<PAGE>
DELAWARE GROUP
For Growth of Capital
Trend Fund
[Illustration of man trimming trees demonstrating growth of Capital]
service and guidance
professional management
goals
1996
Semi-Annual
Report
DELAWARE
GROUP
- -------
<PAGE>
- --------------------------------------------------------------------------------
JANUARY 15, 1997
opportunity
Dear Shareholder:
LAST YEAR, A LEADING FINANCIAL NEWSPAPER DESCRIBED TREND FUND
as providing "a bumpy road to riches" in the 1990s. Considering the potholes
we encountered among small cap stocks during the past six months, the
metaphor was apropos.
Trend Fund's total return was a disappointing -3.74% (based on Class
A shares with capital gains and dividends reinvested at net asset value) for
the first half of fiscal 1997, which ended December 31, 1996.
Any investment in small company stocks, especially emerging growth
stocks, should be evaluated from a long-term perspective. As with any serious
endeavor, success requires patience, commitment, and a willingness to accept
short-term setbacks.
Trend Fund's stock selections in the business services sector have
done well since June 30. But gains in this industry group were more than
offset by a painful retreat in health care stocks, which were affected by
concerns about Medicare funding. Stocks of small technology companies and
consumer service businesses also declined, negatively affecting the Fund's
results.
(TREND FUND EMPLOYS A GUMSHOE APPROACH TO STOCK SELECTION.)
I've been with Delaware almost 35 years. Since Trend Fund's founding
in 1968, I've watched the Fund progress through many market cycles. I remain
a firm believer in Trend Fund's gumshoe approach to stock research, and the
ability of this approach to uncover long-term capital appreciation potential.
(Photo of Glasses, Pen and Keyboard)
Trend Fund's stock selection strategy involves face-to-face
meetings with company management, talking with both competitors and
customers, and in-depth analysis of how a business is
capitalizing on long-term demographic trends, capturing market share and
building long-term earnings.
Part of the reason small company growth stocks have
underperformed other stocks in recent months is that short-term oriented
investors have been fixated on company size. In the face of a slowing U.S.
economy, some investors concluded that bigger was better.
1996 semi-annual report
2
<PAGE>
However, market history since the 1920s teaches us that small
company stocks have, over the long haul, been one of the best
performing asset classes. Although we can't offer any guarantees, we believe
this historical trend remains intact.
Inside, Trend Fund's portfolio managers -- Edward N. Antoian and
Gerald S. Frey -- provide an overview of what's happened since June and offer
an outlook for the months ahead. Your portfolio managers remain committed to
Trend's investment discipline, and we believe they
have positioned the Fund to meet the challenges of the current
market environment.
We thank you for your commitment to Delaware Group as we travel
toward the new millennium.
Sincerely,
/s/ Wayne A. Stork
- ------------------
Wayne A. Stork
CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE OFFICER
AVERAGE ANNUAL TOTAL RETURN
- --------------------------------------------------------------------------------
JULY 1, 1996 DEC. 31, 1991
TO DEC. 31, 1996 TO DEC. 31. 1996
- --------------------------------------------------------------------------------
Trend Fund A Class -3.74% +16.32%
- --------------------------------------------------------------------------------
NASDAQ Industrial Index +0.16% +14.06%
Lipper Capital
Appreciation Fund Average +5.07% +13.02%
- --------------------------------------------------------------------------------
ALL PERFORMANCE QUOTED ABOVE ASSUMES REINVESTMENT OF DIVIDENDS AND CAPITAL
GAINS. TREND FUND AND LIPPER CAPITAL APPRECIATION FUND AVERAGE RESULTS ARE
AT NET ASSET VALUE WITHOUT EFFECT OF SALES CHARGES.
PERFORMANCE FOR ALL FUND CLASSES CAN BE FOUND ON PAGE 8. THE LIPPER AVERAGE
CONSISTED OF 78 AND 216 FUNDS, RESPECTIVELY, FOR THE FIVE YEARS AND SIX
MONTHS ENDED DECEMBER 31, 1996.
performance
1996 semi-annual report
3
<PAGE>
Portfolio Managers' Review
INVESTMENT STRATEGY
und invests in rapidly growing companies that we believe can adapt to and
profit from trends within the U.S. economy and society. We strive to benefit
from the early phases of a firm's life cycle, a period that generally offers the
greatest capital appreciation potential.
Since June, several U.S. economic trends were in place that
historically have been a harbinger of strong returns for small cap stocks.
Inflation was at a comfortably low annual rate of 3.3%. Job growth remained
healthy. The U.S. dollar rose in value relative to other currencies. In the
past, this has helped small companies outshine multinational giants.
The trouble was, history didn't repeat itself.
In many industries, the Goliaths of market capitalization were in
favor with investors. Investors who focused on small emerging growth
companies struggled to avoid being stomped on. During the first half of our
fiscal year, the share prices of many smaller health care,
technology and consumer goods companies declined 10% to 20%. In particular,
our consumer goods stock selections were negatively affected by lackluster
growth in consumer spending.
PORTFOLIO HIGHLIGHTS
- --------------------------------------------------------------------------------
PERCENT OF NET ASSETS
MARKET VALUE OF COMPANIES* JUNE 30, 1996 DECEMBER 31, 1996
- --------------------------------------------------------------------------------
Less than $250 million 45% 30%
$250 million to $1.5 billion 45% 47%
Greater than $1.5 billion 10% 23%
Number of Stocks 163 134
Median Market Capitalization $295 million $316 million
Median Stock
Price-To-Earnings Ratio** 18x 21.6x
Top Sector Consumer Products/Services
Beta*** 0.95 0.95
* PERCENT OF NET ASSETS
** BASED ON A CONSENSUS OF ANALYSTS' EARNINGS ESTIMATES FOR NEXT 12 MONTHS
AS REPORTED TO FIRST CALL.
*** 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.
1996 semi-annual report
4
<PAGE>
HEALTHCARE: PAYING FOR THE GRAYING OF AMERICA
Small health care stocks' feeble short-term performance was the
product of two forces:
1) a growing realization by elected leaders that Medicare must be reformed to
control ballooning costs, and
2) increased industry competition that has resulted in lower profit margins,
putting smaller firms at a relative disadvantage.
Many health care service companies depend on government reimbursement
to compensate them for services provided to patients age 65 and older. However,
in a few years, the Social Security taxes that currently finance Medicare will
be insufficient. Congress is debating what to do. This has created a great deal
of uncertainty about the health care industry's business prospects.
Share prices of some of Trend Fund's major holdings have consequently
suffered since June. For example, the price of RENAL TREATMENT CENTERS fell
substantially during the first half of fiscal 1997. The company, which provides
dialysis services to people with kidney diseases, had been one of our most
successful selections in fiscal 1996. We've maintained our position because we
believe the company provides an essential, profitable service that is unlikely
to be affected by Medicare changes.
guidance
BUSINESS SERVICES: OUR BRIGHT SPOT
- --------------------------------------------------------------------------------
SECTOR PERFORMANCE
DECEMBER 31, 1995 TO DECEMBER 31, 1996
- --------------------------------------------------------------------------------
INDUSTRY GROUP TREND FUND HOLDINGS WILSHIRE SMALL CAP GROWTH INDEX
- --------------------------------------------------------------------------------
Health Care -11.7% -7.7%
Technology -10.0% +2.1%
Business Services +39.5% +35.8%
Consumer Services +6.7% +6.1%
Consumer Goods +9.3% +27.4%
PERFORMANCE IS BASED ON PRICES OF STOCK HOLDINGS AND INDEX COMPONENTS AND DOES
NOT INCLUDE FUND EXPENSES. THE FIVE SECTORS SHOWN HERE REPRESENTED MORE THAN 90%
OF TREND'S HOLDINGS AS OF DECEMBER 31, 1996. FOR COMPLETE FUND PERFORMANCE, SEE
PAGE 8. STOCKS IN THE UNMANAGED WILSHIRE SMALL CAP GROWTH INDEX FIT WILSHIRE
ASSET MANAGEMENT'S GROWTH STOCK CHARACTERISTICS AND FALL BETWEEN THE 751ST AND
2,500 LARGEST SECURITIES IN THE UNMANAGED WILSHIRE 5000 INDEX, A MEASURE OF
STOCKS WITH A BROAD RANGE OF MARKET CAPITALIZATION.
1996 semi-annual report
5
<PAGE>
BUSINESS SERVICES:
WASTE NOT, WANT NOT
So far in fiscal 1997, we've continued to enjoy success with shares of
waste processing businesses, particularly REPUBLIC INDUSTRIES, the Fund's
largest stock holding as of December 31, 1996. Smaller companies in this
industry are gaining market share by taking advantage of the fact that the
Goliaths of garbage -- WMX Technologies and Browning-Ferris -- are
restructuring. In our opinion,Republic also has strong growth prospects for its
auto rental operations.
Another segment of business services that we believe offers capital
appreciation potential are companies such as AAR CORP. involved in aviation
services, particularly the maintenance of older commercial jets. Although many
airlines have ordered new planes, it will be a while before manufacturers can
deliver. In the meantime, airlines (and travelers) will have to make due with
old equipment. In addition, there seems to be no shortage of discount airlines
who recycle old jets.
TECHNOLOGY - STILL LOOKING TO CONNECT
As of December 31, 1996, technology stocks made up approximately 16% of
your Fund's portfolio, about the same weighting as the Wilshire Small Cap Growth
Index. During the past six months, we were disappointed with the performance of
our holdings. We sold some stocks such as OCTEL COMMUNICATIONS that failed to
meet our earnings expectations.
Our emphasis in technology is on companies whose product and services
appear likely to grow regardless of the overall U.S. economy. These include
businesses whose products help computers talk to each other and increase the
size of the data pipeline so information can be transferred, stored and managed
more quickly.
Two themes we are focusing on are business' need to upgrade
computer software to avoid database problems in the year 2000 as well as the
growth of intranets -- internal company information networks.
(Photo of Glasses, Pen and Keyboard)
Q. What is a small company growth stock?
A. It's the stock of a rapidly growing business in the early phase of its life
cycle. Such shares generally offer superior capital appreciation potential.
1996 semi-annual report
6
<PAGE>
INVESTMENT OUTLOOK
By our estimate, small cap stocks are selling at prices relative to large cap
stocks that are in the middle of a historical range, suggesting that small
cap companies are neither overvalued or undervalued.
(WE BELIEVE IT IS IMPORTANT TO NOT FOLLOW THE CROWD AND INSTEAD TRUST WHAT WE
SEE AND HEAR FIRST HAND.)
Still, we believe some small cap stocks could outpace the overall stock market
in the year ahead, especially if the dollar continues to strengthen in value
against major world currencies.
In our opinion, the earnings potential of small, domestically oriented
companies could become more attractive if large multinational corporations
suffer as a result of the dollar's appreciation. That could happen because
American goods may become more expensive for foreigners to buy, or because the
earnings of overseas subsidiaries would be less when converted into dollars.
However, even this positive scenario for small cap stocks is tempered
by the fact that small technology businesses tend to do a lot of exporting. So,
their earnings may also be hurt by a rise in the dollar.
Even with the stock market at record highs, your Fund's management team
is finding companies that meet our strict investment guidelines. To properly
evaluate these opportunities for long-term capital appreciation, we believe it
is important to not follow the crowd, and instead trust what we see and hear
first hand from individuals who actually run businesses, provide them with
credit or buy their products and services. We look forward to reporting to you
after our fiscal year ends in June.
EDWARD N. ANTOIAN
VICE PRESIDENT AND
SENIOR PORTFOLIO MANAGER
GERALD S. FREY
VICE PRESIDENT AND
SENIOR PORTFOLIO MANAGER
January 15, 1997
(Photo of Globes)
1996 semi-annual report
7
<PAGE>
Fund Performance
THREE DECADES OF ACHIEVEMENT
Trend Fund's Performance Since 1968
$10,000 Investment, Distributions Reinvested
Trend Fund U.S. Consumer
A Class Price Index
---------- -------------
10/03/64 $ 10,000 $10,000
12/31/68 $ 10,249 $10,124
12/29/72 $ 7,943 $12,112
12/31/76 $ 5,562 $16,585
12/31/80 $ 10,080 $24,587
12/31/84 $ 17,641 $30,020
12/30/88 $ 27,776 $34,337
12/31/92 $ 66,947 $40,423
11/29/96 $116,581 $45,252
It takes more than $4.50 to buy what $1 bought the year that Dustin Hoffman was
advised to consider plastics in the movie THE GRADUATE. As you can see, $1
invested in Trend Fund back then would have grown to nearly $12 as of December
31, 1996.
PERFORMANCE SHOWN ABOVE IS FOR CLASS A SHARES AND REFLECTS A 4.75% FRONT-END
SALES CHARGE. RETURNS FOR OTHER CLASSES WILL DIFFER DUE TO DIFFERENT CHARGES
AND EXPENSES.
TREND FUND PERFORMANCE
Average Annual Total Return Through December 31, 1996
- --------------------------------------------------------------------------------
LIFETIME TEN YEARS FIVE YEARS ONE YEAR
- --------------------------------------------------------------------------------
Class A (Est. 1968) +9.08% +16.65% +15.19% +5.43%
- --------------------------------------------------------------------------------
Class B (Est. 1994)
Excluding sales charge +19.25% +9.81%
- --------------------------------------------------------------------------------
Including sales charge +18.22% +5.84%
- --------------------------------------------------------------------------------
Class C (Est. 1995)
Excluding sales charge +13.36% +9.78%
Including sales charge +13.36% +8.78%
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 RESULT. B AND C CLASS RESULTS "EXCLUDING SALES CHARGE"
ASSUME INVESTMENT WAS NOT REDEEMED.
CLASS A shares were initially offered October 3, 1968. Returns reflect the
effect of a 4.75% front-end sales charge and a 12b-1 fee implemented on June
1, 1992.
CLASS B shares, initially offered May 2, 1994, 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 contingent deferred sales charge of up to 4%.
CLASS C, initially offered November 29, 1995, have a 1% annual distribution
and service fee. If redeemed within 12 months, a 1% contingent deferred
sales charge applies.
The average annual total returns for the ten-year, five-year, one-year and
six-month periods ended December 31, 1996, for Trend Fund's Institutional
Class, which is available without sales or asset-based distribution charges
only to certain eligible institutional accounts, were +17.32%, +16.52%,
+10.87% and -3.71%. 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 12b-1 fee.
1996 semi-annual report
8
<PAGE>
FINANCIAL STATEMENTS
DELAWARE GROUP TREND FUND, INC.
STATEMENT OF NET ASSETS/DECEMBER 31, 1996
(UNAUDITED)
- --------------------------------------------------------------------------------
Number Market
of Shares Value
---------------------
COMMON STOCK - 92.52%
AEROSPACE & DEFENSE - 1.29%
AAR ............................................... 203,300 $ 6,149,825
*Kellstrom Industries .............................. 288,000 2,412,000
-----------
8,561,825
-----------
AUTOMOBILES & AUTO PARTS - 0.39%
*Boyd Wheels ....................................... 190,100 2,625,756
-----------
2,625,756
-----------
BANKING, FINANCE & INSURANCE - 3.94%
*CRW Financial ..................................... 281,160 2,407,433
*First Alliance .................................... 236,300 7,059,463
Medallion Financial ............................... 62,500 945,313
*NAL Financial Group ............................... 123,500 1,196,406
Security Capital Pacific Trust .................... 375,200 8,582,700
*United Dental Care ................................ 196,600 6,008,588
-----------
26,199,903
-----------
BUILDING & MATERIALS - 0.30%
LSI Industries .................................... 150,600 2,014,275
-----------
2,014,275
-----------
CABLE, MEDIA & PUBLISHING - 6.94%
*Central European Media Entertainment .............. 222,100 6,996,150
Evergreen Media Class A ........................... 141,000 3,507,375
*Groupe AB SA-ADR .................................. 159,400 2,291,375
*HSN ............................................... 317,404 7,498,669
*Hollywood Entertainment ........................... 101,700 1,894,163
*Infinity Broadcasting Class A ..................... 212,025 7,129,341
*Mecklermedia ...................................... 167,100 3,331,556
*Metro Networks .................................... 62,500 1,570,313
*Norwood Promotional Products ...................... 318,100 5,646,275
*Univision Communications Class A .................. 59,300 2,194,100
*Young Broadcasting Class A ........................ 141,600 4,159,500
----------
46,218,817
----------
COMPUTERS & TECHNOLOGY - 16.25%
*Activision ........................................ 255,118 3,220,865
*Aspect Development ................................ 51,200 1,388,800
*Aware ............................................. 110,300 1,137,469
*C-COR Electronics ................................. 194,000 2,582,625
*Cadence Design Systems ............................ 262,800 10,446,300
*Cayenne Software .................................. 466,200 1,806,525
*Credit Management Solutions ....................... 90,900 1,283,963
*Cypress Semiconductor ............................. 78,600 1,110,225
*EMC ............................................... 318,800 10,560,250
*Elamex S.A. de C.V ................................ 352,600 3,437,850
*Fore Systems ...................................... 185,200 6,100,025
*GTECH Holdings .................................... 206,100 6,595,200
*Geoworks .......................................... 138,100 3,366,188
*HPR ............................................... 353,700 4,819,163
*INSO .............................................. 48,500 1,909,688
*Komag ............................................. 298,700 8,083,569
- ----------
Top 10 stock holdings, representing 19.60% of net assets, are in bold face.
<PAGE>
Number Market
of Shares Value
---------------------
COMMON STOCK (CONTINUED)
COMPUTERS & TECHNOLOGY (CONTINUED)
*Maxis ........................................... 313,700 $ 3,803,613
*NOVA ............................................ 275,800 6,102,075
*PLATINUM Technology ............................. 434,832 5,897,409
*Peerless Systems ................................ 338,000 5,703,750
*Puma Technology ................................. 54,900 933,300
*Rogue Wave Software ............................. 102,600 1,641,600
*Ross Systems .................................... 504,000 4,819,500
*Storage Technology .............................. 239,700 11,415,713
-----------
108,165,665
-----------
CONSUMER PRODUCTS - 0.37%
*Zag Industries .................................. 149,800 2,481,063
-----------
2,481,063
-----------
ELECTRONICS & ELECTRICAL - 8.28%
*Altera .......................................... 44,600 3,241,863
*Cable Design Technologies ....................... 158,000 4,888,125
*ESS Technology .................................. 157,900 4,440,938
*ITI Technologies ................................ 176,400 2,657,025
*KLA Instruments ................................. 59,200 2,097,900
*Kulicke & Soffa Industries ...................... 59,200 1,128,500
*P-COM ........................................... 237,100 7,053,725
Pittston Brink's Group .......................... 239,000 6,453,000
*Protection One .................................. 326,300 3,242,606
*Sawtek .......................................... 120,900 4,752,881
*Sipex ........................................... 276,000 8,866,500
*TriQuint Semiconductor .......................... 240,900 6,308,569
-----------
55,131,632
-----------
ENVIROMENTAL SERVICES - 7.21%
*Republic Industries ............................. 1,264,692 39,442,607
*Superior Services ............................... 422,600 8,557,650
-----------
48,000,257
-----------
FOOD, BEVERAGE & TOBACCO - 1.56%
*Sonic ........................................... 291,550 7,361,638
*United Natural Foods ............................ 177,200 3,045,625
-----------
10,407,263
-----------
HEALTHCARE & PHARMACEUTICALS - 8.96%
*Advanced Health ................................. 210,300 2,655,038
*Agouron Pharmaceuticals ......................... 131,900 8,919,738
*Alternative Living Services ..................... 216,600 3,140,700
*American Oncology Resources ..................... 453,700 4,622,069
*Ascend Communications ........................... 58,500 3,634,313
*Capstone Pharmacy ............................... 540,900 6,085,125
*Carriage Services ............................... 175,400 3,891,688
*Columbia Laboratories ........................... 297,300 4,310,850
*DUSA Pharmaceuticals ............................ 166,900 1,157,869
*FPA Medical Management .......................... 160,200 3,554,438
*NeoPath ......................................... 139,100 2,555,963
*Renal Treatment Centers ......................... 292,500 7,458,750
1996 semi-annual report
9
<PAGE>
DELAWARE GROUP TREND FUND, INC. (CONTINUED)
STATEMENT OF NET ASSETS (CONTINUED)
- --------------------------------------------------------------------------------
COMMON STOCK (CONTINUED)
HEALTHCARE & PHARMACEUTICALS (CONTINUED)
Number Market
of Shares Value
---------------------
*Sano .............................................. 182,500 $ 2,737,500
*Total Renal Care Holdings ......................... 134,700 4,882,875
----------
59,606,916
----------
INDUSTRIAL MACHINERY - 2.79%
*Central Sprinkler ................................. 297,900 7,484,738
*PRI Automation .................................... 98,900 4,462,863
*Spinnaker Industries .............................. 328,856 6,623,160
----------
18,570,761
----------
LEISURE, LODGING & ENTERTAINMENT - 9.15%
*Ascent Entertainment Group ........................ 404,500 6,370,875
*CapStar Hotel ..................................... 316,300 6,207,388
*Cinergi Pictures Entertainment .................... 181,700 366,239
*Dave & Buster's ................................... 155,900 3,108,256
*Equity Marketing .................................. 239,900 4,438,150
*Extended Stay America ............................. 365,000 7,345,625
K2 ............................................... 143,400 3,943,500
*Mirage Resorts .................................... 297,100 6,424,788
*Morton's Restaurant Group ......................... 248,100 4,186,688
*Overseas Filmgroup ................................ 79,300 371,719
*Rio Hotel and Casino .............................. 325,700 4,763,363
*Studio Plus Hotels ................................ 261,750 4,155,281
*Sun International Hotels .......................... 163,800 5,978,700
*Teardrop Golf ..................................... 62,600 307,131
*Ticketmaster Group ................................ 244,600 2,935,200
----------
60,902,903
----------
METALS & MINING - 1.31%
*Gibraltar Steel ................................... 219,100 5,696,600
*Steel Dynamics .................................... 158,500 3,001,594
----------
8,698,194
----------
RETAIL - 11.25%
*Alrenco ........................................... 397,800 4,152,038
*Aviation Sales .................................... 96,500 1,978,250
*Charming Shoppes .................................. 204,400 1,028,387
Duty Free International ........................... 470,000 6,815,000
*Eagle Hardware & Garden ........................... 211,000 4,378,250
*Egghead ........................................... 332,900 1,726,919
*Finish Line Class A ............................... 175,500 3,696,469
*General Nutrition ................................. 286,200 4,865,400
*Hot Topic ......................................... 70,900 1,382,550
*Meyer (Fred) ..................................... 170,700 6,059,850
*Neiman-Marcus Group ............................... 162,500 4,143,750
*Petco Animal Supplies ............................. 133,400 2,718,025
<PAGE>
Number Market
of Shares Value
---------------------
COMMON STOCK (CONTINUED)
RETAIL (CONTINUED)
*Piercing Pagoda ................................. 186,100 $ 4,466,400
Russ Berrie ..................................... 461,350 8,304,300
Schultz Sav-O Stores ............................ 415,800 6,029,100
*Staples ......................................... 203,900 3,682,944
*Vons Companies .................................. 12,400 742,450
*Wet Seal ........................................ 411,000 8,708,063
-----------
74,878,145
-----------
TELECOMMUNICATIONS - 3.77%
*IntelCom Group .................................. 214,300 3,777,038
*PageMart Wireless ............................... 131,500 879,406
*Telco Systems ................................... 220,600 4,232,763
*Tele-Communications International ............... 208,700 2,804,406
*Teleport Communications Group ................... 263,600 8,039,800
*TeleSpectrum Worldwide .......................... 322,100 5,073,075
*TresCom International ........................... 38,200 291,275
-----------
25,097,763
-----------
TEXTILES, APPAREL, & FURNITURE - 1.93%
*Cutter & Buck ................................... 18,100 213,806
*Cyrk ............................................ 419,000 5,473,188
*Sport-Haley ..................................... 133,400 1,684,175
Wolverine World Wide ............................ 189,225 5,487,525
-----------
12,858,694
-----------
TRANSPORTATIONS & SHIPPING - 0.39%
*Midwest Express Holdings ........................ 71,500 2,574,000
-----------
2,574,000
-----------
UTILITIES - 1.32%
*AES China Generating Class A .................... 347,500 4,387,188
*York Research ................................... 467,900 4,386,563
-----------
8,773,751
-----------
MISCELLANEOUS - 5.12%
*Bouygues Offshore S.A ........................... 316,600 4,076,225
*CUC International ............................... 630,311 14,969,888
*NCO Group ....................................... 71,100 1,177,594
*NFO Research .................................... 186,175 4,188,938
*National Education .............................. 325,100 4,957,775
Norrell ......................................... 173,800 4,736,050
-----------
34,106,470
-----------
Total Common Stock (cost $481,604,672) .......... 615,874,053
-----------
WARRANTS - 0.01%
LEISURE, LODGING & ENTERTAINMENT - 0.01%
*Teardrop Golf ................................... 39,200 41,650
-----------
Total Warrants (cost $3,920) .................... 41,650
-----------
1996 semi-annual report
10
<PAGE>
DELAWARE GROUP TREND FUND, INC. (CONTINUED)
STATEMENT OF NET ASSETS (CONTINUED)
- --------------------------------------------------------------------------------
Principal Market
Amount Value
--------------------------
REPURCHASE AGREEMENT - 9.42%
With Chase Manhattan 6.50%
1/02/97 (dated 12/31/96, collateralized
by $31,795,000 U.S. Treasury Notes
6.50% due 4/30/99,
market value $32,526,289) .................... $31,870,000 $31,870,000
With J.P. Morgan Securities 6.60%
1/02/97 (dated 12/31/96, collateralized
by $28,080,000 U.S. Treasury Notes
8.75% due 8/15/00,
market value $31,463,300) .................... 30,833,000 30,833,000
----------
Total Repurchase Agreement
(cost $62,703,000) ........................... 62,703,000
----------
TOTAL MARKET VALUE OF SECURITIES OWNED - 101.95%
(cost $544,311,592) ..................................... $678,618,703
LIABILITES NET OF RECEIVABLES
AND OTHER ASSETS - (1.95%) .............................. (12,992,873)
------------
NET ASSETS APPLICABLE TO 41,969,017 SHARES
($.50 par value) OUTSTANDING - 100.00% ................... $665,625,830
============
NET ASSET VALUE - TREND FUND A CLASS
($468,539,620 / 29,565,582 shares) ...................... $15.85
======
NET ASSET VALUE - TREND FUND B CLASS
($50,480,057 / 3,245,074 shares) ........................ $15.56
======
NET ASSET VALUE - TREND FUND C CLASS
($9,393,559 / 597,690 shares) ........................... $15.72
======
NET ASSET VALUE - TREND FUND INSTITUTIONAL CLASS
($137,212,594 / 8,560,671 shares) ....................... $16.03
======
- ----------
*Non-income producing securities for the six months ended 12/31/96.
+Restricted Securities - Investment in securities not registered under the
Securitites Act of 1993, as amended. These securities have contractual
restrictions on resale. At December 31,1996, these securities amounted to
$6,623,160 or 0.99% of net assets.
COMPONENTS OF NET ASSETS AT DECEMBER 31, 1996:
Common stock, $.50 par value, 500,000,000 shares
authorized to the Fund with 125,000,000 shares
allocated ................................................. $ 540,622,256
Accumulated undistributed income:
Net investment loss ....................................... (687,562)
Net realized loss on investments .......................... (8,615,975)
Net unrealized appreciation of investments ................ 134,307,111
------------
Total net assets ........................................... $ 665,625,830
=============
- ----------
In accordance with Statement of Position 93-2, Determination, Disclosure and
Financial Statements Presentation of Income, Capital Gain and Return of
Capital Gain Distributions by Investment Companies, the Fund reclassified
$3,923,736 of permanent book and tax basis differences from accumulated net
investment loss to accumulated net realized gain on investments. This amount
was the net investment loss for book and tax purposes for the six months
ended December 31, 1996.
See accompanying notes
1996 semi-annual report
11
<PAGE>
DELAWARE GROUP TREND FUND, INC.
STATEMENT OF OPERATIONS
DECEMBER 31, 1996
(UNAUDITED)
- --------------------------------------------------------------------------------
INVESTMENT INCOME:
Dividends .......................................... $1,844,721
Interest ........................................... 1,821,012 $3,665,733
---------
EXPENSES:
Management fees ($2,472,981)
and directors' fees ($9,843) ...................... $2,482,824
Distribution expenses .............................. 851,717
Dividend disbursing and transfer agent
fees and expenses ................................. 648,657
Accounting fees and salaries ....................... 101,853
Reports to shareholders ............................ 83,100
Federal and state registration fees ................ 51,074
Taxes, other than taxes on income .................. 48,026
Professional fees .................................. 21,286
Custodian fees ..................................... 16,762
Other .............................................. 47,996 4,353,295
------ ---------
NET INVESTMENT LOSS ....................................... (687,562)
NET REALIZED GAINAND UNREALIZED
LOSS ON INVESTMENTS :
Net realized gain from security transactions .............. 606,454
Net unrealized depreciation of investments
during the period ........................................ (25,146,075)
-----------
NET REALIZED GAIN AND UNREALIZED LOSS
ON INVESTMENTS ........................................... (24,539,621)
-----------
NET DECREASE IN NET ASSETS RESULTING
FROM OPERATIONS .......................................... ($25,227,183)
============
See accompanying notes
<PAGE>
DELAWARE GROUP TREND FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
Six Months Year
Ended Ended
12/31/96 6/30/96
(Unaudited)
-------------------------------
OPERATIONS:
Net investment loss .......................... $ (687,562) $ (3,923,736)
Net realized gain from security transactions . 606,454 69,081,802
Net unrealized appreciation (depreciation) of
investments during the period ............... (25,146,075) 88,249,218
----------- -----------
Net increase (decrease) in net assets
resulting from operations ................... (25,227,183) 153,407,284
----------- -----------
DISTRIBUTIONS TO
SHAREHOLDERS FROM NET REALIZED
GAIN FROM SECURITY TRANSACTIONS:
Trend Fund A Class .......................... (39,963,160) (20,793,378)
Trend Fund B Class .......................... (3,093,202) (501,207)
Trend Fund C Class .......................... (553,950) (1)
Trend Fund Institutional Class .............. (11,579,487) (3,884,806)
----------- -----------
(55,189,799) (25,179,392)
----------- -----------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold:
Trend Fund A Class .......................... 306,051,224 370,792,059
Trend Fund B Class .......................... 20,475,788 28,458,862
Trend Fund C Class .......................... 4,350,545 6,737,178
Trend Fund Institutional Class .............. 38,688,560 112,722,496
Net asset value of shares issued upon
reinvestment of dividends from net
realized gain from security transactions:
Trend Fund A Class .......................... 37,775,962 18,929,896
Trend Fund B Class .......................... 2,938,894 454,494
Trend Fund C Class .......................... 538,254 1
Trend Fund Institutional Class .............. 10,448,339 3,296,199
----------- -----------
421,267,566 541,391,185
----------- -----------
Cost of shares repurchased:
Trend Fund A Class .......................... (314,286,397) (309,975,910)
Trend Fund B Class .......................... (3,652,582) (2,941,394)
Trend Fund C Class .......................... (1,070,022) (761,331)
Trend Fund Institutional Class .............. (45,547,920) (46,152,789)
----------- -----------
(364,556,921) (359,831,424)
----------- -----------
Increase in net assets derived
from capital share transactions ............. 56,710,645 181,559,761
----------- -----------
NET INCREASE (DECREASE) IN NET ASSETS ........ (23,706,337) 309,787,653
NET ASSETS:
Beginning of period .......................... 689,332,167 379,544,514
----------- -----------
End of period ................................ $ 665,625,830 $ 689,332,167
============= =============
See accompanying notes
1996 semi-annual report
12
<PAGE>
DELAWARE GROUP TREND FUND, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996
(UNAUDITED)
- --------------------------------------------------------------------------------
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. 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 has been made.
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 (losses) 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.
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 net
assets of the Fund, less fees paid to the independent directors. At December 31,
1996, the Fund had a liability for Investment Management fees and other expenses
payable to DMC of $306,884.
Pursuant to the Distribution Agreement, the Fund pays Delaware Distributors,
L.P. (DDLP), the Distributor and an 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 B Class and C Class. No distribution expenses are
paid by the Institutional Class. At December 31, 1996, the Fund had a liability
for distribution fees and other expenses payable to DDLP of $14,261. For the six
months ended December 31, 1996, the Fund paid DDLP $157,600 for commissions
earned on sales of Trend Fund A Class shares.
<PAGE>
The Fund has engaged Delaware Service Company, Inc., (DSC), an affiliate of DMC,
to serve as dividend disbursing and transfer agent of the Fund. Effective August
19, 1996, the Fund also engaged DSC to provide accounting services for the Fund.
Previously, Fund personnel provided this service and the related costs were
recorded in salaries and other expense categories in the statement of
operations. For the six months ended December 31, 1996, the Fund has expensed
$648,657 for dividend disbursing and transfer agent services and $66,737 for
accounting services. At December 31, 1996, the Fund had a liability for such
fees and other expenses payable to DSC of $25,134.
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 December 31, 1996, the Fund made purchases of $351,548,761
and sales of $313,360,338 of investment securities other than U.S. government
securities and temporary cash investments.
At December 31, 1996, the federal income tax cost basis of the Fund's
investments was $544,663,308 and net unrealized appreciation for federal income
tax purposes aggregated $133,955,395 of which $164,483,317 related to unrealized
appreciation of securities and $30,527,922 related to unrealized depreciation of
securities.
4. Capital Stock
Transactions in capital stock shares were as follows:
Six Months Year
Ended Ended
12/31/96 6/30/96
----------- ---------
Shares sold:
Trend Fund A Class ......................... 19,369,225 22,551,524
Trend Fund B Class ......................... 1,314,351 1,747,498
Trend Fund C Class ......................... 276,521 399,723
Trend Fund Institutional Class ............. 2,438,697 6,955,622
Shares issued upon reinvestment
of dividends from net realized
gain from security transactions:
Trend Fund A Class ........................ 2,590,947 1,253,631
Trend Fund B Class ........................ 204,657 28,228
Trend Fund C Class ........................ 37,095 --
Trend Fund Institutional Class ............ 708,843 216,362
---------- ----------
26,940,336 33,152,588
---------- ----------
Share repurchased:
Trend Fund A Class ........................ (19,769,374) (18,873,878)
Trend Fund B Class ........................ (231,690) (184,109)
Trend Fund C Class ........................ (67,377) (48,272)
Trend Fund Institutional Class ............ (2,807,012) (2,827,946)
---------- ----------
(22,875,453) (21,934,205)
---------- ----------
Net increase .............................. $ 4,064,883 $ 11,218,383
============ ============
1996 semi-annual report
13
<PAGE>
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
5.Line of Credit
The Fund has a committed line of credit of $5 million. No amount was
outstanding at December 31, 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.
7. Financial Highlights
Selected data for each share of the Fund outstanding throughout each period
were as follows:
<TABLE>
<CAPTION>
Trend Fund A Class
-----------------------------------------------------------------------------
Six Months Year Ended
Ended June 30,
12/31/96(3) 1996 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period .............. $ 18.160 $ 14.210 $ 12.210 $ 13.980 $ 11.380 $ 8.920
Income from investment operations:
Net investment loss(1)........................... (0.017) (0.127) (0.074) (0.042) (0.004) (0.005)
Net realized and unrealized gain (loss) from
security transactions ............................ (0.783) 4.977 2.864 0.212 3.754 2.625
-------- -------- ------- ------- ------- -------
Total from investment operations ................ (0.800) 4.850 2.790 0.170 3.750 2.620
-------- -------- ------- ------- ------- -------
Less distributions:
Dividends from net investment income ............ none none none none none none
Distributions from net realized gain on
security transactions ............................ (1.510) (0.900) (0.790) (1.940) (1.150) (0.160)
-------- -------- ------- ------- ------- -------
Total distributions ............................... (1.510) (0.900) (0.790) (1.940) (1.150) (0.160)
-------- -------- ------- ------- ------- -------
Net asset value, end of period ...................... $ 15.850 $ 18.160 $ 14.210 $ 12.210 $ 13.980 $ 11.380
======== ======== ======== ======= ======= =======
Total return(2)...................................... (3.74%) 35.53% 24.40% 0.59% 35.24% 29.31%
Ratios/supplemental data:
Net assets, end of period (000 omitted) ........... $468,540 $ 497,188 $318,933 $253,964 $219,826 $124,548
Ratio of expenses to average net assets ........... 1.30% 1.31% 1.36% 1.37% 1.33% 1.18%
Ratio of net investment loss to net assets ........ (0.21%) (0.79%) (0.58%) (0.72%) (0.61%) (0.43%)
Portfolio turnover ................................ 104% 90% 64% 67% 75% 76%
Average commission rate paid ...................... $ 0.0600 $ 0.0557 N/A N/A N/A N/A
</TABLE>
- ----------
1 Years ended 1995, 1996 and the six months ended December 31, 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.
3 Ratios have been annualized and total return has not been annualized.
1996 semi-annual report
14
<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
Six Months Year 9/6/94(4) Six Months 11/29/95(4) Six Months Year Year Year 11/23/92(4)
Ended Ended to Ended to Ended Ended Ended Ended to
12/31/96(3) 6/30/96 6/30/95 12/31/96(3) 6/30/96 12/31/96(3) 6/30/96 6/30/95 6/30/94 6/30/93
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period..... $17.920 $14.130 $12.110 $18.090 $15.460 $18.33 $14.300 $12.250 $13.990 $12.760
Income from investment
operations:
Net investment gain
(loss)(1) ............. (0.074) (0.248) (0.142) (0.075) (0.253) 0.004 (0.087) (0.044) (0.002) (0.035)
Net realized and
unrealized gain (loss)
from security
transactions .......... (0.776) 4.938 2.162 (0.785) 3.233 (0.794) 5.017 2.884 0.202 1.615
------- ------ ------ ------ ------ ------ ------ ------ ------ ------
Total from investment
operations ............ (0.850) 4.690 2.020 (0.860) 2.980 (0.790) 4.930 2.840 0.200 1.580
------- ------ ------ ------ ------ ------ ------ ------ ------ ------
Less distributions:
Dividends from net
investment income...... none none none none none none none none none none
Distributions from net
realized gain on
security transactions.. (1.510) (0.900) none (1.510) (0.350) (1.510) (0.900) (0.790) (1.940) (0.350)
------- ------- ------- ------- ------- ------- ------ ------ ------- -------
Total distributions.... (1.510) (0.900) none (1.510) (0.350) (1.510) (0.900) (0.790) (1.940) (0.350)
------- ------- ------- ------- ------- ------- ------ ------ ------- -------
Net asset value,
end of period ......... $15.560 $17.920 $14.130 $15.720 $18.090 $16.030 $18.33 14.300 $12.250 $13.990
======= ======= ======= ======= ======= ======= ====== ====== ======= =======
Total return(2).......... (4.16%) 34.55% 16.68% (4.18%) 19.66% (3.71%) 35.88% 24.74% 0.83% 21.69%
Ratios/supplemental data:
Net assets, end of
period (000 omitted).. $50,480 $35,090 $ 5,175 $9,394 $6,359 $137,212 $150,695 $55,437 $13,499 $2,237
Ratio of expenses to
average net assets.... 2.05% 2.06% 2.12% 2.05% 2.06% 1.05% 1.06% 1.12% 1.15% 1.21%
Ratio of net investment
loss to net assets.... (0.96%) (1.54%) (1.34%) (0.96%) (1.54%) 0.04% (0.54%) (0.34%) (0.50%) (0.49%)
Portfolio turnover..... 104% 90% 64% 104% 90% 104% 90% 64% 67% 75%
Average commission rate
paid ................. $0.0600 $0.0557 N/A $0.0600 $0.0557 $0.0600 $0.0557 N/A N/A N/A
</TABLE>
- ----------
1 Years ended 1995, 1996 and the six months ended December 31, 1996 per share
information was based on the average shares outstanding method.
2 Does not include contingent deferred sales charge which varies from 1%-4%
depending upon the holding period for Trend Fund B Class.
3 Ratios have been annualized and total return has not been annualized.
4 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.
1996 semi-annual report
15
<PAGE>
THIS SEMI-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.
INVESTMENT MANAGER
Delaware Management Company, Inc.
Philadelphia
NATIONAL DISTRIBUTOR
Delaware Distributors, L.P.
Philadelphia
SHAREHOLDER SERVICING,
DIVIDEND DISBURSING AND
TRANSFER AGENT
Delaware Service Company, Inc.
Philadelphia
1818 Market Street
Philadelphia, PA 19103-3682
FOR SHAREHOLDERS
1.800.523.1918
FOR SECURITIES DEALERS
1.800.362.7500
FOR FINANCIAL INSTITUTIONS
REPRESENTATIVES ONLY
1.800.659.2265
(Photo of Globes)
Be sure to consult your financial adviser when making investments. 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, and involve investment risk, including the possible loss of
principal. Shares of the Fund are not bank or credit union deposits.
Copy Rights Delaware Distributors, L.P.
Printed in the USA on
recycled paper
DELAWARE
GROUP
- ---------------------
Philadelphia - London
TRN-SA [12/96] PP2/97
F-103
