Virtus Global Dividend & Income Fund

LOGO

 

 

 

QUARTERLY REPORT

Virtus Global Dividend & Income Fund Inc.

 

 

Not FDIC Insured

No Bank Guarantee

May Lose Value

  September 30, 2016


FUND DISTRIBUTIONS AND MANAGED DISTRIBUTION PLAN

The Fund has a Managed Distribution Plan to pay 7% (effective with the April dividend declaration, this rate was revised to 10%) of the Fund’s net asset value on an annualized basis. Distributions may represent earnings from net investment income, realized capital gains, or, if necessary, return of capital. The board believes that regular monthly, fixed cash payouts will enhance shareholder value and serve the long-term interests of shareholders. You should not draw any conclusions about the Fund’s investment performance from the amount of the distributions or from the terms of the Fund’s Managed Distribution Plan.

On a tax basis, the Fund estimates that it distributed more than its income and net realized capital gains in the fiscal year to date. Shareholders should note, however, that if the Fund’s aggregate investment income and net realized capital gains are less than the amount of the distribution level, the difference will be paid from the Fund’s capital and will constitute a return of the shareholder’s capital. A return of capital may occur, for example, when some or all of the money that you invested in the Fund is paid back to you. A return of capital distribution does not necessarily reflect the Fund’s investment performance and should not be confused with “yield” or “income.”

The amounts and sources of distributions reported in the Fund’s notices pursuant to Section 19(a) of the Investment Company Act of 1940 are only estimates and are not being provided for tax reporting purposes. The actual amounts and sources of the amounts for tax reporting purposes will depend upon the Fund’s investment experience during its fiscal year and may be subject to changes based on tax regulations. The Fund will send shareholders a Form 1099-DIV for 2016 that tells them how to report distributions for federal income tax purposes.

The Board may amend, suspend or terminate the Managed Distribution Plan at any time, without prior notice to shareholders if it deems such action to be in the best interest of the Fund and its shareholders.

Information on the Fund is available at www.Virtus.com. Section 19(a) notices are posted on the website at:
http://www.virtus.com/
our-products/closed-end-fund-details/ZTR.

 


MESSAGE TO SHAREHOLDERS

Dear Fellow Virtus Global Dividend & Income Fund Shareholder:

I am pleased to share with you the manager’s report for the Virtus Global Dividend & Income Fund Inc. (formerly Zweig Total Return Fund, Inc.) for the three months ended September 30, 2016.

Effective September 7, 2016, Virtus Investment Advisers became the investment adviser to the fund and Kayne Anderson Rudnick Investment Management and Newfleet Asset Management were appointed to manage the fund. Performance and characteristics prior to that date were attained by the previous adviser using a different investment strategy. The fund was renamed Virtus Global Dividend & Income Fund Inc. effective September 27, 2016.

For the three months ended September 30, 2016, the fund’s NAV increased 1.24%, including $0.337 in reinvested distributions. During the same period, the Virtus Global Dividend & Income Fund Linked Benchmark, a composite index that consists of 60% Russell Developed Large Cap Index(1) and 40% Bloomberg Barclays U.S. Aggregate Bond Index(2), increased 2.60%, including reinvested dividends(3). Performance for the composite’s underlying indices over this period was a 4.89% increase for the Russell Developed Large Cap Index and a 0.46% increase in the Bloomberg Barclays U.S. Aggregate Bond Index.

On behalf of the fund’s investment professionals, I thank you for entrusting your assets to us. Should you have any questions or require support, the Virtus customer service team is ready to assist you at 1-866-270-7788 or through the closed-end fund section of our website, www.virtus.com.

 

Sincerely,

 

LOGO

 

George R. Aylward

President, Chairman and Chief Executive Officer

The Virtus Global Dividend & Income Fund, Inc.

November 2016

Performance data quoted represents past results. Past performance is no guarantee of future results and current performance may be higher or lower than performance shown above. Any market index referenced herein is unmanaged; its returns do not reflect any fees, expenses, or sales charges; and is not available for direct investment.

 

(1)  The Russell Developed Large Cap Index is a free-float market capitalization-weighted index constructed to provide a comprehensive and unbiased barometer for the large-cap segment in the developed world, calculated on a total return basis with net dividends reinvested.
(2)  The Bloomberg Barclays U.S. Aggregate Bond Index measures the U.S. investment grade fixed rate bond market, calculated on a total return basis.
(3)  Performance of the Virtus Global Dividend & Income Fund Linked Benchmark between 8/1/2007 and 9/6/2016 represents an allocation consisting of 50% S&P 500® Index and 50% Bloomberg Barclays U.S. Government Bond Index. Prior to 8/1/2007, the allocation consisted of 37.5% S&P 500® Index and 62.5% Bloomberg Barclays U.S. Government Bond Index. The S&P 500® Index is a free-float market capitalization-weighted index of 500 of the largest U.S. companies, calculated on a total return basis with dividends reinvested. The Bloomberg Barclays U.S. Government Bond Index measures U.S. investment grade government debt securities, calculated on a total return basis.

 

1


MESSAGE TO SHAREHOLDERS (Continued)

Equity Securities: The market price of equity securities may be adversely affected by financial market, industry, or issuer-specific events. Focus on a particular style or on small- or medium- sized companies may enhance that risk.

Credit & Interest: Debt securities are subject to various risks, the most prominent of which are credit and interest rate risk. The issuer of a debt security may fail to make interest and/or principal payments. Values of debt securities may rise or fall in response to changes in interest rates, and this risk may be enhanced with longer-term maturities.

Leverage: When a fund leverages its portfolio, the value of its shares may be more volatile and all other risks may be compounded.

U.S. Government Securities: U.S. government securities may be subject to price fluctuations. An agency may default on an obligation not backed by the United States. Any guarantee on U.S. government securities does not apply to the value of the fund’s shares.

Market Price/NAV: Shares of closed-end funds often trade at a discount to their net asset value, which may increase investors’ risk of loss. At the time of sale, an investor’s shares may have a market price that is above or below the fund’s NAV.

Short Sales: The fund may engage in short sales, and may experience a loss if the price of a borrowed security increases before the date on which the fund replaces the security. This information does not represent an offer, or the solicitation of an offer, to buy or sell securities of the fund.

 

2


VIRTUS GLOBAL DIVIDEND & INCOME FUND

SCHEDULE OF INVESTMENTS

SEPTEMBER 30, 2016 (Unaudited)

 

Asset Allocation as of September 30, 2016

 
 
The following table inllustrates asset allocations within certain sectors as a percentage of total investments net of written options    

Common Stocks

    60

Corporate Bonds and Notes

    19   

U.S. Government Securities

    8   

Mortgage-Backed Securities

    6   

Loan Agreements

    1   

Asset-Backed Securities

    1   

Exchange Traded Funds

    1   

Preferred Stock

    1   

Other (includes Short-Term Investments)

    3   
   

 

 

 

Total

    100
   

 

 

 

($ reported in thousands)

    Par Value      Value  
U.S. GOVERNMENT SECURITIES—10.9%  

U.S. Treasury Inflation Indexed Bond
0.375%, 7/15/25(9)(10)

  $ 10,000       $ 10,495   

U.S. Treasury Note

    

0.625%, 6/30/18(9)

    2,000         1,996   

3.625%, 8/15/19(9)

    5,000         5,388   

3.625%, 2/15/21(9)

    5,000         5,531   

2.250%, 11/15/25

    10,000         10,562   

1.500%, 8/15/26

    5,100         5,054   
TOTAL U.S. GOVERNMENT SECURITIES
(Identified Cost $38,210)
          39,026   
FOREIGN GOVERNMENT SECURITIES—0.6%  

Argentine Republic

    

144A 7.500%, 4/22/26(3)

    390         440   

144A 7.625%, 4/22/46(3)

    380         429   

Republic of Costa Rica
144A 7.000%, 4/4/44(3)

    500         536   

Republic of Panama
3.875%, 3/17/28

    500         541   

Sultanate of Oman 144A
4.750%, 6/15/26(3)

    300         301   
TOTAL FOREIGN GOVERNMENT SECURITIES
(Identified Cost $2,240)
          2,247   
    Par Value      Value  
MORTGAGE-BACKED SECURITIES—8.2%   
Agency—6.6%  

FNMA

    

3.500%, 4/1/46(9)

  $ 5,617       $ 5,926   

3.000%, 5/1/46(9)

    5,572         5,799   

3.500%, 5/1/46(9)

    5,667         5,981   

3.000%, 7/1/46(9)

    5,708         5,940   
    

 

 

 
       23,646   
    

 

 

 
Non-Agency—1.6%  

Agate Bay Mortgage Trust 13-1, A1
144A 3.500%, 7/25/43(2)(3)

    505         518   

Citigroup Commercial Mortgage Trust 16-S, A
2.228%, 9/10/31

    685         685   

Goldman Sachs Mortgage Securities Trust
07-GG10, A1A
5.988%, 8/10/45(2)

    928         944   

JPMorgan Chase Commercial Mortgage Securities Trust 14-C22, A4
3.801%, 9/15/47

    1,320         1,441   

JPMorgan Mortgage Trust 16-3, A3
144A 3.500%, 10/25/46(2)(3)

    975         1,012   
 

 

See Notes to Schedule of Investments

 

 

3


VIRTUS GLOBAL DIVIDEND & INCOME FUND

SCHEDULE OF INVESTMENTS (Continued)

SEPTEMBER 30, 2016 (Unaudited)

($ reported in thousands)

 

    Par Value      Value  
Non-Agency (continued)  

Towd Point Mortgage Trust 16-4, A1
144A 2.250%, 7/25/56(2)(3)

  $ 975       $ 979   
    

 

 

 
               5,579   
TOTAL MORTGAGE-BACKED SECURITIES
(Identified Cost $29,235)
          29,225   
ASSET-BACKED SECURITIES—1.1%  

Centre Point Funding LLC 12-2A,1
144A 2.610%, 8/20/21(3)

    713         707   

Conn Funding II LP 16-B, A 144A 3.730%, 10/15/18(3)

    585         585   

DT Auto Owner Trust 16-4A C,
144A 2.740%, 10/17/22(3)

    780         780   

Navistar Financial Dealer Note Master Owner Trust II 16-1, B
144A 2.546%, 9/27/21(2)(3)

    780         786   

OneMain Financial Issuance Trust 15-A, A
144A 3.190%, 3/18/26(3)

    560         566   

Trip Rail Master Funding LLC 14-1A, A1
144A 2.863%, 4/15/44(3)

    586         584   
TOTAL ASSET-BACKED SECURITIES
(Identified Cost $4,005)
         4,008   
CORPORATE BONDS AND NOTES—25.3%   
Consumer Discretionary—3.9%  

Aramark Services, Inc.
144A 4.750%, 6/1/26(3)(9)

    235         237   

Boyd Gaming Corp.
6.875%, 5/15/23(9)

    190         207   

Caesars Growth Properties Holdings LLC
9.375%, 5/1/22

    180         193   

CCO Holdings LLC
144A 5.500%, 5/1/26(3)(9)

    315         331   

Cequel Communications Holdings I LLC (Cequel Capital Corp.)

    

144A 5.125%, 12/15/21(3)(9)

    110         111   

144A 5.125%, 12/15/21(3)(9)

    275         276   
    Par Value      Value  
Consumer Discretionary (continued)  

Clear Channel Worldwide Holdings, Inc. Series B 7.625%, 3/15/20

  $ 445       $ 443   

Columbus Cable Barbados Ltd. Series B,
144A 7.375%, 3/30/21(3)

    505         538   

Comcast Cable Communications Holdings, Inc.
9.455%, 11/15/22(9)

    2,534         3,564   

Delphi Automotive plc
3.150%, 11/19/20(9)

    360         373   

Grupo Televisa SAB
4.625%, 1/30/26

    495         529   

Hanesbrands, Inc.

    

144A 4.625%, 5/15/24(3)

    50         52   

144A 4.875%, 5/15/26(3)

    165         169   

Landry’s, Inc.
144A 6.750%, 10/15/24(3)

    110         112   

MGM Growth Properties Operating Partnership LP

    

(MGP Finance Co-Issuer, Inc.)
144A 5.625%, 5/1/24(3)

    65         70   

144A 4.500%, 9/1/26(3)

    110         111   

MGM Resorts International 6.000%, 3/15/23

    215         234   

Newell Brands, Inc.

    

144A 5.000%, 11/15/23(3)(9)

    60         64   

4.200%, 4/1/26(9)

    65         71   

PetSmart, Inc. 144A 7.125%, 3/15/23(3)(9)

    345         363   

Priceline Group, Inc. (The)
3.650%, 3/15/25

    490         514   

QVC, Inc.
4.375%, 3/15/23(9)

    665         667   

SFR (Numericable) Group S.A.
144A 6.000%, 5/15/22(3)

    500         512   

Signet UK Finance plc 4.700%, 6/15/24(9)

    525         506   

Sirius XM Radio, Inc.
144A 5.375%, 7/15/26(3)

    410         422   

Six Flags Entertainment Corp.
144A 4.875%, 7/31/24(3)

    325         329   

Station Casinos LLC 7.500%, 3/1/21

    585         619   
 

 

See Notes to Schedule of Investments

 

 

4


VIRTUS GLOBAL DIVIDEND & INCOME FUND

SCHEDULE OF INVESTMENTS (Continued)

SEPTEMBER 30, 2016 (Unaudited)

($ reported in thousands)

 

    Par Value      Value  
Consumer Discretionary (continued)  

TI Group Automotive Systems LLC
144A 8.750%, 7/15/23(3)

  $ 200       $ 218   

Toll Brothers Finance Corp.

    

5.625%, 1/15/24

    25         27   

4.875%, 11/15/25

    760         781   

Wyndham Worldwide Corp. 5.100%, 10/1/25

    615         673   

Ziggo Secured Finance BV 144A 5.500%, 1/15/27(3)

    410         410   
    

 

 

 
       13,726   
    

 

 

 
Consumer Staples—1.1%  

Anheuser-Busch Inbev Worldwide, Inc. 7.750%, 1/15/19(9)

    1,500         1,706   

CVS Health Corp. 2.875%, 6/1/26(9)

    635         645   

Flowers Foods, Inc. 4.375%, 4/1/22(9)

    690         746   

Rite Aid Corp.
144A 6.375%, 4/1/23(3)

    100         108   

Safeway, Inc. 7.250%, 2/1/31

    285         284   

Whole Foods Market, Inc. 144A 5.200%, 12/3/25(3)(9)

    355         386   
    

 

 

 
       3,875   
    

 

 

 
Energy—1.9%  

Anadarko Petroleum Corp. 6.600%, 3/15/46(9)

    215         263   

Antero Resources Corp. 5.625%, 6/1/23(9)

    200         205   

Blue Racer Midstream LLC 144A 6.125%, 11/15/22(3)(9)

    115         113   

Callon Petroleum Co. 144A 6.125%, 10/1/24(3)

    85         88   

Chevron Corp. 3.191%, 6/24/23(9)

    2,000         2,131   

Cimarex Energy Co. 4.375%, 6/1/24(9)

    300         314   

Continental Resources, Inc.

    

5.000%, 9/15/22(9)

    275         275   

4.500%, 4/15/23(9)

    175         169   

EnLink Midstream Partners LP 4.850%, 7/15/26(9)

    35         35   

Helmerich & Payne International Drilling Co.
4.650%, 3/15/25(9)

    290         306   
    Par Value      Value  
Energy (continued)  

Holly Energy Partners LP 144A 6.000%, 8/1/24(3)

  $ 35       $ 36   

Kinder Morgan Energy Partners LP 7.500%, 11/15/40

    615         735   

MPLX LP
144A 4.875%, 12/1/24(3)

    635         657   

Parsley Energy LLC 144A 6.250%, 6/1/24(3)

    540         560   

Sabine Pass Liquefaction LLC
6.250%, 3/15/22

    355         389   

Sunoco LP 144A 6.375%, 4/1/23(3)

    545         563   
    

 

 

 
       6,839   
    

 

 

 
Financials—9.6%  

AerCap Ireland Capital Ltd. (Aercap Global Aviation Trust)
3.950%, 2/1/22(9)

    495         507   

Air Lease Corp. 2.625%, 9/4/18(9)

    175         177   

Allstate Corp. (The) 5.750%, 8/15/53(2)(9)

    445         478   

Ally Financial, Inc.

    

4.250%, 4/15/21(9)

    200         204   

5.750%, 11/20/25(9)

    300         315   

Apollo Management Holdings LP 144A 4.000%, 5/30/24(3)(9)

    475         490   

Ares Capital Corp.

    

4.875%, 11/30/18(9)

    65         68   

3.875%, 1/15/20(9)

    175         181   

Ares Finance Co., LLC
144A 4.000%, 10/8/24(3)(9)

    675         654   

Banco de Credito del Peru
144A 6.125%, 4/24/27(2)(3)

    440         490   

Banco de Credito e Inversiones 144A 4.000%, 2/11/23(3)

    680         719   

Banco Inbursa S.A. Institucion de Banca Multiple 144A 4.125%, 6/6/24(3)(9)

    400         405   

Banco Nacional de Comercio Exterior SVC 144A 4.375%, 10/14/25(3)

    500         517   
 

 

See Notes to Schedule of Investments

 

 

5


VIRTUS GLOBAL DIVIDEND & INCOME FUND

SCHEDULE OF INVESTMENTS (Continued)

SEPTEMBER 30, 2016 (Unaudited)

($ reported in thousands)

 

    Par Value      Value  
Financials (continued)  

Bancolombia S.A. 5.125%, 9/11/22

  $ 655       $ 681   

Bank of America Corp.

    

2.000%, 1/11/18(9)

    370         372   

5.625%, 7/1/20(9)

    585         657   

4.450%, 3/3/26(9)

    855         918   

Bank of India
144A 3.250%, 4/18/18(3)

    660         673   

Bank of New York Mellon Corp. (The)
2.800%, 5/4/26(9)

    520         534   

Barclays Bank plc 144A 6.050%, 12/4/17(3)(9)

    625         653   

Berkshire Hathaway, Inc.

    

2.750%, 3/15/23(9)

    50         52   

3.125%, 3/15/26(9)

    110         116   

Capital One Financial Corp.

    

4.200%, 10/29/25(9)

    450         470   

3.750%, 7/28/26(9)

    495         498   

Citigroup, Inc. 5.500%, 9/13/25(9)

    2,000         2,282   

Compass Bank 3.875%, 4/10/25(9)

    625         612   

Development Bank of Kazakhstan OJSC 144A 4.125%, 12/10/22(3)

    720         706   

Discover Financial Services 3.950%, 11/6/24(9)

    475         486   

Ford Motor Credit Co. LLC 5.000%, 5/15/18(9)

    2,000         2,099   

FS Investment Corp. 4.250%, 1/15/20(9)

    410         420   

General Electric Capital Corp.
3.150%, 9/7/22(9)

    2,000         2,126   

General Motors Financial Co., Inc.
3.700%, 5/9/23

    575         586   

Goldman Sachs Group, Inc. (The)
5.750%, 1/24/22

    1,000         1,161   

Guanay Finance Ltd.
144A 6.000%, 12/15/20(3)

    705         720   

Hutchison Whampoa International Ltd. Series 12 144A 6.000%(2)(3)(4)(5)(9)

    780         796   

ICAHN Enterprises LP 5.875%, 2/1/22

    160         154   
    Par Value      Value  
Financials (continued)  

iStar Financial, Inc. 5.000%, 7/1/19

  $ 225       $ 225   

Jefferies Group LLC 6.875%, 4/15/21

    215         251   

Kazakhstan Temir Zholy Finance BV
144A 6.950%, 7/10/42(3)

    535         584   

Leucadia National Corp. 5.500%, 10/18/23(9)

    375         394   

Liberty Mutual Group, Inc. 144A 4.250%, 6/15/23(3)(9)

    610         660   

Lincoln National Corp. 4.200%, 3/15/22

    625         676   

Macquarie Group Ltd.
144A 6.250%, 1/14/21(3)(9)

    520         593   

Manulife Financial Corp.
4.150%, 3/4/26

    540         591   

Metlife, Inc.
3.600%, 11/13/25

    550         581   

Morgan Stanley

    

4.100%, 5/22/23(9)

    385         407   

4.350%, 9/8/26(9)

    855         913   

Navient Corp. 7.250%, 9/25/23(9)

    100         100   

OM Asset Management plc 4.800%, 7/27/26(9)

    495         496   

PKO Finance AB
144A 4.630%, 9/26/22(3)(6)

    640         691   

Prudential Financial, Inc.

    

5.875%, 9/15/42(2)(9)

    480         530   

5.625%, 6/15/43(2)(9)

    400         431   

S&P Global, Inc. 4.000%, 6/15/25(9)

    485         526   

Santander Holdings USA, Inc.
2.700%, 5/24/19(9)

    485         491   

Societe Generale S.A.
144A 4.750%, 11/24/25(3)(9)

    500         517   

Trinity Acquisition plc 4.400%, 3/15/26(9)

    200         210   

UBS AG
7.625%, 8/17/22(9)

    1,235         1,439   

Woodside Finance Ltd. 144A 3.700%, 9/15/26(3)(9)

    125         126   
    

 

 

 
       34,409   
    

 

 

 
Health Care—1.8%  

AbbVie, Inc.

    

2.850%, 5/14/23(9)

    335         340   

3.600%, 5/14/25(9)

    440         460   

3.200%, 5/14/26(9)

    275         279   
 

 

See Notes to Schedule of Investments

 

 

6


VIRTUS GLOBAL DIVIDEND & INCOME FUND

SCHEDULE OF INVESTMENTS (Continued)

SEPTEMBER 30, 2016 (Unaudited)

($ reported in thousands)

 

    Par Value      Value  
Health Care (continued)  

Cardinal Health, Inc.

    

3.200%, 3/15/23(9)

  $ 325       $ 341   

3.750%, 9/15/25(9)

    415         450   

Community Health Systems, Inc.
5.125%, 8/1/21(9)

    110         109   

Crimson Merger Sub, Inc.
(Ortho-Clinical Diagnostics S.A.) 144A 6.625%, 5/15/22(3)(9)

    300         265   

Endo Finance LLC 144A 6.000%, 7/15/23(3)

    275         252   

Forest Laboratories LLC 144A 4.875%, 2/15/21(3)

    395         439   

HCA, Inc.

    

5.375%, 2/1/25

    200         207   

5.250%, 6/15/26

    50         53   

4.500%, 2/15/27

    445         447   

MEDNAX, Inc. 144A 5.250%, 12/1/23(3)

    225         237   

Mylan, Inc.
4.200%, 11/29/23

    500         523   

Quintiles Transnational Corp.
144A 4.875%, 5/15/23(3)

    185         191   

Shire Acquisitions Investments Ireland DAC
2.400%, 9/23/21

    200         201   

Surgery Center Holdings, Inc.
144A 8.875%, 4/15/21(3)

    305         326   

Team Health, Inc.
144A 7.250%, 12/15/23(3)

    10         11   

Teleflex, Inc.
4.875%, 6/1/26

    200         207   

Tenet Healthcare Corp.

    

4.350%, 6/15/20(2)

    185         187   

4.500%, 4/1/21

    215         217   

Teva Pharmaceutical Finance Netherlands III BV
3.150%, 10/1/26(9)

    295         297   

Universal Health Services, Inc.

    

144A 4.750%, 8/1/22(3)(9)

    100         103   

144A 5.000%, 6/1/26(3)(9)

    235         245   

Zoetis, Inc.
3.450%, 11/13/20

    110         115   
    

 

 

 
       6,502   
    

 

 

 
    Par Value      Value  
Industrials—0.6%  

Bombardier, Inc.
144A 4.750%, 4/15/19(3)(9)

  $ 275       $ 269   

Carpenter Technology Corp.
4.450%, 3/1/23

    630         623   

Masco Corp.

    

5.950%, 3/15/22

    280         319   

4.450%, 4/1/25

    140         149   

Owens Corning
3.400%, 8/15/26(9)

    495         498   

Prime Security Services Borrower LLC (Prime Finance, Inc.) 144A 9.250%, 5/15/23(3)

    190         207   

TransDigm, Inc.
6.500%, 5/15/25

    115         120   
    

 

 

 
       2,185   
    

 

 

 
Information Technology—1.1%  

Apple, Inc.

    

2.850%, 2/23/23(9)

    135         142   

3.250%, 2/23/26(9)

    380         404   

Diamond 1 Finance Corp. (Diamond 2 Finance Corp.)

    

144A 5.450%, 6/15/23(3)(9)

    100         107   

144A 7.125%, 6/15/24(3)

    85         94   

144A 6.020%, 6/15/26(3)(9)

    100         110   

144A 8.100%, 7/15/36(3)(9)

    100         118   

144A 8.350%, 7/15/46(3)(9)

    120         144   

First Data Corp. 144A
5.000%, 1/15/24(3)(9)

    570         581   

Hewlett Packard Enterprise Co.
144A 4.900%, 10/15/25(3)(9)

    300         320   

Microsoft Corp.
2.400%, 8/8/26(9)

    295         295   

NXP BV (NXP Funding LLC)
144A 4.125%, 6/1/21(3)

    500         536   

Oracle Corp.

    

2.400%, 9/15/23(9)

    60         60   

2.650%, 7/15/26(9)

    420         420   

Verisk Analytics, Inc.
4.000%, 6/15/25(9)

    470         499   
    

 

 

 
       3,830   
    

 

 

 
Materials—1.7%  

Alpek SAB de C.V. 144A
5.375%, 8/8/23(3)

    765         819   
 

 

See Notes to Schedule of Investments

 

 

7


VIRTUS GLOBAL DIVIDEND & INCOME FUND

SCHEDULE OF INVESTMENTS (Continued)

SEPTEMBER 30, 2016 (Unaudited)

($ reported in thousands)

 

    Par Value      Value  
Materials (continued)  

Ardagh Packaging Finance plc 144A 4.625%, 5/15/23(3)(9)

  $ 500       $ 503   

Berry Plastics Corp.
5.125%, 7/15/23(9)

    360         368   

Du Pont (E.I.) de Nemours & Co.
2.800%, 2/15/23(9)

    2,000         2,045   

INEOS Group Holdings S.A. 144A 5.625%, 8/1/24(3)

    495         487   

Inversiones CMPC S.A. 144A 4.375%, 5/15/23(3)

    935         975   

Novelis Corp.
144A 6.250%, 8/15/24(3)

    25         27   

Office Cherifien des Phosphates S.A. (OCP) 144A 5.625%, 4/25/24(3)

    500         543   

Standard Industries, Inc. 144A 6.000%, 10/15/25(3)(9)

    410         439   
    

 

 

 
       6,206   
    

 

 

 
Real Estate—1.3%  

Alexandria Real Estate Equities, Inc.
3.950%, 1/15/27(9)

    300         314   

American Campus Communities Operating Partnership LP
3.350%, 10/1/20(9)

    60         62   

Corporate Office Properties LP
3.600%, 5/15/23(9)

    660         660   

Developers Diversified Realty Corp.
7.875%, 9/1/20

    395         474   

Digital Realty Trust LP
5.250%, 3/15/21(9)

    415         464   

Kilroy Realty LP
4.375%, 10/1/25

    475         513   

Kimco Realty Corp.
3.400%, 11/1/22

    460         485   

MPT Operating Partnership LP

    

6.375%, 3/1/24

    50         55   

5.500%, 5/1/24

    225         236   

5.250%, 8/1/26

    25         26   
    Par Value      Value  
Real Estate (continued)  

National Retail Properties, Inc.
4.000%, 11/15/25(9)

  $ 150       $ 160   

Sovran Acquisition LP
3.500%, 7/1/26

    310         317   

Welltower, Inc.
4.000%, 6/1/25(9)

    500         531   

WP Carey, Inc.
4.600%, 4/1/24

    400         418   
    

 

 

 
       4,715   
    

 

 

 
Telecommunication Services—1.5%  

Altice Financing S.A.
144A 6.625%, 2/15/23(3)(9)

    505         520   

BellSouth Telecommunications LLC
6.375%, 6/1/28(9)

    2,000         2,389   

CenturyLink, Inc. Series Y
7.500%, 4/1/24(9)

    355         380   

Crown Castle International Corp.
3.700%, 6/15/26(9)

    50         52   

Empresa Nacional de Telecomunicaciones S.A.
144A 4.875%, 10/30/24(3)

    540         556   

T-Mobile USA, Inc.
6.500%, 1/15/26

    335         372   

Telefonica Emisiones SAU
4.570%, 4/27/23(9)

    560         625   

Windstream Services LLC
7.750%, 10/15/20

    505         518   
    

 

 

 
       5,412   
    

 

 

 
Utilities—0.8%  

Dominion Resources, Inc.
2.962%, 7/1/19(2)(9)

    50         51   

Duke Energy Corp .
2.650%, 9/1/26(9)

    505         496   

FirstEnergy Transmission LLC
144A 4.350%, 1/15/25(3)(9)

    520         558   

NRG Yield Operating LLC
5.375%, 8/15/24

    150         155   

Southern Power Co.
4.150%, 12/1/25(9)

    570         614   

State Grid Overseas Investment Ltd.
144A 4.125%, 5/7/24(3)

    500         552   
 

 

See Notes to Schedule of Investments

 

 

8


VIRTUS GLOBAL DIVIDEND & INCOME FUND

SCHEDULE OF INVESTMENTS (Continued)

SEPTEMBER 30, 2016 (Unaudited)

($ reported in thousands)

 

    Par Value      Value  
Utilities (continued)  

TerraForm Power Operating LLC
144A 9.375%, 2/1/23(2)(3)

  $ 360       $ 373   
    

 

 

 
               2,799   
TOTAL CORPORATE BONDS AND NOTES
(Identified Cost $89,431)
          90,498   
LOAN AGREEMENTS(2)—1.3%   
Consumer Discretionary—0.3%  

Caesars Entertainment Resort Properties LLC Tranche B,
0.000%, 10/11/20(7)

    390         390   

CDS U.S. Intermediate Holdings, Inc. First Lien,
0.000%, 7/8/22(7)

    200         201   

Laureare Education, Inc. 2021 Extended,
0.000%, 3/17/21(7)

    200         199   

Station Casinos LLC Tranche B,
0.000%, 6/8/23(7)

    200         202   

UFC Holdings LLC First Lien
0.000%, 8/18/23(7)

    235         237   
    

 

 

 
       1,229   
    

 

 

 
Health Care—0.3%  

CHG Healthcare Services, Inc. First Lien,
0.000%, 6/7/23(7)

    265         268   

NVA Holdings, Inc. Second Lien,
0.000%, 8/14/22(7)

    200         200   

Quorum Health Corp.
0.000%, 4/29/22(7)

    230         224   

Surgery Center Holdings, Inc. First Lien,
0.000%, 11/3/20(7)

    250         250   
    

 

 

 
       942   
    

 

 

 
Industrials—0.2%  

Brickman Group Ltd. LLC (The) Second Lien,
0.000%, 12/17/21(7)

    90         90   
    Par Value     Value  
Industrials (continued)  

McGraw-Hill Global Education Holdings LLC Tranche B, First Lien,
0.000%, 5/4/22(7)

  $ 250      $ 252   

Navistar, Inc. Tranche B,
0.000%, 8/7/20(7)

    300        301   

Sedgwick Claims Management Services, Inc. Second Lien,
0.000%, 2/28/22(7)

    300        297   
   

 

 

 
      940   
   

 

 

 
Information Technology—0.1%  

ON Semiconductor Corp. 2016 New Replacement Term Loan
3.776%, 3/31/23

    200        201   
   

 

 

 
Real Estate—0.1%  

Capital Automotive LP Second Lien,
0.000%, 4/30/20(7)

    200        202   
   

 

 

 
Telecommunication Services—0.1%  

UPC Financing Partnership
0.000%, 8/31/24(7)

    200        201   
   

 

 

 
Utilities—0.2%  

NRG Energy, Inc.
0.000%, 6/30/23(7)

    595        597   

Texas Competitive Electric Holdings Co., LLC

   

0.000%, 10/31/17(7)

    163        164   

Tranche C
0.000%, 10/31/17(7)

    37        38   
   

 

 

 
              799   
TOTAL LOAN AGREEMENTS
(Identified Cost $4,526)
        4,514   
    Shares        
PREFERRED STOCKS—0.8%   
Energy—0.2%  

PTT Exploration & Production PCL
144A, 4.875%(2)(3)

    500 (8)      510   
   

 

 

 
 

 

See Notes to Schedule of Investments

 

 

9


VIRTUS GLOBAL DIVIDEND & INCOME FUND

SCHEDULE OF INVESTMENTS (Continued)

SEPTEMBER 30, 2016 (Unaudited)

($ reported in thousands)

 

    Shares     Value  
Financials—0.6%  

Citigroup, Inc. Series J,
7.125%

    20,000      $ 579   

Citigroup, Inc. Series T,
6.25%(2)

    390 (8)      420   

PNC Financial Services Group, Inc. (The) Series R,
4.850%(2)(9)

    535 (8)      534   

SunTrust Bank, Inc.
5.625%(2)

    110,000        114   

Wells Fargo & Co. Series K,
7.980%(2)(9)

    585 (8)      611   
   

 

 

 
              2,258   
TOTAL PREFERRED STOCKS
(Identified Cost $2,767)
        2,768   
COMMON STOCKS—79.2%   
Consumer Discretionary—7.0%  

Compass Group plc

    153,700        2,983   

Garmin Ltd.(9)

    121,070        5,825   

Las Vegas Sands Corp.(9)

    187,390        10,782   

Leggett & Platt, Inc.

    65,780        2,998   

Meredith Corp.

    45,680        2,375   
   

 

 

 
      24,963   
   

 

 

 
Consumer Staples—11.6%  

Altria Group, Inc.

    198,330        12,540   

General Mills, Inc.

    44,830        2,864   

Kimberly-Clark Corp.

    22,800        2,876   

Philip Morris International, Inc.(9)

    102,770        9,991   

Reynolds American, Inc.

    222,660        10,499   

Unilever plc Sponsored ADR

    56,690        2,687   
   

 

 

 
      41,457   
   

 

 

 
Energy—6.6%  

Royal Dutch Shell plc Class B ADR

    142,680        7,538   

TOTAL SA Sponsored ADR(9)

    146,200        6,974   

Vermilion Energy Inc(9)

    232,320        9,000   
   

 

 

 
      23,512   
   

 

 

 
Financials—11.0%  

Bank of Hawaii Corp.(9)

    80,590        5,852   

Cincinnati Financial Corp.

    49,160        3,708   

CL Financial Corp.

    223,800        4,288   
    Shares      Value  
Financials (continued)  

Federated Investors, Inc. Class B

    219,880       $ 6,515   

Royal Bank of Canada(9)

    135,550         8,399   

SCOR SE

    3,315,160         10,409   
    

 

 

 
       39,171   
    

 

 

 
Health Care—11.1%  

AstraZeneca plc Sponsored ADR(9)

    286,690         9,421   

Coloplast A S

    402,230         3,129   

GlaxoSmithKline plc Sponsored ADR(9)

    242,860         10,475   

Roche Holding AG Sponsored ADR

    147,120         4,556   

Takeda Pharmaceutical Co., Ltd.

    81,330         1,948   

Telstra Corp., Ltd.(9)

    502,250         10,055   
    

 

 

 
       39,584   
    

 

 

 
Industrials—3.9%  

BAE Systems plc(9)

    240,180         6,567   

Waste Management, Inc.

    113,960         7,266   
    

 

 

 
       13,833   
    

 

 

 
Information Technology—3.8%  

Analog Devices, Inc.

    45,040         2,903   

Cisco Systems, Inc.

    137,000         4,346   

Microchip Technology, Inc.

    45,170         2,807   

Paychex, Inc.

    58,640         3,393   
    

 

 

 
       13,449   
    

 

 

 
Materials—1.3%  

BASF SE

    53,500         4,577   
    

 

 

 
Real Estate—3.8%  

Realty Income Corp.(9)

    205,720         13,769   
    

 

 

 
Telecommunication Services—10.3%  

AT&T, Inc.(9)

    268,170         10,890   

BCE, Inc.(9)

    292,290         13,498   

Vodafone Group plc Sponsored ADR(9)

    426,000         12,418   
    

 

 

 
       36,806   
    

 

 

 
Utilities—8.8%  

National Grid plc Sponsored ADR(9)

    186,070         13,231   
 

 

See Notes to Schedule of Investments

 

 

10


VIRTUS GLOBAL DIVIDEND & INCOME FUND

SCHEDULE OF INVESTMENTS (Continued)

SEPTEMBER 30, 2016 (Unaudited)

($ reported in thousands)

 

    Shares      Value  
Utilities (continued)  

PPL Corp.(9)

    310,410       $ 10,731   

WEC Energy Group, Inc.

    124,590         7,461   
    

 

 

 
               31,423   
TOTAL COMMON STOCKS
(Identified Cost $285,890)
         282,544   
EXCHANGE-TRADED FUNDS—1.0%  

iShares iBoxx $ Investment Grade Corporate Bond Fund(11)

    13,640         1,680   

SPDR Barclays Short-Term High Yield Bond Index Fund(11)

    72,200         2,000   
TOTAL EXCHANGE-TRADED FUNDS
(Identified Cost $3,655)
         3,680   
    Contracts         
PURCHASED OPTION—0.1%   
Call Options—0.0%  

S&P 500® Index
expiration 10/05/16
strike price $2,290

    509         0   

S&P 500® Index
expiration 10/07/16
strike price $2,295

    1,016         5   

S&P 500® Index
expiration 10/12/16
strike price $2,275

    651         1   

S&P 500® Index
expiration 10/14/16
strike price $2,280

    1,208         17   
    

 

 

 
       23   
    

 

 

 
Put Options—0.1%  

S&P 500® Index
expiration 10/05/16
strike price $1,995

    509         0   

S&P 500® Index
expiration 10/07/16
strike price $2,040

    1,016         35   

S&P 500® Index
expiration 10/12/16
strike price $2,025

    651         46   
    Contracts     Value  
Put Options (continued)  

S&P 500® Index expiration 10/14/16 strike price $2,040

    1,208      $ 152   
   

 

 

 
              233   
TOTAL PURCHASED OPTION—0.1%
(Premiums Paid $466)
        256   
    Shares        
SHORT-TERM INVESTMENTS—3.8%   
Money Market Mutual Fund—3.8%  

JPMorgan U.S. Government Money Market Fund—Institutional Shares
(seven-day effective yield
0.360%)(11)

    13,413,147        13,413   
TOTAL SHORT-TERM INVESTMENTS
(Identified Cost $13,413)
        13,413   
TOTAL INVESTMENTS BEFORE
WRITTEN OPTIONS—132.3%
   
(Identified Cost $473,838)        472,179 (1) 
    Contracts        
WRITTEN OPTIONS—(0.2)%   
Call Options—(0.0)%  

S&P 500® Index expiration 10/05/16 strike price $2,230

    509        (3

S&P 500® Index expiration 10/07/16 strike price $2,235

    1,016        (10

S&P 500® Index expiration 10/12/16 strike price $2,225

    651        (19

S&P 500® Index expiration 10/14/16 strike price $2,230

    1,208        (56
   

 

 

 
      (88
   

 

 

 
Put Options—(0.2)%  

S&P 500® Index expiration 10/05/16 strike price $2,055

    509        (13
 

 

See Notes to Schedule of Investments

 

 

11


VIRTUS GLOBAL DIVIDEND & INCOME FUND

SCHEDULE OF INVESTMENTS (Continued)

SEPTEMBER 30, 2016 (Unaudited)

($ reported in thousands)

 

    Contracts     Value  
Put Options (continued)  

S&P 500® Index
expiration 10/07/16
strike price $2,100

    1,016      $ (162

S&P 500® Index
expiration 10/12/16
strike price $2,075

    651        (107

S&P 500® Index
expiration 10/14/16
strike price $2,090

    1,208        (356
   

 

 

 
              (638
TOTAL WRITTEN OPTIONS—(0.2)%
 
(Premiums Received $1,258)        (726 )(1) 
TOTAL INVESTMENTS NET OF WRITTEN
OPTIONS—132.1%
(Identified Cost $472,580)
         471,453   

Other assets and liabilities,
net—(32.1)%

   

    (114,640
   

 

 

 
NET ASSETS—100.0%      $ 356,813   
   

 

 

 

Footnote Legend:

(1) Federal Income Tax Information: For tax information at September 30, 2016, see Note 3 Federal Income Tax Information in the Notes to Schedules of Investments.
(2) Variable or step coupon security; interest rate shown reflects the rate in effect at September 30, 2016.
(3) Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At September 30, 2016, these securities amounted to a value of $36,470 or 10.2% of net assets.
(4) No contractual maturity date.
(5) Interest payments may be deferred.
(6) This Note was issued for the sole purpose of funding a loan agreement between the issuer and the borrower. As the credit risk for this security lies solely with the borrower, the name represented here is that of the borrower.
(7) This loan will settle after September 30, 2016, at which time the interest rate, based on the
  London Interbank Offered Rate (“LIBOR”) and the agreed upon spread on trade date, will be reflected.
(8) Value shown as par value.
(9) All or a portion of the security is segregated as collateral for written options and borrowings.
(10) Principal amount is adjusted daily pursuant to the change in the Consumer Price Index.
(11) Shares of this fund are publicly offered and its prospectus and annual report are publicly available.

 

Country Weightings        

United States

     65

United Kingdom

     14   

Canada

     8   

France

     4   

Australia

     2   

Germany

     1   

Switzerland

     1   

Other

     5   

Total

     100

†    % of total investments net of written options as of September 30, 2016

        

 

 

See Notes to Schedule of Investments

 

 

12


VIRTUS GLOBAL DIVIDEND & INCOME FUND

SCHEDULE OF INVESTMENTS (Continued)

SEPTEMBER 30, 2016 (Unaudited)

($ reported in thousands)

 

The following table provides a summary of inputs used to value the Fund’s investments as of September 30, 2016 (See Security Valuation Note 1A in the Notes to Schedules of Investments):

 

     Total Value at
September 30, 2016
    Level 1
Quoted Prices
    Level 2
Significant
Observable
Inputs
 

Debt Securities:

      

Asset-Backed Securities

   $ 4,008      $      $ 4,008   

Corporate Bonds And Notes

     90,498               90,498   

Foreign Government Securities

     2,247               2,247   

Loan Agreements

     4,514               4,514   

Mortgage-Backed Securities

     29,225               29,225   

U.S. Government Securities

     39,026               39,026   

Equity Securities:

      

Common Stocks

     282,544        282,544          

Exchange-Traded Funds

     3,680        3,680          

Preferred Stocks

     2,768        579        2,189   

Purchased Options

     256        256          

Short-Term Investment

     13,413        13,413          
  

 

 

   

 

 

   

 

 

 

Total Investments before Written Options

   $ 472,179      $ 300,472      $ 171,707   
  

 

 

   

 

 

   

 

 

 

Written Options

   $ (726   $ (726   $   
  

 

 

   

 

 

   

 

 

 

Total Investments Net of Written Options

   $ 471,453      $ 299,746      $ 171,707   
  

 

 

   

 

 

   

 

 

 

There are no Level 3 (significant unobservable inputs) priced securities.

There were no transfers between Level 1 and Level 2 related to securities held at September 30, 2016.

 

See Notes to Schedule of Investments

 

13


VIRTUS GLOBAL DIVIDEND & INCOME FUND

FINANCIAL HIGHLIGHTS

SEPTEMBER 30, 2016 (Unaudited)

(Reported in thousands except for the per share amounts)

 

     Total Net Assets      Net Asset Value
per share
 

Beginning of period: December 31, 2015

     $ 431,263         $ 13.56   

Net investment income*

   $ 5,842         $ 0.20     

Net realized and unrealized gain on investments

     5,516           0.22     

Dividends from net investment income and distributions from net long-term and short-term capital gains**

     (24,003        (0.83  

Capital shares transactions—Common shares repurchased

     (61,805        0.05     
  

 

 

      

 

 

   

Net increase (decrease) in net assets/net asset value

     (74,450        (0.36  
    

 

 

      

 

 

 

End of period: September 30, 2016

     $ 356,813         $ 13.20   
    

 

 

      

 

 

 

 

* Computed using average shares outstanding.
** Please note that the tax status of our distributions is determined at the end of the taxable year. However, based on interim data as of September 30, 2016, we estimate that 22.8% of distributions will represent net investment income, 75.3% will represent long-term capital gains and 1.9% will represent return of capital. Also refer to inside front cover for information on the Managed Distribution Plan.

 

See Notes to Schedule of Investments

 

14


VIRTUS GLOBAL DIVIDEND & INCOME FUND

NOTES TO SCHEDULE OF INVESTMENTS

SEPTEMBER 30, 2016 (Unaudited)

 

Note 1. Significant Accounting Policies

The significant accounting policies consistently followed by the Fund in the preparation of its Schedule of Investments are summarized below and, for derivatives, included in Note 2 below. The preparation of the Schedule of Investments in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities at the date of the Schedule of Investments. Actual results could differ from those estimates and those differences could be significant.

 

  A. Security Valuation

Security valuation procedures for the Fund, which include nightly price variance, as well as back-testing such as bi-weekly unchanged price, monthly secondary source and transaction analysis, have been approved by the Board of Trustees (the “Board”, or the “Trustees”). All internally fair valued securities are approved by a valuation committee (the “Valuation Committee”) appointed by the Board. The Valuation Committee is comprised of certain members of management as identified to the Board and convenes independently from portfolio management. All internally fair valued securities are updated daily and reviewed in detail by the Valuation Committee monthly unless changes occur within the period. The Valuation Committee reviews the validity of the model inputs and any changes to the model. Quarterly fair valuations are reviewed by the Board.

The Fund utilizes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The Fund’s policy is to recognize transfers between levels at the end of the reporting period.

 

      Level 1 – quoted prices in active markets for identical securities (security types generally include listed equities).

 

      Level 2 – prices determined using other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.).

 

      Level 3 – prices determined using significant unobservable inputs (including the Valuation Committee’s own assumptions in determining the fair value of investments).

A description of the valuation techniques applied to the Fund’s major categories of assets and liabilities measured at fair value on a recurring basis is as follows:

Equity securities are valued at the official closing price (typically last sale) on the exchange on which the securities are primarily traded or, if no closing price is available, at the last bid price and are categorized as Level 1 in the hierarchy. Restricted equity securities and private placements that are not widely traded, are illiquid, or are internally fair valued by the Valuation Committee, are generally categorized as Level 3 in the hierarchy.

Certain non-U.S. securities may be fair valued in cases where closing prices are not readily available or are deemed not reflective of readily available market prices. For example, significant events (such as movement in the U.S. securities market or other regional and local developments) may occur between the time that non-U.S. markets

 

15


VIRTUS GLOBAL DIVIDEND & INCOME FUND

NOTES TO SCHEDULE OF INVESTMENTS (Continued)

SEPTEMBER 30, 2016 (Unaudited)

 

close (where the security is principally traded) and the time that a Fund calculates its net asset value (“NAV”) (at the close of regular trading on the New York Stock Exchange (“NYSE”), generally 4 p.m. Eastern time) that may impact the value of securities traded in these non-U.S. markets.

In such cases the Fund fair values non-U.S. securities using an independent pricing service which considers the correlation of the trading patterns of the non-U.S. security to the intraday trading in the U.S. markets for investments such as ADRs, financial futures, exchange-traded funds and certain indexes, as well as prices for similar securities. Such fair valuations are categorized as Level 2 in the hierarchy. Because the frequency of significant events is not predictable, fair valuation of certain non-U.S. common stocks may occur on a frequent basis.

Debt securities, including restricted securities, are valued based on evaluated quotations received from independent pricing services or from dealers who make markets in such securities. For most bond types, the pricing service utilizes matrix pricing that considers one or more of the following factors: yield or price of bonds of comparable quality, coupon, maturity, current cash flows, type, and current day trade information, as well as dealer-supplied prices. These valuations are generally categorized as Level 2 in the hierarchy. Structured debt instruments, such as mortgage-backed and asset-backed securities, may also incorporate collateral analysis and utilize cash flow models for valuation, and are generally categorized as Level 2 in the hierarchy. Pricing services do not provide pricing for all securities and therefore indicative bids from dealers are utilized which are based on pricing models used by market makers in the security and are generally categorized as Level 2 in the hierarchy. Debt securities that are not widely traded, are illiquid, or are internally fair valued by the Valuation Committee, are generally categorized as Level 3 in the hierarchy.

Listed derivatives that are actively traded are valued based on quoted prices from the exchange and are categorized as Level 1 in the hierarchy. Over-the-counter derivative contracts, which include forward currency contracts and equity-linked instruments, do not require material subjectivity as pricing inputs are observed from actively quoted markets and are categorized as Level 2 in the hierarchy.

Investments in open-end mutual funds are valued at NAV. Investments in closed-end funds are valued as of the close of regular trading on the NYSE each business day. Both are categorized as Level 1 in the hierarchy.

A summary of the inputs used to value the Fund’s net assets by each major security type is disclosed at the end of the Schedule of Investments for the Fund. The inputs or methodologies used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.

 

  B. Security Transactions and Investment Income:

Security transactions are recorded on the trade date. Realized gains and losses from sales of securities are determined on the identified cost basis. Dividend income is recognized on the ex-dividend date or, in the case of certain foreign securities, as soon as the Fund is notified. Interest income is recorded on the accrual basis. The Fund amortizes premiums and accretes discounts using the effective interest method. Any distributions from the underlying funds are recorded in accordance with the character of the distributions as designated by the underlying funds.

 

16


VIRTUS GLOBAL DIVIDEND & INCOME FUND

NOTES TO SCHEDULE OF INVESTMENTS (Continued)

SEPTEMBER 30, 2016 (Unaudited)

 

 

  C. Foreign Currency Translation:

Non-U.S. investment securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollar amounts at the foreign currency exchange rate effective at the end of the reporting period. Cost of investments is translated at the currency exchange rate effective at the trade date. The gain or loss resulting from a change in currency exchange rates between the trade and settlement date of a portfolio transaction is treated as a gain or loss on foreign currency. Likewise, the gain or loss resulting from a change in currency exchange rates between the date income is accrued and the date it is paid is treated as a gain or loss on foreign currency. The Fund does not isolate that portion of the results of operations arising from changes in foreign exchange rates on investments from the fluctuations arising from changes in the market prices of securities held. Such fluctuations are included with the net realized and unrealized gain or loss on investments.

 

  D. Short Sales:

A short sale is a transaction in which the Fund sells a security it does not own in anticipation of a decline in market price. To sell a security short, the Fund must borrow the security. The Fund’s obligation to replace the security borrowed and sold short will be fully collateralized at all times by the proceeds from the short sale retained by the broker and by cash and securities deposited in a segregated account with the Fund’s custodian. If the price of the security sold short increases between the time of the short sale and the time the Fund replaces the borrowed security, the Fund will realize a loss, and if the price declines during the period, the Fund will realize a gain. Any realized gain will be decreased by, and any realized loss increased by, the amount of transaction costs. On ex-dividend date, dividends on short sales are recorded as an expense to the Fund.

In accordance with the terms of its prime brokerage agreement, the Fund may receive rebate income or be charged a fee based on borrowed securities which is under interest expense on short sales on the Statement of Operations. Such income or fee is calculated on a daily basis based on the market value of each borrowed security and a variable rate that is dependent upon the availability of such security.

At September 30, 2016, the Fund did not hold any securities sold short.

 

  E. Loan Agreements

The Fund may invest in direct debt instruments which are interests in amounts owed by a corporate, governmental, or other borrower to lenders or lending syndicates. Loan agreements are generally non-investment grade and often involve borrowers that are highly leveraged. The Fund may invest in obligations of borrowers who are in bankruptcy proceedings. Loan agreements are typically senior in the corporate capital structure of the borrower. A loan is often administered by a bank or other financial institution (the “lender”) that acts as agent for all holders. The agent administers the terms of the loan, as specified in the loan agreement. The Fund’s investments in loans may be in the form of participations in loans or assignments of all or a portion of loans from third parties. When investing in loan participations, the Fund has the right to receive payments of principal, interest and any fees to which it is entitled only from the lender selling the loan participation and only upon receipt by the lender of payments from the borrower. The Fund generally has no right to enforce compliance with the

 

17


VIRTUS GLOBAL DIVIDEND & INCOME FUND

NOTES TO SCHEDULE OF INVESTMENTS (Continued)

SEPTEMBER 30, 2016 (Unaudited)

 

terms of the loan agreement with the borrower. As a result, the Fund may be subject to the credit risk of both the borrower and the lender that is selling the loan agreement. When the Fund purchases assignments from lenders it acquires direct rights against the borrower on the loan.

The Fund may invest in multiple series or tranches of a loan, which may have varying terms and carry different associated risks. Loan agreements may involve foreign borrowers, and investments may be denominated in foreign currencies. Direct indebtedness of emerging countries involves a risk that the government entities responsible for the repayment of the debt may be unable, or unwilling, to pay the principal and interest when due.

The loan agreements have floating rate loan interests which generally pay interest at rates that are periodically determined by reference to a base lending rate plus a premium. The base lending rates are generally LIBOR (London Interbank Offered Rate), the prime rate offered by one or more U.S. banks or the certificate of deposit rate. When a loan agreement is purchased the Fund may pay an assignment fee. On an ongoing basis, the Fund may receive a commitment fee based on the undrawn portion of the underlying line of credit portion of a loan agreement. Prepayment penalty fees are received upon the prepayment of a loan agreement by a borrower. Prepayment penalty, facility, commitment, consent and amendment fees are recorded to income as earned or paid.

At September 30, 2016, all loan agreements held by the Fund are assignment loans.

Note 2. Derivative Financial Instruments

Disclosures about derivative instruments and hedging activities are intended to enable investors to understand how and why a Fund uses derivatives, how derivatives are accounted for, and how derivative instruments affect a Fund’s results of operations and financial position. Summarized below are such disclosures and accounting policies for each specific type of derivative instrument used by the Fund.

 

  Options contracts

An options contract provides the purchaser with the right, but not the obligation, to buy (call option) or sell (put option) a financial instrument at an agreed-upon price. The Fund pursues an option income strategy whereby it purchases and sells out-of-the-money puts and calls, creating an options spread designed to generate a consistent level of option cash flow which should result in additional yield. The Fund is subject to equity price risk in the normal course of pursuing its investment objectives.

When the Fund purchases an option, it pays a premium and an amount equal to that premium is recorded as an asset. When the Fund writes an option, it receives a premium and an amount equal to that premium is recorded as a liability. The asset or liability is adjusted daily to reflect the current market value of the option.

Holdings of the Fund designated to cover outstanding written options are noted in the Schedule of Investments. Purchased options are reported as an asset within “Investment in securities at value” in the Statement of Assets and Liabilities. Options written are reported as a liability within “Written options outstanding at value”. Changes in value of the purchased option is included in “Net change in unrealized appreciation (depreciation) on investments” in the Statement of Operations. Changes in value of written options is included in “Net change in unrealized appreciation (depreciation) on written options”.

 

18


VIRTUS GLOBAL DIVIDEND & INCOME FUND

NOTES TO SCHEDULE OF INVESTMENTS (Continued)

SEPTEMBER 30, 2016 (Unaudited)

 

If an option expires unexercised, the Fund realizes a gain or loss to the extent of the premium received or paid. If an option is exercised, the premium received or paid is recorded as an adjustment to the proceeds from the sale or the cost basis of the purchase. The difference between the premium and the amount received or paid on effecting a closing purchase or sale transaction is also treated as a realized gain or loss. Gain or loss on purchased options is included in “Net realized gain (loss) on investments” in the Statement of Operations. Gain or loss on written options is presented separately as “Net realized gain (loss) on written options” in the Statement of Operations.

The risk in writing covered call options is that the Fund gives up the opportunity for profit if the market price of the security increases and the option is exercised. The risk in writing covered put options is that the Fund may incur a loss if the market price of the security decreases and the option is exercised. The risk in buying options is that the Fund pays a premium whether or not the option is exercised. The use of such instruments may involve certain additional risks as a result of unanticipated movements in the market. Writers (sellers) of options are normally subject to unlimited risk of loss, as the seller will be obligated to deliver or take delivery of the security at a predetermined price which may, upon exercise of the option, be significantly different from the then-market value. However, the Fund may limit its risk of loss when writing an option by purchasing an option by purchasing an option similar to the one that is sold except for the fact it is further “out of the money”.

The Fund had transactions in written call options for the period ended September 30, 2016 as follows:

 

     Calls     Puts  

Written Options

   Number of
Contracts
    Premiums
Received
    Number of
Contracts
    Premiums
Received
 

Written Options outstanding at December 31, 2015

          $             $   

Options written

     42,521        2,061        42,521        14,767   

Options closed

     (32,308     (1,637     (31,104     (11,166

Options expired

     (6,829     (316     (8,033     (2,451

Options exercised

                            
  

 

 

   

 

 

   

 

 

   

 

 

 

Written Options outstanding at September 30, 2016

     3,384      $ 108        3,384      $ 1,150   
  

 

 

   

 

 

   

 

 

   

 

 

 

Note 3. Federal Income Tax Information

($ reported in thousands)

At September 30, 2016, federal tax cost and aggregate gross unrealized appreciation (depreciation) of securities held by the Fund were as follows:

 

    

Federal
Tax Cost

   

Unrealized
Appreciation

    

Unrealized
(Depreciation)

   

Net Unrealized
Appreciation
(Depreciation)

 

Investments (before written options)

   $ 474,124      $ 4,426       $ (6,371   $ (1,945
Written Options      (1,258     548         (16     532   

The differences between book basis cost and tax basis cost were attributable primarily to the tax deferral of losses on wash sales.

 

19


VIRTUS GLOBAL DIVIDEND & INCOME FUND

NOTES TO SCHEDULE OF INVESTMENTS (Continued)

SEPTEMBER 30, 2016 (Unaudited)

 

Note 4. Regulatory Matters And Litigation

From time to time, the Fund, the Fund’s Adviser and/or subadvisers and/or their affiliates may be involved in litigation and arbitration as well as examinations and investigations by various regulatory bodies, including the SEC, involving compliance with, among other things, securities laws, client investment guidelines, laws governing the activities of broker-dealers and other laws and regulations affecting their products and other activities. At this time, the Fund’s Aadviser believes that the outcomes of such matters are not likely, either individually or in the aggregate, to be material to these financial statements.

Note 5. Subsequent Events

Management has evaluated the impact of all subsequent events on the Fund through the date the financial statements were issued, and has determined that there the following subsequent events that require recognition or disclosure in these financial statements.

On November 25, 2016, the Fund announced the commencement of a tender offer to acquire for cash up to 5 percent of its outstanding shares at a price equal to 98 percent of the Fund’s net asset value per share as of the close regular trading on the New York Stock Exchange on the date the offer expires. If more than 5 of a Fund’s outstanding shares are tendered, the will purchase shares from tendering stockholders on a pro-rata basis.

 

20


KEY INFORMATION

Zweig Shareholder Relations: 1-866-270-7788

For general information and literature, as well as updates on net asset value, share price, major industry groups and other key information

REINVESTMENT PLAN

Many of you have questions about our reinvestment plan. We urge shareholders who want to take advantage of this plan and whose shares are held in “Street Name,” to consult your broker as soon as possible to determine if you must change registration into your own name to participate.

REPURCHASE OF SECURITIES

Notice is hereby given in accordance with Section 23(c) of the Investment Company Act of 1940 that the Fund may from time to time purchase its shares of common stock in the open market when Fund shares are trading at a discount from their net asset value.

PROXY VOTING INFORMATION (FORM N-PX)

The Adviser votes proxies relating to portfolio securities in accordance with procedures that have been approved by the Fund’s Board of Directors. You may obtain a description of these procedures, along with information regarding how the Fund voted proxies during the most recent 12-month period ended June 30, free of charge, by calling toll-free 1-800-272-2700. This information is also available through the Securities and Exchange Commission’s website at http://www.sec.gov.

FORM N-Q INFORMATION

The Fund files a complete schedule of portfolio holdings with the Securities and Exchange Commission (the “SEC”) for the first and third quarters of each fiscal year on Form N-Q. Form N-Q is available on the SEC’s website at http://www.sec.gov. Form N-Q may be reviewed and copied at the SEC’s Public Reference Room. Information on the operation of the SEC’s Public Reference Room can be obtained by calling toll-free 1-800-SEC-0330.

 

21


DIRECTORS AND OFFICERS

George R. Aylward, Chairman, President, and Chief Executive Officer

Philip R. McLoughlin, Director

James M. Oates, Director

James B. Rogers, Jr., Director

R. Keith Walton, Director

Brian T. Zino, Director

W. Patrick Bradley, Executive Vice President, Treasurer, and Chief Financial Officer

William Renahan, Vice President, Chief Legal Officer, and Secretary

Jacqueline Porter, Vice President and Assistant Treasurer

Nancy Engberg, Vice President and Chief Compliance Officer

 

Investment Adviser

Virtus Investment Advisers

100 Pearl Street

Hartford, CT 06103-4506

Fund Administrator

Virtus Fund Services, LLC

100 Pearl Street

Hartford, CT 06103-4506

Custodian

JPMorgan Chase Bank, NA

1 Chase Manhattan Plaza

New York, NY 10005-1401

Transfer Agent

Computershare Trust Company, NA

P.O. Box 43078

Providence, RI 02940-3078

Fund Counsel

Sullivan & Worcester LLP

1666 K Street, NW

7th Floor

Washington DC 20006

 

 

 

This report is transmitted to the shareholders of Virtus Global Dividend & Income Fund Inc. for their information. This is not a prospectus, circular, or representation intended for use in the purchase of shares of the Fund or any securities mentioned in this report.

 

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For more information about

Virtus Closed-End Funds, please

contact us at 1-866-270-7788

or closedendfunds@virtus.com

or visit Virtus.com.

 

   09-16

 

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c/o Computershare Investor Services

P.O. Box 43078

Providence, RI 02940