<PAGE>
1996
Annual
Report
=============
DELAWARE
GROUP
TREND
FUND
============
[Picture of Liberty Bell}
A Tradition of Sound Investing Since 1929
DELAWARE
GROUP
=====================
Philadelphia o London
<PAGE>
Trend Fund
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Investment
- --------------------------
Objective
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To seek long-term capital appreciation by investing primarily in
securities of emerging and other growth-oriented companies.
[Picture of City Hall]
About Our Cover
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Headquartered in Philadelphia, Pennsylvania, Delaware Group shares in the
tradition of a city built on the vision of opportunity. Amidst the city's
historic sites, symbolic of our nation's freedom and prosperity,
Delaware Group provides both individual and institutional
investors with a conservative, disciplined approach to money management.
Delaware Group
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A Tradition of
- --------------------------
Sound Investing
- --------------------------
Delaware Management Company's investment experience dates back to 1929.
Our first mutual fund was established in 1938. Headquartered in Philadelphia
with an affiliate in London, Delaware provides a full range of mutual fund
investments and retirement plan services. Delaware International Advisers Ltd.,
our London-based international affiliate, was established in 1990.
Delaware Group manages mutual funds with the same time-tested,
disciplined strategies demanded by the large public and private pension
plans, foundations and endowments that are among our clients. With over 60
years of experience, we have demonstrated our commitment to quality
investment management and service.
Today, Delaware manages some $29 billion in mutual funds and
institutional investment advisory accounts. We measure our success by the
financial success and satisfaction of our nearly 500,000 shareholders.
<PAGE>
July 29, 1996
Dear
- --------------------------
Shareholder:
- --------------------------
We are pleased to report that this past year has been an exciting and
rewarding period for Trend Fund. Your Fund provided a robust total return of
+35.53% (based on Class A shares with capital gains and dividends reinvested at
net asset value) for the 12 months ended June 30, 1996.
Positive economic factors and prudent stock selection enabled Trend
Fund to significantly outperform both the unmanaged NASDAQ Industrial Index as
well as 87% of mutual funds included in Lipper's Capital Appreciation category
as shown below. We also outperformed the unmanaged Wilshire Small Cap Growth
Index, a barometer of emerging growth stocks.
One way to measure a mutual fund's performance is to factor in the
effect of federal taxes. We are pleased to report on page 9 that Trend Fund's
tax-adjusted five- and 10-year total returns, as measured by Morningstar Inc.,
are very attractive compared to your Fund's peers.
In fiscal 1996, our strategy of basing stock selections on demographic
trends, as well as each company's market share and long-term earnings potential
proved successful. Our holdings in environmental service, health care and
computer networking companies did especially well. And, the superior results the
Fund provided were accomplished without excessive exposure to any industry group
or short-term bets on a single sector.
Trend Fund's accomplishments since portfolio manager Edward Antoian
began managing the Fund in 1984 have been impressive, and long-term shareholders
have seen their investment grow more than seven-fold in the past 12 years (with
distributions reinvested). In a report several months ago Morningstar described
your Fund's manager as "a real pavement-pounder" whose "commitment to constant
research is the Fund's greatest strength."
Albert Einstein once said that "the important thing is not to stop
questioning." We believe such a philosophy is especially important when it comes
to analyzing emerging growth investment opportunities. This approach to stocks
allows us to critically examine our assumptions regarding a business' long-term
growth potential during periods of market volatility.
===============================================================================
Average Annual Total Return
-------------------------------------
July 1, 1995 to July 1, 1986 to
June 30, 1996 June 30, 1996
-------------------------------------
Trend Fund A Class +35.53% +15.16%
NASDAQ Industrial Index +25.47% +10.48%
Wilshire Small Cap Growth Index +26.01% +12.19%
Lipper Capital Appreciation Fund Average +23.97% +10.96%
All performance quoted above assumes reinvestment of dividends and capital
gains. Trend Fund and Lipper Capital Appreciation Fund Average results are
without the effect of sales charges. The NASDAQ Industrial Index is composed
of stocks similar in market capitalization to those in Trend Fund. The Lipper
Average is a broad-based composite of funds that seek capital appreciation
from a wide range of stocks. Performance for all Fund classes can be found on
pages 10 and 11. The Lipper Average consisted of 52 and 169 funds,
respectively, for the 10 years and 12 months ended June 30, 1996.
===============================================================================
1
<PAGE>
On June 3, 1996, Delaware welcomed Gerald S. Frey, a talented and
experienced industry veteran, who is focusing on technology stock selection for
the Fund. In the pages that follow, Mr. Antoian and Mr. Frey discuss what
contributed to your Fund's outstanding performance for most of fiscal 1996 and
admirable relative performance during the market decline that began in late May.
Your Fund's managers also offer their outlook for the coming year, a period that
may be challenging.
To continue to achieve success, Trend Fund's management must anticipate
the impact of change, whether it be new political agendas, shifts in consumer
spending, technology or social developments. America may be at the dawn of a new
era in which most people will interact with information sources rather than
passively read text or view video, and we need to seek out the opportunities
that such change will create.
Change offers substantial economic potential for mutual fund investors
with vision and patience. As we draw closer to a new millennium Delaware will be
there, seeking out prudent investments.
Sincerely,
/s/ Wayne A. Stork
- -----------------------------
Wayne A. Stork
Chairman, President
and Chief Executive Officer
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Trend Fund's Performance Versus
Mutual Funds in Lipper's Capital Appreciation Category
Periods Ended June 30, 1996
---------------------------------------
One Year Five Years 10 Years
Trend Fund Rank (Class A Shares) 22nd 6th 5th
Funds in the Lipper Capital
Appreciation Category 169 82 52
Percentile Ranking Top 13% Top 7% Top 10%
Source: Lipper Analytical Services. Past performance does not guarantee
future results.
For performance data for all classes, see pages 10 and 11.
==============================================================================
Your Fund's performance has ranked within the top tier of
mutual funds that seek capital appreciation for the one-,
five- and 10-year periods ended June 30, 1996.
2
<PAGE>
A Conversation With
Edward N. Antoian and Gerald S. Frey
Your Fund's
- -------------------------------
Portfolio
- -------------------------------
Managers
- -------------------------------
Q: So, how have small-cap and emerging growth stocks fared during the past
12 months?
Antoian: It's been a very rewarding time. Domestic economic growth rebounded.
New technologies, products and services were welcomed by both consumers and
investors. Inflation remained low and the U.S. dollar rose in value relative
to other currencies. This helped small companies outshine multinational
giants. Small companies in a wide variety of industries have generated strong
earnings.
Q: Trend Fund had an excellent year. What helped the Fund do so well?
Antoian: Health care and technology stocks provided the greatest contribution
to performance. Some of our consumer and business services stocks also did
well. Our focus on the operations, management and earnings prospects of
emerging growth businesses helped us make investments in many of the right
companies at the right time.
And several stocks benefited from mergers. In June, Westinghouse
Electric agreed to buy Infinity Broadcasting, our largest holding among media
stocks.
[photo of Edward N. Antoian]
Edward N. Antoian has managed
Trend Fund for the past 12 years.
Prior to joining Delaware in
June 1984, Mr. Antoian worked
in the Institutional Equity
Department of E.F. Hutton.
Republic Industries (the Fund's largest stock holding as of June 30)
purchased Continental Waste Industries, which we also hold. Republic also
agreed to buy ADT Ltd. This is a $5 billion pooling of interests that would
make Republic the world's largest provider of electronic security services.
===============================================================================
Portfolio Highlights
June 30, 1995 June 30, 1996
Market Value of Companies*
Less than $250 million 54.0% 44.8%
$250 million to $1.5 billion 23.8% 44.9%
Greater than $1.5 billion 12.2% 10.3%
Number of Stocks 176 163
Median Market Capitalization $340 million $295 million
Median Stock Price-To-Earnings Ratio** 18 18
Top Sectors Consumer Products/Services
Beta*** 1.03 0.95
* percent of net assets
** based on a consensus of analysts' earnings estimates
*** a measure of volatility relative to the S&P 500 Index based on
monthly returns for the past three years. Beta of the S&P 500 Index equals 1.0.
===============================================================================
3
<PAGE>
Q: What do you look for when you invest in small cap stocks?
Antoian: We invest in rapidly growing businesses that we believe can adapt to
and profit from trends within the U.S. economy and society. We want to
benefit from the early phases of a company's life cycle, a period that
generally offers the greatest capital appreciation potential. So when we do
research, we:
* Try to anticipate the effect of social and demographic changes on
business and consumer behavior.
* Focus on those companies we think have the talent and resources to
capitalize on changes in the marketplace.
* Look for companies with conservative accounting practices and
relatively strong financial health.
* Study a company's history, strategic focus and the competitive
environment.
* Meet in-person with companies' management, competitors, suppliers and
industry experts.
Frey: We use this process to screen out companies that are merely benefiting
from a consumer or technology fad from businesses whose sales we believe are
poised to grow a lot for a long time to come. We base our decisions on a time
horizon of at least two years.
(PICTURE OF) Gerald S. Frey
Gerald S. Frey joined Delaware
Management Co. on June 3, 1996 to
assist Mr. Antoian, primarily
focusing on technology stock
selection. Mr. Frey had been a senior
director at Morgan Grenfell Capital
Management in New York. He has
managed investments for 20 years.
Technology - Balancing Risk and Potential Reward
Q: Technology has been a very volatile sector during the past year. What did
you do to avoid getting burned?
Frey: Since the summer of 1995, there have been conflicting indicators of
industry growth. That's made some emerging growth fund managers fickle about
technology stocks. We took a consistent, long-term approach during fiscal
1996. We were attracted to companies whose earnings prospects are not
dependent on the overall health of the economy.
Our most successful selections during the year were Cadence Design
Systems, a company that makes software to automate the design of computer
circuits, and Sierra On-Line, which produces interactive ani-
4
<PAGE>
mated entertainment products. Some technology companies did not perform as we
expected, such as Standard Microsystems, a maker of network interface products,
which we eliminated from the portfolio.
Q: What do you see as the biggest factor affecting technology companies?
Frey: Computers increasingly need to "talk" to each other. There is also a
lot of demand for an increase in the size of the data "pipeline" so
information can be transferred, stored and managed more quickly. To that end,
in the past year many companies captivated investor interest with new
products designed to make it easier to travel the information superhighway.
However, we believe it is necessary to be very selective with
technology because the road changes direction quickly whenever new technology
comes to market. It's unclear whether many of the initial public offerings in
technology in 1995 and 1996 will prosper or run out of gas.
Consumers - Spending is
Chic Again, for Some
Q: The Fund's weighting of consumer stocks is nearly twice that of the
Wilshire Small-Cap Growth Index. Consumer stocks are affected by people's
willingness to spend. Don't many households have a lot of debt?
Antoian: Consumer debt is higher than it was three years ago, but lower than
in the late 1980s because mortgage payments, as a percentage of income, are
lower (see chart on page 6). For middle income Americans, the early 1990s was
a time of "tightened belts." With the recession, shopping for "value" became
fashionable. You had more companies adopting casual clothing polices.
Retailers' sales slumped.
We believe that consumer sentiment - and spending - is now shifting, at
least among some groups. Teenagers and wealthy households seem to have more
flamboyant tastes in clothing and jewelry and more visible expressions of
affluence.
===============================================================================
Broad Sector Diversification
Trend Fund vs. Wilshire Small-Cap Growth Index
June 30, 1996
Share Share
of Fund's of
Broad Sectors Net Assets Index Investment Rationale
Consumer Goods/Services* 35.3% 20.8% Luxury/Teen Spending Strong
Technology* 27.3% 22.5% New Products/Information Age
Business Services 14.9% 14.9% Corporate "Outsourcing" Trend
Health Care 13.5% 17.1% Technology Helping to Cut Costs
Basic Industry 5.8% 11.7% Low Growth Potential
Financial 1.2% 5.1% Smaller Firms Lack
Competitive Advantage
*Includes several related industries.
Stocks in the unmanaged Wilshire Small Cap Growth Index fit Wilshire Asset
Management's growth stock characteristics and fall between the 751st largest
to the 2,500th largest securities in the unmanaged Wilshire 5000 Index, a
measure of stocks with a broad range of market capitalization.
===============================================================================
5
<PAGE>
Q: What investments did you make in light of increased teen spending?
Antoian: During the year we held stocks of companies such as Urban Outfitters,
Wolverine World Wide and Piercing Pagoda. We believe we're in a multi-year
increase in retail "fashion" spending by young adults and we wanted to
benefit from it. All three stocks did well.
Q: Any disappointments?
Antoian: Movies! We sold our position in Savoy Pictures Entertainment after
box office showings did not meet our expectations early in 1996 and have
reduced our position in Cinergi Pictures Entertainment. Apparently, young
adults and others seem to be attracted to more interactive entertainment.
Health Care - Biotechnology and Specialized Services
Q: Within the health care sector, government policy plays a substantial role.
What does this mean for emerging growth companies?
Antoian: The pace of the Food and Drug Administration product review can make
or break a company's future earnings growth. Medicare and Medicaid
reimbursement practices affect profits for a wide range of health care
services.
During much of fiscal 1996, the Fund's investments in several
biotechnology companies did well as the FDA allowed products to move toward
the final approval stage. We believe the agency is taking long-term steps to
streamline its oversight process, which should benefit the biotechnology
sector in the years ahead.
Our most successful health care stock during the past year was Renal
Treatment Centers, which provides dialysis services. We think it has solid
earnings prospects, and benefits from the fact that kidney dialysis is a
rapidly growing service. One side effect of an aging population is that more
Americans face kidney diseases, requiring lifelong, regular "cleaning" of
blood. During the past year, stocks of companies that provide this
life-saving service were boosted by the prospect that Congress may require
private insurers to provide more dialysis coverage.
Americans devote 11% of their annual cash flow after taxes to pay off consumer
debt and car loans, a higher percentage than during the 1980s. Teenagers and
wealthier households are the biggest sources of growth in consumer spending.
Debt and Taxes
Mortgage and Consumer Obligations
as a Percentage of After Tax Household Income
Combined
Consumer Debt Mortgage Debt Total
------------- ------------- -----------
Mar. '82 9.4% 5.4% 14.8%
Mar. '83 9 % 5.4% 14.4%
Mar. '84 9 % 5.4% 14.4%
Mar. '85 9.8% 5.7% 15.5%
Mar. '86 10.4% 5.8% 16.2%
Mar. '87 10.7% 6 % 16.7%
Mar. '88 10.6% 6.2% 16.8%
Mar. '89 10.7% 6.5% 17.2%
Mar. '90 10.7% 6.6% 17.3%
Mar. '91 10.6% 6.4% 17.0%
Mar. '92 10 % 6.1% 16.1%
Mar. '93 10 % 5.9% 15.9%
Mar. '94 9.8% 5.6% 15.4%
Mar. '95 10.3% 5.9% 16.2%
Mar. '96 11 % 5.8% 16.8%
Source: Bloomberg Business News
6
<PAGE>
Investment Outlook
Q: Most small-cap stock prices dropped in July and rebounded in August. Do
you see continuing volatility in the months ahead?
Frey: The small-cap market has had a healthy correction, in my opinion. This
may lead investors to concentrate on companies' long-term prospects rather
than follow the short-term momentum of the market.
In the coming months we believe that the U.S. dollar's value
relative to other currencies will continue to be strong, which should help
the earnings growth of small companies remain attractive relative to
multinational companies.
Antoian: We continue to find companies that meet our strict investment
guidelines. Small-cap stocks currently trade at prices relative to earnings
(P/E ratios) that are about one and a half times that of large company P/Es.
Historically, small caps have traded at P/Es one to two times that of large
companies.
In a volatile market environment, our approach to small company
investing will remain long term, and not dependent on a "top-down" assessment
of government economic statistics, the direction of interest rates or
technical market indicators. We prefer to trust what we see and hear first
hand from individuals who run businesses, provide them with credit or buy
their products and services.
Q: Thank you, gentlemen. We look forward to your next report.
After reaching a record high on May 24, 1996, the small-cap stock market
declined sharply through the end of the fiscal year. Trend Fund shares retained
more of their value than the unmanaged NASDAQ Industrial Index during this time.
Of course, this is a very short time period and this pattern of outperformance
is not guaranteed. We thought, however, that this data would interest
shareholders in light of market volatility during the period.
Trend Fund's Performance Amid
Short-Term Market Volatility
Percentage Change in Net Asset Value
May 24, 1996 to June 30, 1996
NASDAQ Trend
Industrial Index Fund Class A
---------------- ------------
05/24/96 0 0
05/27/96
05/28/96 -1.21% -1.1 %
05/29/96 -1.97% -2.2 %
05/30/96 -1.27% -1.83%
05/31/96 -0.6 % -0.68%
06/03/96 -1.15% -1.1 %
06/04/96 -0.84% -0.79%
06/05/96 -0.7 % -0.58%
06/06/96 -2.02% -1.52%
06/07/96 -2.47% -2.51%
06/10/96 -1.77% %
06/11/96 -1.97% -0.58%
06/12/96 -1.67% -0.05%
06/13/96 -2.31% -0.74%
06/14/96 -3.09% -1.16%
06/17/96 -3.64% -2 %
06/18/96 -5.92% -4.06%
06/19/96 -6.33% -4.59%
06/20/96 -7.48% -6.01%
06/21/96 -7.01% -5.85%
06/24/96 -6.35% -5.06%
06/25/96 -7.14% -5.22%
06/26/96 -9.04% -6.91%
06/27/96 -8.06% -6.49%
06/28/96 -6.17% -4.22%
See page 1 for Class A performance at net asset value for the entire fiscal
year. for performance for all classes over the long term and for the entire
fiscal year, see pages 10 and 11.
7
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A Look at
- -------------------------------
Long-Term
- -------------------------------
Performance
- -------------------------------
And Taxes
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In fiscal 1996, your Fund achieved very positive results during a period of
generally strong performance for small-cap stocks. We're pleased with what
the Fund has accomplished since June 1995.
When you and your financial adviser evaluate Trend Fund, we urge you
to look at the Fund's long-term record. As shown on pages 10 and 11, a
$10,000 investment in Trend Fund's Class A shares on June 30, 1986 (with
distributions reinvested and a 4.75% sales charge) would have nearly
quadrupled in value during the past 10 years to $39,080. Trend also
outperformed the unmanaged NASDAQ Industrial Index for the 10-year period
ended June 30, 1996.
With the payment of a $1.51 per share capital gains distribution
from realized securities profits to shareholders of record as of July 30,
1996, Trend Fund has provided capital gains distributions for nine
consecutive calendar years.
Paying capital gains to shareholders generates federal tax
liability, even if the gains are reinvested. Your Fund is cognizant of
investors' desire to reduce the tax burden on investments. Of course
investors who own Trend Fund through an Individual Retirement Account or
other tax-deferred investment plan generally have no exposure to capital
gains taxes.
We are pleased to report that data from Morningstar shows your Fund
has a superior long-term record of tax efficiency relative to other mutual
funds that seek capital appreciation.
During the past nine calendar years, more than half of the capital
gains paid by the Fund have been long-term gains.
By paying more long-term gains than short-term gains, the Fund
increased the potential federal tax savings for investors in higher tax
brackets. That is because short-term gains have been taxed at a higher rate
than long-term gains since federal tax reform in 1986.
All other things being equal, a mutual fund with high tax efficiency
relative to its peers can allow investors to keep more of what they earn, and
thus increase the wealth-building potential of an investment.
Of course, the future can't be predicted with certainty, and the tax
impact on investors is only one of many factors considered by the fund when
it decides to sell a portfolio holding. Nevertheless, we believe Trend Fund's
record is worth reviewing as you and your financial adviser seek to achieve
your long-term financial goals.
8
<PAGE>
===============================================================================
Trend Fund's Tax-Adjusted Average Annual Total Return
(Class A shares, Dividends and Capital Gains Reinvested
Assumes 4.75% front-end sales charge and a 39.6% federal tax bracket)
Period Ended May 31, 1996
---------------------------------------------
Morningstar
Aggressive Growth
Trend Fund Fund Average
Three Years +17.1% +17.1% (63 funds)
Five Years +21.3% +15.8% (46 funds)
10 Years +13.5% +10.7% (29 funds)
Source: Morningstar Inc.
Morningstar does not calculate one-year tax-adjusted returns. Above returns
reflect all elements of total return and the latest available data. Results
assume a 28% tax on realized long-term capital gains and a 39.6% tax on
realized short-term capital gains. The Fund has capital gains and losses that
have not yet been realized. This may affect future tax-adjusted returns.
Returns would be higher for investors in lower tax brackets. B and C Class
shares do not yet have three-year records. Non-tax adjusted returns for all
classes can be found on pages 10 and 11. Past performance does not guarantee
future results.
===============================================================================
Trend Fund Capital Gains History
January 1988 through July 1996 (Dollars Per Share)
Calendar Year Short-Term Gains Long-Term Gains Total
1988 $0.000 $0.320 $0.320
1989 $0.000 $2.220 $2.220
1990 $0.000 $0.520 $0.520
1991 $0.000 $0.160 $0.160
1992 $0.353 $0.797 $1.150
1993 $0.837 $1.103 $1.940
1994 $0.096 $0.694 $0.790
1995 $0.362 $0.538 $0.900
1996 $0.945 $0.565 $1.510
------ ------ ------
Total $2.593 $6.917 $9.510
The IRS taxes short-term capital gains, those gains realized in less than a
year, as ordinary income. Long-term capital gains are currently taxed at a
28% rate, which for some taxpayers is lower than the rate they pay on
ordinary income. Past performance does not guarantee future results.
==============================================================================
9
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Trend Fund's Long-Term Performance
June 30, 1986 to June 30, 1996
$10,000 Investment
Total Return
Total Return Without
Lipper Capital NASDAQ With Reinvestment Reinvestment of
Appreciation Industrial of Dividends & Dividends & Capital
Fund Average Index Capital Gains (A Class) Gains (A Class)
-------------- --------- ----------------------- -------------------
June '86 $10000 $10000 $9525 $9525
June '87 $11472 $10995 $9754 $9754
June '88 $10719 $10038 $8695 $8695
June '89 $12387 $10288 $11626 $12110
June '90 $13932 $12175 $10663 $13844
June '91 $14401 $12860 $9540 $13556
June '92 $16524 $14678 $12171 $18758
June '93 $19995 $17799 $14951 $25400
June '94 $20388 $17427 $13059 $23180
June '95 $24877 $21598 $15198 $28835
June '96 $31160 $27096 $19422 $39080
The Value of Reinvestment $19,658
Capital gains and dividend reinvestment has provided more than half of the
total return of Trend Fund A Class for the past 10 years, based on a 4.75%
sales charge. Performance for other classes of Trend Fund will vary due to
differing charges and expenses
- -------------------------------------------------------------------------------
Trend Fund Performance
Average Annual Total Return Through June 30, 1996
10 Years Five Years One Year
Class A (Est.1968) +14.60% +23.10% +29.08%
- -------------------------------------------------------------------------------
Class B (Est.1994) Lifetime
Excluding sales charge +28.19% +34.55%
Including sales charge +26.38% +30.55%
- -------------------------------------------------------------------------------
Class C* (Est.1995)
Excluding sales charge +19.66%
Including sales charge +18.66%
*aggregate return through June 30, 1996
10
<PAGE>
Returns reflect reinvestment of distributions and any applicable sales
charges as noted below. Return and share value will fluctuate so that shares
when redeemed may be worth more or less than the original cost. Past
performance is not a guarantee of future results. B and C Class results
"excluding sales charge" assume investment was not redeemed.
Class A returns reflect the impact of the 4.75% front-end sales charge and
since June 1, 1992, a 0.30% 12b-1 fee.
Class B shares do not carry a front-end sales charge, but are subject to a 1%
annual distribution and service fee. They are also subject to a deferred
sales charge of up to 4%. Lifetime performance excluding sales charge assumes
the investment was not redeemed. Class B was initially offered on May 2,
1994.
Class C performance is for a seven-month period and may not be representative
of longer term results. C shares have a 1% annual distribution and service
fee. If redeemed within 12 months, a 1% contingent deferred sales charge
applies. Class C was initially offered on November 29, 1995.
The average annual total returns for the ten-year, five-year and one-year
periods ended June 30, 1996 for Trend Fund's Institutional Class, which is
available without sales or asset-based distribution charges only to certain
eligible institutional accounts, were, +15.25%, +24.50% and +35.88%. The
Institutional Class was initially made available November 9, 1992;
performance prior to that date was adjusted to eliminate the effect of the
sales charge, but not Class A's asset-based distribution charge.#
11
<PAGE>
Financial
- -------------------------------------------------------------------------------
Statements
- -------------------------------------------------------------------------------
Delaware Group Trend Fund, Inc.
Statement of Net Assets
June 30, 1996
Number Market
of shares Value
COMMON STOCK - 87.35%
Aerospace & Defense - 0.93%
AAR . . . . . . . . . . . . . . . . . . . . 203,800 $ 4,152,425
*Kellstrom Industries. . . . . . . . . . . . 288,000 2,286,000
-----------
6,438,425
-----------
Automobiles & Auto Parts - 0.80%
*Boyds Wheels . . . . . . . . . . . . . . . 177,200 2,270,375
*Custom Chrome . . . . . . . . . . . . . . . 122,100 3,266,175
-----------
5,536,550
-----------
Banking, Finance & Insurance - 0.60%
*CRW Financial . . . . . . . . . . . . . . . 71,820 2,334,150
*Dignity Partners. . . . . . . . . . . . . . 116,600 1,023,894
*Medallion Financial . . . . . . . . . . . . 62,500 773,438
-----------
4,131,482
-----------
Buildings & Materials - 0.37%
LSI Industries . . . . . . . . . . . . . . . 150,600 2,560,200
-----------
2,560,200
-----------
Cable, Media, & Publishing - 4.14%
*Central European Media Entertainment. . . . 187,700 4,598,650
*Evergreen Media Class A . . . . . . . . . . 94,000 3,995,000
*HA-LO Industries. . . . . . . . . . . . . . 59,400 1,559,250
*Infinity Broadcasting Class A . . . . . . . 212,025 6,360,750
*Marvel Entertainment Group . . . . . . . . 144,388 1,353,638
*Norwood Promotional Products . . . . . . . 239,300 5,294,513
*Young Broadcasting Class A . . . . . . . . 141,600 5,363,100
-----------
28,524,901
-----------
Computers & Technology - 13.51%
*A.D.A.M. Software . . . . . . . . . . . . . 184,600 599,950
*Activision. . . . . . . . . . . . . . . . . 255,118 3,332,479
*Bachman Information Systems . . . . . . . . 720,600 5,089,237
*C-COR Electronics . . . . . . . . . . . . . 194,000 3,443,500
*Cadence Design Systems . . . . . . . . . . 262,800 8,869,500
*Caere . . . . . . . . . . . . . . . . . . . 423,400 4,869,100
*DecisionOne Holdings. . . . . . . . . . . . 94,000 2,256,000
*Elamex S.A. de C.V. . . . . . . . . . . . . 364,900 3,603,388
*Excalibur Technologies . . . . . . . . . . 197,500 4,394,375
*Fulcrum Technologies. . . . . . . . . . . . 76,400 993,200
*GTECH Holdings. . . . . . . . . . . . . . . 206,100 6,105,712
*Gandalf Technologies. . . . . . . . . . . . 388,300 3,069,997
*HPR . . . . . . . . . . . . . . . . . . . . 200,000 4,175,000
*Health Systems Design . . . . . . . . . . . 20,300 301,962
*Imnet Systems . . . . . . . . . . . . . . . 157,100 4,771,912
*Oracle. . . . . . . . . . . . . . . . . . . 110,250 4,347,984
*PLATINUM Technology . . . . . . . . . . . . 270,832 4,079,407
*Quality Systems . . . . . . . . . . . . . . 154,200 2,756,325
Top 10 holdings, representing 14.86% of net assets, are in boldface.
<PAGE>
Number Market
of Shares Value
COMMON STOCK (Continued)
Computers & Technology (Continued)
*Ross Systems. . . . . . . . . . . . . . . . 580,300 $ 3,264,188
*SPSS. . . . . . . . . . . . . . . . . . . . 92,700 2,340,675
Scientific-Atlanta . . . . . . . . . . . . . 256,800 3,980,400
*Sierra On-Line Class A . . . . . . . . . . 200,700 8,793,169
*Sunquest Information Systems . . . . . . . 51,500 766,063
*Symantec. . . . . . . . . . . . . . . . . . 208,400 2,618,025
*Techforce . . . . . . . . . . . . . . . . . 179,700 1,111,894
*Transition Systems. . . . . . . . . . . . . 61,500 1,737,375
*Verity. . . . . . . . . . . . . . . . . . . 20,000 567,500
*Walsh International . . . . . . . . . . . . 99,100 910,481
-----------
93,148,798
-----------
Consumer Products - 1.47%
Alberto Culver Class A . . . . . . . . . . . 24,800 992,000
Alberto Culver Class B . . . . . . . . . . . 19,100 885,762
*FoxMeyer Health . . . . . . . . . . . . . . 237,000 3,525,375
*Gilend Sciences . . . . . . . . . . . . . . 187,100 4,700,887
-----------
10,104,024
-----------
Electronics & Electrical - 5.33%
*Cable Design Technologies . . . . . . . . . 181,200 5,979,600
*CIDCO . . . . . . . . . . . . . . . . . . . 116,800 4,117,200
*Digital Microwave . . . . . . . . . . . . . 137,800 2,282,312
*ITI Technologies. . . . . . . . . . . . . . 176,400 5,810,175
*Protection One. . . . . . . . . . . . . . . 305,800 5,026,588
*Storage Technology. . . . . . . . . . . . . 266,700 10,201,275
*TriQuint Semiconductor . . . . . . . . . . 159,800 3,295,875
-----------
36,713,025
-----------
Energy - 2.71%
*ENSCO International . . . . . . . . . . . . 161,800 5,258,500
*Forasol-Foramer N.V.. . . . . . . . . . . . 284,900 3,596,863
*Global Industries . . . . . . . . . . . . . 114,700 3,441,000
*Marine Drilling . . . . . . . . . . . . . . 635,000 6,389,688
-----------
18,686,051
-----------
Environmental Services - 5.55%
*Continental Waste Industries . . . . . . . 384,766 8,609,139
*Republic Industries . . . . . . . . . . . . 827,680 24,157,910
*+Republic Industries . . . . . . . . . . . 188,400 5,482,428
-----------
38,249,477
-----------
Food, Beverage & Tobacco - 3.41%
*Buffets . . . . . . . . . . . . . . . . . . 569,400 6,903,975
Dreyer's Grand Ice Cream . . . . . . . . . . 186,800 5,954,250
*Hart Brewing. . . . . . . . . . . . . . . . 57,900 607,950
*Lincoln Snacks. . . . . . . . . . . . . . . 109,700 157,694
*Opta Food Ingredients . . . . . . . . . . . 272,100 2,755,012
*Sonic . . . . . . . . . . . . . . . . . . . 291,550 7,142,975
-----------
23,521,856
-----------
Healthcare & Pharmaceuticals - 11.90%
*Aksys Ltd.. . . . . . . . . . . . . . . . . 31,000 461,125
*American Oncology Resources . . . . . . . . 250,000 5,406,250
*Apache Medical Systems . . . . . . . . . . 16,000 196,000
*CIMA Labs . . . . . . . . . . . . . . . . . 315,700 2,407,212
*Columbia Laboratories . . . . . . . . . . . 297,300 4,422,337
*Connective Therapeutics . . . . . . . . . . 275,300 2,856,237
12
<PAGE>
Statement of Net Assets (Continued)
Number Market
of Shares Value
COMMON STOCK (Continued)
Healthcare & Pharmaceuticals (Continued)
*++Cypress Bioscience. . . . . . . . . . . . 1,280,400 $ 2,139,668
*Cytyc. . . . . . . . . . . . . . . . . . . 109,900 2,871,137
*DepoTech. . . . . . . . . . . . . . . . . . 156,000 3,900,000
*DUSA Pharmaceuticals. . . . . . . . . . . . 188,500 1,661,156
*Eclipse Surgical Technologies . . . . . . . 60,800 836,000
*EntreMed. . . . . . . . . . . . . . . . . . 40,600 614,075
*Ethical Holdings PLC. . . . . . . . . . . . 249,500 2,432,625
*FPA Medical Management . . . . . . . . . . 413,000 6,427,312
*FemRx . . . . . . . . . . . . . . . . . . . 104,300 1,134,262
*IBAH. . . . . . . . . . . . . . . . . . . . 188,700 1,521,394
*IMPATH. . . . . . . . . . . . . . . . . . . 37,900 686,937
*Interneuron Pharmaceutical . . . . . . . . 25,900 770,525
*Molecular Biosystems. . . . . . . . . . . . 324,500 2,920,500
*NCS HealthCare. . . . . . . . . . . . . . . 48,600 1,464,075
*NeoPath . . . . . . . . . . . . . . . . . . 119,200 2,994,900
*Norland Medical Systems . . . . . . . . . . 213,300 4,052,700
*Noven Pharmaceuticals . . . . . . . . . . . 18,000 289,125
*Pediatrix Medical Group . . . . . . . . . . 47,200 2,312,800
*Pharmakinetics Laboratories . . . . . . . . 716,440 335,831
*Renal Treatment Centers . . . . . . . . . . 292,500 8,409,375
*Royce Laboratories. . . . . . . . . . . . . 203,400 1,042,425
*Sano. . . . . . . . . . . . . . . . . . . . 191,700 3,019,275
*Sunrise Assisted Living . . . . . . . . . . 40,500 987,188
*Total Renal Care Holdings . . . . . . . . . 134,700 5,691,075
*Ventritex . . . . . . . . . . . . . . . . . 274,000 4,709,375
*Vertex Pharmaceuticals . . . . . . . . . . 99,500 3,034,750
-----------
82,007,646
-----------
Industrial Machinery - 1.08%
*Central Sprinkler . . . . . . . . . . . . . 337,100 7,416,200
-----------
7,416,200
-----------
Leisure, Lodging, & Entertainment - 10.45%
*Ascent Entertainment Group. . . . . . . . . 432,800 10,820,000
*Bell Sports . . . . . . . . . . . . . . . . 209,250 1,530,140
*Cinergi Pictures Entertainment . . . . . . 474,900 1,053,684
*Dave & Buster's . . . . . . . . . . . . . . 201,400 5,362,275
*Equity Marketing. . . . . . . . . . . . . . 151,200 2,362,500
*Extended Stay America . . . . . . . . . . . 170,600 5,352,575
*GT Bicycles . . . . . . . . . . . . . . . . 204,100 3,342,137
K2 . . . . . . . . . . . . . . . . . . . . . 118,700 3,219,738
*Mirage Resorts. . . . . . . . . . . . . . . 178,100 9,617,400
*Morton's Restaurant Group . . . . . . . . . 248,100 4,341,750
*Rio Hotel and Casino . . . . . . . . . . . 280,800 4,317,300
*Savoy Pictures Entertainment . . . . . . . 482,600 2,533,650
*Studio Plus Hotels. . . . . . . . . . . . . 124,300 4,070,825
*Sun International Hotels . . . . . . . . . 163,800 7,944,300
*Trump Hotels & Casino Resorts . . . . . . . 141,400 4,029,900
*WMS Industries. . . . . . . . . . . . . . . 86,200 2,122,675
-----------
72,020,849
-----------
<PAGE>
Number Market
of Shares Value
COMMON STOCK (Continued)
Metals & Mining - 0.68%
*Gibraltar Steel . . . . . . . . . . . . . . 234,700 $ 4,694,000
-----------
4,694,000
-----------
Real Estate - 1.18%
Security Capital Pacific Trust . . . . . . . 375,200 8,160,600
-----------
8,160,600
-----------
Retail - 10.82%
*99 Cents Only Stores. . . . . . . . . . . . 2,400 33,600
*Central Tractor Farm & Country . . . . . . 78,800 989,925
Duty Free International. . . . . . . . . . . 378,800 5,776,700
*Eagle Hardware & Garden . . . . . . . . . . 211,400 3,210,637
*Egghead . . . . . . . . . . . . . . . . . . 419,100 4,610,100
*Finish Line Class A . . . . . . . . . . . . 161,500 4,612,844
*General Nutrition . . . . . . . . . . . . . 299,300 5,219,044
*InaCom. . . . . . . . . . . . . . . . . . . 245,900 4,625,994
*Neiman-Marcus Group . . . . . . . . . . . . 162,500 4,387,500
*Neostar Retail Group. . . . . . . . . . . . 45,500 230,344
*Petco Animal Supplies . . . . . . . . . . . 133,400 3,835,250
*Piercing Pagoda . . . . . . . . . . . . . . 121,100 2,194,938
Russ Berrie. . . . . . . . . . . . . . . . . 456,650 8,390,944
Schultz Sav-O Stores . . . . . . . . . . . . 415,800 5,353,425
*Staples . . . . . . . . . . . . . . . . . . 203,900 3,963,306
*Toy Biz . . . . . . . . . . . . . . . . . . 244,400 4,949,100
*Urban Outfitters. . . . . . . . . . . . . . 160,600 4,015,000
*Vons Companies. . . . . . . . . . . . . . . 101,600 3,797,300
*Wet Seal. . . . . . . . . . . . . . . . . . 183,300 4,364,831
-----------
74,560,782
-----------
Telecommunications - 4.01%
*EIS International . . . . . . . . . . . . . 289,100 7,317,844
*IntelCom Group. . . . . . . . . . . . . . . 214,300 5,357,500
*P.T. Pasifik Satelit Nusantara . . . . . . 81,300 1,646,325
*PageMart Wireless . . . . . . . . . . . . . 131,500 1,339,656
*ProNet. . . . . . . . . . . . . . . . . . . 96,800 1,191,850
*Spectralink . . . . . . . . . . . . . . . . 94,300 878,169
*Tele-Communications International . . . . . 238,000 4,209,625
*Teleport Communications Group . . . . . . . 88,100 1,673,900
*TresCom International . . . . . . . . . . . 169,000 1,732,250
*Verilink. . . . . . . . . . . . . . . . . . 89,600 2,307,200
-----------
27,654,319
-----------
Textiles, Apparel, & Furniture - 1.24%
*Cutter & Buck . . . . . . . . . . . . . . . 112,400 1,383,925
Pillowtex. . . . . . . . . . . . . . . . . . 162,300 2,008,463
*Sport-Haley . . . . . . . . . . . . . . . . 133,400 1,967,650
Wolverine World Wide . . . . . . . . . . . . 98,450 3,199,625
-----------
8,559,663
-----------
Transportation & Shipping - 2.02%
*Midwest Express Holdings. . . . . . . . . . 71,500 2,296,938
Pittston Brink's Group . . . . . . . . . . . 200,300 5,833,738
*Rush Enterprises. . . . . . . . . . . . . . 81,300 1,016,250
*Team Rental Group . . . . . . . . . . . . . 42,100 584,138
*Trico Marine Services . . . . . . . . . . . 185,400 4,194,675
-----------
13,925,739
-----------
13
<PAGE>
Statement of Net Assets (Continued)
Number Market
of Shares Value
COMMON STOCK (Continued)
Utilities - 1.32%
*AES China Generating Class A . . . . . . . 347,500 $ 3,670,469
*York Research . . . . . . . . . . . . . . . 508,600 5,403,875
-----------
9,074,344
-----------
Miscellaneous - 3.83%
*CUC International . . . . . . . . . . . . . 370,950 13,168,721
*NFO Research. . . . . . . . . . . . . . . . 186,175 4,351,841
*National Education. . . . . . . . . . . . . 325,100 4,632,675
Norrell. . . . . . . . . . . . . . . . . . . 86,900 4,268,963
-----------
26,422,200
-----------
Total Common Stock
(cost $442,536,345). . . . . . . . . . . . . 602,111,131
-----------
Units - 0.03%
*Vyrex . . . . . . . . . . . . . . . . . . . 51,200 211,200
-----------
Total Units (cost $332,800). . . . . . . . . 211,200
-----------
Principal
Amount
REPURCHASE AGREEMENTS - 11.97%
With Chase Manhattan Bank 5.40%
7/01/96 (dated 6/28/96,
collateralized by $27,846,000 U.S.
Treasury Notes 7.75% due 1/31/00,
market value $29,908,920) . . . . . . . . . $29,198,000 29,198,000
With J.P. Morgan Securities 5.40%
7/01/96 (dated 6/28/96,
collateralized by $26,968,000 U.S.
Treasury Notes 6.25% due 8/31/00,
market value $27,320,700) . . . . . . . . . 26,670,000 26,670,000
With PaineWebber 5.40% 7/01/96
(dated 6/28/96, collateralized by
$5,531,000 U.S. Treasury Notes
8.50% due 4/15/97, market value
$5,745,305 and $21,055,000 U.S.
Treasury Notes 6.875% due 4/30/97,
market value $21,483,733) . . . . . . . . . 26,670,000 26,670,000
-----------
Total Repurchase Agreements
(cost $82,538,000). . . . . . . . . . . . . 82,538,000
-----------
<PAGE>
Market
Value
TOTAL MARKET VALUE OF SECURITIES OWNED - 99.35%
(cost $525,407,145). . . . . . . . . . . . . . . . . . . . $684,860,331
RECEIVABLES AND OTHER ASSETS NET OF LIABILITIES -
0.65%. . . . . . . . . . . . . . . . . . . . . . . . . . . 4,471,836
------------
NET ASSETS APPLICABLE TO 37,904,134 SHARES
($.50 par value) OUTSTANDING - 100.00% . . . . . . . . . . $689,332,167
============
NET ASSET VALUE - TREND FUND A CLASS
($497,188,288/27,374,784 shares) . . . . . . . . . . . . . $18.16
======
NET ASSET VALUE - TREND FUND B CLASS
($35,089,708/1,957,756 shares) . . . . . . . . . . . . . . $17.92
======
NET ASSET VALUE - TREND FUND C CLASS
($6,359,274/351,451 shares). . . . . . . . . . . . . . . . $18.09
======
NET ASSET VALUE - TREND FUND INSTITUTIONAL CLASS
($150,694,897/8,220,143 shares). . . . . . . . . . . . . . $18.33
======
__________________
* Non-income producing security for the year ended June 30, 1996.
+Security exempt from registration under the Rule 144A of the Securities Act of
1933. This security may be resold in transactions exempt from registration,
normally to qualified institutional buyers. At June 30, 1996 this security
amounted to $5,482,428 or 0.80% of net assets.
++Restricted Security - Investment in a security not registered under the
Securities Act of 1933. This security has contractual restrictions on resale. At
June 30, 1996 this security amounted to $2,139,668 or 0.31% of net assets.
COMPONENTS OF NET ASSETS AT JUNE 30, 1996:
Common stock, $.50 par value, 500,000,000 shares
authorized to the Fund with 125,000,000 shares
allocated. . . . . . . . . . . . . . . . . . . . . . . . . . $483,911,621
Accumulated undistributed income:
Net investment loss. . . . . . . . . . . . . . . . . . . . . (3,923,736)
Net realized gain on investments . . . . . . . . . . . . . . 49,891,096
Net unrealized appreciation of investments . . . . . . . . . 159,453,186
------------
Total net assets. . . . . . . . . . . . . . . . . . . . . . . $689,332,167
============
During the current fiscal year, the Fund adopted Statement of Position 93-2,
Determination, Disclosure and Financial Statement Presentation of Income,
Capital Gain and Return of Capital Gain Distributions by Investment Companies.
Accordingly, the Fund reclassified $1,668,029 of permanent book and tax basis
differences from accumulated net investment loss to common stock and $5,197,007
of permanent book and tax basis differences from accumulated net investment loss
to accumulated net realized gain on investme nts.
See accompanying notes
14
<PAGE>
Delaware Group Trend Fund, Inc.
Statement of Operations
June 30, 1996
INVESTMENT INCOME:
Interest. . . . . . . . . . . . . . . . . $1,611,021
Dividends . . . . . . . . . . . . . . . . 1,038,303 $ 2,649,324
----------
EXPENSES:
Management fees ($3,826,146)
and directors' fees ($13,973) . . . . . 3,840,119
Distribution expenses . . . . . . . . . . 1,183,507
Dividend disbursing and transfer
agent fees and expenses. . . . . . . . . 993,335
Federal and state registration fees . . . 142,462
Salaries. . . . . . . . . . . . . . . . . 130,583
Reports to shareholders . . . . . . . . . 74,310
Taxes, other than taxes on income . . . . 70,800
Professional fees . . . . . . . . . . . . 42,372
Custodian fees. . . . . . . . . . . . . . 17,712
Other . . . . . . . . . . . . . . . . . . 77,860 6,573,060
--------- ----------
NET INVESTMENT LOSS . . . . . . . . . . . (3,923,736)
NET REALIZED AND UNREALIZED GAIN
ON INVESTMENTS:
Net realized gain from security transactions 69,081,802
Net unrealized appreciation of investments
during the period. . . . . . . . . . . . 88,249,218
----------
NET REALIZED AND UNREALIZED GAIN
ON INVESTMENTS . . . . . . . . . . . . . 157,331,020
------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS. . . . . . . . . . . . . $153,407,284
============
NET ASSET VALUE AND OFFERING PRICE
PER SHARE - TREND FUND A CLASS:
Net asset value per share (A). . . . . . . . . . . . . . . . . $18.16
Sale charges (4.75% of offering price, or 4.89% of amount
invested per share) (B) . . . . . . . . . . . . . . . . . . . 0.91
------
Offering price . . . . . . . . . . . . . . . . . . . . . . . . $19.07
======
See accompanying notes
<PAGE>
Delaware Group Trend Fund, Inc.
Statement of Changes in Net Assets
Year Ended Year Ended
6/30/96 6/30/95
OPERATIONS:
Net investment loss. . . . . . . . . $ (3,923,736) $ (1,785,245)
Net realized gain from security
transactions . . . . . . . . . . . 69,081,802 15,008,174
Net unrealized appreciation of
investments during the period . . . 88,249,218 57,806,727
------------ ------------
Net increase in net assets
resulting from operations . . . . . 153,407,284 71,029,656
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS
FROM NET REALIZED GAIN
FROM SECURITY TRANSACTIONS:
Trend Fund A Class. . . . . . . . . (20,793,378) (16,739,040)
Trend Fund B Class. . . . . . . . . (501,207) --
Trend Fund C Class. . . . . . . . . (1) --
Trend Fund Institutional Class. . . (3,884,806) (1,144,886)
------------ ------------
(25,179,392) (17,883,926)
------------ ------------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold:
Trend Fund A Class. . . . . . . . . 370,792,059 131,559,559
Trend Fund B Class. . . . . . . . . 28,458,862 4,740,239
Trend Fund C Class. . . . . . . . . 6,737,178 --
Trend Fund Institutional Class . . 112,722,496 42,474,949
Net asset value of shares issued
upon reinvestment of dividends from
net realized gain from security
transactions:
Trend Fund A Class. . . . . . . . . 18,929,896 15,551,079
Trend Fund B Class. . . . . . . . . 454,494 --
Trend Fund C Class. . . . . . . . . 1 --
Trend Fund Institutional Class. . . 3,296,199 801,350
------------ ------------
541,391,185 195,127,176
------------ ------------
Cost of shares repurchased:
Trend Fund A Class. . . . . . . . . (309,975,910) (128,026,067)
Trend Fund B Class. . . . . . . . . (2,941,394) (145,450)
Trend Fund C Class. . . . . . . . . (761,331) --
Trend Fund Institutional Class. . . (46,152,789) (8,019,913)
------------ ------------
(359,831,424) (136,191,430)
------------ ------------
Increase in net assets derived
from capital share transactions . . 181,559,761 58,935,746
------------ ------------
NET INCREASE IN NET ASSETS . . . . . 309,787,653 112,081,476
------------ ------------
NET ASSETS:
Beginning of period . . . . . . . . 379,544,514 267,463,038
------------ ------------
End of period . . . . . . . . . . . $689,332,167 $379,544,514
============ ============
See accompanying notes
15
<PAGE>
Delaware Group Trend Fund, Inc.
Notes to Financial Statements
June 30, 1996
Delaware Group Trend Fund, Inc. ("the Fund"), is registered as a diversified
open-end investment company under the Investment Company Act of 1940. The Fund
is organized as a Maryland corporation and offers four classes of shares.
The investment objective of the Fund is to seek to achieve capital appreciation
by investing primarily in securities of emerging and other growth-oriented
companies.
1. Significant Accounting Policies
The following accounting policies are in accordance with generally accepted
accounting principles and are consistently followed by the Fund:
Security Valuation - Securities listed on an exchange are valued at the last
quoted sales price as of 4:00 pm EST on the valuation date. Securities not
traded or securities not listed on an exchange are valued at the mean of the
last quoted bid and asked prices. Long-term debt securities are valued by an
independent pricing service and are believed to reflect the fair value of such
securities. Money market instruments having less than 60 days to maturity are
valued at amortized cost which approximates market value.
Federal Income Taxes - The Fund intends to continue to qualify as a regulated
investment company and make the requisite distributions to shareholders.
Accordingly, no provision for federal income taxes is required in the financial
statements.
Repurchase Agreements - The Fund may invest in a pooled cash account along with
other members of the Delaware Group of Funds. The aggregated 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 100% 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.
Class Accounting - Investment income, common expenses, and gain (loss) on
investments are allocated to the various classes of the Fund on the basis of
daily net assets of each class. Distribution expenses relating to a specific
class are charged directly to that class.
Other - Expenses common to all Funds within the Delaware Group of Funds are
allocated amongst the funds on the basis of average net assets. Security
transactions are recorded on the date the securities are purchased or sold
(trade date). Costs used in calculating realized gains and losses on the sale of
investment securities are those of the specific securities sold. Dividend income
is recorded on the ex-dividend date and interest income is recorded on an
accrual basis. Original issue discounts are accreted to interest income over the
lives of the respective securities.
The Fund declared distributions from net realized gains from security
transactions in the amount of $1.51 per share payable on August 7, 1996, to
shareholders of record July 30, 1996. The ex-dividend date was July 31, 1996.
<PAGE>
2. Investment Management and Distribution Agreements
In accordance with the terms of the Investment Management Agreement, the Fund
pays Delaware Management Company, Inc. (DMC), the Investment Manager of the
Fund, an annual fee which is calculated daily at the rate of 0.75% of the
average daily net assets of the Fund, less fees paid to the independent
directors. At June 30, 1996, the Fund had a liability for Investment Management
fees and other expenses payable to DMC of $183,504.
Pursuant to the Distribution Agreement, the Fund pays Delaware Distributors,
L.P. (DDLP), the Distributor and affiliate of DMC, an annual fee not to exceed
0.30% of the average daily net assets of the A Class and 1.00% of the average
daily net assets of the B Class and C Class. No distribution expenses are paid
by the Institutional Class. At June 30, 1996, the Fund had a liability for
distribution fees and other expenses payable to DDLP of $26,225. For the year
ended June 30, 1996, the Fund paid DDLP $322,263 for commissions earned on sales
of Trend Fund A Class shares.
The Fund has engaged Delaware Service Company, Inc., (DSC), an affiliate of DMC,
to serve as dividend disbursing and transfer agent for the Fund. For the year
ended June 30, 1996, the Fund has expensed $993,335 for these services. At June
30, 1996, the Fund had a liability for such fees and other expenses payable to
DSC of $39,747.
Certain officers of DMC are officers, directors, and/or employees of the Fund.
These officers, directors, and employees are paid no compensation by the Fund.
Certain fund expenses are paid directly by brokers. The amount of these expenses
is less than 0.01% of the Fund's average net assets.
3. Investments
During the year ended June 30, 1996, the Fund made purchases of $525,426,571 and
sales of $435,279,782 of investment securities other than U.S. government
securities and temporary cash investments.
At June 30, 1996, unrealized appreciation for financial reporting and federal
income tax purposes aggregated $158,784,916 of which $187,289,631 related to
unrealized appreciation of securities and $28,504,715 related to unrealized
depreciation of securities.
The realized gain for federal income tax purposes was $69,434,534 for the year
ended June 30, 1996.
16
<PAGE>
Notes to Financial Statements (Continued)
4. Capital Stock
Transactions in capital stock shares were as follows:
Year Ended Year Ended
6/30/96 6/30/95
Shares sold:
Trend Fund A Class. . . . . . . . . . . 22,551,524 10,667,330
Trend Fund B Class. . . . . . . . . . . 1,747,498 377,619
Trend Fund C Class. . . . . . . . . . . 399,723 --
Trend Fund Institutional Class . . . . 6,955,622 3,363,517
Shares issued upon reinvestment of
dividends from net realized
gain from security transactions:
Trend Fund A Class. . . . . . . . . . . 1,253,631 1,355,804
Trend Fund B Class. . . . . . . . . . . 28,228 --
Trend Fund C Class. . . . . . . . . . . -- --
Trend Fund Institutional Class . . . . 216,362 69,562
------------ ------------
33,152,588 15,833,832
------------ ------------
Share repurchased:
Trend Fund A Class. . . . . . . . . . . (18,873,878) (10,385,998)
Trend Fund B Class. . . . . . . . . . . (184,109) (11,480)
Trend Fund C Class. . . . . . . . . . . (48,272) --
Trend Fund Institutional Class . . . . (2,827,946) (658,987)
------------ ------------
(21,934,205) (11,056,465)
------------ ------------
Net increase . . . . . . . . . . . . . . 11,218,383 4,777,367
============ ============
5.Line of Credit
The Fund has a committed line of credit of $5 million. No amount was outstanding
at June 30, 1996, or at any time during the fiscal year period.
6.Concentration of Credit Risk
The Fund may invest up to 10% of its net assets in illiquid securities which
include securities with contractual restrictions on resale, securities exempt
from registration under Rule 144A of the Securities Act of 1933, as amended, and
other securities which may not be readily marketable. The relative illiquidity
of such securities may adversely affect the Fund's ability to dispose of such
securities in a timely manner and at a fair price when it is necessary to
liquidate such securities. These securities have been denoted in the Statement
of Net Assets.
17
<PAGE>
Notes to Financial Statements (Continued)
7. Financial Highlights
Selected data for each share of the Fund outstanding throughout each period were
as follows:
<TABLE>
<CAPTION>
Trend Fund A Class
-------------------------------------------------------------
Year Ended June 30,
1996 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period. . . . . . . . . . . . . . . $14.210 $12.210 $13.980 $11.380 $ 8.920
Income from investment operations:
Net investment loss(1) . . . . . . . . . . . . . . . . . . . . . (0.127) (0.074) (0.042) (0.004) (0.005)
Net realized and unrealized gain from security transactions . . 4.977 2.864 0.212 3.754 2.625
------- ------- ------- ------- -------
Total from investment operations. . . . . . . . . . . . . . . . . 4.850 2.790 0.170 3.750 2.620
------- ------- ------- ------- -------
Less distributions:
Dividends from net investment income. . . . . . . . . . . . . . . none none none none none
Distributions from net realized gain on security transactions . . (0.900) (0.790) (1.940) (1.150) (0.160)
------- ------- ------- ------- -------
Total distributions . . . . . . . . . . . . . . . . . . . . . . . (0.900) (0.790) (1.940) (1.150) (0.160)
------- ------- ------- ------- -------
Net asset value, end of period. . . . . . . . . . . . . . . . . . $18.160 $14.210 $12.210 $13.980 $11.380
======= ======= ======= ======= =======
Total return(2). . . . . . . . . . . . . . . . . . . . . . . . . . 35.53% 24.40% 0.59% 35.24% 29.31%
Ratios/supplemental data:
Net assets, end of period (000 omitted) . . . . . . . . . . . . . $497,188 $318,933 $253,964 $219,826 $124,548
Ratio of expenses to average net assets . . . . . . . . . . . . . 1.31% 1.36% 1.37% 1.33% 1.18%
Ratio of net investment loss to net assets. . . . . . . . . . . . (0.79%) (0.58%) (0.72%) (0.61%) (0.43%)
Portfolio turnover. . . . . . . . . . . . . . . . . . . . . . . . 90% 64% 67% 75% 76%
Average commission rate paid . . . . . . . . . . . . . . . . . . $0.0557 N/A N/A N/A N/A
</TABLE>
- ------------------
(1) Year ended 1995 and 1996 per share information was based on the average
shares outstanding method.
(2) Does not reflect any maximum sales charges that are or were in effect nor
the 1% limited contingent deferred sales charge that would apply in the
event of certain redemptions within 12 months of purchase for Trend Fund
A Class.
18
<PAGE>
Notes to Financial Statements (Continued)
7. Financial Highlights (Continued)
Selected data for each share of the Fund outstanding throughout each period were
as follows:
<TABLE>
<CAPTION>
Trend Fund B Class Trend Fund C Class Trend Fund Institutional Class
-------------------- ------------------ -------------------------------------
Period Period Period
Year 9/6/94(1) 11/29/95(1) Year Year Year 11/23/92(1)
Ended to to Ended Ended Ended to
6/30/96 6/30/95 6/30/96 6/30/96 6/30/95 6/30/94 6/30/93
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period . $14.130 $12.110 $15.460 $14.300 $12.250 $13.990 $12.760
Income from investment operations:
Net investment loss(2). . . . . . . . (0.248) (0.142) (0.253) (0.087) (0.044) (0.002) (0.035)
Net realized and unrealized gain
from security transactions . . . . . 4.938 2.162 3.233 5.017 2.884 0.202 1.615
------- ------- ------- ------- ------ ------ ------
Total from investment operations. . . 4.690 2.020 2.982 4.930 2.840 0.200 1.580
------- ------- ------- ------- ------ ------ ------
Less distributions:
Dividends from net investment income. none none none none none none none
Distributions from net realized gain
on security transactions . . . . . . (0.900) none (0.350) (0.900) (0.790) (1.940) (0.350)
------- ------- ------- ------- ------ ------ ------
Total distributions . . . . . . . . . (0.900) none (0.350) (0.900) (0.790) (1.940) (0.350)
------- ------- ------- ------- ------ ------ ------
Net asset value, end of period . . . $17.920 $14.130 $18.090 $18.330 $14.300 $12.250 $13.990
======= ======= ======= ======= ======= ======= =======
Total return(3). . . . . . . . . . . . 34.55% 16.68% 19.66% 35.88% 24.74% 0.83% 21.69%
Ratios/supplemental data:
Net assets, end of period
(000 omitted) . . . . . . . . . . . $35,090 $5,175 $6,359 $150,695 $55,437 $13,499 $2,237
Ratio of expenses to average net
assets . . . . . . . . . . . . . . . 2.06% 2.12% 2.06% 1.06% 1.12% 1.15% 1.21%
Ratio of net investment loss to net
assets . . . . . . . . . . . . . . . (1.54%) (1.34%) (1.54%) (0.54%) (0.34%) (0.50%) (0.49%)
Portfolio turnover. . . . . . . . . . 90% 64% 90% 90% 64% 67% 75%
Average commission rate paid . . . . $0.0557 N/A $0.0557 $0.0557 N/A N/A N/A
</TABLE>
- -------------------
(1) Date of initial public offering. Ratios have been annualized and total
return has not been annualized for Trend Fund B Class and Trend Fund C
Class. Ratios and total return have been annualized for Trend Fund
Institutional Class.
(2) Year ended 1995 and 1996 per share information was based on the average
shares outstanding method.
(3) Does not include contingent deferred sales charge which varies from 1%-4%
depending upon the holding period for Trend Fund B Class.
19
<PAGE>
Delaware Group Trend Fund, Inc.
Report of Independent Auditors
To the Shareholders and Board of Directors
Delaware Group Trend Fund, Inc.
We have audited the accompanying statement of net assets of Delaware Group Trend
Fund, Inc. as of June 30, 1996, and the related statement of operations for the
year then ended, the statement of changes in net assets for each of the two
years in the period then ended, and the financial highlights for each of the
five years in the period then ended. These financial statements and financial
highlights are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these fina ncial statements and financial highlights
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of June
30, 1996 by correspondence with the custodian and brokers. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Delaware Group Trend Fund, Inc. at June 30, 1996, the results of its operations
for the year then ended, the changes in its net assets for each of the two years
in the period then ended, and the financial highlights for each of the five
years in the period then ended, in conformity with generally accepted accounting
principles.
Ernst & Young LLP
Philadelphia, Pennsylvania
August 2, 1996
- -------------------------------------------------------------------------------
20
<PAGE>
This annual report is for the information of Trend Fund shareholders, but it may
be used with prospective investors when preceded or accompanied by a current
Prospectus for Trend Fund, which sets forth details about charges, expenses,
investment objectives and operating policies of the Fund. You should read the
prospectus carefully before you invest. Summary investment results are
documented in the Fund's current Statement of Additional Information. The
figures in this report represent past results which are not a guarantee of
future results. The return and principal value of an investment in the Fund will
fluctuate so that shares, when redeemed, may be worth more or less than their
original cost.
- -------------------------------------------------------------------------------
Board
- -----------------------------------
Members
- -----------------------------------
Wayne A. Stork
Chairman, President and Chief Executive Officer
Delaware Group of Funds
Philadelphia, PA
Walter P. Babich
Board Chairman, Citadel Constructors, Inc.
King of Prussia, PA
Anthony D. Knerr
Consultant, Anthony Knerr & Associates
New York, NY
Ann R. Leven
Treasurer, National Gallery of Art
Washington, DC
W. Thacher Longstreth
Vice Chairman, Packquisition Corp.
Philadelphia, PA
Charles E. Peck
Secretary of Enterprise Homes, Inc.
Fredericksburg, VA
former Chairman and CEO
The Ryland Group, Inc.
Columbia, MD
Affiliated
- ------------------------------------
Officers
- ------------------------------------
George M. Chamberlain, Jr.
Senior Vice President and Secretary,
Delaware Group of Funds
Philadelphia, PA
Keith E. Mitchell
President and CEO,
Delaware Distributors, L.P.
Philadelphia, PA
David K. Downes
Senior Vice President, Chief Financial Officer and
Chief Administrative Officer
Delaware Group of Funds
Philadelphia, PA
<PAGE>
Delaware Group
- -------------------------------------
of Funds
- -------------------------------------
For Growth of Capital
Trend Fund
Enterprise Fund
DelCap Fund
Value Fund
U.S. Growth Fund
For Total Return
Devon Fund
Decatur Total Return Fund
Decatur Income Fund
Delaware Fund
For Global Diversification
Emerging Markets Fund
New Pacific Fund
World Growth Fund
International Equity Fund
Global Assets Fund
Global Bond Fund
For Current Income
Delchester Fund
Corporate Income Fund
Federal Bond Fund
U.S. Government Fund
Limited-Term Government Fund
For Tax-Free Current Income
Tax-Free Pennsylvania Fund
Tax-Free USA Fund
Tax-Free Insured Fund
Tax-Free USA Intermediate Fund
Money Market Funds
Delaware Cash Reserve
U.S. Government Money Fund
Tax-Free Money Fund
Closed-End Equity/Income*
Dividend and Income Fund
Global Dividend and Income Fund
This report must be preceded or accompanied by a current Trend Fund prospectus
and the Delaware Group Fund Performance Update for the most recently completed
calendar quarter. For a prospectus of any other Delaware Group fund, contact
your financial adviser or Delaware Group.
* Delaware Group Dividend and Income Fund and Delaware Group Global Dividend and
Income Fund purchases can be made through any registered broker.
DELAWARE
GROUP
- --------------
Philadelphia * London
<PAGE>
Be sure to consult your financial adviser when making investment decisions.
Mutual funds can be a valuable part of your financial plan; however, shares of
the Fund are not FDIC or NCUSIF insured, are not guaranteed by any bank or any
credit union, are not obligations of or deposits of any bank or any credit
union, and involve investment risk, including the possible loss of principal.
Shares of the Fund are not bank or credit union deposits.
Investment Manager
Delaware Management Company, Inc.
Philadelphia, Pennsylvania
International Affiliate
Delaware International Advisers Ltd.
London, England
National Distributor
Delaware Distributors, L.P.
Philadelphia, Pennsylvania
Shareholder Servicing,
Dividend Disbursing
and Transfer Agent
Delaware Service Company, Inc.
Philadelphia, Pennsylvania
1818 Market Street
Philadelphia, PA 19103-3682
Nationwide (800) 523-4640
Securities Dealers Only
Nationwide (800) 362-7500
Financial Institutions Representatives Only
Nationwide (800) 659-2265
Copy Rights Delaware Distributors, L.P.
Printed in the U.S.A. on recycled paper.
AR-003[6/96]TKO8/96
