Global Dividend
and Income Fund
service and guidance
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goals
professional management
1998
Annual
Report
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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.
<TABLE>
<CAPTION>
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
<S> <C> <C> <C>
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.
</TABLE>
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
<TABLE>
<CAPTION>
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
------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
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
</TABLE>
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.
<TABLE>
<CAPTION>
CONTRACTS IN
TO EXCHANGE SETTLEMENT NET UNREALIZED
DELIVER FOR DATE VALUE APPRECIATION/DEPRECIATION
------- ------- ------- ------- -------------------------
<S> <C> <C> <C> <C> <C>
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
------- ------- ------- ------- -------------------------
<S> <C> <C> <C> <C> <C>
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
</TABLE>
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]
