD] [GRAPHIC OMITTED: PHOTO OF A MAN IN SUIT WITH ARMS CROSSED] [GRAPHIC OMITTED: PHOTO OF GLASSES, KEYBOARD AND BALANCE SHEET] [GRAPHIC OMITTED: PHOTO OF A MAN, WOMAN, CHILD LOOKING AT OCEAN ON BEACH] goals professional management 1998 Annual Report [GRAPHIC OMITTED: LOGO OF DELAWARE INVESTMENTS ---------------------------- Philadelphia * London] A TRADITION OF SOUND INVESTING commitment Investment Objectives and Strategies DELAWARE GROUP GLOBAL DIVIDEND AND INCOME FUND'S OBJECTIVE To provide high current income, and secondarily, capital appreciation. To achieve this, the Fund is diversified among different asset classes as described below. Asset class concentration depends on the portfolio managers' assessment of each market's relative risks and rewards. U.S. COMMON STOCKS WITH ABOVE-AVERAGE YIELDS The Fund's management focuses on stocks that pay high dividends relative to their share price. Such high-yield stocks can point the Fund to strong companies whose stocks have capital appreciation potential. The dividend income from these stocks has the potential to add to total return. CONVERTIBLE PREFERRED STOCKS AND BONDS The Fund invests in both convertible preferred stock and convertible bonds. Both pay fixed rates of income, but because they can be converted into common stock, they are indirectly tied to the common stock's performance. As a result, convertible securities generally offer higher income than common stocks and an opportunity for price appreciation when the value of the underlying security rises. The Fund may buy convertibles when the underlying common stock offers strong growth potential but a low yield. HIGH-YIELD CORPORATE BONDS High-yield bonds, those rated BB or lower, have greater default risk than bonds with higher quality ratings, but provide a greater level of income to compensate investors for the additional risks. Prices of high- yield bonds tend to be less sensitive to changes in interest rates than higher rated bonds. FOREIGN STOCKS In evaluating foreign stocks, the Fund's management takes into account risks that include a country's inflation outlook, economy, politics, different accounting standards, tax policies and effect of currency fluctuations. The value of the company's projected dividend stream is "discounted" for these risks so that management has a consistent yardstick to compare stocks around the globe. FOREIGN BONDS The Fund invests in foreign government and corporate bonds whose total return potential relative to currency, political and economic risk, appears attractive. In order to reduce currency risk, the Fund may buy foreign bonds denominated in U.S. dollars rather than the currency of the country issuing the bonds. LEVERAGING About $25 million (23.9%) of your Fund's assets were leveraged as of November 30, 1998. Leveraging is a tool that is generally not available to open-end mutual funds and one that can be an important contributor to your Fund's income and capital appreciation. Of course, there is no guarantee the Fund will achieve its objective by using leveraging. Leveraging could result in a higher degree of volatility because the Fund's net asset value could be more sensitive to fluctuations in short- term interest rates and equity prices. We believe this risk is reasonable given the potential benefits of higher income. Current income December 18, 1998 Dear Shareholder: DETERIORATING ECONOMIC AND FINANCIAL conditions around the globe made our job more challenging in fiscal year 1998. A positive mood had set the tone for continued price appreciation in world securities markets early in the year. That faded in late summer as currency problems and loan defaults in emerging markets panicked investors. In September, the U.S. Federal Reserve Board's Open Market Committee began lowering short-term interest rates. The federal funds rate (the rate charged between banks for overnight loans) had been reduced a total of 0.75% to 4.75% by November 30. Lower rates sent U.S. stocks soaring to new highs, and restored much needed liquidity to the U.S. bond market. The United Kingdom, Canada and the Far East followed with rate cuts of their own. This helped international equity markets recover in October and November. The Morgan Stanley Europe, Australia and South East Asia (EASEA) Index rose 14.58% in U.S. dollar terms over the two- month period. The Morgan Stanley EASEA Index is an unmanaged measure of international stock performance in Europe, Australia and South East Asia, excluding Japan. This recovery enabled Global Dividend and Income Fund (NYSE Symbol: DGF) to secure short-term gains. However, these gains were not enough to fully offset principal losses in our global bond portfolio and poor performance in our Australian and New Zealand equity positions. For the 12 months ended November 30, 1998, the Fund returned a slim +2.19% (at net asset value with distributions reinvested). During the second half of fiscal 1998, the Fund's holdings in Real Estate Investment Trusts (REITs), though reduced since May, also detracted from our performance. Lack of liquidity in both the stock and high-yield bond markets created a global credit crunch making it difficult for REITs to secure capital necessary to support continued growth. The REIT sector was down 14% for the year through November 30.
AVERAGE ANNUAL TOTAL RETURNS AT NET ASSET VALUE FOR PERIODS ENDED NOVEMBER 30, 1998 Lifetime March 4, 1994 Through Premium(+)/Discount(-) 12 Months November 30, 1998 as of November 30, 1998 Global Dividend and Income Fund +2.19% +12.67% +1.15% Standard & Poor's 500 Index +23.66% +23.68% Merrill Lynch High-Yield Bond Index +3.63% +9.17% Morgan Stanley Europe, Australia and South East Asia (EASEA) Index +24.61% +16.00% Salomon Brothers World Government Bond Index +18.28% +7.79% Lipper Closed-End Income Fund Average +7.41% +10.95% The Fund's total return and the returns of unmanaged indexes shown above assume reinvestment of distributions. These indexes are not available for direct investment. Past performance does not guarantee future results. The Fund's inception date was March 4, 1994. There were 11 funds in the Lipper Closed-End Income and Preferred Stock Fund Average for the 12-month period and 11 funds for the lifetime period ended November 30, 1998, respectively.
On a positive note, shares of Global Dividend and Income Fund closed at a 1.15% premium to net asset value on November 30, 1998. Last June, you may recall that the Fund was trading at a discount. We believed this was temporary, since previously, the Fund has traded at a premium to net asset value. We are gratified to see the Fund again trading slightly above its net asset value. As of November 30, Global Dividend and Income Fund's dividend yield, based on market price, was 9.45%. This was more than six times the 1.37% dividend yield on stocks in the unmanaged S&P 500 Index. The Fund's yield was boosted by investments in the utilities sector, which generally offered yields over 5%. In conjunction with this summer's sell-off in riskier types of investments, domestic high-yield bond prices fell sharply. Lack of liquidity and low demand pushed prices down an average of 6.5%. The net result was a loss in principal for U.S. high-yield bonds. This negatively affected the Fund's domestic bond performance. Your Fund's managers in Philadelphia and London discuss Global Dividend Income Fund's fiscal 1998 performance on the following pages. Michael Dugan, who has two decades of investment management experience, has joined the team of domestic portfolio managers (see below). Your managers also review the Fund's current positioning as they seek high current income and capital appreciation from both foreign and domestic stocks and high-yield bonds. One final note, we are pleased to report that Global Dividend and Income Fund paid a year-end distribution of $0.27 to shareholders of record on December 9, 1998. ($0.257 was a long-term capital gain and $0.013 was a short-term capital gain, both from realized securities profits.) We wish you our best this new year, and look forward to reporting to you again in June. Sincerely, /S/Jeffrey J. Nick JEFFREY J. NICK Chairman, President and Chief Executive Officer Delaware Investments Family of Funds Introducing Michael Dugan, Co-Manager of Global Dividend and Income Fund Michael Dugan has been in the investment business for over 20 years. He joined Delaware Management Company as a portfolio manager in May 1997. He was previously a senior portfolio manager and research director at Thompson, Siegel and Walmsley in Richmond, VA. Mr. Dugan received a bachelor's degree in 1969 and a Master in Finance degree in 1981, both from Loyola College. Portfolio Manager's Review BABAK ZENOUZI Vice President/Senior Portfolio Manager Delaware Management Company U.S. Equities MICHAEL DUGAN Vice President/Senior Portfolio Manager Delaware Management Company U.S. Equities PAUL A. MATLACK Vice President/Senior Portfolio Manager Delaware Management Company U.S. Fixed Income CLIVE A. GILLMORE Director/Senior Portfolio Manager Delaware International Advisers Ltd. Foreign Equities IAN G. SIMS Director/Senior Portfolio Manager Delaware International Advisers Ltd. Foreign Fixed-Income December 18, 1998 ACHIEVING TOTAL RETURN THROUGH DIVERSIFICATION Diversification across asset classes can help buffer the Fund's performance during periods of short-term volatility. By investing in both U.S. and foreign stocks and bonds, your Fund provides more uniform exposure to different markets which can help deliver more consistent results over time. Unfortunately, in fiscal 1998 several of the asset classes represented in the Fund were hard hit by global instability. Global Dividend and Income Fund's asset allocation policy is based on a careful process of evaluating a security's risk relative to its potential rewards. The Fund combines investments in both domestic and foreign income-oriented stocks that have above-average dividend yields, with domestic and foreign high-yield corporate bonds. The Fund also invests in U.S. and foreign convertible preferred stocks and convertible bonds, which generally offer higher income than common stocks. [GRAPHIC OMITTED: PIE CHART SHOWING PORTFOLIO ASSET ALLOCATION] PORTFOLIO ASSET ALLOCATION NOVEMBER 30, 1998 Foreign Stocks 19.8% U.S. Common and Preferred Stocks 32.2% Foreign Bonds 14.3% Non-Convertible U.S. Corporate Bonds 19.5% Convertible Preferred Stocks 7.8% Convertible U.S. Bonds 3.5% Cash and Other 2.9% Footnote reads: The above chart represents net assets. Global Dividend and Income Fund's asset allocation policy is based on a careful process of evaluating a security's risk relative to its potential rewards. As of November 30, 1998, common stocks represented 51.3% of the Fund's portfolio assets - 31.9% in U.S. equities and 19.4% in foreign stocks. U.S. corporate bonds accounted for 19.5% of portfolio assets - a slight increase since May - while foreign bonds nearly doubled to 14.2% of portfolio assets. Foreign and U.S. convertible securities made up the rest of the portfolio. We describe the Fund's asset class concentration in greater detail on the following pages. U.S. REAL ESTATE MARKETS: CAUGHT IN THE CREDIT CRUNCH Strong tenant demand and a trend toward higher rents in many parts of the country have benefited the REIT market since October 1997. However, during fiscal 1998, financial problems in Russia, Asia and other emerging markets raised concerns about lenders' ability to finance continued domestic development. By September 1998, investors and banks were lending more cautiously. Lower availability of capital affected all types of equity assets, including REITs, which had a more difficult time acquiring new properties and companies. The silver lining is that less construction resulting from the credit crunch has helped push property prices higher. As of November 30, 1998, Global Dividend and Income Fund's equity REIT holdings were 17.4% of net assets. This area of the portfolio's domestic stock holdings hurt fiscal 1998 performance. Our strategy is to stay the course in REITs. We believe lending and market conditions will improve in 1999, though we expect returns on REITs to be moderate. Strong dividend yields in this sector - ranging from 5% to 6% - continue to attract our attention. DEREGULATION IN U.S. UTILITY INDUSTRY YIELDS OPPORTUNITY Domestic utility stocks accounted for 6.9% of net assets as of November 30. Traditionally, these stocks have offered above-average dividend yields. In recent years, U.S. electric companies have been moving toward deregulation and competition, a path first broken by other industries, including telecommunications, natural gas, and airlines. Several states, including Pennsylvania, have enacted legislation allowing retail electric utility competition. Others, including California, Florida and Texas are now considering it. We believe deregulation will give utility companies the opportunity to grow, and we hold several stocks we believe may benefit. GLOBAL EXPOSURE BAD FOR BANK BUSINESS During the second half of 1998, the economic turmoil that began in Asia a year ago caused stocks on Wall Street to stall. Many banks took big hits from their exposure to ailing overseas economies. We minimized the Fund's losses in this sector by reducing Global Dividend and Income Fund's bank allocation to 9.6%. Our stock selection within this sector has focused less on banks with far reaching global exposure and more on those whose business is domestically oriented. Among them are Mellon Bank, Fleet Financial Group and Summit Bancorp. We continue to hold BankAmerica despite its global exposure because of consistently strong yields and positive earnings prospects. U.S. ENERGY INDUSTRY SEEKS CONSOLIDATION Merger activity in the U.S. banking industry in 1998 is being rivaled by plans for massive consolidations among U.S. energy companies. In August, British Petroleum and Amoco announced a merger which has since been completed. In December, Exxon and Mobil agreed to merge. These two mergers represent the largest merger/ acquisition transactions in history. In early December, oil stock prices fell sharply due to concerns that demand for oil companies' services and equipment would decline because of low crude oil prices and industry consolidation. Not since the oil bust of 1986 had oil prices been so low. Since May, we have added several oil companies to the portfolio such as Chevron. The Fund's overall weighting in this sector was 5.2% as of the end of November. With stock prices falling and dividend yields well above average, this sector looks very promising for future growth and income potential. FOREIGN STOCKS: TRADE RELATIONS WITH ASIA HURT PERFORMANCE As of November 30, foreign common stocks represented 24.6% of net assets. Of this, the United Kingdom and Australia were your Fund's largest country weightings, accounting for 7.0% and 4.1%, respectively. While we had no direct exposure to Japan, many of our stock holdings in the U.K, Australia and New Zealand were hurt by their trade relations with Southeast Asia. In particular, New Zealand Telecom and Carter Holt Harvey, an Australian paper and pulp manufacturer, did not perform well. [GRAPHIC OMITTED: PIE CHART SHOWING PORTFOLIO COUNTRY ALLOCATION] PORTFOLIO COUNTRY ALLOCATION NOVEMBER 30, 1998 United States 61.5% United Kingdom 7.0% Australia/New Zealand 6.6% South Africa 4.0% Continental Europe 12.3% Latin America 4.3% Canada 1.9% Asian Pacific 2.0% Turkey 0.4% In our opinion, a slowdown in the world's established economies is likely in 1999. As always, our foreign stock selection will be based on evaluations of individual countries, taking into account their economic and political environments, as well as the effect of currency fluctuations, among other factors. Once we establish the risks, we "discount" the value of a company's projected dividend stream for those risks. This gives us a consistent measure to compare stocks around the globe. U.S. HIGH-YIELD CORPORATE BONDS: LIQUIDITY DROUGHT CREATED PROBLEMS Early in fiscal 1998, U.S. high-yield bonds delivered the strongest performance of any other segment of the fixed-income market. At the time, strong demand supported bond prices. However, the summer's reports of foreign loan defaults and credit problems pushed U.S. high-yield bonds from center stage. Cash flows abruptly shifted away from stocks and high-yield bonds, and into the safety net of U.S. Treasuries. This liquidity drought halted new debt issuance. After the Fed's October interest rate reduction, liquidity in many high-yield issues improved. Lower rates enabled corporations to sell new bonds; however, new issuance this late in the year did not keep up with renewed investor demand. This imbalance pushed high-yield bond prices slightly higher, pushing yields down as a result. In the recent market environment, Global Dividend and Income Fund's short-term performance from high-yield bonds, primarily bonds rated BB or B, was disappointing. However, because there was no fundamental change in the portfolio's holdings, that is, there were no credit problems that caused our underperformance, we remain confident that the bonds in the portfolio will continue to pay the high income for which they were chosen and will contribute favorably to our income potential. FOREIGN BONDS RALLIED IN THE SECOND HALF World bonds posted solid gains in the second half of our 1998 fiscal year. A weaker U.S. dollar helped to boost returns in non-dollar linked countries. European markets delivered returns in the area of 12% through the end of our reporting period. In contrast, countries such as Canada and Australia, had negative results due to currency devaluations caused by concern about world commodity prices. Global Dividend and Income Fund's largest country weighting in foreign bonds was South Africa, representing 5.0% of the foreign bond allocation on November 30. We increased our position since May because South African bonds have offered yields well over 10%, and because their currency, the rand, is currently cheap relative to the U.S. dollar. We have added a bond position in Greece (2% of the Fund's foreign bond allocation). We believe that even though Greece has not joined the new European Monetary Union, it could benefit from improved fiscal quality as it strides to qualify for membership. By implementing a new single currency - the euro - the European Union hopes to enhance trade among member nations. While the initial reaction to the euro has been positive, issues of labor mobility, nationalism and the ability of the European Central Bank to remain independent may create some future uncertainty. OUTLOOK In 1999, we believe that established markets' corporate earnings growth will remain essentially flat. In our opinion, corporate profits will be under considerable pressure from rising labor costs and financial market excesses over the next 12 months. This could cause economic problems, especially in the U.S. and the U.K. We expect that the U.S. equity market will continue to experience volatility over the coming months. Many economists believe that the Fed is finished raising rates for a while. We will wait to see if the Fed's previous actions have been enough to ward off the strain of the global financial crisis and support future U.S. economic growth. Japan is the key question for the world economy. Should Japan's troubled economy stabilize, as we believe it will, this may further the recovery process in global economies. This, in addition to low bond yields, would lend support to global equity markets. Over its lifetime of four years, Global Dividend and Income Fund has successfully met its investment objective of providing high current income with capital appreciation as a secondary objective. In spite of short-term volatility, we are confident that our diversified, value- oriented strategy will help us continue to meet this objective over the long-term. [GRAPHIC OMITTED: WORM CHART SHOWING MARKET PRICE VS. NET ASSET VALUE] GLOBAL DIVIDENDS AND INCOME FUND MARKET PRICE VS. NET ASSET VALUE DECEMBER 1, 1997 TO NOVEMBER 30, 1998 Premium/Discount Data Current +1.15% on 11/30/98 High +10.81% on 1/9/98 Low -11.57% on 10/30/98 Month and Year Market Price Net Asset Value Nov. 28,'97 $17.31 $17.09 Dec. 26,'97 $18.50 $16.93 Jan. 30,'98 $18.06 $16.80 Feb. 27,'98 $18.44 $17.14 Mar. 27,'98 $17.50 $17.69 Apr. 24,'98 $17.63 $17.47 May 29,'98 $16.63 $17.10 June 26,'98 $15.88 $16.60 July 31,'98 $16.56 $16.40 Aug. 28,'98 $13.75 $14.72 Sep. 25,'98 $14.06 $14.85 Oct. 30,'98 $13.88 $15.69 Nov. 30,'98 $15.88 $15.70 Footnote reads: Source: Bloomberg Business News. Past performance does not guarantee future results. Fund Performance A $10,000 INVESTMENT IN GLOBAL Dividend and Income Fund since inception on March 4, 1994, would have grown to $17,614 as of November 30, 1998, based on net asset value with distributions reinvested. That's 7.38% higher than the average of the Fund's peers during the same period. [GRAPHIC OMITTED: BAR CHART: GROWTH OF A $10,000 INVESTMENT] GLOBAL DIVIDEND AND INCOME FUND GROWTH OF A $10,000 INVESTMENT MARCH 4, 1994 TO NOVEMBER 30, 1998 Lipper Closed-End Global Dividend Income Fund Average and Income Fund (11 funds) $17,614 $16,403 Footnote reads: Performance assumes reinvestment of distributions. Past performance does not guarantee future results. DGF shares were initially offered with a sales charge of 6%. Performance since inception does not include this or any brokerage commissions for purchases made since inception. YOUR FUND'S SHARE BUYBACK PROGRAM In 1994, your Fund's board of directors approved a share repurchase program that authorizes Global Dividend and Income Fund's lead manager to purchase up to 10% of the Fund's outstanding shares on the floor of the New York Stock Exchange. Through November 30, we did not make use of this option since we did not see this as the most effective way to add value to the portfolio. YOUR REINVESTMENT OPTIONS Global Dividend and Income Fund offers an automatic dividend reinvestment program. If you would like to reinvest dividends and shares are registered in your name, contact Investors Fiduciary Trust Co. at 1.800.596.8396. You will be asked to put your request in writing. If you have shares registered in "street" name, contact the broker/dealer holding the shares or your financial adviser. JEFFREY NICK NAMED CHAIRMAN On December 17, 1998, Jeffrey J. Nick was named Chairman of the Delaware Investments Family of Funds. He replaces Wayne A. Stork who has retired as Chairman of the Board of Directors, but continues to serve as a Board Member. Mr. Nick was named President and Chief Executive Officer of Delaware Investments Family of Funds in October 1997. He has been CEO of Lincoln National Investment Companies since October 1996 and previously managed Lincoln's operations in the United Kingdom. Mr. Nick holds an MBA from the University of Chicago and a bachelor of arts degree from Princeton University. FINANCIAL STATEMENTS DELAWARE GROUP GLOBAL DIVIDEND AND INCOME FUND, INC. STATEMENT OF NET ASSETS NOVEMBER 30, 1998 NUMBER OF MARKET SHARES VALUE COMMON STOCK - 64.77% AUTOMOBILES & AUTO EQUIPMENT - 2.78% Continental 26,000 $ 650,748 General Motors 16,000 1,120,000 GKN 102,000 1,129,190 ------------ 2,899,938 ------------ BANKING, FINANCE & INSURANCE - 9.59% BankAmerica 15,000 977,813 Bayerische Verelnsbank 7,800 702,163 Commonwealth Bank of Australia 46,517 640,963 First Union 16,200 984,150 Fleet Financial Group 24,600 1,025,513 ING Groep NV 16,000 917,398 KeyCorp 26,000 797,875 Mellon Bank 20,000 1,258,750 National Australia Bank 75,430 1,127,905 National Mutual Holdings 35,000 69,517 Summit Bancorp 16,000 669,000 Washington Mutual 21,750 843,492 ------------ 10,014,539 ------------ BUILDINGS & MATERIALS - 0.45% Compagnie de Saint-Gobain 3,200 473,260 ------------ 473,260 ------------ CABLE, MEDIA & PUBLISHING - 0.37% Elsevier NV 29,500 387,721 ------------ 387,721 ------------ CONSUMER CYCLICAL - 0.49% Alexander & Baldwin 22,400 512,400 ------------ 512,400 ------------ CONSUMER PRODUCTS - 1.95% Dollar General (STRYPES) 33,000 1,146,750 Tenneco 25,000 890,625 ------------ 2,037,375 ------------ CHEMICALS - 1.82% Bayer 20,750 886,810 duPont (E.I.) deNemours 12,000 705,000 Orica 56,800 313,775 ------------ 1,905,585 ------------ ELECTRONICS - 0.73% Siemens 10,750 762,123 ------------ 762,123 ------------ - ------------------------ Top 10 common stock holdings, representing 11.32% of net assets, are in boldface. ENERGY - 4.82% Centrica 91,000 188,796 Chevron 14,000 1,170,750 Elf Gabon 2,200 311,810 PacifiCorp 45,000 843,750 Royal Dutch Petroleum 16,200 777,023 RWE 11,000 585,697 Texaco 20,000 1,151,250 ------------ 5,029,076 ------------ FOOD, BEVERAGE & TOBACCO - 4.08% Fortune Brands 27,900 950,344 Foster's Brewing Group 291,542 763,175 Philip Morris Companies 20,000 1,118,750 Southcorp 255,000 830,155 Unigate 77,000 604,068 ------------ 4,266,492 ------------ HEALTHCARE & PHARMACEUTICALS - 1.81% Baxter International 10,000 635,625 Glaxo Wellcome 39,370 1,250,376 ------------ 1,886,001 ------------ INDUSTRIAL MACHINERY - 0.84% Deere & Co. 25,000 873,438 ------------ 873,438 ------------ LEISURE, LODGING & ENTERTAINMENT - 0.64% Bass 48,214 666,594 ------------ 666,594 ------------ METALS & MINING - 1.74% Aluminum Co. of America 15,000 1,111,875 Rio Tinto 49,000 576,812 Rouge Steel 14,800 133,200 ------------ 1,821,887 ------------ PACKAGING & CONTAINERS - 0.28% Amcor 66,000 287,535 ------------ 287,535 ------------ PAPER & FOREST PRODUCTS - 2.05% Carter Holt Harvey 200,000 190,104 Georgia-Pacific Timber Group 38,300 880,900 Temple-Inland 20,000 1,073,750 ------------ 2,144,754 ------------ REAL ESTATE - 17.43% Apartment Investment & Management 19,700 674,725 Arden Realty 35,000 805,000 Camden Property Trust 25,000 642,188 Capital Automotive 25,000 333,594 Corporate Office Properties 30,700 212,981 Duke Realty Investments 38,000 862,125 Equity Office Properties Trust 25,000 628,125 Essex Property Trust 27,000 835,313 Glenborough Realty Trust 30,000 641,250 Golf Trust of America 33,400 872,575 Grove Property Trust 50,000 537,500 JDN Realty 43,500 899,906 LTC Healthcare 1,612 4,635 Liberty Property Trust 31,142 766,872 Macerich Company (The) 36,000 958,500 New Plan Excel Realty Trust 38,400 840,000 Pan Pacific Retail Properties 33,800 673,888 Patriot American Hospitality 30,000 221,250 Penn Real Estate Investment Trust 24,000 480,000 Philips International Realty 30,000 465,000 Prentiss Properties Trust 43,508 946,299 Public Storage 32,000 850,000 Reckson Associates Realty 34,000 784,125 Spieker Properties 25,000 903,125 Starwood Hotels & Resorts Trust 30,000 911,250 Sun Communities 20,000 651,250 Tower Realty Trust 13,400 252,088 Union Du Credit - Bail Immobilier 2,700 377,446 Wharf Holdings 107,000 169,293 ------------ 18,200,303 ------------ RETAIL - 1.01% Boots 65,000 1,054,172 ------------ 1,054,172 ------------ TELECOMMUNICATIONS - 2.73% GTE 15,700 973,400 Telecom Corporation of New Zealand 189,000 803,952 Telefonica 22,909 1,078,257 ------------ 2,855,609 ------------ TRANSPORTATION & SHIPPING - 1.62% Brambles Industries 55,000 1,346,731 British Airways 50,000 344,819 ------------ 1,691,550 ------------ UTILITIES - 6.88% BG 80,294 552,081 Cable & Wireless 88,000 1,125,198 Electrabel 1,689 652,030 Emerson Electric 13,000 845,000 Hong Kong Electric Holdings 200,000 665,160 Utilities (Continued) Iberdrola 56,000 929,121 Rochester Gas & Electric 20,000 615,000 Southern 35,000 1,032,500 United Utilities 53,000 773,425 ------------ 7,189,515 ------------ MISCELLANEOUS - 0.66% Eridania Beghin-Say 2,550 473,207 Jardine Matheson Holdings 64,800 220,320 ------------ 693,527 ------------ Total Common Stock (cost $56,391,003) 67,653,394 ------------ WARRANTS - 0.00% REAL ESTATE - 0.00% Wharf Holdings Warrants 12/31/99 5,350 629 ------------ Total Warrants (cost $71,913) 629 ------------ CONVERTIBLE PREFERRED STOCK - 10.23% BANKING, FINANCE & INSURANCE - 1.02% Salomon 7.625% series FSA "DECS" 23,000 1,066,625 ------------ 1,066,625 ------------ BUILDINGS & MATERIALS - 0.94% Blue Circle Industries 7.625% 150,000 405,863 Ingersoll Rand 6.75% "PRIDES" 24,000 577,500 ------------ 983,363 ------------ CABLE, MEDIA & PUBLISHING - 0.41% Metromedia Intl Group 7.25% 16,900 426,725 ------------ 426,725 ------------ CHEMICALS - 0.60% Monsanto 6.50% "ACES" 13,800 624,450 ------------ 624,450 ------------ REAL ESTATE - 2.15% Crescent Real Estate 6.75% 31,300 551,663 General Growth Properties 7.25% 38,300 986,225 SL Green Realty 8.00% 30,000 708,750 ------------ 2,246,638 ------------ RETAIL - 1.00% Cendant 7.50% "PRIDES" 31,000 1,042,375 ------------ 1,042,375 ------------ TRANSPORTATION & SHIPPING - 1.45% Greyhound Lines 8.50% 26,500 950,688 Union Pacific Cap Trust 6.25% "TIDES" 12,000 565,500 ------------ 1,516,188 ------------ UTILITIES - 1.32% Houston Industries 7.00% "ACES" 15,000 1,380,000 ------------ 1,380,000 ------------ MISCELLANEOUS - 1.34% Newell Financial Trust 5.25% 25,000 1,403,125 ------------ 1,403,125 ------------ Total Convertible Preferred Stock (cost $10,378,715) 10,689,489 ------------ PREFERRED STOCK - 0.49% CABLE, MEDIA & PUBLISHING - 0.49% Granite Broadcasting 12.75% 612 507,960 ------------ Total Preferred Stock (cost $536,123) 507,960 ------------ PRINCIPAL AMOUNT+ ------------ NON-CONVERTIBLE BONDS - 42.50% AEROSPACE & DEFENSE - 0.24% Derlan Manufacturing sr notes 10.00% 2007 US$ 300,000 252,000 ------------ 252,000 ------------ AUTOMOBILES & AUTO EQUIPMENT - 0.90% Collins & Aikman Series B sr sub notes 10.00% 2007 US$ 275,000 288,750 Motors & Gears Series D sr notes 10.75% 2006 US$ 200,000 207,000 Venture Holdings Trust sr sub notes 9.75% 2004 US$ 457,000 447,860 ------------ 943,610 ------------ BANKING, FINANCE & INSURANCE - 2.51% Banco Nacional de Comercia Exterior unsec deb 7.25% 2004 US$ 750,000 711,563 Bank of Greece Series RG unsec deb (loan stock) 10.75% 2010 GBP 120,000 266,286 DVI unsec sr notes 9.875% 2004 US$ 225,000 218,250 European Investment Bank deb 17.50% 1999 GRD 50,000,000 178,744 International Finance unsec marathon bonds 15.25% 1999 GRD 150,000,000 537,553 National Bank of Hungary sr deb 10.00% 2003 GBP 400,000 703,249 ------------ 2,615,645 ------------ BUILDINGS & MATERIALS - 1.40% American Standard sr notes 7.375% 2008 US$ 1,000,000 1,002,500 American Standard sr notes 10.875% 1999 US$ 450,000 460,688 ------------ 1,463,188 ------------ CABLE, MEDIA & PUBLISHING - 0.64% CBS Radio PIK 11.375% 2009 US$ 7,300 8,614 Granite Broadcasting sr sub notes 9.375% 2005 US$ 500,000 468,125 Muzak LP/Capital sr unsec notes 10.00% 2003 US$ 80,000 82,400 Rogers Cablesystems sr unsec sub deb 11.00% 2015 US$ 90,000 105,525 ------------ 664,664 ------------ CHEMICALS - 0.25% BPC Holding Series B sr sec notes 12.50% 2006 US$ 250,000 261,875 ------------ 261,875 ------------ COMPUTERS & TECHNOLOGY - 0.12% Unisys sr unsec notes 11.75% 2004 US$ 105,000 120,225 ------------ 120,225 ------------ CONSUMER PRODUCTS - 0.70% American Safety Razor Series B sr notes 9.875% 2005 US$ 475,000 475,000 Fedders North America sr sub notes 9.375% 2007 US$ 250,000 251,250 ------------ 726,250 ------------ ELECTRONICS - 0.23% HCC Industries sr unsec sub notes 10.75% 2007 US$ 250,000 242,500 ------------ 242,500 ------------ ENERGY - 0.41% Continental Resources sr sub notes 10.25% 2008 US$ 500,000 430,000 ------------ 430,000 ------------ FOOD, BEVERAGE & TOBACCO - 0.60% Core - Mark International sr sub notes 11.375% 2003 US$ 100,000 102,250 Delta Beverage sr notes 9.75% 2003 US$ 500,000 526,250 ------------ 628,500 ------------ FOREIGN GOVERNMENT - 18.86% Argentina Global Bond 9.75% 2027 US$ 369,000 335,559 Hellenic Republic 8.70% 2005 GRD 350,000,000 1,263,685 Hellenic Republic 9.20% 2002 GRD 100,000,000 354,277 Hellenic Republic 11.00% 1999 GRD 150,000,000 531,943 Hydro-Quebec (loan stock) 12.75% 2015 GBP 160,000 450,079 Mexican Cetes (T-Bills) 0.00% 1999 MXN 2,500,000 2,174,261 Mexican United States Global Bond 9.875% 2007 US$ 750,000 759,375 New Zealand Government 8.00% 2001 NZD 2,000,000 1,115,723 New Zealand Government 8.00% 2004 NZD 2,000,000 1,176,767 *Poland Global par bond 3.00% 2024 (a) US$ 2,000,000 1,342,500 Poland Govt Bond 12.00% 2003 PLZ 2,500,000 751,758 Republic of Argentina Series 10.25% 2003 DEM 1,000,000 616,865 Republic of Argentina Series BGLO sr unsec unsub 11.00% 2006 US$ 350,000 357,000 *Republic of Brazil - IDU Series A deb 6.75% 2001 US$ 307,500 288,473 Republic of Colombia unsec unsub 7.625% 2007 US$ 1,000,000 820,000 Republic of Korea unsub notes 8.875% 2008 US$ 1,000,000 996,250 Republic of South Africa Series 160 10.75% 1998 ZAR 2,500,000 437,983 Republic of South Africa Series 162 12.50% 2002 ZAR 14,000,000 2,234,537 Republic of South Africa Series 9.50% 2007 ZAR 8,000,000 969,938 Republic of South Africa Series 13.00% 2010 ZAR 11,000,000 1,627,182 Republic of Turkey unsec deb 9.00% 2003 GBP 400,000 551,875 Russian Ministry of Finance unsec unsub 9.25% 2001 US$ 500,000 183,125 United Mexican States Global Bonds 8.625% 2008 US$ 380,000 361,238 ------------ 19,700,393 ------------ HEALTHCARE & PHARMACEUTICALS - 0.38% Healthsouth sr sub notes 9.50% 2001 US$ 200,000 207,250 Paracelsus Healthcare sr unsec sub notes 10.00% 2006 US$ 200,000 184,250 ------------ 391,500 ------------ INDUSTRIALS - 0.23% American Builders & Contractors Series B sr unsec sub notes 10.625% 2007 US$ 250,000 238,750 ------------ 238,750 ------------ LEISURE, LODGING & ENTERTAINMENT - 2.37% AFC Enterprises sr sub notes 10.25% 2007 US$ 250,000 260,625 Alliance Gaming sr unsec sub notes 10.00% 2007 US$ 200,000 180,000 Cinemark USA Series B sr sub notes 9.625% 2008 US$ 1,020,000 1,073,550 Scott's Hospitality Series A unsec deb 10.95% 2001 CAD 800,000 581,060 Trump Atlantic City Associates Funding sec 1st mtg notes 11.25% 2006 US$ 400,000 378,000 ------------ 2,473,235 ------------ METALS & MINING - 1.65% Commonwealth Aluminum sr sub notes 10.75% 2006 US$ 200,000 202,000 Keystone Consolidated Industries sr sec notes 9.625% 2007 US$ 600,000 597,000 Weirton Steel sr notes 11.375% 2004 US$ 950,000 921,500 ------------ 1,720,500 ------------ PACKAGING & CONTAINERS - 0.54% Container Corporation of America Series A sr notes 11.25% 2004 US$ 200,000 208,000 Pierce Leahy sr sub notes 9.125% 2007 US$ 200,000 212,000 Pierce Leahy sr sub notes 11.125% 2006 US$ 129,000 142,545 ------------ 562,545 ------------ PAPER & FOREST PRODUCTS - 0.86% Domtar deb 10.85% 2017 CAD 1,000,000 828,634 Four M Series B sr sec notes 12.00% 2006 US$ 100,000 69,000 ------------ 897,634 ------------ RETAIL - 2.72% ASDA Group unsec unsub deb 10.875% 2010 GBP 250,000 578,479 Ameriserve Food Distribution 10.125% 2007 US$ 500,000 455,000 Cole National Group sr sub notes 9.875% 2006 US$ 500,000 535,000 Fleming Companies sr notes 10.625% 2001 US$ 400,000 412,000 Provigo Series 1991 deb 11.25% 2001 CAD 800,000 585,902 Wilsons Leather sr unsec notes 11.25% 2004 US$ 275,000 277,750 ------------ 2,844,131 ------------ TELECOMMUNICATIONS - 1.25% Jacor Communications sr unsec sub notes 9.75% 2006 US$ 500,000 553,750 Outdoor Communications sr sub notes 9.25% 2007 US$ 225,000 238,500 Rogers Communications sr unsec notes 8.875% 2007 US$ 500,000 517,500 ------------ 1,309,750 ------------ TEXTILES - 0.50% GFSI Series B sr unsec sub notes 9.625% 2007 US$ 200,000 188,250 Synthetic Industries Series B sr sub notes 9.25% 2007 US$ 325,000 335,563 ------------ 523,813 ------------ TRANSPORTATION & SHIPPING - 0.83% Atlantic Express sr sec notes 10.75% 2004 US$ 300,000 303,750 Blue Bird Body Series B sr sub notes 10.75% 2006 US$ 200,000 211,250 MC Shipping sr notes 11.25% 2008 US$ 500,000 355,000 ------------ 870,000 ------------ UTILITIES - 2.05% AES sr unsec sub notes 10.25% 2006 US$ 400,000 429,000 Calpine sr notes 10.50% 2006 US$ 400,000 432,000 Korea Electric unsub notes 6.375% 2003 US$ 1,000,000 822,500 Midland Funding II Series A deb 11.75% 2005 US$ 400,000 460,500 ------------ 2,144,000 ------------ MISCELLANEOUS - 2.26% Fischer Scientific International sr sub notes 9.00% 2008 US$ 250,000 251,875 Graphic Controls Series A sr sub notes 12.00% 2005 US$ 1,000,000 1,150,000 Huntsman sr sub notes 9.50% 2007 US$ 500,000 500,625 Larouche Industries sr sub notes 9.50% 2007 US$ 500,000 455,625 ------------ 2,358,125 ------------ Total Non-Convertible Bonds (cost $45,390,279) 44,382,833 ------------ CONVERTIBLE BONDS - 4.61% AUTOMOBILES & AUTO EQUIPMENT - 0.70% Mascotech sub debt 4.50% 2003 US$ 900,000 730,125 ------------ 730,125 ------------ BANKING, FINANCE & INSURANCE - 0.40% Bell Atlantic Financial sr unsec deb 5.75% 2003 US$ 400,000 412,000 ------------ 412,000 ------------ CABLE, MEDIA & PUBLISHING - 0.48% Mail-Well sub notes 5.00% 2002 US$ 550,000 506,000 ------------ 506,000 ------------ COMPUTERS & TECHNOLOGY - 0.51% Platinum Technology sub notes 6.25% 2002 US$ 610,000 527,650 ------------ 527,650 ------------ INDUSTRIALS - 0.66% Thermo Fibertek sub notes 4.50% 2004 US$ 835,000 685,744 ------------ 685,744 ------------ LEISURE, LODGING & ENTERTAINMENT - 0.44% Capstar Hotel sub notes 4.75% 2004 US$ 640,000 464,000 ------------ 464,000 ------------ PAPER & FOREST PRODUCTS - 0.19% Repola unsec sub deb 6.50% 2004 FIM 1,000,000 198,990 ------------ 198,990 ------------ REAL ESTATE - 0.72% IRT Property sub deb 7.30% 2003 US$ 500,000 485,000 LTC Properties sub deb 8.50% 2001 US$ 250,000 271,875 ------------ 756,875 ------------ MISCELLANEOUS - 0.51% Metamor Worldwide 2.94% sub notes 2004 US$ 700,000 537,250 ------------ 537,250 ------------ Total Convertible Bonds (cost $5,308,024) 4,818,634 ------------ SHORT-TERM SECURITIES - 3.65% **U.S. Treasury Bills 4.06% due 12/24/98 US$ 3,819,000 3,809,324 ------------ Total Short-Term Securities (cost $3,809,324) 3,809,324 ------------ TOTAL MARKET VALUE OF SECURITIES OWNED - 126.25% (cost $121,885,381) $131,862,263 LIABILITIES NET OF RECEIVABLES AND OTHER ASSETS - (26.25%) (27,416,366) ------------ NET ASSETS APPLICABLE TO 6,650,647 SHARES ($0.01 par value) OUTSTANDING; EQUIVALENT TO $15.70 PER SHARE - 100.00% $104,445,897 ============ - ------------------------ ACES - Automatic Common Exchange Security DECS - Dividend Enhanced Convertible Stock PIK - Pay-In-Kind PRIDES - Preferred Redeemable Increased Dividend Securities STRYPES - Structured Yield Product Exchangeable for Stock TIDES - Term Income Deferrable Equity Securities deb - Debentures sec - Secured sr - Senior sub - Subordinated unsub - Unsubordinated * Sovereign debt obligations issued as part of debt restructuring that are collateralized in full as to principal due at maturity by U.S. Treasury zero coupon obligations which have the same maturity as the Brady Bond. ** US Treasury Bills are traded on a discount basis; the interest rate shown is the yield at the time of purchase by the Fund. (a) Coupon will increase periodically based upon a predetermined schedule. Stated interest rate is the rate in effect at November 30, 1998. + Principal amount is stated in the currency in which each bond is denominated. CAD - Canadian dollar MXN - Mexican peso DEM - German deutsche mark NZD - New Zealand dollar FIM - Finnish markka PLZ - Polish Zlotty GBP - British pound US$ - U.S. dollar GRD - Greek drachma ZAR - South African rand COMPONENTS OF NET ASSETS AT NOVEMBER 30, 1998: Common stock, $0.01 par value, 500,000,000 shares authorized to the Fund $ 93,096,054 Accumulated net realized gain on investments 1,358,626 Net unrealized appreciation of investments 9,991,217 ------------ Total net assets $104,445,897 ============ See accompanying notes DELAWARE GROUP GLOBAL DIVIDEND AND INCOME FUND, INC. STATEMENT OF OPERATIONS YEAR ENDED NOVEMBER 30, 1998 INVESTMENT INCOME: Interest (net of foreign taxes withheld of $221,023) $6,406,148 Dividends (net of foreign taxes withheld of $76,795) 3,766,449 $10,172,597 ------------ ------------ EXPENSES: Management fees 938,854 Administrative fees 163,152 Reports to shareholders 72,097 Amortization of line of credit organization expenses 36,631 Professional fees 31,064 Transfer agent fees 26,500 Amortization of organization expenses 24,820 Custodian fees 12,600 Taxes (other than taxes on income) 6,040 Directors' fees 5,677 Other 60,998 ------------ Total operating expenses (before interest expense) 1,378,433 Interest expense 1,555,664 ------------ Total expenses 2,934,097 ------------ NET INVESTMENT INCOME 7,238,500 ------------ NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCIES: Net realized gain (loss) on: Investment transactions 4,327,799 Foreign currencies (1,424,665) ------------ Net realized gain 2,903,134 ------------ Net change in unrealized appreciation/depreciation on investments and foreign currencies (7,548,958) ------------ NET REALIZED AND UNREALIZED LOSS ON INVESTMENTS AND FOREIGN CURRENCIES (4,645,824) ------------ NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 2,592,676 ============ See accompanying notes DELAWARE GROUP GLOBAL DIVIDEND AND INCOME FUND, INC. STATEMENTS OF CHANGES IN NET ASSETS YEAR ENDED YEAR ENDED 11/30/98 11/30/97 OPERATIONS: Net investment income $ 7,238,500 $ 6,653,917 Net realized gain on investments and foreign currencies 2,903,134 5,297,743 Net change in unrealized appreciation/depreciation of investments and foreign currencies (7,548,958) 6,588,624 ------------ ------------ Net increase in net assets resulting from operations 2,592,676 18,540,284 ------------ ------------ DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM: Net investment income (5,813,835) (6,345,563) Net realized gains on investment transactions (6,017,460) (3,630,407) ------------ ------------ (11,831,295) (9,975,970) ------------ ------------ NET INCREASE (DECREASE) IN NET ASSETS (9,238,619) 8,564,314 NET ASSETS: Beginning of year 113,684,516 105,120,202 ------------ ------------ End of year $104,445,897 $113,684,516 ============ ============ See accompanying notes DELAWARE GROUP GLOBAL DIVIDEND AND INCOME FUND, INC. STATEMENT OF CASH FLOWS YEAR ENDED NOVEMBER 30, 1998 Net Cash (Including Foreign Currency) Provided by Operating Activities: Net increase in net assets resulting from operations $ 2,592,676 ------------ Adjustments to reconcile net increase in net assets from operations to cash provided by operating activities: Increase in investments 1,157,820 Amortization of organizational expenses 61,451 Net realized gain from investment transactions (4,327,799) Net realized foreign exchange losses 1,424,665 Net change in unrealized appreciation of investments and foreign currencies 7,548,958 Increase in receivable for investments sold (1,532,256) Increase in interest and dividends receivable (110,439) Increase in payable for investments purchased 6,007,876 Decrease in interest payable (8,776) Decrease in accrued expenses and other liabilities (91,369) ------------ Total adjustments 10,130,131 ------------ Net cash provided by operating activities 12,722,807 ------------ Cash flows used for financing activities: Cash dividends paid (11,831,295) ------------ Net cash used for financing activities (11,831,295) ------------ Effect of exchange rates on cash (149,476) ------------ Net increase in cash 742,036 Cash at beginning of year 0 ------------ Cash at end of year $ 742,036 ============ Cash paid for interest $ 1,562,860 ============ See accompanying notes
DELAWARE GROUP GLOBAL DIVIDEND AND INCOME FUND, INC. FINANCIAL HIGHLIGHTS NOVEMBER 30, 1998 Selected data for each share of the Fund outstanding throughout each period were as follows: YEAR YEAR YEAR YEAR FOR THE PERIOD ENDED ENDED ENDED ENDED 3/4/94* TO 11/30/98 11/30/97 11/30/96 11/30/95 11/30/94 ------------------------------------------------------------ Net asset value, beginning of period $17.09 $15.81 $14.060 $13.090 $14.000+ Income (loss) from investment operations: Net investment income 1.09 1.00 0.98 1.14 0.84 Net realized and unrealized gain (loss) on investments and foreign currencies (0.70) 1.78 2.27 1.15 (1.05) --------- --------- --------- --------- --------- Total from investment operations 0.39 2.78 3.25 2.29 (0.21) --------- --------- --------- --------- --------- Less dividends and distributions: Dividends from net investment income (0.87) (0.95) (1.02) (1.32) (0.70) Distributions from net realized gains on investment transactions (0.91) (0.55) (0.48) -- -- --------- --------- --------- --------- --------- Total dividends and distributions (1.78) (1.50) (1.50) (1.32) (0.70) --------- --------- --------- --------- --------- Net asset value, end of period $15.70 $17.09 $15.81 $14.06 $13.09 ========= ========= ========= ========= ========= Market value, end of period $15.88 $17.31 $15.88 $13.75 $11.75 ========= ========= ========= ========= ========= Total return based on:(1) Market value 2.05% 18.98% 27.42% 29.74% (17.15%) ========= ========= ========= ========= ========= Net asset value 2.19% 17.93% 24.10% 19.08% (1.11%) ========= ========= ========= ========= ========= Ratios and supplemental data: Net assets, end of period (000 omitted) $104,446 $113,685 $105,120 $93,500 $87,780 ========= ========= ========= ========= ========= Ratio of total operating expenses to average net assets 2.69% 2.67% 2.61% 1.13% 1.32%** Ratio of total operating expenses to adjusted average net assets (before interest expense)(2) 1.03% 1.02% 1.09% N/A N/A Ratio of interest expense to adjusted average net assets(2) 1.16% 1.16% 1.06% N/A N/A Ratio of net investment income to average net assets 6.63% 6.03% 6.80% 8.39% 8.54%** Ratio of net investment income to adjusted average net assets(2) 5.38% 4.93% 5.59% N/A N/A Portfolio turnover 51% 68% 88% 101% 86% Leverage analysis: Debt outstanding at end of period (000 omitted) $ 25,000 $ 25,000 $ 25,000 N/A N/A Average daily balance of debt outstanding (000 omitted) $ 25,000 $ 25,000 $ 20,355 N/A N/A Average daily balance of shares outstanding (000 omitted) 6,651 6,651 6,651 N/A N/A Average debt per share $ 3.76 $ 3.76 $ 3.06 N/A N/A - ------------------------ * Commencement of operations. ** Annualized + Net of underwriter's discount of $0.90 and offering costs of $0.10 charged to paid-in capital with respect to issuance of common shares. 1 Total investment return is calculated assuming a purchase of common stock on the opening of the first day and a sale on the closing of the last day of each period reported. Dividends and distributions, if any, are assumed for the purposes of this calculation, to be reinvested at prices obtained under the Fund's dividend reinvestment plan. Generally, total investment return based on net asset value will be higher than total investment return based on market value in periods where there is an increase in the discount or a decrease in the premium of the market value to the net asset value from the beginning to the end of such periods. Conversely, total investment return based on net asset value will be lower than total investment return based on market value in periods where there is a decrease in the discount or an increase in the premium of the market value to the net asset value from the beginning to the end of such periods. The total investment returns calculated based on market value and net asset value for a period of less than one year have not been annualized. 2 Adjusted net assets excludes debt outstanding. See accompanying notes
DELAWARE GROUP GLOBAL DIVIDEND AND INCOME FUND, INC. NOTES TO FINANCIAL STATEMENTS NOVEMBER 30, 1998 Delaware Group Global Dividend and Income Fund, Inc. (the "Fund") is registered as a diversified, closed-end management investment company under the Investment Company Act of 1940, as amended. The Fund is organized as a Maryland corporation. The primary investment objective is to seek high current income. Capital appreciation is a secondary objective. 1. Significant Accounting Policies The following accounting policies are in accordance with generally accepted accounting principles and are consistently followed by the Fund. Security Valuation - Securities listed on an exchange are valued at the last quoted sales price as of the close of the NYSE on the valuation date. Securities not traded or securities not listed on an exchange are valued at the mean of the last quoted bid and asked prices. Securities listed on a foreign exchange are valued at the last quoted sales price before the Fund is valued. Long-term debt securities are valued by an independent pricing service and such prices are believed to reflect the fair value of such securities. Short-term instruments having less than 60 days to maturity are valued at amortized cost which approximates market value. Other securities and assets for which market quotations are not readily available are valued at fair value as determined in good faith by or under the direction of the Fund's Board of Directors. Federal Income Taxes - The Fund intends to continue to qualify as a regulated investment company and make the requisite distributions to shareholders. Accordingly, no provision for Federal income taxes has been made in the financial statements. Income and capital gain distributions are determined in accordance with federal income tax regulations which may differ from generally accepted accounting principles. Distributions - In December 1995, the Fund implemented a managed distribution policy. Under the policy, the Fund declares and pays monthly dividends at an annual rate of not less than $1.50 per share and is managed with a goal of generating as much of the dividend as possible from ordinary income (net investment income and short-term capital gains). The balance of the dividend then comes from long-term capital gains (once a year) and, if necessary, a return of capital. No dividends were designated as a return of capital for the year ended November 30, 1998. Borrowings - The Fund has entered into a Line of Credit Agreement with Societe Generale for $25,000,000. A total of $120,000 was incurred in connection with the start-up of the Line of Credit. These costs were deferred and are being amortized ratably over a period of three years from the date of the first borrowing (See Note 5). Foreign Currency Transactions - Transactions denominated in foreign currencies are recorded at the current prevailing exchange rates. The value of all assets and liabilities denominated in foreign currencies are translated into U.S. dollars at the exchange rate of such currencies against the U.S. dollar as of 3:00 PM EST. 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. It is not practical to isolate that portion of both realized and unrealized gains and losses on investments in equity securities in the statement of operations that result from fluctuations in foreign currency exchange rates. The Fund does isolate that portion of gains and losses on investments in debt securities which are due to changes in the foreign exchange rate from that which are due to changes in market prices of debt securities. The Fund reports certain foreign currency related transactions as components of realized gains 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 generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Other - Security transactions are recorded on the date the securities are purchased or sold (trade date). Costs used in calculating realized gains and losses on the sale of investment securities are those of the specific securities sold. Dividend income is recorded on the ex-dividend date and interest income is recorded on the accrual basis. 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. Original issue discounts are accreted to interest income over the lives of the respective securities. Withholding taxes on foreign dividends have been provided for in accordance with the Fund's understanding of the applicable country's tax rules and rates. Organization Costs - A total of $124,000 was incurred in connection with the organization of the Fund. These costs were deferred and are being amortized ratably over a five year period from the date the Fund commenced operations. 2. Investment Management, Administration Agreements and Other Transactions with Affiliates In accordance with the terms of the Investment Management Agreement, the Fund pays Delaware Management Company (DMC), the Investment Manager of the Fund, an annual fee which is calculated daily at the rate of 0.70% of the adjusted average daily net assets. At November 30, 1998, the Fund had a liability for Investment Management fees and other expenses payable to DMC of $74,668. The Fund has also entered into an Advisory Agreement with Delaware International Advisers Ltd. (DIAL) (the "Subadviser"), an affiliate of DMC. For the services provided to DMC, DMC pays the Subadviser a monthly fee equal to 40% of the fee paid to DMC under the terms of the Investment Management Agreement. Commencing on June 30, 1998 the Fund entered into an Administration Agreement with Delaware Service Company, Inc. (DSC), an affiliate of DMC, to provide accounting and administrative services. The Fund pays DSC a monthly fee computed at the annual rate of 0.05% of the Fund's adjusted average net assets subject to an annual minimum of $100,000. Prior to June 30, 1998, the accounting and administrative services were provided by Princeton Administrators L.P. At November 30, 1998, the Fund had a liability for these and other expenses payable to DSC of $11,814. For the year ended November 30, 1998, DSC and Princeton Administrators L.P. earned $41,667 and $121,485, respectively for their services. For purposes of the calculation of investment management fees and administration fees, adjusted average net assets do not include the Line of Credit liability. Officers, directors and employees of DMC and DSC, who are also officers, directors and employees of the Fund, do not receive any compensation from the Fund. 3. Investments During the year ended November 30, 1998, the Fund made purchases of $66,569,283 and sales of $73,677,692 of investment securities other than U.S. government securities and temporary cash investments. At November 30, 1998, the aggregate cost of securities and unrealized appreciation/depreciation for federal income tax purposes for the Fund was as follows: Cost of Investments $121,885,381 ============ Aggregate unrealized appreciation $ 18,389,916 Aggregate unrealized depreciation (8,413,034) ------------ Net unrealized appreciation $ 9,976,882 ============ 4. Capital Stock The Fund did not repurchase any shares under the Share Repurchase Program during the year ended November 30, 1998. Shares issuable under the Fund's dividend reinvestment plan are purchased by the Fund's transfer agent, IFTC, in the open market. 5. Line of Credit In February 1996, the Fund entered into a Line of Credit Agreement with Societe Generale for $25,000,000. At November 30, 1998, the par value of loans outstanding was $25,000,000 at a variable interest rate of 5.72%. During the year ended November 30, 1998, the average daily balance of loans outstanding was $25,000,000 at a weighted average interest rate of approximately 6.15%. The maximum amount of loans outstanding at any time during the year was $25,000,000. The loan is collateralized by the Fund's portfolio. 6. Foreign Exchange Contracts The Fund will generally enter into forward foreign currency contracts as a way of managing foreign exchange rate risk. A 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. A Fund may also use these contracts to hedge the U.S. dollar value of securities it already owns denominated in foreign currencies. Forward foreign currency contracts are valued at the mean between the bid and asked prices of the contracts and are marked-to-market daily. Interpolated values are derived when the settlement date of the contract is an interim date for which quotations are not available. The change in market value is recorded by the Fund as an unrealized gain or loss. When the contract is closed, the Fund records a realized gain or loss 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 forward foreign currency contracts does not eliminate fluctuations in the underlying prices of the Fund's securities, but it does establish a rate of exchange that can be achieved in the future. Although forward foreign currency contracts limit the risk of loss due to a decline in the value of the hedged currency, they also limit any potential gain that might result should the value of the currency increase. In addition, the Fund could be exposed to risks if the counterparties to the contracts are unable to meet the terms of their contracts.
CONTRACTS IN TO EXCHANGE SETTLEMENT NET UNREALIZED DELIVER FOR DATE VALUE APPRECIATION/DEPRECIATION ------- ------- ------- ------- ------------------------- PLZ 2,578,510 $ 743,087 12/1/98 $ 740,101 $2,986 CONTRACTS IN TO EXCHANGE SETTLEMENT NET UNREALIZED RECEIVE FOR DATE VALUE APPRECIATION/DEPRECIATION ------- ------- ------- ------- ------------------------- PLZ 2,644,058 $ 762,636 12/1/98 $ 758,915 ($3,721) GRD 378,593,250 $1,323,776 12/2/98 $1,332,607 8,831
7. Credit and Market Risks 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 a deterioration in a country's 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 proportion of the aggregate market value of equity securities listed on the major securities exchanges in emerging markets are held by a smaller number of investors. This may limit the number of shares available for acquisition or disposition by the Fund. The Fund may invest in high-yield fixed income securities which carry ratings of BB or lower by S&P and /or Ba or lower by Moody's. Investments in these higher yielding securities may be accompanied by a greater degree of credit risk than higher rated securities. Additionally, lower rated securities may be more susceptible to adverse economic and competitive industry conditions than investment grade securities. The Fund may invest up to 10% of its total assets in illiquid securities which may include securities with contractual restrictions on resale, securities exempt from registration under Rule 144A of the Securities Act of 1933, as amended, and other securities which may not be readily marketable. The relative illiquidity of some of these securities may adversely affect the Fund's ability to dispose of such securities in a timely manner and at a fair price when it is necessary to liquidate such securities. 8. Geographic Disclosure As of November 30, 1998, the Fund's geographic diversification was as follows: PERCENTAGE OF TOTAL SECURITIES COUNTRY* MARKET VALUE AT VALUE - ------------ ------------ ----------------- United States $ 81,035,371 61.45% United Kingdom 9,249,873 7.01 Australia 5,379,756 4.08 South Africa 5,269,640 4.00 Germany 3,587,541 2.72 Mexico 3,294,874 2.50 New Zealand 3,286,546 2.49 Greece 3,132,488 2.38 Canada 2,445,675 1.86 Poland 2,094,258 1.59 Netherlands 2,082,142 1.58 Spain 2,007,378 1.52 South Korea 1,818,750 1.38 France 1,635,723 1.24 Argentina 1,309,424 0.99 Hong Kong 835,082 0.63 Colombia 820,000 0.62 Hungary 703,249 0.53 Belgium 652,030 0.50 Turkey 551,875 0.42 Brazil 288,473 0.22 Finland 198,990 0.15 Russia 183,125 0.14 ------------ ------------ Total $131,862,263 100.00% ============ ============ - ------------------------ * Based on the currency in which each security is denominated. Like any investment in securities, the value of the portfolio may be subject to risk or loss from market, currency, economic and political factors which occur in the countries where the Fund is invested. DELAWARE GROUP GLOBAL DIVIDEND & INCOME FUND, INC. REPORT OF INDEPENDENT AUDITORS TO THE SHAREHOLDERS AND BOARD OF DIRECTORS DELAWARE GROUP GLOBAL DIVIDEND AND INCOME FUND, INC. We have audited the accompanying statement of net assets of Delaware Group Global Dividend and Income Fund, Inc. (the "Fund") as of November 30, 1998, and the related statements of operations and cash flows for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the periods indicated therein. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights. Our procedures included confirmation of securities owned as of November 30, 1998, by correspondence with the Fund's custodian and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Delaware Group Global Dividend and Income Fund, Inc. at November 30, 1998, 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 its financial highlights for each of the periods indicated therein, in conformity with generally accepted accounting principles. /S/Ernst & Young LLP -------------------- Ernst & Young LLP Philadelphia, Pennsylvania January 8, 1999 PROXY RESULTS (UNAUDITED) For the Fiscal year ended November 30, 1998, The Delaware Group Global Dividend and Income Fund shareholders voted on the following proposals at the annual meeting of shareholders on December 4, 1998. The description of each proposal and number of shares voted are as follows. SHARES SHARES VOTED VOTED WITHHELD FOR AUTHORITY ------------ ------------ 1. To elect the Fund's Board of Directors: Wayne A. Stork 3,782,303 229,942 Walter P. Babich 3,791,753 220,492 Anthony D. Knerr 3,802,153 210,092 Ann R. Leven 3,802,641 209,604 W. Thacher Longstreth 3,805,772 206,473 Charles E. Peck 3,805,772 206,473 Thomas F. Madison 3,805,772 206,473 Jeffrey J. Nick 3,789,530 222,715 John H. Durham 3,803,087 209,158 SHARES SHARES SHARES VOTED VOTED VOTED FOR AGAINST ABSTAIN -------- -------- -------- 2. To approve the reclassification of the Fund's investment objective from fundamental to non-fundamental. 2,970,548 142,138 174,076 3. To approve standardized fundamental investment restrictions for the Fund (proposal involves separate votes on sub-proposals 3A-3G). 3A. To adopt a new fundamental investment restriction concerning concentration of the Fund's investments in the same industry. SHARES SHARES SHARES VOTED VOTED VOTED FOR AGAINST ABSTAIN -------- -------- -------- 2,984,853 114,769 187,141 3B. To adopt a new fundamental investment restriction concerning borrowing money and issuing senior securities. SHARES SHARES SHARES VOTED VOTED VOTED FOR AGAINST ABSTAIN -------- -------- -------- 2,969,682 129,414 187,667 3C. To adopt a new fundamental investment restriction concerning underwriting. SHARES SHARES SHARES VOTED VOTED VOTED FOR AGAINST ABSTAIN -------- -------- -------- 2,967,001 127,981 191,781 3D. To adopt a new fundamental investment restriction concerning investments in real estate. SHARES SHARES SHARES VOTED VOTED VOTED FOR AGAINST ABSTAIN -------- -------- -------- 2,972,240 123,674 190,849 3E. To adopt a new fundamental investment restriction concerning investments in commodities. SHARES SHARES SHARES VOTED VOTED VOTED FOR AGAINST ABSTAIN -------- -------- -------- 2,947,015 152,366 167,382 3F. To adopt a new fundamental investment restriction concerning lending by the Fund. SHARES SHARES SHARES VOTED VOTED VOTED FOR AGAINST ABSTAIN -------- -------- -------- 2,950,721 151,700 184,342 3G. To reclassify all current fundamental investment restrictions as non-fundamental. SHARES SHARES SHARES VOTED VOTED VOTED FOR AGAINST ABSTAIN -------- -------- -------- 2,941,227 150,503 195,033 4A. To approve a new investment management agreement with Delaware Management Company for the Fund. SHARES SHARES SHARES VOTED VOTED VOTED FOR AGAINST ABSTAIN -------- -------- -------- 2,961,274 137,781 187,708 4B. To approve a new sub-advisory agreement with Delaware International Advisors Ltd. For the Fund. SHARES SHARES SHARES VOTED VOTED VOTED FOR AGAINST ABSTAIN -------- -------- -------- 2,961,075 133,108 192,580 5. To ratify the selection of Ernst & Young LLP, as independent auditors for the Company. SHARES SHARES SHARES VOTED VOTED VOTED FOR AGAINST ABSTAIN -------- -------- -------- 3,815,883 55,353 141,008 TAX INFORMATION (UNAUDITED) Of the ordinary income distributions paid by the Fund during its taxable year ended November 30, 1998, 36.39% qualifies for the dividends received deduction for corporations. Additionally, the Fund distributed long-term gains of $0.257 per share and short-term gains of $0.013 per share to shareholders of record on December 9, 1998. Year 2000 (Unaudited) Like other investment companies, financial and business organizations and individuals around the world, the Fund could be adversely affected if computer systems used by the Investment Manager and other service providers do not properly process and calculate date-related information and data on and after January 1, 2000. The Fund is taking steps to obtain satisfactory assurances that the Investment Manager and other major service providers are taking steps reasonably designed to address the Year 2000 issue with respect to the computer systems that such service providers use. At this time, however, there can be no assurance that these steps will be sufficient to avoid any adverse impact to the Fund. THIS ANNUAL REPORT IS FOR THE INFORMATION OF GLOBAL DIVIDEND AND INCOME FUND SHAREHOLDERS. IT SETS FORTH DETAILS about charges, expenses, investment objectives and operating policies of the Fund. You should read it carefully before you invest. The return and principal value of an investment in each Fund will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. Notice is hereby given in accordance with Section 23(c) of the Investment Act of 1940 that the Fund may purchase at market prices from time to time shares of its Common Stock on the open market. BOARD OF DIRECTORS JEFFREY J. NICK Chairman, President and Chief Executive Officer Delaware Investments Family of Funds Philadelphia, PA WALTER P. BABICH+ Board Chairman, Citadel Constructors, Inc. King of Prussia, PA JOHN DURHAM Partner, Complete Care Services Horsham, Pa ANTHONY D. KNERR+ Consultant, Anthony Knerr & Associates New York, NY ANN R. LEVEN+ Treasurer, National Gallery of Art Washington, DC W. THACHER LONGSTRETH City Councilman Philadelphia, PA THOMAS F. MADISON* President and Chief Executive Officer MLM Partners, Inc. Minneapolis, MN CHARLES E. PECK Secretary/Treasurer, Enterprise Homes, Inc. Fredericksburg, VA WAYNE A. STORK Chairman Delaware Management Holdings, Inc. Philadelphia, PA *Appointed June 19, 1997 +Audit Committee Member EXECUTIVE OFFICERS JEFFREY J. NICK Chairman, President and Chief Executive Officer Delaware Investments Family of Funds Philadelphia, PA RICHARD G. UNRUH, JR. Executive Vice President Philadelphia, PA PAUL E. SUCKOW Senior Vice President/Chief Investment Officer, Fixed-Income Philadelphia, PA DAVID K. DOWNES Senior Vice President/ Chief Administrative Officer/ Chief Financial Officer Philadelphia, PA GEORGE M. CHAMBERLAIN, JR. Senior Vice President/ Secretary General Counsel Philadelphia, PA JOSEPH H. HASTINGS Senior Vice President/ Corporate Controller Philadelphia, PA MICHAEL P. BISHOFF Senior Vice President/Treasurer Philadelphia, PA [GRAPHIC OMITTED: PHOTO OF TWO GLOBES] directors & officers INVESTMENT MANAGER Delaware Management Company Philadelphia, Pennsylvania SUB-ADVISER Delaware International Advisers Ltd. London, England PRINCIPAL OFFICE OF THE FUND 1818 Market Street Philadelphia, PA 19103-3682 INDEPENDENT AUDITORS Ernst & Young LLP 2001 Market Street Philadelphia, PA [GRAPHIC OMITTED: DGF/NYSE LOGO] Registrar and Stock Transfer agent Investors Fiduciary Trust Company 210 West 10th Street Kansas City, MO 64105 1.800.596.8396 For Securities Dealers 1.800.362.7500 For Financial Institutions Representatives Only 1.800.659.2265 www.delawarefunds.com Printed in the USA on recycled paper (1348) AR-DGF[12/98]TKO1/99 Recordholders as of November 30, 1998: 461 (copyright) Delaware Distributors, L.P. [GRAPHIC OMITTED: LOGO OF DELAWARE INVESTMENTS ---------------------------- Philadelphia * London] -----END PRIVACY-ENHANCED MESSAGE-----