UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

FORM N-Q

QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS OF
REGISTERED MANAGEMENT INVESTMENT COMPANY

Investment Company Act file number:  811-22050 
 
Exact name of registrant as specified in charter:  Delaware Enhanced Global Dividend 
  and Income Fund 
 
Address of principal executive offices:  2005 Market Street 
  Philadelphia, PA 19103 
 
Name and address of agent for service:  David F. Connor, Esq. 
  2005 Market Street 
  Philadelphia, PA 19103 
 
Registrant’s telephone number, including area code:  (800) 523-1918 
 
Date of fiscal year end:  November 30 
 
Date of reporting period:  August 31, 2009 


Item 1. Schedule of Investments.

Schedule of Investments (Unaudited)

Delaware Enhanced Global Dividend and Income Fund

August 31, 2009

Number of Value
Shares             (U.S. $)
Common Stock – 42.66%v
Consumer Discretionary – 6.59%
Autoliv 17,100 $ 548,397
±*Bayerische Motoren Werke 13,922   636,215
Cablevision Systems 1,150 25,691
*†DIRECTV Group 1,500   37,140
Disney (Walt) 22,500 585,900
±*Don Quijote 26,500 634,389
±Esprit Holdings 85,574 520,675
Gap 28,800 565,920
*Home Depot 19,200 523,968
*KB HOME 17,000 309,570
Mattel 33,200 597,268
McGraw-Hill Companies 15,500 520,955
±*PPR 4,798 558,632
±*Publicis Groupe 13,059 481,384
±Round One 34,682 314,226
Target 12,600 592,200
±Techtronic Industries 622,500 611,626
±Toyota Motor 12,184 519,484
±Vivendi 21,204 605,362
±WPP Group 34,732 290,553
±Yue Yuen Industrial Holdings 106,000 280,027
9,759,582
Consumer Staples – 3.39%
Archer-Daniels-Midland 15,800 455,514
±*Coca-Cola Amatil 72,835 609,052
CVS Caremark 13,800 517,776
±@Greggs 61,810 408,366
Heinz (H.J.) 12,000 462,000
Kimberly-Clark 8,200 495,772
Kraft Foods Class A 16,600 470,610
±*Metro 10,082 548,781
±Parmalat 246,222 633,228
Safeway 22,000 419,100
5,020,199
Diversified REITs – 0.73%
±British Land 17,594 137,988
±*Corio 2,648 162,204
*Digital Realty Trust 4,400 191,752
Duke Realty 8,600 99,072
Lexington Reality Trust 27,211 126,803
±Stockland 29,000 92,293
±*Unibail-Rodamco 1,399 277,354
1,087,466
Energy – 4.15%
Anadarko Petroleum 10,900 576,282
±BP 63,145 541,225
Chevron 7,900 552,526
ConocoPhillips 11,000 495,330
Devon Energy 8,700 534,006
Exxon Mobil 6,800 470,220
Marathon Oil 16,800 518,616
Occidental Petroleum 7,000 511,700
Petroleo Brasiliero ADR 15,500 514,600
±*Total 9,279 532,501
†Transocean 5,300 401,952
Williams Companies 29,900 491,556
6,140,514
Financials – 5.47%
Allstate 20,400 599,556
±*AXA 21,672 495,069
±Banco Santander 38,742 596,522
Bank of New York Mellon 17,500 518,175
BB&T 21,100 589,534
Blackstone Group 4,000 51,560
Comerica 17,400 464,058
JPMorgan Chase & Co 13,900 604,094
Marsh & McLennan 22,700 534,358
±Mitsubishi UFJ Financial Group 117,989 750,128
±*Nordea Bank FDR 55,893 586,317
±†Standard Chartered 24,044 543,082
State Street 11,900 624,512
SunTrust Banks 25,200 588,924
Travelers 10,900     549,578
8,095,467



Health Care – 3.98%            
Abbott Laboratories 9,200 416,116
±Astellas Pharma 14,400 575,596
±AstraZeneca 5,604 260,136
Bristol-Myers Squibb 21,100 466,943
=Cardinal Health 12,900 320,307
Johnson & Johnson 7,900 477,476
Merck 19,200 622,656
±Novartis 14,244 661,616
±Novo Nordisk Class B 6,707 409,235
Pfizer 27,800 464,260
Quest Diagnostics 8,400 453,264
±Sanofi-Aventis 4,041 275,181
Wyeth 10,400 497,640
5,900,426
Health Care REITs – 0.06%
Nationwide Health Properties 2,800 89,264
89,264
Industrial REITs – 0.52%
±Cambridge Industrial Trust 2,167,000 646,450
±*ING Industrial Fund 307,371 130,963
777,413
Industrials – 5.10%
±Asahi Glass 63,000 547,991
±*Compagnie de Saint-Gobain 13,202 596,542
±Deutsche Post 33,775 583,523
±Finmeccanica 34,410 550,763
†Flextronics International 6,400 37,952
General Electric 25,800 358,620
Honeywell International 14,000 514,640
±*Koninklijke Philips Electronics 26,923 608,719
†Mobile Mini 2,394 42,446
Northrop Grumman 10,300 502,743
Pitney Bowes 18,900 422,415
±Singapore Airlines 45,000 401,953
±Singapore Airport Terminal Services 32,850 56,362
±Teleperformance 20,324 700,321
±Tomkins 186,009 535,795
±†*Vallourec 3,212 489,537
*Waste Management 20,100 601,593
7,551,915
Information Technology – 3.37%
†CGI Group Class A 99,428 1,028,158
†EMC 52,500 834,750
Intel 29,500 599,440
International Business Machines 4,200 495,810
†Motorola 85,500 613,890
±Nokia 39,149 549,644
±Samsung Electronics 457 281,775
Xerox 67,200 581,280
4,984,747
Malls REITs – 0.35%
*Simon Property Group 8,157 518,948
518,948
Manufactured Housing REITs – 0.06%
Equity Lifestyle Properties 2,300 92,575
92,575
Materials – 2.47%
*Agrium 11,500 548,665
Dow Chemical 29,000 617,410
duPont (E.I.) deNemours 15,400 491,722
±Lafarge 8,350 711,677
±Linde 5,562 562,111
Nucor 10,300 458,762
Vale ADR 13,900 267,019
3,657,366
Mortgage REITs – 0.14%
Annaly Mortgage Management 2,600 45,084
Chimera Investment 12,100 45,980
†Cypress Sharpridge Investments 8,200 114,800
205,864
Multifamily REITs – 0.10%
Camden Property Trust 3,900 143,130
143,130
Office REITs – 0.69%
HRPT Properties Trust 42,700 276,696
±ING UK Real Estate Trust 317,470 218,621
*Mack-Cali Realty 8,300 265,849
±Orix REIT 17 88,394
Parkway Properties 3,500 63,350
SL Green Realty 3,300 116,457
1,029,367



Real Estate Management & Development – 0.38%                        
±Mitsubishi Estate 4,549 75,240
Regency Centers 3,900 130,845
†Starwood Property Trust 17,700 350,283
556,368
Shopping Center REITs – 0.50%
Kimco Realty 16,900 212,094
±Link REIT 43,500 95,995
±Macquarie CountryWide Trust 355,587 189,275
Ramco-Gershenson Properties Trust 5,400 56,808
±Westfield Group 16,989 181,413
735,585
Telecommunications – 2.17%
AT&T 17,100 445,455
Chunghwa Telecom ADR 27,903 477,134
±*France Telecom 17,021 432,940
Frontier Communications 25,700 182,727
*†Leap Wireless International 1,050 17,315
†MetroPCS Communications 2,300 18,308
±Telstra 93,272 256,808
TELUS 8,961 277,908
Verizon Communications 14,500 450,080
±Vodafone Group 302,726 655,272
3,213,947
Utilities – 2.44%
American Electric Power 14,200 446,306
Duke Energy 32,600 504,974
Edison International 14,300 477,763
±National Grid 57,700 554,857
NorthWestern 3,800 91,162
Progress Energy 13,100 517,843
Public Service Enterprise Group 15,000 475,050
Sempra Energy 10,800 541,836
3,609,791
Total Common Stock (cost $77,949,470) 63,169,934
 
Convertible Preferred Stock – 2.48%
Banking, Finance & Insurance – 0.04%
@Fannie Mae 8.75% exercise price $32.45, expiration date 5/13/11 20,000 59,800
59,800
Energy – 0.13%
Whiting Petroleum 6.25% exercise price $43.42, expiration date 12/31/49 1,500 192,000
192,000
Health Care & Pharmaceuticals – 1.02%
Mylan 6.50% exercise price $17.08, expiration date 11/15/10 1,000 969,950
Schering-Plough 6.00% exercise price $33.69, expiration date 8/13/10 2,250 545,484
1,515,434
Health Care REITs – 0.18%
Nationwide Health Properties 7.75% exercise price $22.25, expiration date 12/31/49 1,800 258,138
258,138
Telecommunications – 1.11%
Crown Castle International 6.50% exercise price $36.88, expiration date 8/15/12 18,000 911,250
Lucent Technologies Capital Trust I 7.75% exercise price $24.80, expiration date 3/15/17 1,000 730,250
1,641,500
Total Convertible Preferred Stock (cost $4,682,130) 3,666,872
 
Principal
Amount°
Agency Collateralized Mortgage Obligations – 0.41%
Fannie Mae
       Series 2001-50 BA 7.00% 10/25/41 USD 183,768 200,479
       Series 2003-122 4.50% 2/25/28 115,389 118,705
Freddie Mac
       Series 2557 WE 5.00% 1/15/18 60,000 63,484
       Series 3094 US 6.75% 9/15/34 86,274 84,068
       Series 3131 MC 5.50% 4/15/33 40,000 42,523
       Series 3173 PE 6.00% 4/15/35 65,000 69,436
       Series 3337 PB 5.50% 7/15/30 25,000 26,094
Total Agency Collateralized Mortgage Obligations (cost $570,047) 604,789
 
Agency Mortgage-Backed Securities – 3.31%
·Fannie Mae ARM
       5.142% 11/1/35 32,450 33,901
       5.154% 3/1/38 75,201 78,666
       5.391% 4/1/36 40,128 42,139
       6.024% 10/1/36 47,066 49,581
       6.09% 10/1/36 31,315 33,103
       6.30% 4/1/36 173,619 182,418
Fannie Mae S.F. 15 yr 5.50% 1/1/23 81,950 86,370




Fannie Mae S.F. 30 yr            
       5.00% 12/1/36 238,699 245,920
       5.00% 12/1/37 30,577 31,436
       5.00% 2/1/38 23,988 24,657
       6.50% 6/1/36 56,863 60,944
       6.50% 10/1/36 43,211 46,313
       6.50% 3/1/37 41,048 43,994
       6.50% 7/1/37 978,692 1,048,482
       6.50% 8/1/37 60,912 65,256
       6.50% 11/1/37 40,526 43,416
       6.50% 12/1/37 58,976 63,181
Freddie Mac 6.00% 1/1/17 94,692 99,118
•Freddie Mac ARM
       5.677% 7/1/36 28,359 29,892
       5.815% 10/1/36 74,695 78,250
Freddie Mac S.F. 15 yr
       5.00% 6/1/18 26,823 28,325
       5.00% 12/1/22 174,241 182,305
Freddie Mac S.F. 30 yr
       5.00% 1/1/34 1,158,463 1,195,865
       7.00% 11/1/33 69,841 76,686
       9.00% 9/1/30 82,789 95,002
Freddie Mac S.F. 30 yr TBA
       4.00% 9/1/39 70,000 68,359
       5.00% 10/1/39 50,000 51,328
GNMA I S.F. 30 yr
       7.50% 12/15/23 131,727   146,820
       7.50% 1/15/32 101,744 114,060
       9.50% 9/15/17 83,387 93,077
       12.00% 5/15/15 70,124 79,488
GNMA II S.F. 30 yr
       6.00% 11/20/28 121,783 129,911
       6.50% 2/20/30 226,858 245,339
Total Agency Mortgage-Backed Securities (cost $4,619,969) 4,893,602
 
Agency Obligations – 1.02%
*Federal Home Loan Bank 5.00% 11/17/17 1,395,000 1,511,918
Total Agency Obligations (cost $1,519,594) 1,511,918
 
Commercial Mortgage-Backed Securities – 1.47%
#American Tower Trust 144A
       Series 2007-1A AFX 5.42% 4/15/37 75,000 71,250
       Series 2007-1A D 5.957% 4/15/37 25,000 22,750
·Bank of America Commercial Mortgage Securities
       Series 2004-3 A5 5.578% 6/10/39 50,000 49,019
       Series 2005-6 A4 5.351% 9/10/47 180,000 170,003
       Series 2005-6 AM 5.351% 9/10/47 25,000 19,729
       Series 2007-3 A4 5.837% 6/10/49 30,000 22,982
       Series 2007-4 AM 6.002% 2/10/51 40,000 28,138
Bear Stearns Commercial Mortgage Securities
       ·Series 2005-PW10 A4 5.405% 12/11/40 100,000 98,685
       Series 2006-PW14 A4 5.201% 12/11/38 60,000 53,479
       ·Series 2006-PW12 A4 5.903% 9/11/38 25,000 23,460
       Series 2007-PW15 A4 5.331% 2/11/44 75,000 62,448
       ·Series 2007-T28 A4 5.742% 9/11/42 65,000 60,207
w·Commercial Mortgage Pass Through Certificates Series 2005-C6 A5A 5.116% 6/10/44 95,000 91,707
Goldman Sachs Mortgage Securities II
       ·Series 2004-GG2 A6 5.396% 8/10/38 60,000 55,441
       Series 2005-GG4 A4A 4.751% 7/10/39 170,000 157,513
       ·Series 2006-GG6 A4 5.553% 4/10/38 60,000 52,704
       ·Series 2007-GG10 A4 5.999% 8/10/45 70,000 54,723
·Greenwich Capital Commercial Funding Series 2004-GG1 A7 5.317% 6/10/36 25,000 25,083
·JPMorgan Chase Commercial Mortgage Securities
       Series 2005-LDP3 A4A 4.936% 8/15/42 35,000 33,517
       Series 2005-LDP5 A4 5.344% 12/15/44 150,000 142,346
·Merrill Lynch/Countrywide Commercial Mortgage Trust Series 2007-7 A4 5.81% 6/12/50 150,000 108,908
Morgan Stanley Capital I
       Series 2005-IQ9 A4 4.66% 7/15/56 350,000 343,049
       ·Series 2006-HQ9 A4 5.731% 7/12/44 175,000 168,097
       ·Series 2007-IQ14 A4 5.692% 4/15/49 150,000 116,736
       ·Series 2007-T27 A4 5.803% 6/11/42 160,000 147,307
Total Commercial Mortgage-Backed Securities (cost $2,172,235) 2,179,281
 
Convertible Bonds – 10.91%
Aerospace & Defense – 0.33%
L-3 Communications Holdings 3.00% exercise price $100.14, expiration date 8/1/35 460,000 462,300
#L-3 Communications Holdings 144A 3.00% exercise price $100.14, expiration date 8/1/35 25,000 25,125
487,425
Banking, Finance & Insurance – 0.61%
National City 4.00% exercise price $482.51, expiration date 2/1/11 895,000 899,475
899,475
Basic Industry – 1.23%
Century Aluminum 1.75% exercise price $30.45, expiration date 8/1/24 30,000 26,325
*Rayonier TRS Holdings 3.75% exercise price $54.82, expiration date 10/15/12 1,250,000 1,310,938
#Sino-Forest 144A 5.00% exercise price $20.29, expiration date 8/1/13 500,000 487,500
1,824,763



Cable, Media & Publishing – 0.08%            
Interpublic Group 4.25% exercise price $12.42, expiration date 3/15/23 105,000 96,863
Sinclair Broadcast Group 3.00% exercise price $19.65, expiration date 5/15/27 20,000 17,975
114,838
Computers & Technology – 1.51%
Advanced Micro Devices 6.00% exercise price $28.08, expiration date 5/1/15 775,000 523,125
Euronet Worldwide 3.50% exercise price $40.48, expiration date 10/15/25 900,000 830,249
*#Intel 144A 3.25% exercise price $22.68, expiration date 8/1/39 125,000 133,594
Linear Technology 3.125% exercise price $47.33, expiration date 5/1/27 750,000 749,063
2,236,031
Consumer Cyclical – 0.04%
Beazer Homes USA 4.625% exercise price $49.64, expiration date 6/15/24 80,000 66,400
66,400
Electronics & Electrical Equipment – 0.09%
Flextronics International 1.00% exercise price $15.53, expiration date 8/1/10 140,000 135,450
135,450
Energy – 0.48%
Chesapeake Energy 2.25% exercise price $85.89, expiration date 12/15/38 750,000 507,188
Transocean 1.50% exercise price $168.61, expiration date 12/15/37 220,000 203,775
710,963
Health Care & Pharmaceuticals – 1.51%
fHologic 2.00% exercise price $38.59, expiration date 12/15/37 910,000 739,375
Inverness Medical Innovations 3.00% exercise price $43.98, expiration date 5/15/16 980,000 978,775
Medtronic 1.625% exercise price $55.41, expiration date 4/15/13 525,000 520,406
2,238,556
Industrials – 0.15%
Allied Waste Industries 4.25% exercise price $45.40, expiration date 4/15/34 222,000 222,000
222,000
Leisure, Lodging & Entertainment – 0.24%
#International Game Technology 144A 3.25% exercise price $19.97, expiration date 5/1/14 275,000 352,000
352,000
Real Estate – 1.78%
#Corporate Office Properties 144A 3.50% exercise price $53.12, expiration date 9/15/26 325,000 314,031
Developers Diversified Realty 3.00% exercise price $74.75, expiration date 3/15/12 90,000 77,175
#Digital Realty Trust 144A 5.50% exercise price $43.00, expiration date 4/15/29 380,000 445,550
ProLogis 2.25% exercise price $75.98, expiration date 4/1/37 1,280,000 1,108,800
Vornado Realty Trust 2.85% exercise price $159.04, expiration date 3/15/27 750,000 690,000
2,635,556
Telecommunications – 2.38%
Alaska Communications Systems Group 5.75% exercise price $12.90, expiration date 3/1/13 1,000,000 889,999
Level 3 Communications 5.25% exercise price $3.98, expiration date 12/15/11 750,000 654,375
Lucent Technologies 2.875% exercise price $16.75, expiration date 6/15/23 45,000 43,763
NII Holdings 3.125% exercise price $118.32, expiration date 6/15/12 1,000,000 852,499
Qwest Communications International 4.00% exercise price $5.12, expiration date 11/15/25 200,000 199,000
#SBA Communications 144A 4.00% exercise price $30.38, expiration date 10/1/14 285,000 295,688
#Virgin Media 144A 6.50% exercise price $19.22, expiration date 11/15/16 643,000 585,934
3,521,258
Transportation – 0.48%
Bristow Group 3.00% exercise price $77.34, expiration date 6/14/38 875,000 715,313
715,313
Total Convertible Bonds (cost $15,078,325) 16,160,028
 
Corporate Bonds– 40.03%
Banking – 2.81%
·BAC Capital Trust XIV 5.63% 12/31/49 205,000 128,638
Bank of America
       5.125% 11/15/14 100,000 100,449
       5.75% 12/1/17 75,000 73,073
Barclays Bank 5.20% 7/10/14 100,000 105,089
#Barclays Bank 144A 6.05% 12/4/17 100,000 98,853
BB&T 6.85% 4/30/19 85,000 92,651
BB&T Capital Trust I 5.85% 8/18/35 30,000 24,450
BB&T Capital Trust II 6.75% 6/7/36 35,000 29,313
Capital One Financial 7.375% 5/23/14 150,000 163,791
Credit Suisse/New York 6.00% 2/15/18 100,000 103,018
JPMorgan Chase Capital XXII 6.45% 2/2/37 35,000 30,177
JPMorgan Chase Capital XXV 6.80% 10/1/37 105,000 99,249
·Kazkommerts Finance 8.625% 7/27/16 1,000,000 540,000
#National Australia Bank 144A 3.375% 7/8/14 100,000 100,046
PNC Funding
       5.25% 11/15/15 100,000 102,047
       5.625% 2/1/17 60,000 59,417
@Popular North America Capital Trust I 6.564% 9/15/34 100,000 73,606
·#Rabobank Nederland 144A 11.00% 12/29/49 275,000 325,718
*#Russian Agricultural Bank 144A 9.00% 6/11/14 1,000,000 1,067,401
U.S. Bank North America 4.80% 4/15/15 35,000 36,758
·USB Capital IX 6.189% 4/15/49 295,000 215,350
·Wells Fargo Capital XIII 7.70% 12/29/49 420,000 367,500



Zions Bancorporation            
       5.50% 11/16/15 80,000 60,875
       5.65% 5/15/14 15,000 10,825
       6.00% 9/15/15 215,000 155,262
4,163,556
Basic Industry – 5.21%
ArcelorMittal
       6.125% 6/1/18 95,000 91,078
       9.85% 6/1/19 30,000 34,322
California Steel Industries 6.125% 3/15/14 135,000 123,863
•#Cognis GmbH 144A 2.629% 9/15/13 95,000 80,275
Domtar
       7.125% 8/15/15 80,000   77,400
       7.875% 10/15/11 3,000 3,094
Dow Chemical 8.55% 5/15/19 170,000 185,483
#Evraz Group 144A
       8.25% 11/10/15 1,000,000 877,500
       9.50% 4/24/18 280,000 250,950
Freeport McMoRan Copper & Gold 8.25% 4/1/15 195,000 203,514
Georgia-Pacific
       7.70% 6/15/15 75,000 73,125
       8.875% 5/15/31 148,000 142,080
Huntsman International
       *7.375% 1/1/15 110,000 95,150
       7.875% 11/15/14 235,000 210,325
Innophos 8.875% 8/15/14 230,000 224,250
@#Innophos Holdings 144A 9.50% 4/15/12 115,000 108,675
Lubrizol 8.875% 2/1/19 75,000 92,617
#MacDermid 144A 9.50% 4/15/17 280,000 236,600
·Noranda Aluminium Acquisition PIK 5.413% 5/15/15 176,243 108,389
Norske Skog Canada 8.625% 6/15/11 210,000 123,900
@#Norske Skogindustrier 144A 7.125% 10/15/33 150,000 76,500
#Novelis 144A 11.50% 2/15/15 105,000 102,113
Reliance Steel & Aluminum 6.85% 11/15/36 59,000 46,156
Rockwood Specialties Group 7.50% 11/15/14 165,000 160,050
Ryerson
       ·7.858% 11/1/14 115,000 98,325
       12.00% 11/1/15 65,000 60,125
#Sappi Papier Holding 144A 6.75% 6/15/12 230,000 191,129
Southern Copper 7.50% 7/27/35 1,000,000 999,914
#Steel Capital 144A 9.75% 7/29/13 1,100,000 1,069,749
#Steel Dynamics 144A 8.25% 4/15/16 190,000 187,625
#Teck Resources 144A
       10.25% 5/15/16 60,000 66,600
       10.75% 5/15/19 115,000 131,531
Vale Overseas 6.875% 11/21/36 979,000 985,075
#Vedanta Resources 144A 9.50% 7/18/18 205,000 193,725
7,711,207
Brokerage – 1.49%
Citigroup
       6.375% 8/12/14 35,000 35,431
       6.50% 8/19/13 195,000 200,407
·Citigroup Capital XXI 8.30% 12/21/57 100,000 85,250
Goldman Sachs Group
       5.25% 10/15/13 35,000 36,979
       5.95% 1/18/18 100,000 104,272
       6.25% 9/1/17 20,000 21,232
       6.75% 10/1/37 10,000 10,043
Jefferies Group
       6.25% 1/15/36 5,000 3,864
       6.45% 6/8/27 65,000 51,857
       8.50% 7/15/19 15,000 15,528
JPMorgan Chase & Co 6.30% 4/23/19 100,000 109,828
LaBranche & Co 11.00% 5/15/12 315,000 294,131
Lazard Group
       6.85% 6/15/17 50,000 48,995
       7.125% 5/15/15 9,000 9,051
Morgan Stanley
       5.375% 10/15/15 100,000 102,449
       6.00% 4/28/15 160,000 169,215
#Morgan Stanley 144A 10.09% 5/3/17 2,000,000 901,035
2,199,567
Capital Goods – 2.44%
Associated Materials 9.75% 4/15/12 145,000 130,500
#BAE Systems Holdings 144A
       4.95% 6/1/14 55,000 56,958
       6.375% 6/1/19 80,000 86,948
Building Materials 7.75% 8/1/14 155,000 146,475
#BWAY 144A 10.00% 4/15/14 195,000 203,288
·#C8 Capital 144A 6.64% 12/31/49 140,000 92,342
*#Case New Holland 144A 7.75% 9/1/13 105,000 103,950
*#CPM Holdings 144A 10.625% 9/1/14 40,000 40,600
Eastman Kodak 7.25% 11/15/13 155,000 122,063
#FMG Finance 144A 10.625% 9/1/16 130,000 139,750



Graham Packaging 9.875% 10/15/14             305,000             304,999
*Graphic Packaging International
       8.50% 8/15/11 14,000 14,035
       9.50% 8/15/13 325,000 327,437
#Graphic Packaging International 144A 9.50% 6/15/17 60,000 61,800
Jabil Circuit 7.75% 7/15/16 110,000 108,763
L-3 Communications 6.125% 7/15/13     130,000 126,750
Moog 7.25% 6/15/18 135,000 128,925
#Plastipak Holdings 144A
       8.50% 12/15/15 105,000 100,800
       *10.625% 8/15/19 105,000 110,250
Pregis 12.375% 10/15/13 100,000 90,500
RBS Global/Rexnord
       9.50% 8/1/14 95,000 87,875
       *11.75% 8/1/16 165,000 139,425
*Sally Holdings 10.50% 11/15/16 225,000 234,562
Solo Cup 8.50% 2/15/14 205,000 189,113
Thermadyne Holdings 10.50% 2/1/14 195,000 156,488
Tyco International Finance 8.50% 1/15/19 80,000 96,749
USG 6.30% 11/15/16 205,000 165,025
#USG 144A 9.75% 8/1/14 45,000 46,463
3,612,833
Consumer Cyclical – 3.66%
#Allison Transmission 144A 11.00% 11/1/15 250,000 226,250
Beazer Homes USA 8.625% 5/15/11 60,000 50,700
Burlington Coat Factory Warehouse 11.125% 4/15/14 85,000 80,113
Carrols 9.00% 1/15/13 50,000   48,875
w#CVS Pass Through Trust 144A 8.353% 7/10/31 129,826 139,153
Darden Restaurants 6.80% 10/15/37 80,000 79,446
Denny's Holdings 10.00% 10/1/12 75,000 75,563
*Ford Motor 7.45% 7/16/31 270,000 207,900
Ford Motor Credit
       ·3.26% 1/13/12 135,000 112,556
       7.25% 10/25/11 60,000 56,448
       7.50% 8/1/12 100,000 92,100
       7.80% 6/1/12 295,000 273,051
       *8.00% 6/1/14 145,000 133,707
       9.875% 8/10/11 185,000 183,122
#GMAC 144A
       6.00% 12/15/11 135,000 121,500
       6.625% 5/15/12 110,000 97,900
       6.875% 9/15/11 325,000 303,062
       6.875% 8/28/12 293,000 257,840
Goodyear Tire & Rubber
       *9.00% 7/1/15 165,000 168,300
       10.50% 5/15/16 60,000 64,350
Interface 9.50% 2/1/14 25,000 23,969
#Interface 144A 11.375% 11/1/13 30,000 31,988
#Invista 144A 9.25% 5/1/12 175,000 172,594
#Landry's Restaurants 144A 14.00% 8/15/11 100,000 100,125
Levi Strauss 9.75% 1/15/15 196,000 201,390
M/I Homes 6.875% 4/1/12 90,000 83,250
Macy's Retail Holdings
       8.875% 7/15/15 195,000 198,450
       10.625% 11/1/10 65,000 66,702
Meritage Homes
       6.25% 3/15/15 35,000 30,275
       7.00% 5/1/14 160,000 141,600
Mobile Mini 6.875% 5/1/15 125,000 111,250
Mohawk Industries 6.625% 1/15/16 115,000 108,041
Nordstrom
       6.75% 6/1/14 55,000 59,460
       7.00% 1/15/38 35,000 36,573
*OSI Restaurant Partners 10.00% 6/15/15 127,000 105,410
*Rite Aid 9.375% 12/15/15 275,000 203,500
Ryland Group 8.40% 5/15/17 140,000 142,800
#Sealy Mattress 144A 10.875% 4/15/16 55,000 59,400
Target
       4.00% 6/15/13 60,000 60,581
       7.00% 1/15/38 100,000 115,741
Tenneco 8.625% 11/15/14 225,000 199,125
Toys R US
       *7.625% 8/1/11 140,000 133,000
       7.875% 4/15/13 100,000 85,750
#Toys R Us Property 144A 10.75% 7/15/17 5,000 5,100
#TRW Automotive 144A
       7.00% 3/15/14 100,000 87,500
       7.25% 3/15/17 100,000 84,500
5,420,010
Consumer Non-Cyclical – 2.02%
#Alliance One International 144A 10.00% 7/15/16 205,000 203,463
AmBev International Finance 10.00% 7/24/17 BRL 1,189,000 597,811



#Anheuser-Busch InBev Worldwide 144A                        
       5.375% 11/15/14 USD 45,000 47,982
       6.875% 11/15/19 65,000   72,844
       7.20% 1/15/14 50,000 56,211
Beckman Coulter
       6.00% 6/1/15 40,000 42,681
       7.00% 6/1/19 15,000 16,889
Cornell 10.75% 7/1/12 60,000 60,975
Delhaize America 9.00% 4/15/31 70,000 90,600
Delhaize Group 5.875% 2/1/14 10,000 10,661
#Dole Food 144A 13.875% 3/15/14 140,000 160,300
#Heinz (H.J.) Finance 144A 7.125% 8/1/39 45,000 53,020
#Ingles Markets 144A 8.875% 5/15/17   115,000 115,863
#JBS USA Finance 144A 11.625% 5/1/14 170,000 179,350
Johnsondiversey Holding 10.67% 5/15/13 160,000 150,400
LVB Acquisition 11.625% 10/15/17   110,000 116,875
LVB Acquisition PIK 10.375% 10/15/17 85,000 89,038
Medco Health Solutions 7.125% 3/15/18 95,000 107,297
#M-Foods Holdings 144A 9.75% 10/1/13 65,000 66,138
New Albertson's 7.25% 5/1/13 65,000 63,700
Smithfield Foods 7.75% 5/15/13 130,000 107,900
#Smithfield Foods 144A 10.00% 7/15/14 165,000 169,125
Supervalu 8.00% 5/1/16 30,000 29,663
Tenet Healthcare 7.375% 2/1/13 195,000 180,374
Visant Holding 8.75% 12/1/13 180,000 182,699
Yankee Acquisition 8.50% 2/15/15 25,000 22,750
2,994,609
Energy – 5.54%
Berry Petroleum 10.25% 6/1/14 100,000 104,875
Chesapeake Energy
       *6.375% 6/15/15 30,000 27,488
       7.00% 8/15/14 40,000 38,200
       9.50% 2/15/15 140,000 143,500
Complete Production Services 8.00% 12/15/16 130,000 112,125
Copano Energy 7.75% 6/1/18 125,000 116,250
Denbury Resources
       *7.50% 4/1/13 10,000 9,950
       9.75% 3/1/16 105,000 111,038
Dynergy Holdings 7.75% 6/1/19 210,000 150,150
El Paso
       6.875% 6/15/14 145,000 142,172
       7.00% 6/15/17 205,000 193,707
       7.25% 6/1/18 15,000 14,283
       8.25% 2/15/16 25,000 25,375
Enbridge Energy Partners 9.875% 3/1/19 50,000 61,954
Energy Transfer Partners
       5.65% 8/1/12 20,000 21,130
       9.70% 3/15/19 45,000 55,558
Enterprise Products Operating 9.75% 1/31/14 70,000 84,340
Forest Oil 7.25% 6/15/19 135,000 127,575
Geophysique-Veritas 7.75% 5/15/17 205,000 194,750
#Helix Energy Solutions Group 144A 9.50% 1/15/16 235,000 222,075
#Hilcorp Energy I 144A 7.75% 11/1/15 220,000 204,050
#Holly 144A 9.875% 6/15/17 100,000 100,250
International Coal Group 10.25% 7/15/14 180,000 153,000
*Key Energy Services 8.375% 12/1/14 250,000 227,500
Kinder Morgan Energy Partners
       6.85% 2/15/20 115,000 126,682
       9.00% 2/1/19 30,000 36,304
Lukoil International Finance B 6.356% 6/7/17 1,000,000 944,999
Magellan Midstream Partners 6.55% 7/15/19 50,000 55,294
Mariner Energy 8.00% 5/15/17 270,000 240,300
MarkWest Energy Partners/Finance 8.75% 4/15/18 125,000 119,375
Massey Energy 6.875% 12/15/13 310,000 292,949
Nexen 7.50% 7/30/39 60,000 63,040
Noble Energy 8.25% 3/1/19 70,000 83,660
*ONEOK Partners 8.625% 3/1/19 50,000 59,894
OPTI Canada 7.875% 12/15/14 255,000 164,475
Petrobras International Finance 7.875% 3/15/19 30,000 33,975
PetroHawk Energy 7.875% 6/1/15 225,000 219,375
Petroleum Development 12.00% 2/15/18 145,000 135,575
Plains All American Pipeline
       4.25% 9/1/12 20,000 20,435
       6.50% 5/1/18 105,000 111,221
Quicksilver Resources 11.75% 1/1/16 185,000 197,025
Quiksilver 6.875% 4/15/15 200,000 128,000
Regency Energy Partners 8.375% 12/15/13 85,000 83,938
#SandRidge Energy 144A 9.875% 5/15/16 185,000 185,925
Talisman Energy 7.75% 6/1/19 60,000 69,943
TNK-BP Finance 7.875% 3/13/18 2,000,000 1,897,499
·TransCanada Pipelines 6.35% 5/15/67 25,000 21,030
Weatherford International
       4.95% 10/15/13 45,000 46,494
       5.15% 3/15/13 30,000 31,286
       5.95% 6/15/12 25,000 26,854
       9.625% 3/1/19 20,000 24,337



Whiting Petroleum 7.25% 5/1/13             145,000             144,275
8,205,454
Finance & Investments – 1.43%
Capital One Capital V 10.25% 8/15/39 200,000 203,842
Cardtronics 9.25% 8/15/13 270,000 264,600
General Electric Capital
       5.875% 1/14/38 65,000 57,887
       6.00% 8/7/19 145,000 146,370
       6.875% 1/10/39 40,000 39,795
*·#ILFC E-Capital Trust II 144A 6.25% 12/21/65 50,000 21,500
International Lease Finance
       5.25% 1/10/13 135,000 104,230
       5.35% 3/1/12 65,000 53,642
       5.55% 9/5/12 90,000 71,698
       5.625% 9/20/13 165,000 126,967
       5.875% 5/1/13 30,000 23,627
       6.375% 3/25/13 70,000 54,969
       6.625% 11/15/13 145,000 112,374
MetLife
       6.40% 12/15/36 360,000 287,100
       6.75% 6/1/16 55,000 60,246
       6.817% 8/15/18 15,000 16,600
•#Metlife Capital Trust X 144A 9.25% 4/8/38 125,000 121,861
@#Nuveen Investments 144A 10.50% 11/15/15 415,000 313,326
WellPoint 7.00% 2/15/19 25,000 27,685
2,108,319
Media – 2.43%
Affinion Group 11.50% 10/15/15 100,000 96,500
Belo 6.75% 5/30/13 125,000 109,375
#Charter Communications Operating 144A
       *10.00% 4/30/12 45,000 45,563
       10.375% 4/30/14 95,000 96,663
       10.875% 9/15/14 520,000 566,799
Comcast
       5.85% 11/15/15 31,000 33,650
       6.50% 1/15/15 31,000 34,369
COX Communications 5.45% 12/15/14 100,000 106,311
#COX Communications 144A
       6.95% 6/1/38 5,000 5,482
       8.375% 3/1/39 20,000 24,879
#DISH DBS 144A 7.875% 9/1/19 105,000 104,081
@Grupo Televisa 8.49% 5/11/37 MXN 10,000,000 568,728
Interpublic Group 6.25% 11/15/14 USD 58,000 53,795
#Interpublic Group 144A 10.00% 7/15/17 60,000 63,000
Lamar Media
       *6.625% 8/15/15 105,000 94,500
       6.625% 8/15/15 140,000 123,200
LIN Television 6.50% 5/15/13 30,000 22,800
#Mediacom Capital 144A 9.125% 8/15/19 140,000 139,299
Nielsen Finance
       10.00% 8/1/14 110,000 104,500
       11.50% 5/1/16 40,000 40,000
       11.625% 2/1/14 35,000 34,913
       W12.50% 8/1/16 95,000 66,975
#Nielsen Finance 144A 11.625% 2/1/14 50,000 49,875
#Rainbow National Services 144A 10.375% 9/1/14 65,000 68,250
Sinclair Broadcast Group 8.00% 3/15/12 25,000 20,688
#Sirius XM Radio 144A 9.75% 9/1/15 25,000 25,125
#Terremark Worldwide 144A 12.00% 6/15/17 95,000 100,344
Time Warner Cable 6.75% 7/1/18 95,000 105,125
#Univision Communications 144A 12.00% 7/1/14 65,000 68,575
#UPC Holding 144A 9.875% 4/15/18 100,000 101,625
Videotron Ltee
       6.375% 12/15/15 95,000 87,638
       9.125% 4/15/18 90,000 95,400
#Videotron Ltee 144A 9.125% 4/15/18 30,000 31,800
#Vivendi 144A
       5.75% 4/4/13 40,000 41,018
       6.625% 4/4/18 100,000 104,987
WPP Finance UK 8.00% 9/15/14 100,000 109,642
XM Satellite Radio PIK 10.00% 6/1/11 60,000 54,450
3,599,924
Real Estate – 0.08%
Developers Diversified Realty 5.375% 10/15/12 100,000 90,898
Regency Centers 5.875% 6/15/17 35,000 31,624
122,522
Services Cyclical – 2.71%
ARMARK 8.50% 2/1/15 205,000 199,875
#Ashtead Capital 144A 9.00% 8/15/16 100,000 88,250
Avis Budget Car Rental 7.75% 5/15/16 125,000 100,000



CSX            
       5.75% 3/15/13 25,000 26,504
       6.25% 3/15/18 85,000 91,846
Delta Air Lines 7.92% 11/18/10 90,000 82,800
#Galaxy Entertainment Finance 144A 9.875% 12/15/12 305,000 297,374
Gaylord Entertainment
       6.75% 11/15/14 80,000 67,800
       8.00% 11/15/13 180,000 165,150
Global Cash Access 8.75% 3/15/12 185,000 182,688
#Harrah's Operating Escrow144A
       10.00% 12/15/18 145,000   102,225
       11.25% 6/1/17 319,000 326,177
Hertz
       8.875% 1/1/14 150,000 144,375
       *10.50% 1/1/16 140,000 138,600
Kansas City Southern de Mexico 9.375% 5/1/12 250,000 247,500
MGM MIRAGE
       *6.625% 7/15/15 60,000 43,350
       7.50% 6/1/16 175,000 126,000
       *7.625% 1/15/17 130,000 93,600
#MGM MIRAGE 144A  
       11.125% 11/15/17 80,000 87,000
       13.00% 11/15/13 225,000 252,000
Pinnacle Entertainment 7.50% 6/15/15 330,000 288,750
@#Pokagon Gaming Authority 144A 10.375% 6/15/14 210,000 213,150
Royal Caribbean Cruises 6.875% 12/1/13 125,000 108,750
RSC Equipment Rental 9.50% 12/1/14 210,000 189,000
@#Seminole Indian Tribe of Florida 144A  
       7.804% 10/1/20 160,000 137,458
       8.03% 10/1/20 55,000 47,794
#Shingle Springs Trial Gaming Authority 144A 9.375% 6/15/15 230,000 164,450
4,012,466
Services Non-cyclical – 2.08%
Alliance Imaging 7.25% 12/15/12 120,000 112,800
Allied Waste North America
       6.875% 6/1/17 10,000 10,441
       7.125% 5/15/16 25,000 26,035
Bausch & Lomb 9.875% 11/1/15 205,000 206,538
Browning-Ferris Industries 7.40% 9/15/35 120,000 118,644
#CareFusion 144A 6.375% 8/1/19 60,000 64,320
Casella Waste Systems 9.75% 2/1/13 305,000 271,449
Community Health Systems 8.875% 7/15/15 100,000 100,875
DJO Finance 10.875% 11/15/14 120,000 115,800
Elan Finance 7.75% 11/15/11 165,000 160,875
Express Scripts 6.25% 6/15/14 20,000 21,881
HCA 9.25% 11/15/16 175,000 177,625
·HealthSouth 7.218% 6/15/14 130,000 124,800
Hospira 6.40% 5/15/15 155,000 169,322
Inverness Medical Innovations 9.00% 5/15/16 160,000 159,600
*Psychiatric Solutions 7.75% 7/15/15 140,000 132,300
#Psychiatric Solutions 144A 7.75% 7/15/15 60,000 55,200
Quest Diagnostics
       5.45% 11/1/15 120,000 124,365
       6.40% 7/1/17 35,000 37,384
Select Medical 7.625% 2/1/15 345,000 315,674
UnitedHealth Group
       5.50% 11/15/12 80,000 84,882
       5.80% 3/15/36 10,000 8,998
       6.00% 2/15/18 25,000 25,455
Universal Hospital Services PIK 8.50% 6/1/15 120,000 116,400
·US Oncology PIK 6.904% 3/15/12 270,000 230,849
Waste Management
       7.10% 8/1/26 35,000 37,850
       7.375% 3/11/19 5,000 5,726
WellPoint 5.00% 1/15/11 60,000 62,036
3,078,124
Technology – 0.98%
Anixter 10.00% 3/15/14 75,000 77,813
Avago Technologies Finance 10.125% 12/1/13 115,000 120,750
*First Data 9.875% 9/24/15 500,000 429,999
*Freescale Semiconductor 8.875% 12/15/14 305,000 207,400
*Sanmina-SCI 8.125% 3/1/16 231,000 200,393
Sungard Data Systems 10.25% 8/15/15 250,000 248,750
#Unisys 144A 12.75% 10/15/14 110,000 113,438
Xerox 8.25% 5/15/14 50,000 56,358
1,454,901
Telecommunications – 5.29%
AT&T Wireless 8.125% 5/1/12 110,000 125,215
Cincinnati Bell 7.00% 2/15/15 155,000 146,475
Citizens Utilities 7.125% 3/15/19 120,000 109,800
Cricket Communications 9.375% 11/1/14 300,000 284,250
*Crown Castle International 9.00% 1/15/15 85,000 88,825
#CSC Holdings 144A 8.50% 6/15/15 170,000 172,550
Deutsche Telekom International Finance 5.25% 7/22/13 45,000 47,980



#Digicel 144A 9.25% 9/1/12 100,000             100,250
#Digicel Group 144A
       8.875% 1/15/15 1,100,000   987,249
       12.00% 4/1/14 200,000 213,000
#DigitalGlobe 144A 10.50% 5/1/14 90,000 94,613
#Expedia 144A 8.50% 7/1/16 110,000 111,925
Hughes Network Systems 9.50% 4/15/14 260,000 265,200
#Intelsat Bermuda144A 11.25% 2/4/17 435,000 413,250
Intelsat Jackson Holdings 11.25% 6/15/16 365,000 382,338
Level 3 Financing
       9.25% 11/1/14 105,000 87,150
       12.25% 3/15/13 100,000 98,000
Lucent Technologies 6.45% 3/15/29 200,000 137,000
MetroPCS Wireless 9.25% 11/1/14 218,000 215,003
Nextel Communications
       6.875% 10/31/13 35,000 31,500
       7.375% 8/1/15 660,000 566,774
#NII Capital 144A 10.00% 8/15/16 200,000 199,000
#Nordic Telephone Holdings 144A 8.875% 5/1/16 185,000 188,700
#PAETEC Holding 144A 8.875% 6/30/17 105,000 100,538
#Qwest 144A 8.375% 5/1/16 130,000 131,950
Qwest Communications International 7.50% 2/15/14 85,000 82,450
Rogers Communications 6.80% 8/15/18 20,000 22,686
Rogers Wireless 8.00% 12/15/12 30,000 31,238
Sprint Nextel 6.00% 12/1/16 155,000 130,975
Telecom Italia Capital
       4.00% 1/15/10 30,000 30,222
       5.25% 10/1/15 100,000 103,865
       6.20% 7/18/11 45,000 47,940
       7.175% 6/18/19 20,000 22,306
Telesat Canada
       11.00% 11/1/15 120,000 123,000
       12.50% 11/1/17 140,000 144,900
#Vimpelcom 144A 9.125% 4/30/18 1,155,000 1,154,999
Virgin Media Finance 8.75% 4/15/14 145,000 147,900
Vodafone Group
       5.00% 9/15/15 20,000 20,731
       5.375% 1/30/15 145,000 152,766
#Wind Acquisition Finance 144A
       10.75% 12/1/15 150,000 162,000
       11.75% 7/15/17 140,000 152,600
7,829,113
Utilities – 1.86%
AES
       7.75% 3/1/14 105,000 102,769
       8.00% 10/15/17 30,000 28,875
       8.00% 6/1/20 75,000 70,500
Duke Energy 5.05% 9/15/19 55,000 55,664
Edison Mission Energy
       *7.00% 5/15/17 160,000 123,000
       7.50% 6/15/13 80,000 71,600
Elwood Energy 8.159% 7/5/26 167,845 147,714
Energy Future Holdings 10.875% 11/1/17 100,000 72,000
#FirstEnergy Solutions 144A 6.05% 8/15/21 100,000 101,304
Illinois Power
       6.125% 11/15/17 85,000 89,457
       9.75% 11/15/18 50,000 61,795
Indiana Michigan Power 7.00% 3/15/19 45,000 51,296
#Kansas Gas & Electric 144A 6.70% 6/15/19 15,000 16,982
Korea Southern Power 5.375% 4/18/13 630,000 640,286
Mirant Americas Generation 8.50% 10/1/21 215,000 178,450
wMirant Mid Atlantic Pass Through Trust A 8.625% 6/30/12 83,389 84,015
NRG Energy
       7.375% 2/1/16 265,000 254,068
       7.375% 1/15/17 65,000 62,075
Orion Power Holdings 12.00% 5/1/10 205,000 212,688
PPL Electric Utilities 7.125% 11/30/13 40,000 46,067
•Puget Sound Energy 6.974% 6/1/67 165,000 132,478
*Texas Competitive Electric Holdings 10.25% 11/1/15 220,000 146,850
2,749,933
Total Corporate Bonds (cost $57,920,239) 59,262,538
 
Foreign Agencies – 1.40%D
Germany – 0.04%
KFW 4.875% 6/17/19 60,000 64,892
64,892
Luxembourg – 0.71%
#Gazprom 144A 8.625% 4/28/34 1,000,000 1,052,500
1,052,500
Republic of Korea – 0.03%
Korea Development Bank 5.30% 1/17/13 45,000 45,314
45,314



United States – 0.62%                          
Pemex Project Funding Master Trust 6.625% 6/15/35     1,000,000   915,782
915,782
Total Foreign Agencies (cost $2,358,320) 2,078,488
 
Municipal Bond – 0.08%
California State 7.55% 4/1/39 110,000 118,857
Total Municipal Bond (cost $112,524) 118,857
 
Non-Agency Asset-Backed Securities – 0.64%
Capital Auto Receivables Asset Trust Series 2007-3 A3A 5.02% 9/15/11 46,075 46,982
Caterpillar Financial Asset Trust
       Series 2007-A A3A 5.34% 6/25/12 11,785 12,049
       Series 2008-A A3 4.94% 4/25/14 60,000 60,615
@Centex Home Equity Series 2005-D AF4 5.27% 10/25/35 148,108 145,827
Chase Issuance Trust Series 2005-A7 A7 4.55% 3/15/13 45,000 46,995
Citicorp Residential Mortgage Securities Series 2006-3 A5 5.948% 11/25/36 100,000 59,191
CNH Equipment Trust
       Series 2008-A A3 4.12% 5/15/12 20,000 20,324
       Series 2008-A A4 4.93% 8/15/14 30,000 31,071
       Series 2008-B A3A 4.78% 7/16/12 30,000 30,749
Discover Card Master Trust Series 2007-A1 A1 5.65% 3/16/20 100,000 106,318
#Dunkin Securitization Series 2006-1 A2 144A 5.779% 6/20/31 150,000 144,544
Harley-Davidson Motorcycle Trust
       Series 2005-2 A2 4.07% 2/15/12 47,667 48,313
       Series 2006-2 A2 5.35% 3/15/13 83,859 86,451
Hyundai Auto Receivables Trust
       Series 2007-A A3A 5.04% 1/17/12 12,018 12,265
       Series 2008-A A3 4.93% 12/17/12 30,000 31,149
John Deere Owner Trust Series 2008-A A3 4.18% 6/15/12 35,000 35,555
·MBNA Credit Card Master Note Trust Series 2005-A4 0.283% 11/15/12 30,000 29,847
Total Non-Agency Asset-Backed Securities (cost $963,913) 948,245
 
Non-Agency Collateralized Mortgage Obligations – 0.71%
@·Bear Stearns ARM Trust Series 2007-1 3A2 5.753% 2/25/47 241,551 55,457
Citicorp Mortgage Securities
       Series 2006-4 3A1 5.50% 8/25/21 42,844 40,796
       Series 2007-1 2A1 5.50% 1/25/22 244,441 209,262
       ·Series 2007-AR8 1A3A 5.823% 8/25/37 84,751 46,471
@w·Countrywide Home Loan Mortgage Pass Through Trust Series 2004-HYB4 M 3.944% 9/20/34 19,400 11,097
·First Horizon Asset Securities
       Series 2007-AR2 1A1 5.842% 8/25/37 132,070 96,263
       Series 2007-AR3 2A2 6.293% 11/25/37 101,702 66,407
·GSR Mortgage Loan Trust Series 2006-AR1 3A1 5.35% 1/25/36 177,603 138,289
·JPMorgan Mortgage Trust Series 2004-A5 4A2 4.817% 12/25/34 216,126 208,879
·MASTR ARMs Trust Series 2006-2 4A1 4.989% 2/25/36 92,931 82,333
·Wells Fargo Mortgage-Backed Securities Trust
       Series 2005-AR2 2A1 4.537% 3/25/35 74,625 66,300
       Series 2005-AR16 6A4 5.009% 10/25/35 62,677 25,862
Total Non-Agency Collateralized Mortgage Obligations (cost $1,469,001) 1,047,416
 
«Senior Secured Loans – 0.72%
Chester Downs & Marina 12.375% 12/31/16 105,000 102,638
Energy Futures Holdings 3.776% 10/10/14 168,202 128,206
Northwest Airlines 2.28% 8/21/13 108,878 104,965
Talecris Biotherapeutics 2nd Lien 6.96% 12/6/14 500,000 483,749
Univision Communications Term Tranche Loan 2.535% 9/29/14 315,000 248,151
Total Senior Secured Loans (cost $955,797) 1,067,709
 
Sovereign Debt – 10.35%D
Barbados – 1.14%
#Republic of Barbados 144A 6.625% 12/5/35 USD 2,000,000 1,690,004
1,690,004
Brazil – 1.06%
Banco Nacional de Desenvolvime Economico e Social 6.369% 6/16/18 500,000 517,500
Federal Republic of Brazil 10.25% 1/10/28 BRL 2,000,000 1,055,983
1,573,483
Canada – 0.04%
Export Development Canada 3.125% 4/24/14 USD 65,000 66,239
66,239
Colombia – 0.29%
#Santa Fe de Bogota D.C. 144A 9.75% 7/26/28 COP 1,000,000,000 424,270
424,270
Indonesia – 1.41%
#Republic of Indonesia144A 7.75% 1/17/38 USD 2,000,000 2,080,000
2,080,000
Mexico – 2.20%
Mexican Bonos 9.50% 12/18/14 MXN 40,000,000 3,257,262
3,257,262
Pakistan – 1.09%
@#Republic of Pakistan 144A 6.875% 6/1/17 USD 2,000,000 1,610,000
1,610,000



Philippines – 0.79%                        
Republic of Philippines 8.375% 6/17/19 1,000,000 1,173,750
1,173,750
Republic of Korea – 0.76%
Export-Import Bank Korea 8.125% 1/21/14 1,000,000 1,118,854
1,118,854
Turkey – 1.06%
Republic of Turkey 11.875% 1/15/30 1,000,000 1,565,000
1,565,000
United Kingdom – 0.51%  
@#CS International for City of Kyiv Ukraine 144A 8.25% 11/26/12 1,000,000 758,750
758,750
Total Sovereign Debt (cost $16,280,402) 15,317,612
 
Supranational Banks – 3.27%
European Bank for Reconstruction & Development 7.00% 7/30/12 IDR 41,000,000 905,427
European Investment Bank  
       3.125% 6/4/14 USD 35,000 35,604
       8.00% 10/21/13 ZAR 6,880,000 871,139
       11.25% 2/14/13 BRL 1,800,000 996,997
Inter-American Development Bank 9.00% 8/6/10 BRL 2,081,000   1,113,293
International Bank for Reconstruction & Development 9.75% 8/2/10 ZAR 7,000,000 913,547
Total Supranational banks (cost $5,122,996) 4,836,007
 
U.S. Treasury Obligations – 2.32%
U.S. Treasury Bond 4.25% 5/15/39 USD 375,000 379,278
U.S. Treasury Notes
       *1.75% 8/15/12 895,000 902,343
       2.375% 8/31/14 775,000 774,698
       *3.625% 8/15/19 1,360,000 1,385,925
Total U.S. Treasury Obligations (cost $3,377,539) 3,442,244
 
Leveraged Non-Recourse Securities – 0.00%
@w#JPMorgan Pass Through Trust Series 2007-B 144A 500,000 0
Total Leveraged Non-Recourse Securities (cost $425,000) 0
 
Number of
Shares
Exchange Traded Funds – 0.02%
Equity Fund – 0.02%
*ProShares UltraShort Real Estate 2,600 29,796
Total Exchange Traded Funds (cost $54,032) 29,796
 
Preferred Stock – 0.36%
Developers Diversified Realty Series I 7.50% 1,925 29,068
Digital Realty Series A 8.50% 2,650 65,217
Freddie Mac 6.02% 21,000 42,210
•PNC Financial Services Group 8.25% 195,000 177,895
*ProLogis Series G 6.75% 7,050 139,238
*Vornado Realty Trust 6.625% 3,700 76,220
Total Preferred Stock (cost $932,397) 529,848
 
Principal
Amount°
Residual Interest Trust Certificates – 0.00%
@w#Freddie Mac Auction Pass Through Trust Series 2007 144A 475,000 0
Total Residual Interest Trust Certificates (cost $516,980) 0
 
¹Discount Note – 3.97%
Federal Home Loan Bank 0.081% 9/1/09 5,883,014 5,883,014
Total Discount Note (cost $5,883,014) 5,883,014
 
Total Value of Securities Before Securities Lending Collateral – 126.13%
       (cost $202,963,924) 186,748,198
 
Number of
Shares
Securities Lending Collateral** – 10.59%
Investment Companies
       Mellon GSL DBT II Collateral Fund 8,672,826 8,672,826
       BNY Mellon SL DBT II Liquidating Fund 7,119,867 7,012,357
       †@Mellon GSL Reinvestment Trust II 328,120 33
Total Securities Lending Collateral (cost $16,120,813) 15,685,216
 
Total Value of Securities – 136.72%
       (cost $219,084,737) 202,433,414 ©
Obligation to Return Securities Lending Collateral** – (10.89%) (16,120,813 )
Borrowing Under Line of Credit – (30.39%) (45,000,000 )
Receivables and Other Assets Net of Liabilities (See Notes) – 4.56% 6,748,775
Net Assets Applicable to 12,929,436 Shares Outstanding – 100.00% $ 148,061,376

°Principal amount shown is stated in the currency in which each security is denominated.


AUD – Australian Dollar
BRL – Brazilian Real
COP – Colombian Peso
IDR – Indonesian Rupiah
MXN – Mexican Peso
USD – United States Dollar
ZAR – South African

vSecurities have been classified by type of business.
±Security is being valued based on international fair value pricing. At August 31, 2009, the aggregate amount of international fair value priced securities was $25,251,388, which represented 17.05% of the Fund's net assets. See Note 1 in "Notes."
*Fully or partially on loan.
@Illiquid security. At August 31, 2009, the aggregate amount of illiquid securities was $4,588,567, which represented 3.10% of the Fund’s net assets. See Note 6 in “Notes.”
†Non income producing security.
=Security is being fair valued in accordance with the Fund’s fair valuation policy. At August 31, 2009, the aggregate amount of fair valued securities was $320,307, which represented 0.22% of the Fund’s net assets. See Note 1 in "Notes."
·Variable rate security. The rate shown is the rate as of August 31, 2009.
#Security exempt from registration under Rule 144A of the Securities Act of 1933, as amended. At August 31, 2009, the aggregate amount of Rule 144A securities was $29,469,970 which represented 19.90% of the Fund’s net assets. See Note 6 in “Notes.”
wPass Through Agreement. Security represents the contractual right to receive a proportionate amount of underlying payments due to the counterparty pursuant to various agreements related to the rescheduling of obligations and the exchange of certain notes.
fStep coupon bond. Coupon increases/decreases periodically based on a predetermined schedule. Stated rate in effect at August 31, 2009.
WStep coupon bond. Indicates security that has a zero coupon that remains in effect until a predetermined date at which time the stated interest rate becomes effective.
DSecurities have been classified by country of origin.
«Senior Secured Loans generally pay interest at rates which are periodically redetermined by reference to a base lending rate plus a premium. These base lending rates are generally: (i) the prime rate offered by one or more United States banks, (ii) the lending rate offered by one or more European banks such as the London Inter-Bank Offered Rate (LIBOR), and (iii) the certificate of deposit rate. Senior Secured Loans may be subject to restrictions on resale.
¹The rate shown is the effective yield at the time of purchase.
**See Note 5 in “Notes.”

©Includes $15,582,157 of securities loaned.

Summary of Abbreviations:
ADR – American Depositary Receipt
ARM – Adjustable Rate Mortgage
FDR – Foreign Depositary Receipt
GNMA – Government National Mortgage Association
MASTR – Mortgage Asset Securitization Transactions, Inc.
PIK – Pay-in-kind
REIT – Real Estate Investment Trust
S.F. – Single Family
TBA – To Be Announced
yr – Year

The following foreign currency exchange contract was outstanding at August 31, 2009:

Foreign Currency Exchange Contract1

          Unrealized
Contract to Receive In Exchange For   Settlement Date   Depreciation
AUD 111,676   USD (94,388) 9/3/09 $(16)

The use of foreign currency exchange contracts involves elements of market risk and risks in excess of the amounts recognized in the financial statements. The notional values presented above represent the Fund’s (as defined below) total exposure in such contracts, whereas only the net unrealized appreciation (depreciation) is reflected in the Fund’s net assets.

1See Note 4 in “Notes.”

 
Notes 

1. Significant Accounting Policies
The following accounting policies are in accordance with U.S. generally accepted accounting principles and are consistently followed by Delaware Enhanced Global Dividend and Income Fund (Fund). This report covers the period of time since the Fund’s last fiscal year end.

Security Valuation Equity securities, except those traded on the Nasdaq Stock Market, Inc. (Nasdaq), are valued at the last quoted sales price as of the time of the regular close of the New York Stock Exchange (NYSE) on the valuation date. Securities traded on the Nasdaq are valued in accordance with the Nasdaq Official Closing Price, which may not be the last sales price. If on a particular day an equity security does not trade, then the mean between the bid and the ask prices will be used. Securities listed on a foreign exchange are valued at the last quoted sales price on the valuation date. U.S. Government and agency securities are valued at the mean between the bid and ask prices. Other debt securities, credit default swap (CDS) contracts and interest rate swap contracts are valued by an independent pricing service or broker. To the extent current market prices are not available, the pricing service may take into account developments related to the specific security, as well as transactions in comparable securities. Investment companies are valued at net asset value per share. Foreign currency exchange contracts and foreign cross currency exchange contracts are valued at the mean between the bid and ask prices. Interpolated values are derived when the settlement date of the contract is an interim date for which quotations are not available. Generally, index swap contracts and other securities and assets for which market quotations are not readily available are valued at fair value as determined in good faith under the direction of the Fund’s Board of Directors (Board). In determining whether market quotations are readily available or fair valuation will be used, various factors will be taken into consideration, such as market closures or suspension of trading in a security. The Fund may use fair value pricing more frequently for securities traded primarily in non-U.S. markets because, among other things, most foreign markets close well before the Fund values its securities at 4:00 p.m. Eastern time. The earlier close of these foreign markets gives rise to the possibility that significant events, including broad market moves, government actions or pronouncements, aftermarket trading, or news events may have occurred in the interim. To account for this, the Fund may frequently value foreign securities using fair value prices based on third-party vendor modeling tools (international fair value pricing).


Federal Income Taxes No provision for federal income taxes has been made as the Fund intends to continue to qualify for federal income tax purposes as a regulated investment company under Subchapter M of the Internal Revenue Code of 1986, as amended, and make the requisite distributions to shareholders. The Fund evaluates tax positions taken or expected to be taken in the course of preparing the Fund’s tax returns to determine whether the tax positions are “more-likely-than-not” of being sustained by the applicable tax authority. Tax positions not deemed to meet the more-likely-than-not threshold are recorded as a tax benefit or expense in the current year. Management has analyzed the Fund’s tax positions taken on federal income tax returns for all open tax years (tax years ended November 30, 2005 – November 30, 2008), and has concluded that no provision for federal income tax is required in the Fund’s financial statements.

Repurchase Agreements The Fund may invest in a pooled cash account along with other members of the Delaware Investments® Family of Funds pursuant to an exemptive order issued by the Securities and Exchange Commission. The aggregate daily balance of the pooled cash account is invested in repurchase agreements secured by obligations of the U.S. government. The respective collateral is held by the Fund’s custodian bank until the maturity of the respective repurchase agreements. Each repurchase agreement is at least 102% collateralized. However, in the event of default or bankruptcy by the counterparty to the agreement, realization of the collateral may be subject to legal proceedings. At August 31, 2009, the Fund held no investments in repurchase agreements.

Distributions The Fund has a managed distribution policy. Under the policy, the Fund declares and pays monthly distributions and is managed with a goal of generating as much of the distribution as possible from ordinary income (net investment income and short-term capital gains). The balance of the distribution then comes from long-term capital gains to the extent permitted and, if necessary, a return of capital.

Foreign Currency Transactions – Transactions denominated in foreign currencies are recorded at the prevailing exchange rates on the valuation date. The value of all assets and liabilities denominated in foreign currencies is translated into U.S. dollars at the exchange rate of such currencies against the U.S. dollar daily. Transaction gains or losses resulting from changes in exchange rates during the reporting period or upon settlement of the foreign currency transaction are reported in operations for the current period. The Fund isolates that portion of realized gains and losses on investments in debt securities which are due to changes in foreign exchange rates from that which are due to changes in market prices of debt securities. For foreign equity securities, these changes are included in realized gains (losses) on investments. The Fund reports certain foreign currency related transactions as components of realized gains (losses) for financial reporting purposes, whereas such components are treated as ordinary income (loss) for federal income tax purposes.

Use of Estimates The preparation of financial statements in conformity with U.S. 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 – Expenses directly attributable to the Fund are charged directly to the Fund. Other expenses common to various funds within the Delaware Investments® Family of Funds are generally allocated amongst such funds on the basis of average net assets. Management fees and some other expenses are paid monthly. Security transactions are recorded on the date the securities are purchased or sold (trade date) for financial reporting purposes. Costs used in calculating realized gains and losses on the sale of investment securities are those of the specific securities sold. Dividend income is recorded on the ex-dividend date and interest income is recorded on the accrual basis. Discounts and premiums on non-convertible bonds are amortized to interest income over the lives of the respective securities. Realized gains (losses) on paydowns of mortgage- and asset-backed securities are classified as interest income. Foreign dividends are also recorded on the ex-dividend date or as soon after the ex-dividend date that the Fund is aware of such dividends, net of all non-rebatable tax withholdings. Withholding taxes on foreign dividends and interest have been recorded in accordance with the Fund’s understanding of the applicable country’s tax rules and rates. Distributions received from investments in Real Estate Investment Trusts (REITs) are recorded as dividend income on ex-dividend date as an estimate, subject to reclassification upon notice of the character of such distributions by the issuer.

2. Investments
At August 31, 2009, the cost of investments for federal income tax purposes has been estimated since the final tax characteristics cannot be determined until fiscal year end. At August 31, 2009, the cost of investments and unrealized appreciation (depreciation) for the Fund was as follows:

Cost of investments $ 219,666,937
Aggregate unrealized appreciation 9,663,602
Aggregate unrealized depreciation (26,897,125 )
Net unrealized depreciation $ (17,233,523 )

For federal income tax purposes, at November 30, 2008, $36,156,105 of capital loss carryforwards may be carried forward and applied against future capital gains. Such capital loss carryforwards will expire as follows: $1,676,026 expires in 2015 and $34,480,079 expires in 2016.

The Fund applies Financial Accounting Standards No. 157, Fair Value Measurements (FAS 157). FAS 157 defines fair value as the price that the Fund would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants at the measurement date under current market conditions. FAS 157 also establishes a framework for measuring fair value and a three level hierarchy for fair value measurements based upon the transparency of inputs to the valuation of an asset or liability. Inputs may be observable or unobservable and refer broadly to the assumptions that market participants would use in pricing the asset or liability. Observable inputs reflect the assumptions market participants would use in pricing the asset or liability based on market data obtained from sources independent of the reporting entity. Unobservable inputs reflect the reporting entity’s own assumptions about the assumptions that market participants would use in pricing the asset or liability developed based on the best information available under the circumstances. The Fund’s investment in its entirety is assigned a level based upon the observability of the inputs which are significant to the overall valuation. The three-tier hierarchy of inputs is summarized below.

Level 1 – inputs are quoted prices in active markets
Level 2 – inputs are observable, directly or indirectly
Level 3 – inputs are unobservable and reflect assumptions on the part of the reporting entity

The following table summarizes the valuation of the Fund’s investments by the FAS 157 fair value hierarchy levels as of August 31, 2009:

Level 1 Level 2 Level 3 Total
Agency, Asset-Backed &
       Mortgage-Backed Securities $ -        $ 11,154,102        $ 31,149        $ 11,185,251
Common Stock    37,598,241   25,251,386 320,307 63,169,934
Corporate Debt - 77,540,374 1,690,847 79,231,221
Foreign Debt  - 19,618,000 3,540,033 23,158,033
Investment Companies 29,796 - - 29,796
Municipal Bonds - 118,857 - 118,857
U.S.Treasury Obligations 3,442,244 - - 3,442,244
Short-Term  - 5,883,014 - 5,883,014
Securities Lending Collateral 8,672,826 7,012,357 33 15,685,216
Other - 529,848 - 529,848
Total $ 49,743,107 $ 147,107,938 $ 5,582,369 $ 202,433,414


The following is a reconciliation of investments in which significant unobservable inputs (Level 3) were used in determining fair value:

Agency, Asset-
Backed and
Mortgage- Securities
Backed Common Corporate Foreign Lending
Total Securities Stock Debt Debt Collateral
Balance as of 11/30/08 $ 4,503,971        $ 163,408        $  -        $ 1,426,617        $ 2,887,040        $ 26,906
Net purchases, sales, and settlements   (89,295 ) (23,287 ) - 75,588 (141,596 ) -
Net realized gain (loss) (305,466 )   26   -   (109,750 )   (195,742 ) -
Net transfers in and/or out of Level 3 (714,992 ) (111,883 ) 381,147   (984,256 ) - -
Net change in unrealized  
      appreciation/depreciation 2,188,151   2,885   (60,840 ) 1,282,648 990,331 (26,873 )
Balance as of 8/31/09 $ 5,582,369 $ 31,149 $ 320,307 $ 1,690,847 $ 3,540,033   $ 33
 
Net change in unrealized
      appreciation/depreciation from
      investments still held as of 8/31/09 $ 1,371,404 $ 4,872 (60,840 ) $ 708,486 $ 745,759 $ (26,873 )

3. Line of Credit
For the period ended August 31, 2009 the Fund borrowed money pursuant to a $50,000,000 Line of Credit Agreement with The Bank of New York Mellon (BNY Mellon) that expires on November 30, 2009. Depending on the market conditions, the amount borrowed by the Fund pursuant to the Credit Agreement may be reduced or possibly increased in the future.

At August 31, 2009, the par value of loans outstanding was $45,000,000 at a variable interest rate of 1.56%. During the period ended August 31, 2009, the average daily balance of loans outstanding was $44,032,847 at a weighted average interest rate of approximately 1.33%. Interest on borrowings is based on a variable short-term rate plus an applicable margin. The commitment fee is computed at a rate of 0.10% per annum on the unused balance. The loan is collateralized by the Fund’s portfolio.

4. Derivatives
The Fund applies Financial Accounting Standards No. 161, Disclosures about Derivative Instruments and Hedging Activities (FAS 161). FAS 161 is intended to improve financial reporting about derivative instruments by requiring enhanced disclosures that enable investors to understand: 1) how and why an entity uses derivatives, 2) how they are accounted for, and 3) how they affect an entity's results of operations and financial position.

Financial Futures Contracts The Fund may use futures in the normal course of pursuing its investment objective. The Fund may invest in financial futures contracts to hedge its existing portfolio securities against fluctuations in fair value caused by changes in prevailing market interest rates. Upon entering into a financial futures contract, the Fund deposits cash or pledges U.S. government securities to a broker, equal to the minimum “initial margin” requirements of the exchange on which the contract is traded. Subsequent payments are received from the broker or paid to the broker each day, based on the daily fluctuation in the market value of the contract. These receipts or payments are known as “variation margin” and are recorded daily by the Fund as unrealized gains or losses until the contracts are closed. When the contracts are 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. Risks of entering into financial futures contracts include potential imperfect correlation between the financial futures contracts and the underlying securities and the possibility of an illiquid secondary market for these instruments. When investing in futures, there is minimal counterparty credit risk to the Fund because futures are exchange traded and the exchange’s clearinghouse, as counterparty to all exchange traded futures, guarantees against default. No financial futures contracts were outstanding at August 31, 2009.

Foreign Currency Exchange Contracts – The Fund may enter into foreign currency exchange contracts to generate additional income and as a way of managing foreign exchange rate risk. The Fund may enter into these contracts to fix the U.S. dollar value of a security that it has agreed to buy or sell for the period between the date the trade was entered into and the date the security is delivered and paid for. The Fund may also use these contracts to hedge the U.S. dollar value of securities it already owns that are denominated in foreign currencies. The change in value is recorded as an unrealized gain or loss. When the contract is closed, a realized gain or loss is recorded equal to the difference between the value of the contract at the time it was opened and the value at the time it was closed.

The use of foreign currency exchange contracts and foreign cross currency exchange contracts does not eliminate fluctuations in the underlying prices of the securities, but does establish a rate of exchange that can be achieved in the future. Although foreign currency exchange contracts limit the risk of loss due to 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. The Fund’s maximum risk of loss from counterparty credit risk is the value of its currency exchanged with the counterparty. The risk is generally mitigated by having a netting arrangement between the Fund and the counterparty and by the posting of collateral by the counterparty to the Fund to cover the Fund’s exposure to the counterparty.

Swap Contracts The Fund may enter into interest rate swap contracts, index swap contracts, and CDS contracts in the normal course of pursuing its investment objective. The Fund may use interest rate swaps to adjust the Fund’s sensitivity to interest rates or to hedge against changes in interest rates. Index swaps may be used to gain exposure to markets that the Fund invests in, such as the corporate bond market. The Fund may also use index swaps as a substitute for futures or options contracts if such contracts are not directly available to the Fund on favorable terms. The Fund may enter into CDS contracts in order to hedge against a credit event, to enhance total return or to gain exposure to certain securities or markets.

Interest Rate Swaps. An interest rate swap involves payments received by the Fund from another party based on a variable or floating interest rate, in return for making payments based on a fixed interest rate. An interest rate swap can also work in reverse with the Fund receiving payments based on a fixed interest rate and making payments based on a variable or floating interest rate. Interest rate swaps may be used to adjust the Fund's sensitivity to interest rates or to hedge against changes in interest rates. Periodic payments on such contracts are accrued daily and recorded as unrealized appreciation/depreciation on swap contracts. Upon periodic payment/receipt or termination of the contract, such amounts are recorded as realized gains or losses on swap contracts. The Fund’s maximum risk of loss from counterparty credit risk is the discounted net value of the cash flows to be received from/paid to the counterparty over the interest rate swap contract’s remaining life, to the extent that the amount is positive. This risk is mitigated by having a netting arrangement between the Fund and the counterparty and by the posting of collateral by the counterparty to the Fund to cover the Fund’s exposure to the counterparty.


Index Swaps. Index swaps involve commitments to pay interest in exchange for a market linked return based on a notional amount. To the extent the total return of the security, instrument or basket of instruments underlying the transaction exceeds the offsetting interest obligation, the Fund will receive a payment from the counterparty. To the extent the total return of the security, instrument or basket of instruments underlying the transaction falls short of the offsetting interest obligation, the Fund will make a payment to the counterparty. The change in value of swap contracts outstanding, if any, is recorded as unrealized appreciation or depreciation daily. A realized gain or loss is recorded on maturity or termination of the swap contract. The Fund’s maximum risk of loss from counterparty credit risk is the discounted net value of the cash flows to be received from/paid to the counterparty over the index swap contract’s remaining life, to the extent that the amount is positive. This risk is mitigated by having a netting arrangement between the Fund and the counterparty and by the posting of collateral by the counterparty to the Fund to cover the Fund’s exposure to the counterparty.

Credit Default Swaps. A CDS contract is a risk-transfer instrument through which one party (purchaser of protection) transfers to another party (seller of protection) the financial risk of a credit event (as defined in the CDS agreement), as it relates to a particular referenced security or basket of securities (such as an index). In exchange for the protection offered by the seller of protection, the purchaser of protection agrees to pay the seller of protection a periodic amount at a stated rate that is applied to the notional amount of the CDS contract. In addition, an upfront payment may be made or received by the Fund in connection with an unwinding or assignment of a CDS contract. Upon the occurrence of a credit event, the seller of protection would pay the par (or other agreed-upon) value of the referenced security (or basket of securities) to the counterparty.

During the period ended August 31, 2009, the Fund entered into CDS contracts as a purchaser of protection and seller of protection. Periodic payments (receipts) on such contracts are accrued daily and recorded as unrealized losses (gains) on swap contracts. Upon payment (receipt), such amounts are recorded as realized losses (gains) on swap contracts. Upfront payments made or received in connection with CDS contracts are amortized over the expected life of the CDS contracts as unrealized losses (gains) on swap contracts. The change in value of CDS contracts is recorded as unrealized appreciation or depreciation daily. A realized gain or loss is recorded upon a credit event (as defined in the CDS agreement) or the maturity or termination of the agreement. No CDS contracts were outstanding at August 31, 2009.

CDS may involve greater risks than if the Fund had invested in the referenced obligation directly. CDSs are subject to general market risk, liquidity risk, counterparty risk and credit risk. The Fund’s maximum risk of loss from counterparty credit risk, either as the seller of protection or the buyer of protection, is the fair value of the contract. This risk is mitigated by having a netting arrangement between the Fund and the counterparty and by the posting of collateral by the counterparty to the Fund to cover the Fund’s exposure to the counterparty.

Swaps Generally. Because there is no organized market for swap contracts, the value of open swaps may differ from that which would be realized in the event the Fund terminated its position in the agreement. Risks of entering into these contracts include the potential inability of the counterparty to meet the terms of the contracts. This type of risk is generally limited to the amount of favorable movement in the value of the underlying security, instrument or basket of instruments, if any, at the day of default. Risks also arise from potential losses from adverse market movements and such losses could exceed the unrealized amounts shown on the statements of net assets.

Written Options – During the period ended August 31, 2009, the Fund entered into options contracts in the normal course of pursuing its investment objective. The Fund may write options contracts for any number of reasons, including: to manage the Fund’s exposure to changes in securities prices and foreign currencies; as an efficient means of adjusting the Fund’s overall exposure to certain markets; in an effort to enhance income; to protect the value of portfolio securities; and as a cash management tool. The Fund may write calls or puts on securities, financial indices, and foreign currencies. When the Fund writes an option, a premium is received and a liability is recorded and adjusted on a daily basis to reflect the current market value of the options written. Premiums received from writing options that expire unexercised are treated by the Fund on the expiration date as realized gains. The difference between the premium received and the amount paid on effecting a closing purchase transaction, including brokerage commissions, is treated as realized gain or loss. If a call option is exercised, the premium is added to the proceeds from the sale of the underlying security in determining whether the Fund has a realized gain or loss. If a put option is exercised, the premium reduces the cost basis of the securities purchased by the Fund. The Fund, as writer of an option, bears the market risk of an unfavorable change in the price of the security underlying the written option. When writing options, the Fund is subject to minimal counterparty credit risk.

Transactions in written options during the period ended August 31, 2009 for the Fund were as follows:

Number of contracts        Premiums
Options outstanding at November 30, 2008 - $ -
Options written   850     69,699
Options expired   (525 )   (38,850 )
Options terminated in closing purchase transactions (325 ) (30,849 )
Options outstanding at August 31, 2009 - $ -

5. Securities Lending
The Fund, along with other funds in the Delaware Investments® Family of Funds, may lend its securities pursuant to a security lending agreement (Lending Agreement) with BNY Mellon. With respect to each loan, if the aggregate market value of securities collateral held plus cash collateral received on any business day is less than the aggregate market value of the securities which are the subject of such loan, the borrower will be notified to provide additional collateral not less than the applicable collateral requirements. Cash collateral received is generally invested in the Mellon GSL DBT II Collateral Fund (Collective Trust) established by BNY Mellon for the purpose of investment on behalf of clients participating in its securities lending programs. The Collective Trust may invest in fixed income securities, with a weighted average maturity not to exceed 90 days, rated in one of the top three tiers by Standard & Poor’s Ratings Group (S&P) or Moody’s Investors Service, Inc. (Moody’s) or repurchase agreements collateralized by such securities. The Collective Trust seeks to maintain a net asset value per unit of $1.00, but there can be no assurance that it will always be able to do so. At August 31, 2009, the Collective Trust held only cash and assets with a maturity of one business day or less (Cash/Overnight Assets). The Fund may incur investment losses as a result of investing securities lending collateral in the Collective Trust. This could occur if an investment in the Collective Trust defaulted or if it were necessary to liquidate assets in the Collective Trust to meet returns on outstanding security loans at a time when the Collective Trust’s net asset value per unit was less than $1.00. Under those circumstances, the Fund may not receive an amount from the Collective Trust that is equal in amount to the collateral the Series would be required to return to the borrower of the securities and the Fund would be required to make up for this shortfall. Effective April 20, 2009, BNY Mellon transferred the assets of the Collective Trust other than the Cash/Overnight Assets to the BNY Mellon SL DBT II Liquidating Fund (Liquidating Fund), effectively bifurcating the collateral investment pool. The Fund’s exposure to the Liquidating Fund is expected to decrease as the Liquidating Fund’s assets mature or are sold. In October 2008, BNY Mellon transferred certain distressed securities from the Collective Trust into the Mellon GSL Reinvestment Trust II. The Fund can also accept U.S. government securities and letters of credit (non-cash collateral) in connection with securities loans. In the event of default or bankruptcy by the lending agent, realization and/or retention of the collateral may be subject to legal proceedings. In the event the borrower fails to return loaned securities and the collateral received is insufficient to cover the value of the loaned securities and provided such collateral shortfall is not the result of investment losses, the lending agent has agreed to pay the amount of the shortfall to the Fund, or at the discretion of the lending agent, replace the loaned securities. The Fund continues to record dividends or interest, as applicable, on the securities loaned and is subject to change in value of the securities loaned that may occur during the term of the loan. The Fund has the right under the Lending Agreement to recover the securities from the borrower on demand. With respect to security loans collateralized by non-cash collateral, the Fund receives loan premiums paid by the borrower. With respect to security loans collateralized by cash collateral, the earnings from the collateral investments are shared among the Fund, the security lending agent and the borrower. The Fund records security lending income net of allocations to the security lending agent and the borrower.


At August 31, 2009, the value of securities on loan was $15,582,157, for which the Fund received collateral, comprised of non-cash collateral valued at $15,480, and cash collateral of $16,120,813. Investments purchased with cash collateral are presented on the schedule of investments under the caption “Securities Lending Collateral.”

6. Credit and Market Risk
The Fund borrows through its line of credit for purposes of leveraging. Leveraging may result in higher degrees of volatility because the Fund’s net asset value could be subject to fluctuations in short-term interest rates and changes in market value of portfolio securities attributable to the leverage.

Some countries in which the Fund may invest require governmental approval for the repatriation of investment income, capital or the proceeds of sales of securities by foreign investors. In addition, if there is deterioration in a 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 Untied States. Consequently, acquisition and disposition of securities by the Fund may be inhibited. In addition, a significant portion of the aggregate market value of equity securities listed on the major securities exchanges in emerging markets is held by a smaller number of investors. This may limit the number of shares available for acquisition or disposition by the Fund.

The Fund invests a portion of its assets in high yield fixed income securities, which carry ratings of BB or lower by S&P and/or Ba or lower by Moody’s. Investments in these higher yielding securities are generally accompanied by a greater degree of credit risk than higher rated securities. Additionally, lower rated securities may be more susceptible to adverse economic and competitive industry conditions than investment grade securities.

The Fund invests in fixed income securities whose value is derived from underlying pool of mortgages or consumer loans. The value of these securities is sensitive to changes in economic conditions, including delinquencies and/or defaults, and may be adversely affected by shifts in the market’s perception of the issuers and changes in interest rates. Investors receive principal and interest payments as the underlying mortgages or consumer loans are paid back. Some of these securities are collateralized mortgage obligations (CMOs). CMOs are debt securities issued by U.S. government agencies or by financial institutions and other mortgage lenders, which are collateralized by a pool of mortgages held under an indenture. Prepayment of mortgages may shorten the stated maturity of the obligations and can result in a loss of premium, if any has been paid. Certain of these securities may be stripped (securities which provide only the principal or interest feature of the underlying security). The yield to maturity on an interest-only CMO is extremely sensitive not only to changes in prevailing interest rates, but also to the rate of principal payments (including prepayments) on the related underlying mortgage assets. A rapid rate of principal payments may have a material adverse affect on the Fund’s yield to maturity. If the underlying mortgage assets experience greater than anticipated prepayments of principal, the Fund may fail to fully recoup its initial investment in these securities even if the securities are rated in the highest rating categories.

The Fund invests in REITs and is subject to some of the risks associated with that industry. If the Fund holds real estate directly as a result of defaults or receives rental income directly from real estate holdings, its tax status as a regulated investment company may be jeopardized. There were no direct real estate holdings during the period ended August 31, 2009. The Fund's REIT holdings are also affected by interest rate changes, particularly if the REITs it holds use floating rate debt to finance their ongoing operations.

The Fund may invest up to 10% of its net assets in illiquid securities, which may include securities with contractual restrictions on resale, securities exempt from registration under Rule 144A of the Securities Act of 1933, as amended, and other securities which may not be readily marketable. The relative illiquidity of these securities may impair the Fund from disposing of them in a timely manner and at a fair price when it is necessary or desirable to do so. While maintaining oversight, the Fund's Board has delegated to Delaware Management Company (DMC), a series of Delaware Management Business Trust, the day-to-day functions of determining whether individual securities are liquid for purposes of the Fund's limitation on investments in illiquid assets. Securities eligible for resale pursuant to Rule 144A, which are determined to be liquid, are not subject to the Fund’s 10% limit on investments in illiquid securities. Rule 144A and illiquid securities have been identified on the schedule of investments.

7. Sale of Delaware Investments to Macquarie Group
On August 18, 2009, Lincoln National Corporation and Macquarie Group (Macquarie) entered into an agreement pursuant to which Delaware Investments, including DMC, Delaware Distributors, L.P. (DDLP), and Delaware Service Company (DSC), will be acquired by Macquarie, an Australia-based global provider of banking, financial, advisory, investment and funds management services (Transaction). Upon completion of the Transaction, DMC, DDLP and DSC will be wholly-owned subsidiaries of Macquarie.

The Transaction will result in a change of control of DMC which, in turn, will cause the termination of the investment advisory agreement between DMC and the Fund. As a result, a Special Meeting of Shareholders (Meeting) of the Fund will be scheduled for the purpose of asking shareholders to approve a new investment advisory agreement between DMC and the Fund (New Agreement). If approved by shareholders, the New Agreement will take effect upon the closing of the Transaction, which is currently anticipated to occur in the fourth quarter of 2009. Shareholders of the Fund will receive proxy materials including more detailed information about the Meeting, the Transaction and the proposed New Agreement.

8. Subsequent Events
Effective August 31, 2009, the Fund adopted Financial Accounting Standards Board Statement of Financial Accounting Standards No. 165, Subsequent Events (FAS 165). In accordance with FAS 165, management has evaluated whether any events or transactions occurred subsequent to August 31, 2009 through October 25, 2009, the date of issuance of the Fund’s schedule of portfolio holdings, and determined that there were no material events or transactions that would require recognition or disclosure in the Fund’s schedule of portfolio holdings.


Item 2. Controls and Procedures.

     The registrant’s principal executive officer and principal financial officer have evaluated the registrant’s disclosure controls and procedures within 90 days of the filing of this report and have concluded that they are effective in providing reasonable assurance that the information required to be disclosed by the registrant in its reports or statements filed under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission.

     There were no significant changes in the registrant’s internal control over financial reporting that occurred during the registrant’s last fiscal quarter that have materially affected, or are reasonably likely to materially affect, the registrant’s internal control over financial reporting.

Item 3. Exhibits.

     File as exhibits as part of this Form a separate certification for each principal executive officer and principal financial officer of the registrant as required by Rule 30a-2(a) under the Act (17 CFR 270.30a-2(a)), exactly as set forth below: