<PAGE>
THE FUND'S
- ----------------------
INVESTMENT
- ----------------------
OBJECTIVES AND
- ----------------------
STRATEGIES
- ----------------------
Delaware Group Global Dividend and Income Fund's objective is to provide
high current income, and secondarily, capital appreciation, from U.S. stocks,
U.S. high-yield bonds, foreign stocks and foreign bonds. Asset class
concentration depends on the managers' assessments of each markets'
relative risks and rewards. The following profiles your Fund's strategy
in each of the four asset classes.
U.S. AND FOREIGN COMMON STOCKS
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 income
from these stocks has the potential to add to total return.
In evaluating foreign stocks, the Fund's management considers dividend income
as well as relevant risks. The value of the company's projected dividend
stream is "discounted" for risks such as a country's inflation outlook,
economy, politics, different accounting standards and potential currency
fluctuations. We attempt to create a consistent yardstick to compare stocks
around the globe.
CONVERTIBLE STOCKS AND BONDS
The Fund invests in both convertible preferred stocks and convertible bonds.
Both pay fixed rates of income, but because they can be converted into a
certain number of shares of common stock, both 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 convertible securities when the underlying common stock offers strong
growth potential, but a low yield.
U.S. HIGH-YIELD CORPORATE BONDS
High-yield bonds, those rated BB or lower, have greater credit risk
than bonds with higher quality ratings, but typically provide a greater level
of income that has historically compensated investors for additional risk.
Prices of high-yield bonds may also be less sensitive to changes in interest
rates than higher-rated bonds.
FOREIGN BONDS
Your Fund invests in foreign government and corporate bonds whose
income and capital appreciation 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. The Fund may buy foreign bonds in both
established and emerging markets.
<PAGE>
July 3, 1996
Dear
- ----------------------
Shareholder:
- ----------------------
We are pleased to report that for the six months ended May 31, 1996, Global
Dividend and Income Fund provided strong results despite volatile U.S.
interest rates and mixed signals about U.S. economic growth.
For the six months ended May 31, your Fund achieved a +17.62% total
return with dividends reinvested, based on market price
and +8.70% based on net asset value, with dividends reinvested.
As you can see in the chart, your Fund's market price performance
substantially surpassed that of the unmanaged Standard & Poor's 500 Index
for the six months ended May 31.
The Fund's results were achieved with a more than 50% positioning in
U.S. securities, including stocks, convertible bonds and high-yield bonds.
Our largest foreign holdings were in the United Kingdom and Spain.
Overall, we believe your Fund's performance since November is
attributable to several factors:
1) Global diversification, which can help reduce volatility from investment,
currency, political and interest rate risks.
2) A 20% increase in the Fund's monthly dividend to $0.125 a share.
3) A strategic positioning in U.S. high-yield corporate bonds, which are less
affected by rising interest rates than other types of fixed-income
securities.
4) Effective use of a $25 million bank loan to leverage the Fund and increase
its net investment income. This strategy is explained on page 5.
We are gratified that the steps we have taken to increase
shareholder value since last fall have been recognized by investors. While
most closed-end mutual funds traded at a discount to net asset value as of
May 31, Global Dividend and Income Fund traded at a +5.82% premium.
In our opinion, Global Dividend and Income Fund is well-positioned
to help investors benefit from the income potential of stocks and bonds.
Over time, dividends have been a more reliable component of total return from
stocks while income has been the primary source of return from bonds. Should
stock or bond prices move down, dividends and bond income can help cushion the
fall. In a rising market, the compounding of dividend income has the potential
to increase total return.
On the pages that follow, your Fund's portfolio managers review
worldwide market conditions and provide their outlook for the balance of
fiscal 1996. We wish to thank you for your confidence in Delaware Group.
Sincerely,
/s/ Wayne A. Stork
- ----------------------
Wayne A. Stork
CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE OFFICER
- -------------------------------------------------------------------------------
TOTAL RETURN
DECEMBER 1, 1995 - MAY 31, 1996
Based on Based On Premium/
Net Asset Value Market Price Discount
---------------------------------------
Global Dividend and Income Fund +8.70% +17.62% +5.82%
(NYSE Symbol: DGF)
Standard & Poor's 500 Index +11.78%
Morgan Stanley Europe Australia
and South East Asia (EASEA) Index +14.05%
Lipper Closed-End Income Fund Average +2.36% -2.70% -6.51%
The Fund's total return assumes reinvestment of monthly dividends. The Morgan
Stanley Index shown above is an index of foreign stocks that does not include
Japanese stocks. Total return is measured in U.S. dollars. There are 11
closed-end funds in the Lipper Closed-End Fund Average, nearly all of which
are domestic-oriented funds.
- -------------------------------------------------------------------------------
1
<PAGE>
Portfolio
- ----------------------
Managers'
- ----------------------
Review
- ----------------------
The first half of fiscal 1996 has been a time of contrasts. In America, the
stock market, as measured by the Standard & Poor's 500 Index, set new records
even as the U.S. bond prices sagged amid inflation concerns that drove
interest rates higher. Elsewhere in the world, however, interest rates
generally declined, notably in Europe and along the Pacific Rim.
OUR STOCK FOCUS: GLOBAL DIVERSITY, REITs
At the start of the fiscal year, some 25% of your Fund's net assets
were in stocks of companies that are generally sensitive to movements in
interest rates, notably banks and utilities. These stocks provided high
income and helped our performance in markets such as New Zealand, where the
inflation outlook is positive, but hurt us in the U.S. Our
largest common stock position as of May 31 was KEYCORP., a Cleveland based
banking company, amounting to 1.40% of the Fund's net assets.
Although the banking industry's stock performance has not been as
strong in 1996 as in 1995, the industry has been reporting record earnings
and has had strong dividend growth. We believe selected U.S. bank stocks have
excellent investment potential.
Your Fund's performance since November was helped by the Fund's
ownership of shares in Real Estate Investment Trusts (REITs) such as STARWOOD
LODGING and RECKSON ASSOCIATES. Overall, the REIT market provided a total
return of +14.69% for the six months ended May 31, as measured by the
unmanaged Morgan Stanley REIT Index.
- ----------------------------------- ------------------------------------
Asset Allocation Geographic Diversification
Percent of Portfolio May 31, 1996 Percent of Net Assets May 31, 1996
Common Stocks 39.61% United Kingdom 7.67%
Convertible Preferred Stock 6.26% Spain 6.02%
Non-convertible Bonds 43.97% Australia 5.04%
Conv Bonds 9.26% Greece 4.17%
U.S. Treas 0.90% United States* 62.36%
South Africa 3.27%
Asset allocation is based on Canada 2.10%
all securities owned by the Other Europe 7.41%
Fund as of May 31, 1996, Other Pacific Rim 1.96%
including those purchased
through the use of leverage.
This chart differs from the *Includes bonds issued by
financial statements which foreign countries denominated
also take into account in the U.S. dollars.
liabilities.
- ----------------------------------- -----------------------------------
2
<PAGE>
We believe this outperformance by REITs was the result of higher
rents, improved cash flow and higher occupancy levels in the
office/industrial and hotel sectors of the U.S. commercial real estate
market. As of May 31, 12.28% of your Fund's net assets were invested in
REITS, with an emphasis on those with low debt levels, experienced management
and a low payout ratio of dividends relative to earnings. We are optimistic
about the capital appreciation potential of our REIT holdings in the coming
months, as the industry appears to have attracted increased interest on the
part of pension fund investors.
OUR USE OF OPTIONS
In recent months, to help lessen the effect of fluctuating U.S.
interest rates on our U.S. stock portfolio, we have been writing covered call
options. That is, the Fund agrees to sell a stock we already own for a set
price by a future date if the buyer of the call option exercises the right to
buy the stock. Selling a call option is a strategy used when we think a
stock's price may drop.
Selling a covered call option can help reduce loss of principal if
the underlying stock's price declines. Although not the primary purpose of
our use of options, the writing of covered calls also provides additional
income for the Fund. Therefore, we believe this option strategy is
appropriate in an income-oriented fund like Global Dividend and Income Fund.
However, this strategy can limit the Fund's ability to benefit from
capital appreciation if a stock's price rises. We believe having some
"downside protection" - especially in a volatile interest rate environment -
is worth giving up some growth potential.
HIGH-YIELD BONDS OUTPERFORMED OTHER BONDS
The prospect of an increased level of U.S. economic growth during
the first few months of 1996 was generally negative news for the bond market
since it raised concern that the Federal Reserve Board would tighten credit
to fight anticipated inflation.
Nevertheless, high-yield bonds performed well compared to other
fixed-income securities, in part because a healthy economy suggested that
corporations issuing high-yield bonds would have a strong ability to meet
obligations to bondholders.
Your Fund balanced opportunities for high current income while
taking a conservative approach to potential credit risk. We focused on bonds
rated BB and B, the highest non-investment grade ratings. Our performance was
helped by the fact that prior to the start of the current fiscal year, we
slightly reduced average maturity and duration, further reducing the Fund's
sensitivity to changes in interest rates.
As of May 31, your Fund's high-yield component had an average effective maturity
of 5.6 years and an effective duration of 3.6 years. Duration indicates the
approximate percentage of change in a bond's price given a 1% change in
interest rates.
CONVERTIBLE SECURITIES PROVIDED
INCOME AND GROWTH
The past six months was generally a period when small stocks and
growth stocks with low dividends tended to outperform stocks of large
companies that pay high dividends. Owning convertible securities helped your
Fund participate in the capital appreciation of the small to mid-size company
market since November, while the Fund earned an attractive dividend income.
As of May 31, convertible securities represented 19.22% of your
Fund's net assets. Because we believe that the convertible market is fairly
valued, we reduced our weighting of convertible securities to the lowest
level since the Fund's inception.
Historically, the Fund has tended to emphasize convertible bonds
rather than convertible preferred stocks.
3
<PAGE>
Two examples of convertible bonds we owned during the period were those of HOME
SHOPPING NETWORK, the television retailer, and SAFEGUARD SCIENTIFIC, a
microcomputer and computer software distributor. We sold our Safeguard bonds
after the company's share price rose above our target.
FOREIGN BONDS OUTPERFORMED U.S. BONDS
Our decision to increase your Fund's concentration in foreign
government bonds as we entered fiscal 1996 proved fortuitous. These bonds
provided higher income than that available from U.S. bonds and greater
capital appreciation as interest rates fell in selected countries in Europe
and the Pacific Rim.
In addition, we were able to mitigate currency risk normally
associated with foreign bonds because many of these bonds, although issued by
European and Latin American countries, were denominated in U.S. dollars. We
had acquired some of these bonds - known as Brady Bonds - at a substantial
discount last year.
INVESTMENT OUTLOOK
In common stocks, your Fund remains focused on the same mix of
industries we favored in fiscal 1995. We continue to believe the U.S.
financial sector offers very attractive opportunities for income and capital
appreciation. In our opinion, U.S. interest rates should peak in the latter
half of 1996 as economic growth slows. We may add to our position in selected
banks and insurance companies that we believe are well-positioned to benefit
from falling interest rates.
U.S. Treasuries are generally thought to be the "safest" government
securities in the world because of America's economic stability. Given the
recent volatility in U.S. interest rates and the uncertainties generated by
election year politics, we believe income opportunities available from
selected foreign government bonds will remain superior to those in the U.S.
in the coming months, even after taking into account additional foreign
economic, currency and political risks.
While your Fund's geographic and asset mixes are subject to change
as market conditions warrant, we anticipate that our "value"-oriented
selection process will lead us to the same regions of the world in the months
ahead - generally an emphasis on Europe and selected Asian and Pacific
markets with the exception of Japan.
Overall, we anticipate that many markets in the world, including the
U.S., will benefit from lower interest rates for the balance of 1996. In the
U.S., we believe inflation concerns are somewhat overblown and that the bond
market has the potential to provide more positive results than it did during
the past six months.
/s/ Bernard P. Schaffer
- --------------------------------------------
Bernard P. Schaffer
VICE PRESIDENT AND SENIOR PORTFOLIO MANAGER
U.S. STOCKS
/s/ Paul A. Matlack
- --------------------------------------------
Paul A. Matlack
VICE PRESIDENT AND SENIOR PORTFOLIO MANAGER
U.S. FIXED-INCOME
/s/ Clive Gillmore
- --------------------------------------------
Clive Gillmore
VICE PRESIDENT AND SENIOR PORTFOLIO MANAGER
FOREIGN STOCKS
/s/ Ian G. Sims
- --------------------------------------------
Ian G. Sims
VICE PRESIDENT AND SENIOR PORTFOLIO MANAGER
FOREIGN FIXED-INCOME
JULY 3, 1996
4
<PAGE>
Fund
- ----------------------
Updates
- ----------------------
LEVERAGING PROGRAM IMPLEMENTED
The Fund's management used a $25 million bank loan obtained in
November to purchase additional securities for the Fund. The objective is to
earn more from the additional investments acquired with the loan proceeds
than is being paid out in interest on the borrowed money.
Such leveraging, which is generally not available to open-end mutual
funds, can be an important contributor to the Fund's income potential.
Of course, there is no guarantee the Fund will always achieve the
intended objective. Leveraging could result in a higher degree of volatility
because the Fund's net asset value could be more sensitive to fluctuations in
both short-term interest rates as well as equity prices. We believe this risk
is reasonable given the potential benefits of higher income.
MANAGED DISTRIBUTION POLICY ACHIEVES GOALS
As stated in the 1995 annual report, the Fund implemented a managed
distribution policy effective with the payment of the Fund's December
dividend. Under the policy, the Fund is managed with a goal of generating as
much of the dividend as possible from ordinary income. The balance of the
dividend then comes from short-term and long-term capital gains and, if
necessary, a return of capital.
The Fund's management believes this policy has helped the Fund's
market price rise from a discount to net asset value of -2.20% on
November 30, 1995, to a premium to net asset value of +5.82% as of May 31, as
shown on page 6. In the opinion of management, this policy should increase
the attractiveness of the Fund for income-oriented investors.
5
<PAGE>
Your Fund's Performance
Global Dividend & Income Fund
MARKET PRICE VS. NET ASSET VALUE
DECEMBER 1, 1995 TO MAY 31, 1996
MARKET NET ASSET
PRICE VALUE
------ ---------
1Dec $13.750 $14.080
8Dec $13.500 $14.200
15Dec $13.625 $14.150
22Dec $13.875 $14.210
29Dec $14.125 $14.350
5Jan $14.375 $14.490
12Jan $14.250 $14.330
19Jan $14.625 $14.390
26Jan $14.375 $14.420
2Feb $14.375 $14.580
9Feb $14.500 $14.700
16Feb $14.500 $14.600
23Feb $14.375 $14.580
1Mar $14.625 $14.500
8Mar $14.375 $14.410
15Mar $14.125 $14.250
22Mar $14.875 $14.400
29Mar $15.000 $14.410
5Apr $15.125 $14.490
12Apr $15.250 $14.160
19Apr $15.125 $14.300
26Apr $15.125 $14.400
3May $14.875 $14.310
10May $15.000 $14.410
17May $15.125 $14.470
24May $15.000 $14.530
31May $15.375 $14.530
DOLLARS PER SHARE
PREMIUM/DISCOUNT DATA
May 31, 1996 +5.82%
High +7.70% on April 12, 1996
Average +1.18%
Low -4.93% on December 8, 1995
- -----------------------------------------------
_____ MARKET PRICE
- - - - NET ASSET VALUE
WHILE MOST CLOSED-END MUTUAL FUNDS TRADED AT A DISCOUNT TO NET ASSET VALUE AS
OF MAY 31, GLOBAL DIVIDEND AND INCOME FUND TRADED AT A +5.82% PREMIUM.
Past performance does not guarantee future results.
6
<PAGE>
Global Dividend & Income Fund
Total Market Price Return
Based on a $10,000 Investment
March 4, 1994 to May 31, 1996
(with Dividends Reinvested)
TOTAL RETURN
------------
Apr-94 $87,255
May-94 $81,961
Jun-94 $85,185
Jul-94 $88,241
Aug-94 $87,991
Sep-94 $86,867
Oct-94 $84,870
Nov-94 $82,152
Dec-94 $83,668
Jan-95 $87,124
Feb-95 $91,313
Mar-95 $91,277
Apr-95 $92,672
May-95 $97,165
Jun-95 $94,851
Jul-95 $97,528
Aug-95 $98,207
Sep-95 $99,100
Oct-95 $100,861
Nov-95 $107,493
Dec-95 $111,407
Jan-96 $114,361
Feb-96 $116,346
Mar-96 $121,358
Apr-96 $123,377
May-96 $126,433
Past performance does not guarantee future results.
ALTHOUGH THE FUND STRIVES TO PROVIDE CURRENT
INCOME, DIVIDEND REINVESTMENT CAN MAKE A
SUBSTANTIAL DIFFERENCE IN YOUR FUND'S TOTAL RETURN.
7
<PAGE>
Financial
- -----------------
Statements
- -----------------
DELAWARE GROUP
GLOBAL DIVIDEND AND INCOME FUND, INC.
STATEMENT OF NET ASSETS
MAY 31, 1996
(UNAUDITED)
Number Market
of Shares Value
COMMON STOCK - 49.04%
Automobiles & Auto Equipment - 1.14%
Chrysler ................................. 500 $ 33,313
GKN plc .................................. 51,000 783,082
Turner & Newell plc ...................... 116,000 282,177
----------
1,098,572
----------
Banking, Finance & Insurance - 8.71%
Aetna Life & Casualty .................... 5,600 413,000
BANK OF BOSTON ........................... 20,000 997,500
Beneficial ............................... 5,800 337,850
CoreStates Financial ..................... 10,000 393,750
First Chicago NBD ........................ 18,000 785,250
Fleet Financial Group .................... 12,300 542,738
GREAT WESTERN FINANCIAL .................. 50,000 1,150,000
International Nederlanden Groep .......... 6,400 525,681
KEYCORP .................................. 35,000 1,356,250
National Australia Bank .................. 88,000 825,601
PT Bank Dagang Nasional .................. 427,750 430,959
Summit Bancorp ........................... 18,000 654,750
----------
8,413,329
----------
Cable, Media & Publishing - 1.58%
Elsevier ................................. 29,500 456,694
Ipc Holding Ltd. ......................... 30,000 618,750
Television Francaise ..................... 3,900 454,301
----------
1,529,745
----------
Chemicals - 0.72%
Bayer A.G ................................ 2,075 695,140
----------
695,140
----------
Computers & Technology - 0.32%
B.I.C.C .................................. 62,000 313,165
----------
313,165
----------
Electronics - 0.62%
Siemens AG ............................... 10,750 602,591
----------
602,591
----------
Top 10 common stock holdings, representing 10.65% of net assets are in
bold face.
8
<PAGE>
Number Market
of Shares Value
COMMON STOCK (Continued)
Energy - 2.08%
Elf Gabon ................................ 2,200 $ 490,870
EL PASO NATURAL GAS ...................... 25,000 906,250
Royal Dutch Petroleum .................... 4,050 613,027
----------
2,010,147
----------
Food, Beverage & Tobacco - 2.86%
Dalgety plc .............................. 109,750 635,975
PHILIP MORRIS COMPANIES .................. 10,000 993,750
Southcorp Holdings Ltd. ................. 255,000 655,611
Unigate .................................. 77,000 480,794
----------
2,766,130
----------
Healthcare & Pharmaceuticals - 0.88%
Bristol-Myers Squibb ..................... 10,000 853,750
----------
853,750
----------
Leisure, Lodging & Entertainment - 0.71%
Bass plc ................................. 54,000 681,473
----------
681,473
----------
Metals & Mining - 1.00%
Hartebeestfontein ........................ 49,600 199,082
RTZ Corporation plc ...................... 49,000 763,382
----------
962,464
----------
Paper & Forest Products - 0.62%
Georgia-Pacific .......................... 8,300 599,675
----------
599,675
----------
Real Estate - 12.28%
Cali Realty .............................. 30,000 671,250
Colonial Properties Trust ................ 37,000 869,500
Developers Diversified Realty ............ 25,000 781,250
DUKE REALTY INVESTMENTS .................. 30,000 903,750
Evans Withycombe Residential ............. 27,800 576,850
Excel Realty Trust ....................... 25,000 471,875
First Industrial Realty Trust ............ 28,000 661,500
Health Care Property Investors ........... 20,000 655,000
JDN Realty ............................... 37,000 777,000
LTC Properties ........................... 13,000 208,000
Macerich Company (The) .................. 40,000 840,000
Oasis Residential ........................ 25,000 531,250
PATRIOT AMERICAN HOSPITALITY ............. 38,000 1,078,250
RECKSON ASSOCIATES REALTY ................ 30,000 937,500
Sovran Self Storage ...................... 25,000 653,125
Storage Trust Realty ..................... 20,800 431,600
Sun Communities .......................... 20,000 535,000
Union Du Credit Bail Immobil ............. 2,700 279,048
----------
11,861,748
----------
Retail - 1.67%
Boots Company plc ........................ 65,000 613,330
Dickson Concepts ......................... 600,000 686,267
Sime Darby - Hong Kong ................... 300,000 315,993
----------
1,615,590
----------
<PAGE>
Statement of Net Assets (Continued)
Number Market
of Shares Value
COMMON STOCK (Continued)
Telecommunications - 5.53%
British Columbia Telecom ................. 22,000 $ 423,618
Frontier ................................. 25,000 800,000
GTE ...................................... 15,700 671,175
NYNEX .................................... 16,000 738,000
Philippine Long Distance -SP ADR ......... 6,400 368,000
Telecom Corp. of New Zealand ............. 189,000 767,919
Telefonica de Espana ..................... 42,000 752,531
US West .................................. 25,000 815,625
----------
5,336,868
----------
Transportation & Shipping - 0.80%
Brambles Industries ...................... 55,000 772,903
772,903
Utilities - 6.05%
American Electric Power .................. 1,000 40,125
British Gas plc .......................... 91,000 268,596
Cable & Wireless plc ..................... 88,000 605,382
ELECTRABEL NPV ........................... 4,350 933,623
Houston Industries ....................... 20,000 437,500
Iberdrola ................................ 56,000 566,841
Oklahoma Gas & Electric .................. 12,000 457,500
Peco Energy .............................. 25,000 615,625
Rochester Gas & Electric ................. 20,000 402,500
UNICOM ................................... 37,500 1,035,938
United Utilities plc ..................... 53,000 478,749
----------
5,842,379
----------
Miscellaneous - 1.47%
Ceramco Corporation Ltd. ................. 116,000 141,868
Eridania Beghin-Say ...................... 2,550 399,013
Jardine Matheson Holdings Ltd ............ 64,800 498,960
Pacific Dunlop Ltd ....................... 175,000 378,667
----------
1,418,508
----------
Total Common Stock
(cost $45,878,915) ...................... 47,374,177
----------
CONVERTIBLE PREFERRED STOCK - 7.75%
Banking, Finance & Insurance - 1.73%
California Federal Bank 7.75% pfd cv "A" . 33,800 853,450
Salomon 7.625% 1999 series FSA ........... 30,000 825,000
----------
1,678,450
----------
Buildings & Materials - 0.44%
Blue Circle Industries 7.625% pfd cv ..... 150,000 425,310
----------
425,310
----------
Food, Beverage & Tobacco - 1.37%
RJR Nabisco Holdings $0.60
pfd cv "C" "PERCS" ..................... 200,000 1,325,000
----------
1,325,000
----------
<PAGE>
Number Market
of Shares Value
CONVERTIBLE PREFERRED STOCK (Continued)
Metals & Mining - 1.34%
Coeur D' Alene Mines 7.00% pfd cv......... 30,000 $ 667,500
MascoTech $1.20 pfd cv "DECS"............. 40,000 625,000
-----------
1,292,500
-----------
Paper & Forest Products - 1.91%
+International Paper 5.25% pfd cv......... 34,000 1,572,500
James River Corp 9.00%
pfd cv "P" "DECS"....................... 11,500 274,563
-----------
1,847,063
-----------
Retail - 0.96%
Prime Retail 8.50% pfd cv "B"............. 50,000 925,000
-----------
925,000
-----------
Total Convertible Preferred Stock
(cost $7,827,971)...................... 7,493,323
-----------
Principal
Amount
NON-CONVERTIBLE BONDS - 54.44%
Aerospace & Defense - 0.25%
K & F Industries sr sub deb
13.75% 2001..........................US$ 231,000 239,663
-----------
239,663
-----------
Automobiles & Auto Equipment - 0.82%
Exide sr notes 10.75% 2002.............US$ 400,000 408,000
Harvard Industries sr notes
11.125% 2005............................ 400,000 385,000
-----------
793,000
-----------
Banking, Finance & Insurance - 10.65%
Aim Management sr sec notes
9.00% 2003...........................US$ 175,000 179,813
American General sr notes
12.875% 2002.........................US$ 200,000 207,000
Bank of Austria unsec sub
10.875% 2004.........................AUS 1,000,000 859,835
Bank of Greece matador bonds
12.50% 1997..........................ESP 80,000,000 643,397
Bank of Greece matador bonds
10.75% 2010 .........................GBP 120,000 191,506
Commonwealth Bank of Australia
unsec unsub
13.75% 1999 .........................AUD 500,000 452,624
Eurofima sr unsec unsub deb
9.875% 2007..........................AUD 2,000,000 1,666,773
European Bank for Reconstruction &
Development sr unsub
marathon bonds 15.25% 1998...........GRD 100,000,000 422,720
European Investment Bank deb
17.50% 1999..........................GRD 50,000,000 226,106
9
<PAGE>
Statement of Net Assets (Continued)
Principal Market
Amount Value
NON-CONVERTIBLE BONDS (Continued)
Banking, Finance & Insurance (Continued)
European Investment Bank marathon bonds
14.00% 2001..........................ESP 80,000,000 $ 752,763
+First Nationwide Holdings sr sub notes
9.125% 2003..........................US$ 300,000 291,000
International Bank for Reconstruction
& Development sr unsub
15.50% 1997..........................GRD 676,000,000 2,847,096
International Finance marathon bonds
15.25% 1999..........................GRD 150,000,000 633,304
Mutual Group unsec sub deb
7.25% 2004...........................GBP 200,000 281,022
National Bank of Hungary sr deb
10.00% 2003..........................GBP 400,000 637,965
-----------
10,292,924
-----------
Buildings & Materials - 0.61%
American Standard sr notes
10.875% 1999.........................US$ 450,000 479,250
Schuller International Group sr notes
10.875% 2004.........................US$ 100,000 108,500
-----------
587,750
-----------
Cable, Media & Publishing - 2.82%
Century Communications sr notes
9.75% 2002...........................US$ 600,000 607,500
+Granite Broadcast sr sub notes
9.375% 2005..........................US$ 500,000 462,500
Infinity Broadcasting sr sub notes
10.375% 2002.........................US$ 200,000 212,500
Jones Intercable sr notes
9.625% 2002..........................US$ 300,000 306,750
Lamar Advertising sr sec notes
11.00% 2003..........................US$ 400,000 413,000
Rogers Cablesystems sr sec notes
10.00% 2005..........................US$ 300,000 302,250
Rogers Cablesystems sr sec deb
10.00% 2007..........................US$ 140,000 140,350
Rogers Cablesystems sr sec deb
11.00% 2015..........................US$ 90,000 94,725
Sullivan Graphics sr sub notes
12.75% 2005..........................US$ 200,000 188,000
-----------
2,727,575
-----------
Chemicals - 2.70%
Berry Plastics sr sub notes
12.25% 2004..........................US$ 600,000 651,000
Foamex sr notes 11.25% 2002............US$ 400,000 413,000
G.I. Holdings sr notes 0.00% 1998......US$ 228,000 184,680
+G.I. Holdings sr notes 10.00% 2006....US$ 216,000 214,650
10
<PAGE>
Principal Market
Amount Value
NON-CONVERTIBLE BONDS (Continued)
Chemicals (Continued)
NL Industries sr sec notes
11.75% 2003..........................US$ 265,000 $ 274,938
Polymer Group sr notes
12.25% 2002..........................US$ 400,000 440,000
Uniroyal Chemical Acquisition sr sub
notes 11.00% 2003....................US$ 400,000 428,000
-----------
2,606,268
-----------
Computers & Technology - 0.41%
+Unisys sr notes 12.00% 2003...........US$ 250,000 259,375
Unisys credit-sensitive notes
15.00% 1997..........................US$ 130,000 138,938
-----------
398,313
-----------
Consumer Products - 0.77%
American Safety Razor sr notes
9.875% 2005..........................US$ 500,000 512,500
+Remington Arms sr sub notes
10.00% 2003..........................US$ 250,000 231,250
-----------
743,750
-----------
Electronics - 0.46%
ADT Operations sr sub notes
9.25% 2003...........................US$ 250,000 260,000
IMO Industries sr sub deb
12.25% 1997..........................US$ 187,000 187,000
-----------
447,000
-----------
Energy - 1.27%
+Falcon Drilling sr notes
8.875% 2003..........................US$ 500,000 491,250
Ferrellgas sr sub notes
10.00% 2001..........................US$ 200,000 209,000
Plains Resouces sr notes
10.25% 2006..........................US$ 125,000 127,500
TransTexas Gas sr notes 11.50% 2002....US$ 400,000 394,000
-----------
1,221,750
-----------
Environmental Services - 0.89%
Allied Waste Industries sr sub notes
12.00% 2004..........................US$ 400,000 435,000
+Norcal Waste Systems sr notes
12.75% 2005..........................US$ 400,000 422,500
-----------
857,500
-----------
Food, Beverage & Tobacco - 0.72%
Chiquita Brands sub notes
11.5% 2001...........................US$ 400,000 421,000
Purina Mills sr sub notes
10.25% 2003..........................US$ 100,000 99,000
Specialty Foods sr notes
11.125% 2002.........................US$ 190,000 175,750
-----------
695,750
-----------
<PAGE>
Statement of Net Assets (Continued)
Principal Market
Amount Value
NON-CONVERTIBLE BONDS (Continued)
Foreign Government - 16.17%
Hydro-Quebec 12.75% 2015...............US$ 160,000 $ 314,838
Italian Government 12.00% 2003.........ITL 3,000,000,000 2,197,551
Poland Global FRN 2.75% 2024...........US$ 2,000,000 997,500
Republic of Argentina FRN
5.25% 2023...........................US$ 1,500,000 817,970
Republic of South Africa
12.50% 2002..........................ZAL 16,000,000 3,191,292
Republic of Turkey unsec deb
9.00% 2003...........................GBP 400,000 548,875
South Africa Republic 10.75% 1998......ZAL 2,500,000 521,834
Spanish Government
10.50% 2003..........................ESP 120,000,000 1,004,221
Spanish Government
11.30% 2002..........................ESP 320,000,000 2,755,115
Spanish Government
8.20% 2009...........................ESP 100,000,000 719,023
State Electronic Commission of Victoria
10.50% 2003..........................AUD 1,500,000 1,275,530
*United Mexican States
6.25% 2019...........................US$ 2,000,000 1,275,002
-----------
15,618,751
-----------
Healthcare & Pharmaceuticals - 0.51%
Dade International sr sub notes
11.125% 2006.........................US$ 150,000 155,250
HEALTHSOUTH Rehabilitation
sr sub notes
9.50% 2001...........................US$ 200,000 207,500
Tenet Healthcare sr sub notes
10.125% 2005.........................US$ 120,000 127,800
-----------
490,550
-----------
Leisure, Lodging & Entertainment - 1.58%
Cinemark USA sr notes
12.00% 2002..........................US$ 400,000 435,500
MGM Grand Hotel Finance
1st mtg notes
12.00% 2002..........................US$ 400,000 436,000
Scott's Hospitality unsec deb
10.95% 2001..........................CAD 800,000 653,754
-----------
1,525,254
-----------
Metals & Mining - 1.58%
A.K.Steel sr notes 10.750% 2004........US$ 500,000 546,250
Armco sr notes 11.375% 1999............US$ 250,000 257,500
<PAGE>
Principal Market
Amount Value
NON-CONVERTIBLE BONDS (Continued)
Metals & Mining - (Continued)
G.S. Technologies sr notes
12.00% 2004..........................US$ 400,000 $ 414,000
G.S. Technologies sr notes
12.25% 2005..........................US$ 300,000 311,625
-----------
1,529,375
-----------
Packaging & Containers - 1.45%
Container Corp of America sr notes
11.25% 2004..........................US$ 200,000 207,000
Owens-Illinois sr amort deb
11.00% 2003..........................US$ 600,000 652,500
U.S. Can sr sub notes
13.5% 2002............................. 500,000 537,500
-----------
1,397,000
-----------
Paper & Forest Products - 2.38%
Crown Paper sr sub notes
11.00% 2005..........................US$ 200,000 190,000
Domtar deb 10.85% 2017.................CAD 1,000,000 775,889
Pacific Lumber sr notes
10.50% 2003..........................US$ 400,000 392,000
Rainy River Forest Products sr
sec notes 10.75% 2001................US$ 300,000 316,500
Repap Wisconsin sr sec notes
9.25% 2002...........................US$ 400,000 375,000
Riverwood International sr sub notes
10.875% 2008.........................US$ 250,000 249,375
-----------
2,298,764
-----------
Retail - 2.99%
ASDA-MFI Group unsec unsub deb
10.875% 2010.........................GBP 500,000 870,569
Cort Furniture Rental sr notes
12.00% 2000..........................US$ 142,000 148,390
Fleming Companies sr sub notes
10.625% 2001.........................US$ 300,000 267,750
Penn Traffic sr notes 10.65% 2004......US$ 200,000 193,500
Provigo deb 11.25% 2001................CAD 800,000 663,136
Ralph's Grocery sr sub notes
13.75% 2005..........................US$ 350,000 359,625
Ralph's Grocery sr notes
10.45% 2004..........................US$ 400,000 387,000
-----------
2,889,970
-----------
Telecommunications - 1.34%
Metrocall sr sub notes
10.375% 2007.........................US$ 400,000 390,000
Pronet sr sub notes 11.875% 2005.......US$ 450,000 477,000
Rogers Cantel sr sub notes
11.125% 2002.........................US$ 400,000 427,000
-----------
1,294,000
-----------
11
<PAGE>
Statement of Net Assets (Continued)
Principal Market
Amount Value
NON-CONVERTIBLE BONDS (Continued)
Textiles & Furniture - 1.07%
+Clark Schwebel sr notes
10.50% 2006..........................US$ 500,000 $ 520,000
Knoll sr sub notes 10.875% 2006........US$ 500,000 511,250
-----------
1,031,250
-----------
Transportation & Shipping - 0.60%
Teekay Shipping 1st pfd ship
mtg notes 9.625% 2003................US$ 200,000 203,000
Teekay Shipping 1st pfd ship
mtg notes 8.32% 2008.................US$ 400,000 377,000
-----------
580,000
-----------
Utilities - 0.87%
Comcast Cellular sr notes
0.00% 2000...........................US$ 600,000 422,250
Midland Funding II deb 11.75% 2005.....US$ 400,000 423,000
-----------
845,250
-----------
Miscellaneous - 1.53%
Graphic Controls sr sub notes
12.00% 2005..........................US$ 1,000,000 1,072,500
Ivac sr notes 9.25% 2002...............US$ 400,000 405,000
-----------
1,477,500
-----------
Total Non-Convertible Bonds
(cost $51,794,818)...................... 52,588,907
-----------
CONVERTIBLE BONDS - 11.47%
Computers & Technology - 1.43%
+Cyrix Corp. sub notes
5.50% 2001...........................US$ 500,000 511,250
Spectrum Holobyte sub notes
6.5% 2002............................US$ 500,000 355,000
Unisys sub notes 8.25% 2000............US$ 500,000 511,875
-----------
1,378,125
-----------
Electronics - 0.28%
VLSI Technology sub notes
8.25% 2005...........................US$ 300,000 275,625
-----------
275,625
-----------
Energy - 1.11%
+Nabors Industries sub notes
5.00% 2006...........................US$ 1,000,000 1,068,750
-----------
1,068,750
-----------
Healthcare & Pharmaceuticals - 1.70%
+American Medical Response sub notes
5.25% 2001...........................US$ 500,000 559,375
+Rotech Medical sub deb 5.25% 2003.....US$ 500,000 503,750
Theratx sub deb 8.00% 2002.............US$ 600,000 579,000
-----------
1,642,125
-----------
12
<PAGE>
Principal Market
Amount Value
CONVERTIBLE BONDS (Continued)
Industrial - 0.27%
+Thermo Terratech sub
4.625% 2003.........................US$ 250,000 $ 262,500
-----------
262,500
-----------
Leisure, Lodging & Entertainment - 0.27%
Marriott International notes
0.00% 2011..........................US$ 500,000 262,500
-----------
262,500
-----------
Paper & Forest Products - 0.22%
Repola Ltd sub deb 6.50% 2004........ .FIM 1,000,000 211,863
-----------
211,863
-----------
Real Estate - 4.86%
IRT Property sub deb
7.30% 2003..........................US$ 1,000,000 955,000
Liberty Property Trust sub deb
8.00% 2001..........................US$ 500,000 517,500
LTC Properties sub deb
8.50% 2000..........................US$ 500,000 531,250
Malan Realty Investors sub deb
9.50% 2004..........................US$ 800,000 729,000
Mid-Atlantic Realty Trust sub deb
7.625% 2003.........................US$ 1,000,000 900,000
Sizeler Property Investors sub deb
8.00% 2003..........................US$ 1,200,000 1,065,000
-----------
4,697,750
-----------
Retail - 0.79%
+Home Shopping Network sub deb
5.875% 2006.........................US$ 600,000 759,000
-----------
759,000
-----------
Transportation & Shipping - 0.54%
Trans Ocean Container sr sub notes
12.25% 2004.........................US$ 500,000 517,500
-----------
517,500
-----------
Total Convertible Bonds
(cost $11,049,953)..................... 11,075,738
-----------
SHORT-TERM SECURITIES - 1.11%
**U.S. Treasury Bills 5.02%
due 6/20/1996.......................US$ 68,000 67,839
**U.S. Treasury Bills 5.025%
due 6/20/1996.......................US$ 1,008,000 1,005,608
-----------
Total Short-Term Securities
(cost $1,073,447)...................... 1,073,447
-----------
<PAGE>
Statement of Net Assets (Continued)
Shares Market
Subject to Call Value
CALL OPTIONS WRITTEN - 0.00%
First Chicago NBD, July 1996, $45 18,000 $ (3,375)
-------------
Total Call Options Written
(premiums received $14,084).................... (3,375)
-------------
TOTAL MARKET VALUE OF SECURITIES OWNED - 123.81%
(cost $117,611,020)...................................... 119,602,217
LIABILITIES NET OF RECEIVABLES AND
OTHER ASSETS - (23.81)%................................... (22,997,854)
-------------
NET ASSETS APPLICABLE TO 6,650,647 SHARES
($0.01 par value) OUTSTANDING; EQUIVALENT TO
$14.53 PER SHARE - 100.00%............................... $ 96,604,363
=============
- ------
ADR - American Depository Receipt
DECS - Dividend Enhanced Convertible Security
PERCS - Preferred Equity Redemption Cumulative Stock
FRN - Floating Rate Note
*There are 2,000,000 rights attached to these bonds which carry no cost or
value to the Fund.
**U.S. Treasury bills are traded on a discount basis; the interest rate
shown is the discount rate paid at the time of purchase by the Fund.
+Security exempt from registration under Rule 144A of the Securities Act of
1933, as amended. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers (See Note 6).
US$ - U.S. dollars AUS - Austrian schillings
GBP - British pounds GRD - Greek drachmas
CAD - Canadian dollars ZAL - South African rand
ESP - Spanish pesetas FIM - Finnish markka
AUD - Australian dollars
COMPONENTS OF NET ASSETS at May 31, 1996:
Common stock, $0.01 par value, 500,000,000
shares authorized to the Fund`........................... $ 93,096,054
Accumulated undistributed income (loss):
Distributions in excess of net investment income++....... (1,168,222)
Net realized gain on investments++....................... 2,789,267
Net unrealized depreciation of investments
and foreign currencies................................. 1,887,264
-------------
Total net assets applicable to 6,650,647 shares of
common stock; equivalent to $14.53 per share............. $ 96,604,363
=============
++Distributions in excess of net investment income include net realized
gain/(loss) on foreign currencies. Net realized gains on foreign currencies
are distributed as net investment income in accordance with provisions of
the Internal Revenue Code.
See accompanying notes
<PAGE>
DELAWARE GROUP
GLOBAL DIVIDEND AND INCOME FUND, INC.
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED MAY 31, 1996
(UNAUDITED)
INVESTMENT INCOME:
Interest.................................. $3,068,066
Dividends................................. 1,420,636 $4,488,702
----------
EXPENSES:
Management fees........................... 387,919
Administrative fees....................... 116,376
Reports to shareholders................... 32,016
Amortization of organization expenses..... 12,444
Amortization of line of credit
organization expenses .................. 11,541
Custodian fees ........................... 8,400
Transfer agent fees ...................... 6,000
NYSE fees ................................ 8,085
Professional fees ........................ 5,500
Directors' fees .......................... 4,786
Taxes, other than taxes on income ........ 2,400
Registration fees ........................ 1,860
Other .................................... 2,569
----------
Total operating expenses
(before interest expense)............... 599,896
Interest expense.......................... 467,923
----------
Total expenses............................ 1,067,819
NET INVESTMENT INCOME BEFORE
FOREIGN TAXES WITHHELD.................. 3,420,883
FOREIGN TAXES WITHHELD.................... (50,224)
----------
NET INVESTMENT INCOME..................... 3,370,659
----------
NET REALIZED AND UNREALIZED
GAIN/(LOSS) ON SECURITIES AND
FOREIGN CURRENCIES:
Net realized gain/(loss) on:
Security transactions................... 2,743,361
Foreign currencies...................... (87,213)
----------
Net realized gain....................... 2,656,148
Net change in unrealized appreciation on
securities and foreign currencies...... 2,065,268
----------
NET REALIZED AND UNREALIZED
GAIN ON SECURITIES
AND FOREIGN CURRENCIES.................. 4,721,416
----------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS................ $8,092,075
==========
See accompanying notes
13
<PAGE>
DELAWARE GROUP
GLOBAL DIVIDEND AND INCOME FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
Six Months
Ended Year
May 31, Ended
1996 November 30,
(Unaudited) 1995
------------- -------------
OPERATIONS:
Net investment income..................... $ 3,370,659 $ 7,562,237
Net realized gain on securities
and foreign currencies................... 2,656,148 1,944,478
Net change in unrealized appreciation
on securities and foreign currencies.... 2,065,268 5,812,377
----------- -----------
Net increase in net assets
resulting from operations............... 8,092,075 15,319,092
----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income..................... (4,987,985) (8,777,060)
----------- -----------
CAPITAL SHARE TRANSACTIONS:
Cost of shares repurchased................ -- (713,795)
Additional offering costs charged to paid
in capital............................. -- (108,172)
----------- -----------
Decrease in net assets derived
from capital share transactions -- (821,967)
----------- -----------
NET INCREASE IN NET ASSETS................ 3,104,090 5,720,065
NET ASSETS:
Beginning of period....................... 93,500,273 87,780,208
----------- -----------
End of period (including distributions in
excess of net investment income of
$1,168,222 and undistributed
net investment income of
$449,104, respectively)................. $96,604,363 $93,500,273
=========== ===========
See accompanying notes
14
<PAGE>
DELAWARE GROUP
GLOBAL DIVIDEND AND INCOME FUND, INC.
STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED MAY 31, 1996
(UNAUDITED)
Increase (Decrease) in Cash:
(Including Foreign Currency)
Cash flows used for operating activities:
Interest and dividends received
(excluding amortization of $97,523) ................. $ 4,535,806
Operating expenses paid ................................ (665,985)
Interest expenses paid ................................. (363,281)
Purchase of short-term portfolio investments, net ...... (453,265)
Purchase of long-term portfolio investments ............ (74,931,908)
Proceeds from disposition of long-term
portfolio investments ................................ 51,549,306
------------
Net cash used for operating activities ................. (20,329,327)
------------
Cash flows provided by financing activities:
Cash provided by Line of Credit borrowing .............. 25,000,000
Cash used to pay Line of Credit offering expenses ...... (12,999)
Cash dividends paid .................................... (4,987,985)
------------
Net cash provided by financing activities .............. 19,999,016
Effect of exchange rates on cash ......................... (84,112)
------------
Net decrease in cash ..................................... (414,423)
Cash at beginning of period .............................. 475,883
------------
Cash at end of period .................................... $ 61,460
============
Reconciliation of Net Increase in Net Assets
Resulting from Operations to Net Cash (Including
Foreign Currency) Used for Operating Activities:
Net increase in net assets resulting from operations ..... $ 8,092,075
------------
Increase in investments ................................ (24,033,132)
Net realized gain from security transactions ........... (2,743,361)
Net realized loss on options written ................... 87,213
Change in net unrealized depreciation on securities .... (2,054,330)
Net change in unrealized foreign exchange gains ........ (10,938)
Decrease in receivable for investments sold ............ 1,480,442
Decrease in interest and dividends receivable .......... 194,852
Decrease in deferred organization expenses ............. 23,985
Decrease in payable for investments purchased .......... (1,380,700)
Increase in interest payable ........................... 104,641
Decrease in accrued expenses and other liabilities ..... (90,074)
------------
Total adjustments .................................... (28,421,402)
------------
Net cash used for operating activities ................... $(20,329,327)
============
See accompanying notes
<PAGE>
DELAWARE GROUP
GLOBAL DIVIDEND AND INCOME FUND, INC.
NOTES TO FINANCIAL STATEMENTS
MAY 31, 1996
(UNAUDITED)
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.
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 or traded on a national exchange,
except for debt securities, are valued at the last sale price on the exchange
where they are primarily traded. Securities listed on a foreign exchange are
valued at the last quoted sale price before the time when the Fund is valued.
Securities not traded on a particular day, over-the-counter securities and
government and agency securities are valued at the mean value between bid
and asked prices. 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 asked prices. Non-exchange-traded options are valued
using a mathematical model. Short-term instruments having a maturity date
of less than 60 days are valued at amortized cost. Debt securities are
valued by an independent pricing service when such prices are believed to
reflect the fair value of such securities. All assets and liabilities that
are expressed in foreign currencies are valued and translated into U.S.
dollars at the exchange rate of such currencies against the U.S. dollar as
provided by the pricing service as of 3:30 pm New York time; this constitutes
a change from the times recited in the Fund's prospectus for the valuation
of securities and translation of foreign currencies into U.S. dollars.
Forward foreign currency contracts are valued at the mean between the bid
and asked prices of the contracts. Interpolated values are derived when the
settlement date of the contracts is on an interim date for which quotations
are not available.
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 is required in the
financial statements.
Borrowings - The Fund has entered into a Line of Credit Agreement with
Societe Generale for $25,000,000. A total of $110,000 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).
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.
<PAGE>
Dividend Income and distributions are recorded on the ex-dividend date.
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. Interest income and expenses are recorded on
an accrual basis.
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.
Certain fund expenses are paid directly by brokers. The amount of these
expenses is less than 0.01% of the Fund's average weekly net assets.
2. Investment Management Fee and Other Transactions with Affiliates
In accordance with the terms of the Investment Management Agreement, the Fund
pays Delaware Management Company, Inc. (DMC), the Investment Manager
of the Fund, an annual fee equal to 0.70% of the Fund's adjusted average
weekly net assets. At May 31, 1996, the Fund had a liability for Investment
Management fees of $70,594.
The Fund has also entered into an advisory agreement with Delaware
International Advisers Ltd. (DIAL) (the "Subadviser"). 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.
The Fund has also entered into an Administration Agreement with Princeton
Administrators, L.P., the administrator of the Fund, which provides for
payment, subject to an annual minimum fee of $150,000, of a monthly fee
computed at the annual rate of 0.21% of the Fund's adjusted average weekly
net assets. At May 31, 1996, the Fund had a liability for administration fees
of $21,178.
For purposes of the calculation of investment management fees and
administration fees, adjusted weekly net assets do not include the
Line of Credit liability.
Officers, directors and employees of DMC, who are also officers, directors
and employees of the Fund, do not receive any compensation from the Fund.
3. Investments
During the six months ended May 31,1996, the Fund made purchases of
$73,551,208 and sales of $50,171,042 of investment securities other than U.S.
government securities and temporary cash investments.
At May 31,1996, net unrealized appreciation for federal income tax purposes
aggregated $1,988,266 of which $6,347,585 related to unrealized appreciation
of securities and $4,359,319 to unrealized depreciation of securities.
The realized gain for federal income tax purpose was $2,746,292 for the six
months ended May 31, 1996.
15
<PAGE>
Notes to Financial Statements (Continued)
Transactions in options written for the six months ended May 31, 1996, were
as follows:
<TABLE>
<CAPTION>
Options Terminated
--------------------------------------
Number Proceeds from Cost Net
of Premiums Sale of of Realized
Contracts Received Investments Investment Gain
<S> <C> <C> <C> <C> <C>
Options outstanding....... -- $ --
November 30, 1995.........
Contracts written......... 1,450 128,970
Contracts terminated:
Exercised................. 1,014 102,179 $5,332,500 $4,813,130 $621,549
Expired .................. 256 12,707 -- -- 12,707
----- -------- ---------- ---------- --------
Total contracts
terminated................ 1,270 114,886 $5,332,500 $4,813,130 $634,256
----- -------- ---------- ---------- --------
Contracts outstanding
May 31, 1996.............. 180 $ 14,084
===== ========
</TABLE>
4. Forward Foreign Currency Contracts
The Fund will, from time to time, enter into forward foreign currency
contracts. There are costs and risks associated with such currency
transactions. No type of foreign currency transaction will eliminate
fluctuations in the prices of the Fund's foreign securities or will prevent
loss if the prices of such securities should decline. No forward foreign
currency contracts were outstanding as of May 31, 1996.
5. Line of Credit
The Fund has entered into a Line of Credit Agreement with Societe Generale
for $25,000,000. At May 31, 1996, the par value of loans outstanding was
$25,000,000 at a variable interest rate of 6.027%. During the six months
ended May 31, 1996, the average daily balance of loans outstanding was
$25,000,000 at a weighted average interest rate of 5.859%. The maximium
amount of loans outstanding at any time during the period was $25,000,000.
The loan is collateralized by the Fund's portfolio.
6. Concentration of Credit Risk
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 in securities whose value is derived from an underlying
pool of mortgages or consumer loans. Prepayment of these loans may shorten
the stated maturity of the respective obligation and may result in a loss of
premium, if any has been paid.
The Fund may invest up to 10% of its total assets in illiquid securities
which include securities with contractual restrictions on resale, securities
exempt from registration under Rule 144A of the Securities Act of 1933, as
16
<PAGE>
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. These securities
have been denoted in the Statement of Net Assets.
7. Geographic Disclosure
As of May 31, 1996, the Fund's geographic diversification was as follows:
Percentage of
Total Securities
Country* Market Value at Value
- -------- ------------ ----------------
United States .................... $ 74,586,850 62.36%
United Kingdom ................... 9,176,190 7.67%
Spain ............................ 7,193,891 6.02%
Australia ........................ 6,027,710 5.04%
Greece ........................... 4,989,062 4.17%
South Africa ..................... 3,912,208 3.27%
Canada ........................... 2,516,397 2.10%
Italy ............................ 2,197,551 1.84%
France ........................... 1,623,233 1.36%
Netherlands ...................... 1,595,403 1.33%
Germany .......................... 1,297,730 1.09%
Hong Kong ........................ 1,002,260 0.84%
Poland ........................... 997,500 0.83%
Belgium .......................... 933,623 0.78%
New Zealand ...................... 909,786 0.76%
Indonesia ........................ 430,960 0.36%
Finland .......................... 211,863 0.18%
------------ -------
Total ............................ $119,602,217 100.00%
============ =======
* Based on the country of 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.
8. Capital stock
There are 500,000,000 shares of $0.01 par value capital stock authorized.
The Fund did not repurchase any shares under the Share Repurchase Program
during the six months ended May 31, 1996.
On June 3, 1996, the Fund declared its monthly dividend in the amount of
$0.125 per share. This dividend was payable June 28, 1996, to stockholders of
record at the close of business on June 14, 1996. The ex-dividend date was
June 12, 1996.
Shares issuable under the Fund's dividend reinvestment plan are purchased by
the Fund's transfer agent, IFTC, in the open market.
<PAGE>
Notes to Financial Statements (Continued)
9. Financial Highlights
Selected data for each share of the Fund outstanding throughout each period
were as follows:
<TABLE>
<CAPTION>
Six Months Ended For the Period
May 31, 1996 Year Ended March 4, 1994* to
(Unaudited) November 30, 1995 November 30, 1994
---------------- ----------------- -----------------
<S> <C> <C> <C>
Net asset value, beginning of period ........... $ 14.06 $ 13.09 $ 14.00+
Income from investment operations:
Net investment income ......................... 0.51 1.23 0.86
Net realized and unrealized gain (loss)
from security transactions ................... 0.71 1.06 (1.07)
------- ------- -------
Net increase (decrease) in net assets
from investment operations ................... 1.22 2.29 (0.21)
------- ------- -------
Less dividends and distributions:
Dividends from net investment income .......... (0.75) (1.32) (0.70)
Distributions from net gain on security
transactions ................................. -- -- --
------- ------- -------
Total dividends and distributions ............. (0.75) (1.32) (0.70)
------- ------- -------
Net asset value, end of period ................. $ 14.53 $ 14.06 $ 13.09
======= ======= =======
Market value, end of period .................... $ 15.38 $ 13.75 $ 11.75
======= ======= =======
Total investment return based on: (1)
Market value .................................. 17.62% 29.74% (17.15)%
======= ======= =======
Net asset value ............................... 8.70% 19.08% (1.11)%
======= ======= =======
Ratios and supplemental data:
Net assets, end of period (000 omitted) ...... $96,604 $93,500 $87,780
======= ======= =======
Ratio of total operating expenses to
adjusted average weekly net assets
(before interest expense) .................... 1.08%** 1.13% 1.32%**
Ratio of interest expense to adjusted
average weekly net assets ..................... 0.84%** N/A N/A
Ratio of net investment income to adjusted
average weekly net assets ..................... 6.08%** 8.39% 8.54%**
Portfolio turnover ............................. 94%** 101% 86%
Average commission rate paid ................... $0.0491 N/A N/A
</TABLE>
- ------------------
* Commencement of operations.
** Annualized.
+ Net of 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 iinvestment 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 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 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.
17
<PAGE>
BOARD OF
- ----------------------
DIRECTORS
- ----------------------
MR. WAYNE A. STORK MS. ANN R. LEVEN
Chairman, President and Deputy Treasurer
Chief Executive Officer National Gallery of Art
Delaware Group of Funds Washington, DC
Philadelphia, PA
MR. W. THACHER LONGSTRETH
MR. WALTER P. BABICH Vice Chairman
Board Chairman Packquisition Corp.
Citadel Constructors, Inc. Philadelphia, PA
King of Prussia, PA
MR. CHARLES E. PECK
MR. ANTHONY D. KNERR Secretary,
Consultant Enterprise Homes, Inc.
Anthony Knerr & Associates Columbia, MD
New York, NY
AUDIT
- ----------------------
COMMITTEE
- ----------------------
MR. WALTER P. BABICH
MS. ANN R. LEVEN
MR. ANTHONY D. KNERR
EXECUTIVE
- ----------------------
OFFICERS
- ----------------------
MR. WAYNE A. STORK
Chairman, President and
Chief Executive Officer
Delaware Group of Funds
Philadelphia, PA
MR. WINTHROP S. JESSUP
Executive Vice President
MR. RICHARD G. UNRUH, JR.
Executive Vice President
MR. PAUL E. SUCKOW
Senior Vice President/Chief
Investment Officer, Fixed-Income
MR. DAVID K. DOWNES
Senior Vice President/Chief
Administrative Officer/Chief
Financial Officer
MR. GEORGE M. CHAMBERLAIN, JR.
Senior Vice President/Secretary
MR. JOSEPH H. HASTINGS
Vice President/Corporate Controller
MR. MICHAEL P. BISHOF
Vice President/Treasurer
<PAGE>
The Delaware Group includes funds with a wide range of investment objectives.
Stock funds, income funds, tax-free funds, money market funds and closed-end
equity/income funds give investors the ability to create a portfolio that
fits their personal financial goals.
For a prospectus of any Delaware Group fund,
contact your financial adviser or call the Delaware
Group at 800-523-4640. Read the Prospectus carefully before investing.
BE SURE TO CONSULT YOUR FINANCIAL ADVISER WHEN MAKING INVESTMENT DECISIONS.
MUTUAL FUNDS CAN BE A VALUABLE PART OF YOUR FINANCIAL PLAN; HOWEVER, SHARES
OF THE FUND ARE NOT FDIC OR NCUSIF INSURED, ARE NOT GUARANTEED BY ANY CREDIT
UNION OR ANY BANK, ARE NOT OBLIGATIONS OF ANY CREDIT UNION OR ANY BANK, AND
INVOLVE INVESTMENT RISK, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL. SHARES OF
THE FUND ARE NOT CREDIT UNION OR BANK DEPOSITS.
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 IN THE OPEN MARKET.
PRINCIPAL OFFICE OF THE FUND
1818 Market Street
Philadelphia, Pennsylvania 19103
INVESTMENT MANAGER
Delaware Management Company, Inc.
Philadelphia, Pennsylvania
SUBADVISER
Delaware International Advisers Ltd.
London, England
INDEPENDENT AUDITORS
Ernst & Young LLP
2001 Market Street
Philadelphia, Pennsylvania 19103
REGISTRAR AND STOCK TRANSFER AGENT
Investors Fiduciary Trust Company
210 West 10th Street
Kansas City, Missouri 64105
800-596-8396
NUMBER OF RECORDHOLDERS DGIF
AS OF MAY 31, 1996 Listed
363 NYSE
THE NEW YORK STOCK EXCHANGE
GDIF -002[5/96]PP7/96
- ----------------------
DELAWARE
GROUP
GLOBAL
DIVIDEND
AND INCOME
FUND
- ----------------------
1996
SEMI-ANNUAL
REPORT
A Tradition of Sound Investing Since 1929
DELAWARE
GROUP
- ---------
Philadelphia * London
