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:  February 28, 2009 
 

Item 1. Schedule of Investments.

Schedule of Investments (Unaudited)

Delaware Enhanced Global Dividend and Income Fund

February 28, 2009

Number of Value
             Shares              (U.S. $)
Common Stock – 44.09%    
Consumer Discretionary – 5.12%    
Bayerische Motoren Werke 13,922 $ 344,328
Cablevision Systems Class A 900 11,691
Disney (Walt) 22,500 377,325
*Don Quijote 21,100 248,968
Gap 40,100 432,679
*Home Depot 24,000 501,361
*KB HOME 17,000 151,300
Limited Brands 38,300 294,527
Mattel 33,200 393,088
McGraw-Hill Companies 20,600 406,438
*NGK Spark Plug 21,000 162,512
*PPR 2,243 132,904
*Publicis Groupe 13,059 302,242
Round One 34,682 201,232
Starwood Hotels & Resorts Worldwide 20,000 231,800
Techtronic Industries 668,500 239,917
Toyota Motor 10,784 345,443
Vivendi 15,606 370,987
WPP Group 54,473 282,591
    5,431,333
Consumer Staples – 5.90%    
*Archer-Daniels-Midland 24,400 650,504
Coca-Cola Amatil 135,895 775,604
CVS Caremark 17,500 450,450
Greggs 6,181 323,285
Heinz (H.J.) 14,100 460,647
Kimberly-Clark 11,800 555,898
Kraft Foods Class A 24,500 558,110
Kroger 23,900 494,013
Metro 12,157 350,943
Parmalat 307,227 566,804
Safeway 28,100 519,850
Wal-Mart Stores 11,400 561,336
    6,267,444
Diversified REITs – 0.68%    
Ascendas Real Estate Investment Trust 59,300 47,497
*Corio 2,648 104,027
*Digital Realty Trust 4,400 131,516
*Entertainment Properties Trust 2,900 43,239
Lexington Reality Trust 25,000 80,500
*Unibail-Rodamco 2,542 319,083
    725,862
Energy – 4.12%    
Anadarko Petroleum 12,200 426,390
BP 130,020 828,273
Chevron 7,900 479,609
ConocoPhillips 9,000 336,150
*Devon Energy 6,600 288,222
Exxon Mobil 8,600 583,940
Marathon Oil 16,800 390,936


*Total   15,327   720,001
†Transocean 5,300 316,781
    4,370,302
Financials – 3.85%                              
Allstate 13,900 233,937
*AXA 21,672 197,523
Bank of America 34,800 137,460
Bank of New York Mellon 17,500 387,975
BB&T 18,200 293,566
†Cardtronics 8,850 12,390
Comerica 17,400 261,174
JPMorgan Chase & Co 15,900 363,315
*Macquarie Communications Infrastructure Group 260,008 135,664
Mitsubishi Estate 8,000 80,624
Mitsubishi UFJ Financial Group 117,989 533,085
Nordea Bank 55,893 278,652
†Standard Chartered 24,044 226,582
State Street 11,900 300,713
SunTrust Banks 10,600 127,518
Travelers 14,400 520,560
    4,090,738
Health Care – 5.73%    
Abbott Laboratories 9,200 435,528
AstraZeneca 10,771 341,543
Bristol-Myers Squibb 21,100 388,451
Cardinal Health 12,900 418,605
Johnson & Johnson 10,400 520,000
Merck 20,400 493,680
*Novartis 14,244 519,668
Novo Nordisk Class B 10,779 524,835
Ono Pharmaceutical 7,700 356,482
Pfizer 27,800 342,218
Quest Diagnostics 13,600 623,288
Sanofi-Aventis 8,754 449,877
Wyeth 16,400 669,448
    6,083,623
Health Care REITs – 0.66%    
Chartwell Seniors Housing Real Estate Investment Trust 94,500 371,419
Extendicare Real Estate Investment Trust 93,200 329,678
    701,097
Industrial REITs – 0.32%    
Cambridge Industrial Trust 2,167,000 318,769
*ING Industrial Fund 307,371 16,050
    334,819
Industrials – 4.51%    
Asahi Glass 41,000 177,333
†BWAY Holding 2,055 12,905
*Compagnie de Saint-Gobain 9,524 217,237
Deutsche Post 50,790 485,813
Donnelley (R.R.) & Sons 26,500 206,435
FedEx 10,000 432,100
†Flextronics International 5,800 11,948
†General Electric 25,800 219,558
†Graphic Packaging Holding 18,081 14,465
*Honeywell International 14,000 375,620
*Koninklijke Philips Electronics 26,923 430,428
Pitney Bowes 18,900 364,581
Singapore Airlines 45,000 293,210
Teleperformance 20,324 558,847
Tomkins 186,009 298,819
Vallourec 1,952 151,915
*Waste Management 20,100 542,700
4,793,914


Information Technology – 4.47%                                
Canon 17,000 429,074
†CGI Group Class A 99,428 726,865
†EMC 55,000 577,500
Ericsson LM Class B 69,000 558,831
Intel 35,400 450,996
International Business Machines 6,200 570,586
*Motorola 99,100 348,832
Nokia 39,149 366,798
Samsung Electronics 1,449 445,663
Xerox 52,500 271,950
    4,747,095
Malls REITs – 0.25%    
*Simon Property Group 7,900 261,490
    261,490
Materials – 1.48%    
Agrium 12,100 420,838
*Dow Chemical 20,800 148,928
duPont (E.I.) deNemours 15,400 288,904
Innophos Holdings 1,450 15,399
*†Lafarge 2,185 93,609
Linde 5,562 357,384
Weyerhaeuser 10,300 248,848
    1,573,910
Mortgage REITs – 0.08%    
Annaly Capital Management 6,300 87,570
    87,570
Multifamily REITs – 0.07%    
Camden Property Trust 3,900 73,281
    73,281
Office REITs – 0.58%    
HRPT Properties Trust 122,400 395,352
ING UK Real Estate Trust 317,470 77,914
Mack-Cali Realty 8,300 141,764
    615,030
Shopping Center REITs – 0.27%    
Developers Diversified Realty 900 2,655
*Kimco Realty 13,300 117,705
*Macquarie CountryWide Trust 355,587 26,685
Ramco-Gershenson Properties Trust 5,900 30,444
Westfield Group 16,989 113,936
    291,425
Telecommunications – 2.84%    
AT&T 17,100 406,467
†Chunghwa Telecom ADR 44,613 684,809
France Telecom 22,130 494,497
Telstra 213,229 480,585
Verizon Communications 14,500 413,685
Vodafone 302,726 536,569
    3,016,612
Utilities – 3.16%    
American Electric Power 14,200 398,310
Duke Energy 32,600 439,122
Edison International 14,300 389,246
National Grid 83,223 740,765
*†NRG Energy 1,350 25,515
Progress Energy 13,100 464,002
Public Service Enterprise Group 15,000 409,350
Sempra Energy 11,700 486,369
    3,352,679
Total Common Stock (cost $94,075,589)    46,818,224


Convertible Preferred Stock – 3.65%                                  
Banking, Finance & Insurance – 0.01%      
Fannie Mae 8.75% exercise price $32.45, expiration date 5/13/11   20,000 13,000
      13,000
Health Care & Pharmaceuticals – 2.30%      
Inverness Medical Innovations Series B 3.00% exercise price $69.32, expiration date 12/31/49   6,650 954,408
Mylan 6.50% exercise price $17.08, expiration date 11/15/10   1,000 810,890
Schering-Plough 6.00% exercise price $33.69, expiration date 8/13/10   4,000 678,500
      2,443,798
Metals & Mining – 0.17%      
Freeport-McMoRan Copper & Gold 6.75% exercise price $73.24, expiration date 5/1/10   3,450 186,731
      186,731
Telecommunications – 0.94%      
Crown Castle International 6.25% exercise price $36.88, expiration date 8/15/12   16,600 724,175
Lucent Technologies Capital Trust I 7.75% exercise price $24.80, expiration date 3/15/17   1,000 270,250
      994,425
Transportation – 0.23%      
Bristow Group 5.50% exercise price $43.19, expiration date 9/15/09   8,400 241,668
      241,668
Total Convertible Preferred Stock (cost $6,452,524)     3,879,622
 
    Principal  
    Amount°  
Agency Collateralized Mortgage Obligations – 0.66%      
Fannie Mae      
       Series 2001-50 BA 7.00% 10/25/41 USD 194,034 206,283
       Series 2003-122 AJ 4.50% 2/25/28   130,938 132,397
Freddie Mac      
       Series 2557 WE 5.00% 1/15/18   60,000 61,524
       Series 3094 US 6.75% 9/15/34   127,420 121,567
       Series 3113 QA 5.00% 11/15/25   44,755 45,630
       Series 3131 MC 5.50% 4/15/33   40,000 41,609
       Series 3173 PE 6.00% 4/15/35   65,000 67,740
       Series 3337 PB 5.50% 7/15/30   25,000 25,918
Total Agency Collateralized Mortgage Obligations (cost $678,647)     702,668
 
Agency Mortgage-Backed Securities – 7.40%      
·Fannie Mae ARM      
       5.134% 11/1/35   35,609 36,629
       5.165% 3/1/38   81,418 83,726
       5.398% 4/1/36   43,981 45,448
       6.03% 10/1/36   49,653 51,413
       6.091% 10/1/36   32,568 33,741
       6.311% 4/1/36   183,992 190,970
Fannie Mae S.F. 15 yr 5.50% 1/1/23   101,901 105,807
Fannie Mae S.F. 30 yr      
       *5.00% 12/1/36   273,194 278,567
       5.00% 12/1/37   33,196 33,811
       5.00% 1/1/38   55,743 56,775
       5.00% 2/1/38   27,477 27,986
       5.50% 4/1/37   1,035,866 1,062,236
       5.50% 4/1/38   241,827 247,983
       *6.00% 7/1/37   656,951 679,218
       6.00% 8/1/38   291,263 301,135
       6.50% 6/1/36   58,433 61,194
       6.50% 10/1/36   51,423 53,853
       6.50% 3/1/37   45,932 48,102
       6.50% 7/1/37   989,297 1,035,989
       6.50% 8/1/37   64,763 67,820
       6.50% 11/1/37   46,574 48,773
       6.50% 12/1/37   62,318 65,259
Fannie Mae S.F. 30 yr TBA 4.00% 3/1/39   70,000 68,737


Freddie Mac 6.00% 1/1/17              123,196                128,220
·Freddie Mac ARM    
       5.673% 7/1/36 32,451 33,589
       5.819% 10/1/36 87,458 90,181
Freddie Mac S.F. 15 yr    
       5.00% 6/1/18 31,362 32,528
       5.00% 12/1/22 220,736 227,485
Freddie Mac S.F. 30 yr    
       5.00% 1/1/34 1,303,926 1,329,406
       5.00% 11/1/35 231,337 235,424
       7.00% 11/1/33 78,083 83,382
       9.00% 9/1/30 98,335 109,446
Freddie Mac S.F. 30 yr TBA 5.00% 3/1/39 50,000 50,766
GNMA I S.F. 30 yr    
       7.50% 12/15/23 144,987 156,528
       7.50% 1/15/32 109,941 118,469
       9.50% 9/15/17 86,751 94,764
       12.00% 5/15/15 80,051 92,846
GNMA II S.F. 30 yr    
       6.00% 11/20/28 137,882 143,278
       6.50% 2/20/30 230,227 242,964
Total Agency Mortgage-Backed Securities (cost $7,536,767)   7,854,448
 
Agency Obligations – 2.24%    
*Federal Home Loan Bank    
       3.625% 10/18/13 50,000 51,772
       4.875% 5/17/17 960,000 1,034,229
Freddie Mac 4.125% 12/21/12 1,170,000 1,252,967
Tennessee Valley Authority 4.875% 1/15/48 45,000 44,671
Total Agency Obligations (cost $2,216,973)   2,383,639
 
Commercial Mortgage-Backed Securities – 0.87%    
#American Tower Trust 144A    
       Series 2007-1A AFX 5.42% 4/15/37 75,000 66,750
       Series 2007-1A D 5.957% 4/15/37 25,000 20,625
·Bank of America Commercial Mortgage Securities    
       Series 2004-3 A5 5.322% 6/10/39 60,000 49,432
       Series 2005-6 AM 5.18% 9/10/47 25,000 11,758
       Series 2007-3 A4 5.658% 6/10/49 50,000 28,545
·Bear Stearns Commercial Mortgage Securities Series 2007-T28 A4 5.742% 9/11/42 65,000 43,011
·Credit Suisse First Boston Mortgage Securities Series 2005-C6 A4 5.23% 12/15/40 150,000 109,853
·Greenwich Capital Commercial Funding Series 2004-GG1 A7 5.317% 6/10/36 35,000 28,162
·Merrill Lynch/Countrywide Commercial Mortgage Trust Series 2007-7 A4 5.749% 6/12/50 150,000 81,855
Morgan Stanley Capital I    
       Series 2005-IQ9 A4 4.66% 7/15/56 350,000 282,011
       ·Series 2006-HQ9 A4 5.731% 7/12/44 175,000 116,330
       ·Series 2007-IQ14 A4 5.692% 4/15/49 150,000 82,863
Total Commercial Mortgage-Backed Securities (cost $1,249,403)   921,195
 
Convertible Bonds – 9.01%    
Banking, Finance & Insurance – 0.76%    
*National City 4.00% 2/1/11 exercise price $482.51, expiration date 2/1/11 895,000 808,856
    808,856
Basic Industries – 1.34%    
*Rayonier TRS Holdings 3.75% 10/15/12 exercise price $54.82, expiration date 10/15/12 1,250,000 1,096,875
#Sino Forest 144A 5.00% 8/1/13 exercise price $20.29, expiration date 8/1/13 500,000 330,000
    1,426,875
Cable, Media & Publishing – 0.46%    
General Cable 0.875% 11/15/13 exercise price $50.36, expiration date 11/15/13 750,000 493,125
    493,125
Computers & Technology – 1.51%    
Advanced Micro Devices 6.00% 5/1/15 exercise price $28.08, expiration date 5/1/15 775,000 287,719


Euronet Worldwide 3.50% 10/15/25 exercise price $40.48, expiration date 10/15/25              900,000                605,250
Linear Technology 3.125% 5/1/27 exercise price $49.03, expiration date 5/1/27 750,000 707,812
    1,600,781
Electronics & Electrical Equipment – 0.12%    
Flextronics International 1.00% 8/1/10 exercise price $15.53, expiration date 8/1/10 140,000 126,700
    126,700
Health Care & Pharmaceuticals – 0.86%    
Advanced Medical Optics 3.25% 8/1/26 exercise price $59.61, expiration date 8/1/26 313,000 313,000
Hologic 2.00% 12/15/37 exercise price $38.59, expiration date 12/15/37 910,000 596,050
    909,050
Industrials – 0.20%    
Allied Waste Industries 4.25% 4/15/34 exercise price $20.34, expiration date 4/15/34 222,000 207,293
    207,293
Real Estate – 0.61%    
#Host Hotels & Resorts 144A 3.25% 4/15/24 exercise price $16.00, expiration date 4/15/24 85,000 77,563
Vornado Realty Trust 2.85% 4/1/27 exercise price $159.04, expiration date 4/1/27 750,000 569,062
    646,625
Telecommunications – 2.74%    
#Alaska Communications System Group 144A 5.75% 3/1/13 exercise price $12.90, expiration date 3/1/13 1,000,000 653,750
Commscope 3.75% 10/15/12 exercise price $54.82, expiration date 10/15/12 820,000 815,899
#Leap Wireless International 144A 4.50% 7/15/24 exercise price $93.21, expiration date 7/15/24 129,000 87,720
NII Holdings 3.125% 6/15/12 exercise price $118.32, expiration date 6/15/12 1,100,000 737,000
#Virgin Media 144A 6.50% 11/15/16 exercise price $19.22, expiration date 11/15/16 1,175,000 619,813
    2,914,182
Transportation – 0.41%    
Bristow Group 3.00% 6/15/38 exercise price $77.34, expiration date 6/15/38 750,000 437,813
    437,813
Total Convertible Bonds (cost $11,155,028)   9,571,300
 
Corporate Bonds – 41.99%    
Banking – 0.87%    
Bank of America    
       *5.125% 11/15/14 100,000 84,537
       ·8.00% 12/29/49 20,000 7,476
Bank of New York Mellon 5.125% 8/27/13 145,000 144,113
BB&T    
       4.90% 6/30/17 40,000 34,669
       *5.25% 11/1/19 70,000 61,176
JPMorgan Chase Capital XXV 6.80% 10/1/37 85,000 63,645
@·Kazkommerts International 8.625% 7/27/16 1,000,000 229,999
PNC Funding 5.625% 2/1/17 60,000 55,243
U.S. Bank North America 4.80% 4/15/15 35,000 33,506
·USB Capital IX 6.189% 4/15/49 170,000 68,026
*Wells Fargo 5.625% 12/11/17 35,000 33,278
·Wells Fargo Capital 7.70% 12/29/49 225,000 109,626
    925,294
Basic Industries – 5.67%    
Arcelormittal 6.125% 6/1/18 75,000 57,839
California Steel Industries 6.125% 3/15/14 135,000 93,825
Domtar    
       *7.125% 8/15/15 80,000 54,800
       7.875% 10/15/11 45,000 38,588
@#Evraz Group 144A    
       8.25% 11/10/15 1,000,000 595,000
       9.50% 4/24/18 280,000 144,200
Freeport McMoRan Copper & Gold 8.25% 4/1/15 405,000 360,862
Georgia-Pacific    
       7.70% 6/15/15 75,000 66,375
       *8.875% 5/15/31 148,000 114,700
Huntsman International    
       7.375% 1/1/15 55,000 25,988
       7.875% 11/15/14 110,000 52,800


Innophos 8.875% 8/15/14                230,000                184,000
@#Innophos Holding 144A 9.50% 4/15/12   115,000 83,375
Lubrizol 8.875% 2/1/19   60,000 61,618
#MacDermid 144A 9.50% 4/15/17   335,000 134,000
Momentive Performance Materials 9.75% 12/1/14   235,000 90,475
NewPage 10.00% 5/1/12   225,000 69,188
@#Nine Dragons Paper Holdings 144A 9.875% 4/29/13   1,000,000 535,825
Noranda Aluminium Acquisition PIK 6.595% 5/15/15   170,000 41,650
Norske Skog Canada 8.625% 6/15/11   210,000 97,650
@#Norske Skogindustrier 144A 7.125% 10/15/33   150,000 60,000
Reliance Steel & Aluminum 6.85% 11/15/36   59,000 34,361
#Rock-Tenn 144A 9.25% 3/15/16   135,000 135,000
Rockwood Specialties Group 7.50% 11/15/14   165,000 141,075
#Ryerson 144A      
       ·8.545% 11/1/14   115,000 59,225
       12.25% 11/1/15   65,000 38,675
@#Sappi Papier Holding 144A 6.75% 6/15/12   300,000 184,933
Southern Copper 7.50% 7/27/35   1,000,000 668,533
@#Steel Capital 144A 9.75% 7/29/13   1,100,000 640,750
#Steel Dynamics 144A 7.75% 4/15/16   220,000 170,500
@Vale Overseas 6.875% 11/21/36   979,000 848,400
#Vedanta Resources 144A 9.50% 7/18/18   205,000 117,875
·Verso Paper Holdings 4.92% 8/1/14   55,000 14,575
      6,016,660
Brokerage – 1.21%       
Citigroup 6.50% 8/19/13   115,000 107,315
E*TRADE Financial 12.50% 11/30/17   125,000 58,125
Goldman Sachs Group      
       5.95% 1/18/18   70,000 62,675
       6.15% 4/1/18   100,000 91,018
       6.75% 10/1/37   20,000 14,257
       *7.50% 2/15/19   60,000 59,529
Jefferies Group 6.45% 6/8/27   55,000 32,538
JPMorgan Chase & Co 6.00% 1/15/18   55,000 53,254
LaBranche & Co 11.00% 5/15/12   125,000 110,625
Lazard Group 6.85% 6/15/17   46,000 34,427
Morgan Stanley 5.375% 10/15/15   100,000 87,365
#Morgan Stanley 144A 10.09% 5/3/17 BRL 2,000,000 576,465
      1,287,593
Capital Goods – 2.63%       
*Associated Materials 9.75% 4/15/12 USD 145,000 120,350
Building Materials 7.75% 8/1/14   155,000 106,950
BWAY 10.00% 10/15/10   360,000 339,299
Caterpillar 7.90% 12/15/18   55,000 57,599
Celestica      
       7.625% 7/1/13   35,000 31,500
       7.875% 7/1/11   70,000 67,463
Flextronics International      
       6.25% 11/15/14   110,000 92,950
       6.50% 5/15/13   70,000 62,125
*Graham Packaging 9.875% 10/15/14   305,000 193,675
Graphic Packaging International 9.50% 8/15/13   335,000 251,250
Greenbrier 8.375% 5/15/15   160,000 79,600
Hexion US Finance 9.75% 11/15/14   100,000 13,500
L-3 Communications 6.125% 7/15/13   130,000 125,450
#Moog 144A 7.25% 6/15/18   135,000 122,175
Owens Brockway Glass Container 6.75% 12/1/14   245,000 237,650
*RBS Global/Rexnord 11.75% 8/1/16   165,000 108,900
*Sally Holdings 10.50% 11/15/16   225,000 196,313
Thermadyne Holdings 9.50% 2/1/14   195,000 125,288
Tyco Electronics Group 6.55% 10/1/17   40,000 30,205


Tyco International Finance 8.50% 1/15/19                80,000                83,635
United Technologies 6.125% 2/1/19   45,000 47,839
@Vitro 11.75% 11/1/13   1,000,000 257,499
Vought Aircraft Industries 8.00% 7/15/11   75,000 41,625
      2,792,840
Consumer Cyclical – 2.74%      
Centex      
       4.55% 11/1/10   190,000 170,050
       5.125% 10/1/13   50,000 39,000
CVS Caremark      
       *4.875% 9/15/14   45,000 43,740
       5.75% 6/1/17   53,000 51,790
*Denny’s Holdings 10.00% 10/1/12   75,000 64,875
*Dollar General 10.625% 7/15/15   170,000 171,274
DR Horton      
       6.00% 4/15/11   145,000 131,225
       7.875% 8/15/11   135,000 124,875
Ford Motor Credit      
       ·4.01% 1/13/12   135,000 66,319
       7.80% 6/1/12   405,000 219,650
       9.875% 8/10/11   165,000 95,957
#GMAC 144A      
       6.00% 12/15/11   60,000 35,174
       6.625% 5/15/12   60,000 34,588
       6.875% 9/15/11   85,000 55,363
       6.875% 8/28/12   158,000 91,029
*Goodyear Tire & Rubber 9.00% 7/1/15   80,000 60,800
#Invista 144A 9.25% 5/1/12   160,000 148,000
Lear 8.75% 12/1/16   425,000 74,375
Levi Strauss 9.75% 1/15/15   196,000 163,660
M/I Homes 6.875% 4/1/12   90,000 47,700
Mobile Mini 6.875% 5/1/15   125,000 93,125
*Neiman Marcus Group 10.375% 10/15/15   250,000 105,313
Ryland Group      
       5.375% 5/15/12   100,000 87,000
       6.875% 6/15/13   155,000 133,300
Target 4.00% 6/15/13   60,000 59,191
*Tenneco 8.625% 11/15/14   275,000 39,875
Toll      
       8.25% 2/1/11   165,000 162,525
       8.25% 12/1/11   125,000 122,500
#TRW Automotive 144A 7.00% 3/15/14   100,000 28,500
VF 5.95% 11/1/17   15,000 13,348
Wal-Mart Stores      
       5.25% 9/1/35   40,000 37,271
       6.20% 4/15/38   32,000 33,302
       6.50% 8/15/37   15,000 16,114
Yum Brands 6.875% 11/15/37   105,000 87,183
      2,907,991
Consumer Non-Cyclical – 3.37%      
Abbott Laboratories 5.125% 4/1/19   55,000 54,533
ACCO Brands 7.625% 8/15/15   90,000 36,900
Alliance One International      
       8.50% 5/15/12   35,000 30,450
       11.00% 5/15/12   50,000 47,250
@#AmBev International Finance 144A 9.50% 7/24/17 BRL 1,189,000 397,342
Amgen      
       *5.70% 2/1/19 USD 5,000 5,050
       6.375% 6/1/37   15,000 14,559
       6.90% 6/1/38   75,000 77,640
#Anheuser-Busch InBev Worldwide 144A      
       7.75% 1/15/19   30,000 30,067
       8.20% 1/15/39 95,000 92,359


Bottling Group 6.95% 3/15/14              80,000                90,981
*Chiquita Brands International    
       7.50% 11/1/14 120,000 86,700
       8.875% 12/1/15 25,000 19,188
*Constellation Brands 8.125% 1/15/12 160,000 159,200
Cornell 10.75% 7/1/12 60,000 55,500
*Cott Beverages USA 8.00% 12/15/11 140,000 76,300
Del Monte    
       6.75% 2/15/15 30,000 28,800
       9.125% 12/15/12 40,000 40,500
Delhaize America 9.00% 4/15/31 90,000 100,718
Delhaize Group    
       5.875% 2/1/14 10,000 10,025
       6.50% 6/15/17 30,000 29,221
Diageo Capital 5.75% 10/23/17 85,000 84,816
General Mills 5.65% 9/10/12 35,000 36,579
GlaxoSmithKline Capital    
       4.375% 4/15/14 20,000 20,389
       5.65% 5/15/18 10,000 10,314
Iron Mountain    
       6.625% 1/1/16 85,000 79,475
       *8.00% 6/15/20 155,000 146,475
*Jarden 7.50% 5/1/17 185,000 145,225
Johnsondiversey Holding 10.67% 5/15/13 160,000 119,200
Kroger    
       6.80% 12/15/18 15,000 15,501
       6.90% 4/15/38 30,000 30,509
       7.50% 1/15/14 60,000 66,305
LVB Acquisition    
       *10.00% 10/15/17 170,000 170,850
       11.625% 10/15/17 40,000 37,200
Mckesson    
       5.70% 3/1/17 5,000 4,646
       7.50% 2/15/19 60,000 62,753
National Beef Packing 11.00% 8/1/11 145,000 106,575
Novartis Capital 4.125% 2/10/14 65,000 65,675
Novartis Securities Investment 5.125% 2/10/19 50,000 49,565
Pinnacle Foods Finance 9.25% 4/1/15 95,000 78,375
Princeton University 5.70% 3/1/39 55,000 53,954
Schering-Plough    
       6.00% 9/15/17 15,000 15,091
       6.55% 9/15/37 10,000 9,923
Tenet Healthcare 7.375% 2/1/13 195,000 165,750
#Tyson Foods 144A 10.50% 3/1/14 105,000 99,488
Visant Holding 8.75% 12/1/13 240,000 222,000
Wyeth 5.50% 2/1/14 190,000 200,199
    3,580,115
Energy – 6.08%    
AmeriGas Partners 7.125% 5/20/16 155,000 144,925
Chesapeake Energy    
       *6.375% 6/15/15 170,000 139,825
       7.00% 8/15/14 40,000 34,400
       9.50% 2/15/15 5,000 4,675
Complete Production Service 8.00% 12/15/16 130,000 88,563
Compton Petroleum Finance 7.625% 12/1/13 370,000 125,800
#Connacher Oil & Gas 144A 10.25% 12/15/15 245,000 94,325
ConocoPhillips 6.50% 2/1/39 100,000 97,235
#Copano Energy 144A 7.75% 6/1/18 125,000 98,125
Denbury Resources 9.75% 3/1/16 100,000 94,500
Duke Energy Carolinas 5.75% 11/15/13 10,000 10,584
Dynergy Holdings 7.75% 6/1/19 220,000 134,200


El Paso                                
       6.875% 6/15/14 145,000 128,879
       *7.00% 6/15/17 175,000 154,388
       7.25% 6/1/18 15,000 13,313
       8.25% 2/15/16 25,000 23,375
Enterprise Products Operating    
       6.30% 9/15/17 45,000 41,335
       6.50% 1/31/19 30,000 27,602
       6.875% 3/1/33 65,000 55,873
Frontier Oil 8.50% 9/15/16 95,000 92,150
Geophysique-Veritas 7.75% 5/15/17 210,000 163,800
#Helix Energy Solutions Group 144A 9.50% 1/15/16 290,000 163,850
#Hilcorp Energy I 144A 7.75% 11/1/15 350,000 269,499
International Coal Group 10.25% 7/15/14 180,000 130,500
Key Energy Services 8.375% 12/1/14 250,000 163,750
@Lukoil International Finance 6.356% 6/7/17 1,000,000 734,999
Marathon Oil 7.50% 2/15/19 70,000 68,115
Mariner Energy 8.00% 5/15/17 270,000 180,900
Markwest Energy Partners/Finance 8.75% 4/15/18 255,000 182,325
Massey Energy 6.875% 12/15/13 275,000 243,374
Noble Energy 8.25% 3/1/19 55,000 55,313
OPTI Canada 7.875% 12/15/14 270,000 90,450
*Petrobras International Finance 7.875% 3/15/19 35,000 35,263
#PetroHawk Energy 144A 7.875% 6/1/15 225,000 194,625
@Petroleum Development 12.00% 2/15/18 145,000 92,438
Plains All American Pipeline 6.50% 5/1/18 83,000 72,022
Plains Exploration & Production 7.00% 3/15/17 165,000 141,488
Range Resources 7.25% 5/1/18 130,000 118,300
Regency Energy Partners 8.375% 12/15/13 225,000 188,438
Shell International Finance 6.375% 12/15/38 50,000 52,225
@TNK-BP Finance 7.875% 3/13/18 2,000,000 1,149,999
TransCanada Pipelines    
       5.85% 3/15/36 45,000 38,231
       7.125% 1/15/19 20,000 20,680
       7.25% 8/15/38 50,000 49,044
Weatherford International    
       5.95% 6/15/12 25,000 23,705
       6.80% 6/15/37 20,000 14,078
       7.00% 3/15/38 30,000 21,412
Whiting Petroleum 7.25% 5/1/13 145,000 118,900
XTO Energy    
       6.50% 12/15/18 45,000 43,994
       6.75% 8/1/37 30,000 26,839
    6,452,628
Finance & Investments – 1.97%    
@Cardtronics 9.25% 8/15/13 270,000 179,550
FTI Consulting 7.625% 6/15/13 380,000 380,950
General Electric Capital    
       5.625% 5/1/18 115,000 98,683
       5.875% 1/14/38 30,000 21,387
       6.875% 1/10/39 105,000 85,204
·Hartford Financial Services Group 8.125% 6/15/38 385,000 182,990
·#ILFC E-Capital Trust II 144A 6.25% 12/21/65 50,000 5,977
Inergy Finance    
       6.875% 12/15/14 155,000 143,375
       8.25% 3/1/16 145,000 139,925
International Lease Finance    
       5.35% 3/1/12 45,000 28,997
       5.875% 5/1/13 30,000 18,245
       6.625% 11/15/13 50,000 30,542
Leucadia National 8.125% 9/15/15 112,000 93,520
·#Liberty Mutual Group 144A 10.75% 6/15/58 240,000 127,359


MetLife                                  
       6.40% 12/15/36   45,000 24,269
       6.817% 8/15/18   130,000 121,849
       7.717% 2/15/19   35,000 33,828
@PMontpelier Re Holdings 6.125% 8/15/13   15,000 11,351
@#Nuveen Investments 144A 10.50% 11/15/15   395,000 92,825
@Red Arrow International Leasing 8.375% 6/30/12 RUB 9,908,524 196,012
SLM 8.45% 6/15/18 USD 70,000 45,562
Unitrin 6.00% 5/15/17   55,000 34,512
      2,096,912
Media – 2.26%      
#Charter Communications Operating 144A      
       *8.00% 4/30/12   35,000 31,325
       *8.375% 4/30/14   95,000 82,175
       10.875% 9/15/14   410,000 381,299
Comcast      
       4.95% 6/15/16   25,000 22,379
       *5.70% 5/15/18   5,000 4,629
       5.875% 2/15/18   60,000 56,330
       6.30% 11/15/17   10,000 9,708
DirecTV Holdings 8.375% 3/15/13   67,000 68,005
Echostar DBS 7.125% 2/1/16   235,000 213,263
@Grupo Televisa 8.49% 5/11/37 MXN 10,000,000 427,503
Lamar Media      
       *6.625% 8/15/15 USD 105,000 68,250
       6.625% 8/15/15   140,000 88,200
#LBI Media 144A 8.50% 8/1/17   115,000 35,075
Mediacom Capital 9.50% 1/15/13   105,000 91,875
Nielsen Finance 10.00% 8/1/14   110,000 91,300
#Nielsen Finance 144A 11.625% 2/1/14   50,000 43,500
Quebecor Media 7.75% 3/15/16   100,000 82,000
#Rainbow National Services 144A 10.375% 9/1/14   105,000 108,019
Thomson Reuters      
       5.95% 7/15/13   30,000 29,657
       6.50% 7/15/18   30,000 28,161
Time Warner Cable      
       6.75% 7/1/18   85,000 80,722
       8.75% 2/14/19   60,000 64,154
Videotron      
       6.375% 12/15/15   95,000 85,975
       9.125% 4/15/18   30,000 29,775
#Videotron 144A 9.125% 4/15/18   90,000 91,350
#Vivendi 144A 6.625% 4/4/18   95,000 82,959
      2,397,588
Real Estate – 0.02%      
Regency Centers 5.875% 6/15/17   35,000 24,325
      24,325
Services Cyclical – 2.25%      
*ARAMARK 8.50% 2/1/15   390,000 356,849
#Ashtead Capital 144A 9.00% 8/15/16   100,000 58,500
Corrections Corporation of America 6.25% 3/15/13   115,000 110,688
#Erac USA Finance 144A 6.375% 10/15/17   115,000 74,829
@#Galaxy Entertainment Finance 144A 9.875% 12/15/12   305,000 166,225
Gaylord Entertainment      
       6.75% 11/15/14   80,000 51,200
       8.00% 11/15/13   165,000 110,138
Global Cash Access 8.75% 3/15/12   185,000 147,075
Hertz      
       8.875% 1/1/14   225,000 111,375
       *10.50% 1/1/16   105,000 39,900
Kansas City Southern de Mexico 9.375% 5/1/12   150,000 147,750
Lender Process Services 8.125% 7/1/16   105,000 105,394


MGM MIRAGE                                
       6.75% 4/1/13 235,000 101,638
       *7.50% 6/1/16 70,000 28,525
*#MGM MIRAGE 144A 13.00% 11/15/13 75,000 54,375
Pinnacle Entertainment    
       8.25% 3/15/12 20,000 17,900
       8.75% 10/1/13 175,000 156,625
@#Pokagon Gaming Authority 144A 10.375% 6/15/14 350,000 309,750
*RSC Equipment Rental 9.50% 12/1/14 125,000 67,500
@#Seminole Indian Tribe of Florida 144A    
       7.804% 10/1/20 160,000 125,078
       8.03% 10/1/20 55,000 45,752
    2,387,066
Services Non-cyclical – 2.67%    
Alliance Imaging 7.25% 12/15/12 120,000 112,800
Allied Waste North America 6.875% 6/1/17 10,000 9,515
*#Bausch & Lomb 144A 9.875% 11/1/15 365,000 332,150
Browning-Ferris Industries 7.40% 9/15/35 75,000 66,930
Casella Waste Systems 9.75% 2/1/13 315,000 277,200
*Community Health Systems 8.875% 7/15/15 315,000 299,644
Covidien International Finance    
       6.00% 10/15/17 9,000 9,079
       6.55% 10/15/37 105,000 104,721
HCA     
       6.50% 2/15/16 250,000 168,750
       9.25% 11/15/16 525,000 481,687
·HealthSouth 8.323% 6/15/14 250,000 216,250
Quest Diagnostics 5.45% 11/1/15 95,000 87,937
#Roche Holdings 144A 6.00% 3/1/19 70,000 70,810
Select Medical 7.625% 2/1/15 290,000 179,800
UnitedHealth Group    
       5.50% 11/15/12 80,000 79,099
       5.80% 3/15/36 120,000 96,455
Universal Hospital Services PIK 8.50% 6/1/15 35,000 30,625
Waste Management    
       7.10% 8/1/26 35,000 30,414
       7.375% 8/1/10 10,000 10,270
       *7.375% 3/11/19 25,000 24,893
WellPoint    
       5.00% 1/15/11 60,000 60,034
       5.85% 1/15/36 95,000 79,305
       5.95% 12/15/34 10,000 8,140
    2,836,508
Technology – 0.54%    
Amkor Technology 7.75% 5/15/13 90,000 53,438
Cisco Systems 5.90% 2/15/39 70,000 65,402
Oracle 5.75% 4/15/18 110,000 111,432
Sungard Data Systems    
       9.125% 8/15/13 196,000 167,580
       10.25% 8/15/15 250,000 172,499
    570,351
Telecommunications – 7.22%    
AT&T 5.80% 2/15/19 130,000 126,477
AT&T Wireless 8.125% 5/1/12 125,000 135,279
·Centennial Communications 7.185% 1/1/13 95,000 95,000
Cincinnati Bell    
       7.00% 2/15/15 140,000 128,100
       7.25% 7/15/13 80,000 76,800
Citizens Communications 7.125% 3/15/19 185,000 156,325
Cricket Communications 9.375% 11/1/14 400,000 367,000
Crown Castle International 9.00% 1/15/15 345,000 338,100
#CSC Holdings 144A    
       8.50% 4/15/14 13,000   12,545
       8.50% 6/15/15 210,000 201,600


Deutsche Telekom International Finance 5.25% 7/22/13              45,000                45,188
*#Digicel 144A 9.25% 9/1/12 100,000 90,750
#Digicel Group 144A 8.875% 1/15/15 1,100,000 824,999
#Expedia 144A 8.50% 7/1/16 110,000 90,750
GCI 7.25% 2/15/14 85,000 76,925
Hughes Network Systems 9.50% 4/15/14 260,000 228,800
Inmarsat Finance 10.375% 11/15/12 380,000 389,500
Intelsat Jackson Holdings 11.25% 6/15/16 550,000 521,124
#Intelsat Subsidiary Holding 144A 8.875% 1/15/15 70,000 66,850
Lucent Technologies 6.45% 3/15/29 165,000 60,638
MetroPCS Wireless 9.25% 11/1/14 453,000 430,350
#Nordic Telephone Holdings 144A 8.875% 5/1/16 150,000 137,250
*Qwest Capital Funding 7.25% 2/15/11 205,000 196,288
Rogers Communications 6.80% 8/15/18 130,000 130,370
Rogers Wireless 8.00% 12/15/12 100,000 101,375
Sprint Nextel 6.00% 12/1/16 520,000 338,467
Telecom Italia Capital    
       4.00% 1/15/10 30,000 29,485
       5.25% 10/1/15 55,000 46,457
       6.20% 7/18/11 45,000 44,161
#Telesat Canada 144A    
       11.00% 11/1/15 225,000 183,375
       12.50% 11/1/17 45,000 32,625
Time Warner Telecom Holdings 9.25% 2/15/14 225,000 214,313
Verizon Communications    
       5.50% 2/15/18 20,000 18,959
       5.55% 2/15/16 20,000 19,364
       6.10% 4/15/18 10,000 9,918
       8.95% 3/1/39 80,000 94,640
#Verizon Wireless 144A    
       5.55% 2/1/14 95,000 94,548
       8.50% 11/15/18 35,000 39,466
@#Vimpelcom 144A 9.125% 4/30/18 1,255,000 716,855
Virgin Media Finance 8.75% 4/15/14 290,000 262,088
Vodafone Group    
       5.00% 12/16/13 10,000 10,037
       5.00% 9/15/15 20,000 19,017
       5.375% 1/30/15 145,000 141,467
       6.15% 2/27/37 5,000 4,631
#Wind Acquisition Finance 144A 10.75% 12/1/15 150,000 151,125
Windstream 8.125% 8/1/13 170,000 165,750
    7,665,131
Utilities – 2.49%     
AES     
       7.75% 3/1/14 105,000 94,763
       8.00% 10/15/17 30,000 25,650
#AES 144A 8.00% 6/1/20 155,000 129,425
Baltimore Gas & Electric 6.125% 7/1/13 30,000 28,804
Columbus Southern Power 6.05% 5/1/18 20,000 19,029
Commonwealth Edison    
       5.80% 3/15/18 5,000 4,758
       5.90% 3/15/36 30,000 25,571
       6.15% 9/15/17 40,000 38,971
Detroit Edison 5.60% 6/15/18 25,000 24,436
Edison Mission Energy    
       7.00% 5/15/17 10,000 8,500
       7.50% 6/15/13 80,000 73,800
       7.625% 5/15/27 225,000 169,875
Illinois Power 6.125% 11/15/17 85,000 80,110
Indiana Michigan Power 7.00% 3/15/19 25,000 24,441


Jersey Central Power & Light 7.35% 2/1/19              35,000                35,197
@Korea Southern Power 5.375% 4/18/13 630,000 560,409
Mirant Americas Generation 8.50% 10/1/21 100,000 78,500
wMirant Mid Atlantic Pass Through Trust A 8.625% 6/30/12 100,783 100,279
Mirant North America 7.375% 12/31/13 175,000 161,000
NRG Energy    
       7.375% 2/1/16 290,000 268,249
       7.375% 1/15/17 65,000 60,288
Orion Power Holdings 12.00% 5/1/10 205,000 211,406
Pacificorp 6.00% 1/15/39 50,000 49,584
Peco Energy 5.35% 3/1/18 20,000 19,626
PPL Electric Utilities 7.125% 11/30/13 40,000 44,957
Reliant Energy 7.625% 6/15/14 155,000 113,150
Texas Competitive Electric Holdings 10.50% 11/1/15 340,000 173,400
Union Electric 6.70% 2/1/19 15,000 14,767
    2,638,945
Total Corporate Bonds (cost $57,415,041)   44,579,947
 
Foreign Agencies – 1.54%    
France – 0.06%    
#Electricite de France 144A 6.95% 1/26/39 35,000 35,306
France Telecom 7.75% 3/1/11 25,000 26,870
    62,176
Luxembourg – 0.77%    
@#Gazprom 144A 8.625% 4/28/34 1,000,000 825,000
    825,000
Republic of Korea – 0.04%    
Korea Development Bank 5.30% 1/17/13 45,000 41,389
    41,389
United States – 0.67%    
Pemex Project Funding Master Trust 6.625% 6/15/35 1,000,000 710,907
    710,907
Total Foreign Agencies (cost $2,360,080)   1,639,472
 
Municipal Bonds – 0.10%    
Portland, Oregon Sewer System Revenue Series A 5.00% 6/15/18 60,000 68,761
@#West Virginia Tobacco Settlement Finance Authority 7.467% 6/1/47 65,000 35,786
Total Municipal Bonds (cost $129,682)   104,547
 
Non-Agency Asset-Backed Securities – 1.02%    
·Bank of America Credit Card Trust Series 2008-A7 A7 1.15% 12/15/14 30,000 26,877
Capital Auto Receivables Asset Trust Series 2007-3 A3A 5.02% 9/15/11 72,845 70,972
Caterpillar Financial Asset Trust    
       Series 2007-A A3A 5.34% 6/25/12 18,183 18,231
       Series 2008-A A3 4.94% 4/25/14 60,000 59,189
@Centex Home Equity Series 2005-D AF4 5.27% 10/25/35 150,000 135,070
Chase Issuance Trust Series 2005-A7 A7 4.55% 3/15/13 45,000 45,590
@Citicorp Residential Mortgage Securities Series 2006-3 A5 5.948% 11/25/36 100,000 43,014
CNH Equipment Trust    
       Series 2007-B A3A 5.40% 10/17/11 30,000 29,763
       Series 2008-A A3 4.12% 5/15/12 20,000 19,575
       Series 2008-A A4 4.93% 8/15/14 30,000 27,761
       Series 2008-B A3A 4.78% 7/16/12 30,000 29,233
Discover Card Master Trust Series 2007-A1 A1 5.65% 3/16/20 100,000 87,658
@#Dunkin Securitization Series 2006-1 A2 144A 5.779% 6/20/31 150,000 107,671
Harley-Davidson Motorcycle Trust    
       Series 2005-2 A2 4.07% 2/15/12 72,301 70,313
       Series 2006-2 A2 5.35% 3/15/13 113,216 110,329
       Series 2007-2 A3 5.10% 5/15/12 13,153 12,966
Hyundai Auto Receivables Trust    
       Series 2007-A A3A 5.04% 1/17/12 18,653 18,676
       Series 2008-A A3 4.93% 12/17/12 30,000 27,393


John Deere Owner Trust Series 2008-A A3 4.18% 6/15/12                35,000                33,962
·MBNA Credit Card Master Note Trust Series 2005-A4 0.50% 11/15/12   30,000 28,640
@WFS Financial Owner Trust Series 2005-1 A4 3.87% 8/17/12   84,617 83,870
Total Non-Agency Asset-Backed Securities (cost $1,214,925)     1,086,753
 
Non-Agency Collateralized Mortgage Obligations – 1.09%      
@·Bear Stearns ARM Trust Series 2007-1 3A2 5.748% 2/25/47   259,264 92,649
Citicorp Mortgage Securities      
       Series 2006-4 3A1 5.50% 8/25/21   55,587 48,725
       ·Series 2007-1 2A1 5.748% 1/25/22   286,470 245,928
       ·Series 2007-AR8 1A3A 6.031% 8/25/37   89,896 49,442
@w·Countrywide Home Loan Mortgage Pass Through Trust Series 2004-HYB4 M 4.591% 9/20/34 19,545 11,677
·First Horizon Asset Securities      
       Series 2007-AR2 1A1 5.846% 8/25/37   142,072 81,106
       Series 2007-AR3 2A2 6.295% 11/25/37   112,419 57,931
·GSR Mortgage Loan Trust Series 2006-AR1 3A1 5.366% 1/25/36   185,486 110,685
·JPMorgan Mortgage Trust Series 2004-A5 4A2 4.818% 12/25/34   298,562 244,423
·MASTR ARMs Trust Series 2006-2 4A1 4.983% 2/25/36   110,634 80,366
@·Structured ARM Loan Trust Series 2005-22 4A2 5.371% 12/25/35   40,283 15,592
@wWashington Mutual Alternative Mortgage Pass Through Certificates Series 2006-5 2CB3 6.00% 7/25/36 17,362 9,426
·Wells Fargo Mortgage Backed Securities Trust      
       Series 2005-AR2 2A1 4.556% 3/25/35   87,043 59,602
       @Series 2005-AR16 6A4 5.002% 10/25/35   69,489 30,247
       @Series 2006-AR14 2A4 6.081% 10/25/36   64,511 21,735
Total Non-Agency Collateralized Mortgage Obligations (cost $1,802,998)     1,159,534
 
«Senior Secured Loans – 1.40%      
Energy Futures Holdings 4.036% 10/10/14   94,760 58,923
Ford Motor 3.556% 11/29/13   675,000 222,095
General Motors 8.00% 11/17/13   599,427 223,473
Harrah’s Operating Term Tranche Loan B2 3.479% 1/28/15   225,000 131,541
Northwest Airlines 2.57% 8/21/13   110,000 95,810
Talecris Biotherapeutics 2nd Lien 7.74% 12/6/14   500,000 428,749
Toys R US 4.72% 7/19/12   310,000 175,593
Univision Communications 2.73% 9/15/14   315,000 145,373
Total Senior Secured Loans (cost $1,778,980)     1,481,557
 
Sovereign Debt – 12.29%D      
Barbados – 1.49%      
#Republic of Barbados 144A 6.625% 12/5/35   2,000,000 1,583,242
      1,583,242
Brazil – 2.29%      
Banco Nacional de Desenvolvimento Economico e Social 6.369% 6/16/18   500,000 465,625
Federal Republic of Brazil      
       10.25% 1/10/28 BRL 2,000,000 731,025
       11.00% 8/17/40 USD 1,000,000 1,235,000
      2,431,650
Colombia – 0.31%      
#Santa Fe de Bogota D.C. 144A 9.75% 7/26/28 COP 1,000,000,000 332,068
      332,068
Indonesia – 1.29%      
#Republic of Indonesia 144A 7.75% 1/17/38 USD 2,000,000 1,370,000
      1,370,000
Mexico – 2.63%      
Mexican Bonos 9.50% 12/18/14 MXN 40,000,000 2,791,989
      2,791,989
Pakistan – 0.75%      
@#Republic of Pakistan 144A 6.875% 6/1/17 USD 2,000,000 790,000
      790,000
Philippines – 1.00%      
*Republic of Philippines 8.375% 6/17/19 USD 1,000,000 1,063,750
      1,063,750


Republic of Korea – 0.97%                                  
Export-Import Bank Korea 8.125% 1/21/14 USD 1,000,000 1,024,570
      1,024,570
Turkey – 1.19%      
Republic of Turkey 11.875% 1/15/30 USD 1,000,000 1,267,600
      1,267,600
United Kingdom – 0.37%      
@#CS International for City of Kyiv Ukraine 144A 8.25% 11/26/12 USD 1,000,000 390,000
      390,000
Total Sovereign Debt (cost $17,362,509)     13,044,869
 
Supranational Banks – 3.59%      
European Bank for Reconstruction & Development 7.00% 7/30/12 IDR 41,000,000 848,255
European Investment Bank      
       8.00% 10/21/13 ZAR 6,880,000 663,293
       11.25% 2/14/13 BRL 1,800,000 740,076
Inter-American Development Bank 9.00% 8/6/10 BRL 2,081,000 854,628
International Bank for Reconstruction & Development 9.75% 8/2/10 ZAR 7,000,000 702,486
Total Supranational Banks (cost $5,085,734)     3,808,738
 
U.S. Treasury Obligations – 0.25%      
*US Treasury Bonds 4.50% 5/15/38 USD 165,000 187,379
US Treasury Notes 1.875% 2/28/14   80,000 79,475
Total U.S. Treasury Obligations (cost $269,112)     266,854
 
Leveraged Non-Recourse Securities – 0.00%      
@w#JPMorgan Pass Through Trust Series 2007-B 144A 0.001% 1/15/87   500,000 0
Total Leveraged Non-Recourse Securities (cost $425,000)     0
 
    Number of  
    Shares  
Preferred Stock – 0.34%      
*Developers Diversified Realty Series I 7.50%   1,925 9,644
*Digital Realty Series A 8.50%   2,650 48,628
Freddie Mac 6.02%   21,000 6,300
#GMAC 144A 9.00%   197 33,650
·JPMorgan Chase & Co 7.90%   135,000 93,335
·PNC Financial Services Group 8.25%   80,000 50,514
*ProLogis Series G 6.75%   7,050 62,886
*Vornado Realty Trust 6.625%   3,700 52,170
Total Preferred Stock (cost $1,047,064)     357,127
 
    Principal  
    Amount°  
Residual Interest Trust Certificates – 0.00%      
@w#Freddie Mac Auction Pass Through Trust Series 2007 144A USD 475,000 0
Total Residual Interest Trust Certificates (cost $516,980)     0
 
    Number of  
    Shares  
Rights – 0.01%      
*Compagnie de Saint-Gobain   9,524 14,004
Total Rights (cost $0)     14,004
 
    Principal  
    Amount°  
Repurchase Agreement** – 7.65%      
BNP Paribas 0.24%, dated 02/27/09, to be      
repurchased on 3/2/09, repurchase price $8,121,162      
(collateralized by U.S. Government obligations,      
5/14/09-2/11/10; with market value $8,291,222) USD 8,121,000 8,121,000
Total Repurchase Agreement (cost $8,121,000)     8,121,000
 
Total Value of Securities Before Securities Lending Collateral – 139.19%      
       (cost $220,894,036) 147,795,498


               Number of               
  Shares  
Securities Lending Collateral*** – 13.33%    
Investment Companies    
       Mellon GSL DBT II Collateral Fund 14,489,570 14,149,520  
       †Mellon GSL DBT II Liquidation Trust 328,120 33  
Total Securities Lending Collateral (cost $14,817,690)   14,149,553  
 
Total Value of Securities – 152.52%    
       (cost $235,711,726)   161,945,051 ©
Obligation to Return Securities Lending Collateral*** – (13.96%)   (14,817,690 )
Borrowing Under Line of Credit – (42.38%)   (45,000,000 )
Receivables and Other Assets Net of Liabilities (See Notes) – 3.82%   4,053,017  
Net Assets Applicable to 12,929,436 Shares Outstanding – 100.00%   $ 106,180,378  

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

BRL – Brazilian Real
COP – Colombian Peso
EUR – European Monetary Unit
IDR – Indonesian Rupiah
MXN – Mexican Peso
RUB – Russian Ruble
USD – United States Dollar
ZAR – South African Rand

*Fully or partially on loan.
†Non income producing security.
·Variable rate security. The rate shown is the rate as of February 28, 2009.
#Security exempt from registration under Rule 144A of the Securities Act of 1933, as amended. At February 28, 2009, the aggregate amount of Rule 144A securities was $17,732,771 which represented 16.70% of the Fund’s net assets. See Note 8 in “Notes.”
@Illiquid security. At February 28, 2009, the aggregate amount of illiquid securities was $11,377,806 which represented 10.72% of the Fund’s net assets. See Note 8 in “Notes.”
PRestricted Security. These investments are in securities not registered under the Securities Act of 1933, as amended, and have certain restrictions on resale which may limit their liquidity. At February 28, 2009, the aggregate amount of the restricted securities was $11,351 or 0.01% of the Fund’s net assets. See Note 8 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.
«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.
DSecurities have been classified by country of origin.
**See Note 1 in “Notes.”
***See Note 7 in “Notes.”
©Includes $14,138,863 of securities loaned.

Summary of Abbreviations:
ADR – American Depositary Receipts
ARM – Adjustable Rate Mortgage
CDS – Credit Default Swap
GNMA – Government National Mortgage Association
MASTR – Mortgage Asset Securitization Transactions, Inc.
REIT – Real Estate Investment Trust
S.F. – Single Family
TBA – To be announced
yr – Year

The following foreign currency exchange contracts and swap contracts were outstanding at February 28, 2009:

Foreign Currency Exchange Contracts1

Unrealized
Contracts to Receive In Exchange For Settlement Date   (Depreciation)
EUR 49,578 USD (63,613 ) 3/2/09 $(769 )

Swap Contracts2
Credit Default Swap Contracts

                          Unrealized
Swap Counterparty & Notional Annual Protection   Termination   Appreciation
Referenced Obligation Value Payments   Date (Depreciation)
Protection Purchased:                
Barclay’s        
       Hartford Financial CDS $ 45,000 6.65%   3/20/14 $ 3,807  
Citigroup Global Markets        
       Hartford Financial 5 yr CDS 30,000 6.50%   3/20/14 2,685  
       Hartford Financial CDS 60,000 6.70%   3/20/14 4,977  
  $ 135,000     $ 11,469  
Protection Sold:        
Citigroup Global Markets        
       Century Tel 5 yr CDS $ 56,000 1.71%   9/20/13 $ (1,439 )
Total $ 79,000     $ 10,030  

The use of foreign currency exchange contracts and swap contracts involves elements of market risk and risks in excess of the amount 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.”
2See Note 6 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).

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 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 long-term 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. Short-term debt securities having less than 60 days to maturity are valued at amortized cost, which approximates market value. Investment companies are valued at net asset value per share. Short-term debt securities having less than 60 days to maturity are valued at amortized cost, which approximates market value. Investment companies are valued at net asset value per share. Foreign 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. Financial futures contracts and options on financial futures contracts are valued at the daily quoted settlement prices. Exchange-traded options are valued at the last reported sale price or, if no sales are reported, at the mean between the last reported bid and ask prices. 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 Trustees (Board). In determining whether market quotations are readily available or fair valuation will be used, various factors will be taken into consideration, such as market closures or suspension of trading in a security. The Fund may use fair value pricing more frequently for securities traded primarily in non-U.S. markets because, among other things, most foreign markets close well before the Fund values its securities 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 tax 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. Accordingly, no provision for federal income taxes has been made in the financial statements. 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. The Fund did not record any tax benefit or expense in the current period.

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.

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.

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 is 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, where 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 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 the ex-dividend date, subject to reclassification upon notice of the character of such distributions by the issuer.

2. Investments
At February 28, 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 February 28, 2009, the cost of investments and unrealized appreciation (depreciation) for the Fund were as follows:

Cost of investments $ 236,585,528  
Aggregate unrealized appreciation 1,505,437  
Aggregate unrealized depreciation   (76,145,914 )
Net unrealized depreciation $ (74,640,477 )

For federal income tax purposes, capital loss carryforwards may be carried forward and applied against future capital gains. Capital loss carryforward remaining at November 30, 2008 will expire as follows: $1,676,026 expires in 2015 and $34,550,553 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. 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 February 28, 2009:

  Securities       Derivatives
Level 1 $ 37,224,169 $ -
Level 2 106,450,211   9,261
Level 3 4,121,118   -
Total $ 147,795,498 $ 9,261

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

  Securities
Balance as of 11/30/08 $ 4,503,971  
Realized gain/(loss) (83,496 )
Net change in unrealized  
       appreciation/depreciation (129,338 )
Net purchases, sales, and settlements (984,256 )
Net transfers in and/or out of Level 3 814,237  
Balance as of 2/28/09 $ 4,121,118  
 
Net change in unrealized  
       appreciation/depreciation from  
       investments still held as of 2/28/09 $ 814,237  

3. Line of Credit
The Fund entered into a $50,000,000 Credit Agreement with The Bank of New York Mellon (BNY Mellon) that expires on July 1, 2009. During the period ended February 28, 2009, the Fund’s outstanding borrowings made pursuant to the Credit Agreement ranged from $40,000,000 to $45,000,000. Depending on market conditions, the amount borrowed by the Fund pursuant to the Credit Agreement may be reduced or possibly increased in the future.

At February 28, 2009, the par value of loans outstanding was $45,000,000 at a variable interest rate of 1.40%. During the period ended February 28, 2009, the average daily balance of loans outstanding was $42,055,556 at a weighted average interest rate of approximately 1.20%. 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. Foreign Currency Exchange Contracts
The Fund may enter into foreign currency exchange contracts and foreign cross currency exchange contracts as a way of managing foreign exchange rate risk. The Fund may enter into these contracts to fix the U.S. dollar value of a security that it has agreed to buy or sell for the period between the date the trade was entered into and the date the security is delivered and paid for. The Fund may also use these contracts to hedge the U.S. dollar value of securities it already owns that are denominated in foreign currencies. The change in value is recorded as an unrealized gain or loss. When the contract is closed, a realized gain or loss is recorded equal to the difference between the value of the contract at the time it was opened and the value at the time it was closed.

The use of foreign currency exchange contracts 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.

5. Financial Futures Contracts
The Fund may invest in financial futures contracts to hedge its existing fund securities against fluctuations in value caused by changes in prevailing market interest rates. Upon entering into a 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 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. No financial futures contracts were outstanding at February 28, 2009.

6. Swap Contracts
The Fund may enter into interest rate swap contracts, index swap contracts and CDS contracts in accordance with its investment objectives. 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 future 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.

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.

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.

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 it relates to a particular reference security or basket of securities (such as an index). In exchange for the protection offered by the seller of protection, the purchaser of protection agrees to pay the seller of protection a periodic amount at a stated rate that is applied to the notional amount of the CDS contract. In addition, an upfront payment may be made or received by the 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 February 28, 2009, the Fund entered into CDS contracts as a purchaser and seller of protection. Periodic payments (receipts) on such contracts are accrued daily and recorded as unrealized losses (gains) on swap contracts. Upon payment (receipt), such amounts are recorded as realized losses (gains) on swap contracts. Upfront payments made or received in connection with CDS contracts are amortized over the expected life of the CDS contracts as unrealized losses (gains) on swap contracts. The change in value of CDS contracts is recorded as unrealized appreciation or depreciation daily. A realized gain or loss is recorded upon a credit event (as defined in the CDS agreement) or the maturity or termination of the agreement.

CDS may involve greater risks than if the Fund had invested in the referenced obligation directly. Credit default swaps are subject to general market risk, liquidity risk, counterparty risk and credit risk. If the Fund enters into a CDS contract as a purchaser of protection and no credit event occurs, its exposure is limited to the periodic payments previously made to the counterparty.

As the seller of protection in a CDS contract, the Fund would be required to pay the par (or other agreed-upon) value of a reference security (or basket of securities) to the counterparty in the event of a default, bankruptcy, failure to pay, obligation acceleration, modified restructuring, or agreed upon event (each of these events is a “Credit Event”). As the seller of protection, the Fund would have credit exposure to the reference security (or basket of securities). The Fund will not sell protection in a CDS contract if it cannot otherwise hold the security (or basket of securities).At February 28, 2009, the notional amount of protection sold by the Fund totaled $56,000 (0.05% of net assets), which reflects the maximum potential amount the Fund could be required to pay under such contracts. See the schedule of investments for a description of swap contracts outstanding.

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 agreements 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 movements 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 schedule of investments.

7. 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 invests 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. 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 Fund would be required to return to the borrower of the securities and the Fund would be required to make up for this shortfall. Prior to the fiscal period ended February 28, 2009, BNY Mellon transferred certain distressed securities from the Collective Trust into the Mellon GSL DBT II Liquidation Trust. 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 February 28, 2009, the value of securities on loan was $14,138,863, for which the Fund received collateral, comprised of non-cash collateral valued at $178,803, and cash collateral of $14,489,570. Investments purchased with cash collateral are presented on the schedule of investments under the caption “Securities Lending Collateral.”

8. 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 United States. Consequently, acquisition and disposition of securities by the Fund may be inhibited. In addition, a significant portion of the aggregate market value of securities listed on the major securities exchanges in emerging markets 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 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 an underlying pool of mortgages or consumer loans. The value of these securities is sensitive to changes in economic conditions, including delinquencies and/or defaults, and maybe 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 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 February 28, 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. Under the Fund’s 10% limit on investments in illiquid securities policy, the Fund may not invest in an illiquid security if at the time of purchase, the Fund holds more than 10% of its net assets in illiquid securities. 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, 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.

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: