<PAGE>
DELAWARE(SM)
INVESTMENTS Delaware Trend Fund
===========
Growth of Capital
[GRAPHIC OMITTED] Growth of Capital Artwork
2000 ANNUAL REPORT
<PAGE>
TABLE OF CONTENTS
=================
Letter to Shareholders 1
Portfolio Management
Review 3
Performance Summary 6
Financial Statements
Statement of Net Assets 7
Statement of Operations 9
Statements of Changes in
Net Assets 10
Financial Highlights 11
Notes to Financial
Statements 15
Report of Independent
Auditors 17
A TRADITION OF SOUND INVESTING SINCE 1929
=========================================
A Commitment To Our Investors
Experienced
[] Our seasoned investment professionals average more than 15 years' experience.
[] We began managing investments in 1929 and opened our first mutual fund in
1938. Over the past 70 years, we have weathered a full range of economic and
market environments.
Disciplined
[] We follow strict investment policies and clear buy/sell guidelines.
[] We strive to balance risk and reward in order to provide sound investment
alternatives within any given asset class.
Consistent
[] We clearly articulate our investment policies and follow them consistently.
[] Our commitment to style consistency has earned us the confidence of
discriminating institutional and individual investors to manage approximately
$45 billion in assets as of June 30, 2000.
Comprehensive
[] We offer more than 70 mutual funds in these asset classes.
o Large-cap equity o High-yield bonds
o Mid-cap equity o Investment grade bonds
o Small-cap equity o Municipal bonds (23 single-state funds)
o International equity o International fixed-income
o Balanced
[] Our funds are available through financial advisers who can offer you
individualized attention and valuable investment advice.
Funds are not FDIC insured and are not guaranteed. It is possible to lose the
principal amount invested.
(C)Delaware Distributors, L.P.
<PAGE>
Dear Shareholder
"DURING OUR FISCAL YEAR,
THE CHASM BETWEEN NEW
ECONOMY AND OLD
ECONOMY ISSUES
DEEPENED..."
August 14, 2000
Recap of Events -- If markets had titles, the last year would probably be called
"A Tale of Two Markets", as investors experienced both the best of times and the
worst of times. The U.S. stock markets conducted a rally in the fall of 1999
that carried into 2000, led by shares of growth stocks in general and technology
stocks in particular.
The bull run lasted through February, 2000. Beginning on March 10th and
continuing through April and May, however, investor sentiment seemed to have
made an about-face. Fear of rising interest rates brought the major stock
indexes down in an often swift retreat that negated many of those unprecedented
gains. In most instances the high P/E momentum stocks that led the market on the
way up also bore the brunt of the correction. At its lowest point in May, the
technology-heavy Nasdaq Composite Index lost 37% from its peak in March. The
Standard & Poor's 500 Index also retreated -- by May falling approximately 11%
off its March high. The correction seemed to have helped investors become
reacquainted with the concept of risk in the equities markets. In late May and
in June, major market indexes began to rebound from their losses in the spring,
with many technology stocks beginning to show signs of recovery.
During our fiscal year, the chasm between New Economy and Old Economy issues
deepened, with some investors seeming to shy away from companies with track
records in favor of Internet-based businesses that had no clear prospects of
profitability. The stock market seemed divided into two components: technology
stocks and everything else. As the period wore on, many investors began to heed
the warnings of analysts, who had been cautioning that some technology companies
-- and particularly some Internet-related ones -- would need to show investors
they were capable of earning a profit in order to sustain their valuations.
Total Return
For Period Ended June 30, 2000 One Year
--------------------------------------------------------------------------------
Delaware Trend Fund Class A +63.86%*
--------------------------------------------------------------------------------
Lipper Mid-Cap Growth Funds Average (262 funds) +61.97%
Russell 2000 Growth Index +28.39%
--------------------------------------------------------------------------------
All performance shown above is at net asset value without the effect of sales
charges and assumes reinvestment of dividends and capital gains. Performance
information for all Fund classes can be found on page 6. The Lipper category
represents the average returns of mid-capitalization mutual funds tracked by
Lipper (Source: Lipper). The Russell 2000 Growth Index is a measure of small
company stocks that exhibit growth characteristics as defined by Frank Russell
Company. You cannot invest directly in an index. Past performance does not
guarantee future results.
* The total return for the fiscal year ended June 30, 2000 was unusually high
and cannot be sustained. Investors should be aware that this return was
primarily achieved during favorable conditions, especially within the
technology sector.
1
<PAGE>
[GRAPHIC OMITTED] Growth of Capital Artwork
Delaware Trend Fund experienced a strong 12 months. For the fiscal year ended
June 30, 2000, the Fund returned +63.86% (Class A shares at net asset value with
distributions reinvested), outperforming its benchmark, the Russell 2000 Growth
Index, which rose 28.39% during the same period. Despite the spring market
correction, the fiscal year saw many technology stocks post overall returns that
were positive. The Fund's outperformance of its benchmark can be attributed to
the fact that it held a higher percentage of technology stocks than the
benchmark.
Market Outlook -- In our opinion, investors seeking long-term capital
appreciation should continue to be rewarded by investing in small-cap stocks.
We look for a strong second half of 2000 for equities in general, especially if
the Federal Reserve Board ceases its campaign of monetary tightening.
Recent economic data suggests that the economy may be slowing. If a slowdown
does materialize, and impacts corporate earnings, it could have a negative
influence on stock prices. However, as of this writing the summer corporate
earnings season is off to a positive start. If the Federal Reserve has managed
to engineer another soft landing for the economy, a fall run for the stock
market is not out of the question.
Sincerely,
/s/ Wayne A. Stork /s/ David K. Downes
------------------------------------ --------------------------------------
Wayne A. Stork David K. Downes
Chairman, President and Chief Executive Officer,
Delaware Investments Family of Funds Delaware Investments Family of Funds
2
<PAGE>
Gerald S. Frey
Senior Portfolio Manager
August 14, 2000
PORTFOLIO MANAGEMENT REVIEW
===========================
The Fund's Results
Delaware Trend Fund generated a +63.86% return for the 12 months ended June 30,
2000 (Class A shares at net asset value with distributions reinvested). The year
strongly favored small-cap stocks, as investor sentiment seemed to lean toward
growth companies. Our approach to stock selection allowed us to outperform the
Russell 2000 Growth Index, which is the Fund's benchmark. We also held a greater
weighting of technology in the portfolio than does the benchmark, which clearly
aided our performance. Please keep in mind that these returns are highly unusual
and cannot be sustained. You should be aware that these recent returns were
primarily achieved during favorable market conditions, especially within the
technology sector.
We take a team approach to management, systematically analyzing hundreds of
companies to come up with a diverse portfolio of investments. Two experienced
professionals are dedicated to covering each of the Fund's four primary sectors:
technology, health care, business/financial services and consumer stocks. Before
purchasing a stock, we look at price-to-earnings ratios, estimated growth rates,
market capitalizations and cash flows, as well as industry trends.
In making our purchase decisions we generally look for companies that are
industry leaders, have experienced management, strong product cycles, and
innovative concepts. Once we've purchased a stock we typically look to hold it.
Should a small company grow to become a mid-size or large company, we will
generally not sell our position unless something fundamentally changes that
causes us concern.
Portfolio Highlights
Technology
Your Fund held a higher percentage of technology stocks than the Russell 2000
Growth Index. Still, many high-flying dot-com companies do not meet our stock
selection criteria. We focused instead on what we believe are fundamentally
sound telecommunications companies, networking companies, and chipmakers. These
sub-sectors generally did not feel the significant price pressures that many
dot-com and Internet companies experienced in the spring, which were often
brought on by cashflow and profitability concerns.
Two companies that fall into our favored technology sub-sectors, Applied Micro
Circuits and PMC-Sierra, have been strong performers for the Fund over the last
year. Both firms manufacture integrated circuits for computer chips that are
used in telecommunications. We have been impressed with the business models,
management teams, and visions that these companies bring to the table.
The stock of Denver-based New Era of Networks, Inc. performed well over the
first nine months of the period, but trended downward during the correction this
past quarter and detracted from our overall performance. The company provides a
range of products and services to customers integrating their core computer
systems with web applications. Despite its performance during the correction, we
believe New Era remains fundamentally sound. We held onto our position and have
been rewarded by seeing the stock recover since its decline this past spring.
3
<PAGE>
"MANY HIGH-FLYING
DOT-COM COMPANIES DO
NOT MEET OUR STOCK
SELECTION CRITERIA."
[GRAPHIC OMITTED] Growth of Capital Artwork
Health Care
Historically a defensive sector, expected to remain relatively stable in times
of volatility or economic downturn, health care generally performed well over
the second half of our fiscal year. Still, we remain concerned about certain
regulatory issues that cloud the outlook for the industry and which could
negatively impact certain companies.
As a result of our concerns, we focused mainly on biotechnology firms, which we
feel are currently less susceptible to changing regulations. Biotech firms tend
to be growth companies and are not historically defensive investments. They also
tend to develop new drugs more quickly than traditional pharmaceutical
companies. For instance, one of the Fund's biotechnology holdings, United
Therapeutics Corp., develops pharmaceutical products to treat vascular disease
and other chronic conditions. The company's primary product treats advanced
pulmonary hypertension. During the past 12 months, United Therapeutics' stock
has increased more than ninefold and has been one of the strongest performers in
the portfolio.
One goal of Delaware Trend Fund is to find growth companies by identifying broad
socioeconomic trends, and the companies positioned to prosper from those trends.
For example, one trend we identified was the demand for assisted living and
retirement communities for aging baby boomers in coming years. In an attempt to
take advantage of this trend, we invested in Brookdale Living Communities, which
we felt had sound fundamentals and solid growth potential. Unfortunately,
negative news surrounding this industry segment in general pulled down the price
of Brookdale Living's stock, which hurt your Fund's overall performance. Because
we felt the negative sentiment in this area would likely continue, we sold our
position in the company.
Consumer Stocks
Many economists credit consumer spending for much of the strength of the
domestic economy. U.S. Commerce Department statistics indicate that consumer
confidence was high during much of the fiscal year. As a result, Delaware Trend
Fund held a higher percentage of consumer stocks than is reflected in the
benchmark index.
This helped your Fund's performance during the period, as a number of our
consumer stocks performed well during our fiscal year. The Cheesecake Factory
and Tweeter Home Entertainment Group, Inc. were both strong performers among the
consumer stocks held by the Fund. The Cheesecake Factory, an operator of upscale
yet moderately priced chain restaurants, was our top-performing restaurant
holding. We purchased the stock because we were impressed with the company's
management, as well as its prospects for sustainable growth. The Cheesecake
Factory, based in Calabasas Hills, CA, has a market capitalization of
approximately $900 million. Tweeter Home Entertainment Group, which we believe
to have strong growth potential and sound fundamentals, is a specialty retailer
of high-end audio and video electronic products that undertook an expansion
during the period.
During the year, we also owned American Eagle Outfitters, a specialty retailer
of casual apparel and accessories for teenagers and young adults. Unfortunately,
American Eagle's primary target market seemed to lose interest in the company's
products. Its stock price suffered accordingly when sales declined, and this
hurt the overall performance of your Fund for the fiscal period when we sold our
position in the company.
4
<PAGE>
Delaware Trend Fund
Top Sectors
As of June 30, 2000
----------------------------------------------------------------------
Computers & Technology 24.28%
----------------------------------------------------------------------
Electronics & Electrical 16.78%
----------------------------------------------------------------------
Retail 10.83%
----------------------------------------------------------------------
Health Care & Pharmaceuticals 9.47%
----------------------------------------------------------------------
Telecommunications 6.59%
----------------------------------------------------------------------
Business Services 5.87%
----------------------------------------------------------------------
Leisure, Lodging & Entertainment 5.23%
----------------------------------------------------------------------
Cable, Media & Publishing 3.86%
----------------------------------------------------------------------
Banking, Finance & Insurance 2.19%
----------------------------------------------------------------------
Consumer Products 1.92%
----------------------------------------------------------------------
Delaware Trend Fund
Top Holdings
As of June 30, 2000
----------------------------------------------------------------------
Network Appliance 4.30%
----------------------------------------------------------------------
PMC-Sierra 4.04%
----------------------------------------------------------------------
Micrel 3.83%
----------------------------------------------------------------------
Veritas Software 3.51%
----------------------------------------------------------------------
Applied Micro Circuits 3.36%
----------------------------------------------------------------------
Dollar Tree Stores 3.11%
----------------------------------------------------------------------
Nextlink Communications 2.63%
----------------------------------------------------------------------
Henry (Jack) & Associates 2.55%
----------------------------------------------------------------------
Dycom Industries 2.49%
----------------------------------------------------------------------
Pinnacle Holdings 2.14%
----------------------------------------------------------------------
Business/Financial Services
During the fiscal year, Delaware Trend Fund held a lower percentage of financial
issues than was reflected in the Russell 2000 Growth Index. Early in the fiscal
year, we felt that the landscape for financial firms was less than appealing. At
that time, Year 2000 concerns threatened to disrupt the banking system and
interest rate hikes by the Federal Reserve Board were having a negative impact
on the sector. Although financial stocks in general performed better in the
second half of the fiscal year than in the first, the improved performance was
relative, as more rate hikes during the second half kept the broad outlook for
financial stocks cloudy (Source: Bloomberg).
If the Fed is truly approaching the end of its monetary tightening cycle, the
outlook for financials may brighten as interest rates stabilize or even begin to
trend downward. Should financial stocks return to favor, we believe investors
will seek out larger, well-established institutions that offer comprehensive
financial services to their customers.
Within the sector we remain positive about business services. As businesses
continue to outsource many of their technical needs, we have sought out
companies that provide such services -- especially those benefiting from new
technologies. One such holding in the portfolio is Dycom Industries, a provider
of engineering, construction and maintenance services to telecommunications
companies throughout the U.S. We feel the company may be well-positioned to
benefit from the upgrading of communication networks to accommodate broadband.
Dycom stock, which has been volatile during the year, has performed well
overall.
<PAGE>
Outlook
The American economy, now in its tenth year of expansion, has continued to grow
rapidly with relatively little inflation during most of the fiscal year.
Economic data released this summer, however, showed visible signs that the U.S.
economy may finally be slowing. This came as welcome news on Wall Street, where
the hope is that the Federal Reserve Board will end its campaign of raising
interest rates, which is intended to cool the economy and head off inflation. We
do not hold stocks in cyclical industries, which typically feel the
repercussions of economic slowing. As a result, we feel that stocks within our
four major sectors may perform well in a slowing economic environment, if one
does occur.
As an investor in Delaware Trend Fund, we encourage you to take a long-term
approach to your investments. You should also consider consulting a financial
advisor about diversifying your overall portfolio, and making sure that your
holdings include allocations to other asset classes. This is important because
investing in small-cap stocks is generally riskier than investing in the stocks
of larger, more established companies, as small companies generally have
narrower product lines and limited financial resources.
Looking forward, we feel very good about how your Fund is currently positioned.
Over the past few months, investors have realized that small-cap issues were
long forgotten and many small-cap stocks represented excellent value in the
marketplace. Further, the sell-off in technology stocks brought down the stock
prices of many fundamentally sound companies which we now consider to be
undervalued. Our management team will continue to seek out those small-cap
companies that meet our criteria and that we hope will reward our investors in
the future. In our opinion, investors seeking long-term capital appreciation
should continue to be rewarded by investing in small-caps. We believe that there
are opportunities for strong returns in the equity markets for the remainder of
2000, in particular in small-cap stocks.
5
<PAGE>
FUND BASICS
===========
Fund Objective
The Fund seeks capital
appreciation by investing primarily
in securities in emerging or other
growth-oriented companies.
Total Fund Assets
$1.49 billion
Number of Holdings
82
Fund Start Date
October 3, 1968
Your Fund Manager
Gerald S. Frey leads the
Delaware Investments growth team.
He holds a BA in Economics from
Bloomsburg University and
attended Wilkes College and
New York University. Prior to
joining Delaware Investments
in 1996, he was a Senior Director with
Morgan Grenfell Capital
Management in New York.
Nasdaq Symbols
Class A DELTX
Class B DERBX
Class C DETCX
DELAWARE TREND FUND PERFORMANCE
===============================
Growth of a $10,000 Investment
June 30, 1990 through June 30, 2000
Delaware Trend Fund Class A
S&P 500 Index
Russell 2000 Growth Index
period end Trend Fund Class A Russell 2000 S&P 500
06/30/1990 $9,425 $10,000 $10,000
06/30/1991 $8,969 $10,123 $10,740
06/30/1992 $11,598 $11,614 $12,180
06/30/1993 $15,685 $14,629 $13,840
06/30/1994 $15,778 $15,273 $14,035
06/30/1995 $19,627 $18,323 $17,694
06/30/1996 $26,601 $22,700 $22,294
06/30/1997 $27,060 $26,407 $30,030
06/30/1998 $33,547 $30,766 $39,087
06/30/1999 $41,853 $31,227 $47,987
06/30/2000 $68,581 $35,698 $51,463
Chart assumes $10,000 invested on June 30, 1990 and includes the effect of a
5.75% sales charge and the reinvestment of all dividends and capital gains.
Values plotted are as of June 30 each year. Performance of other Fund classes
will vary due to differing charges and expenses. Past performance does not
guarantee future results.
The S&P 500 is a weighted, unmanaged index that generally tracks the performance
of large-cap stocks. The Russell 2000 Growth Index is an unmanaged index that
generally tracks the performance of those stocks in the Russell 2000 Index that
have higher price-to-book ratios and higher forecasted growth values.
<PAGE>
Average Annual Total Returns
Through June 30, 2000 Lifetime 10 Years Five Years One Year
--------------------------------------------------------------------------------
Class A (Est. 10/3/68)
Excluding Sales Charge +11.62% +21.96% +28.43% +63.86%
Including Sales Charge +11.41% +21.23% +26.91% +54.43%
--------------------------------------------------------------------------------
Class B (Est. 9/6/94)
Excluding Sales Charge +26.54% +27.50% +62.74%
Including Sales Charge +26.48% +27.35% +57.74%
--------------------------------------------------------------------------------
Class C (Est. 11/29/95)
Excluding Sales Charge +27.02% +62.72%
Including Sales Charge +27.02% +61.72%
--------------------------------------------------------------------------------
Returns reflect reinvestment of distributions and any applicable sales charges
as noted below. Return and share values will fluctuate so that shares, when
redeemed, may be worth more or less than their original cost. Class B and C
results excluding sales charges assume either that contingent deferred sales
charges did not apply or the investment was not redeemed. Past performance is
not a guarantee of future results.
Please keep in mind that high double and triple digit returns are very unusual
and cannot be sustained. Investors should be aware that such returns were
achieved during extraordinarily favorable market conditions. Current performance
may be lower than the performance shown. Please call 1.800.523.1918 or visit us
at www.delawareinvestments.com for current performance figures. Class A shares
have a 5.75% maximum front-end sales charge and a 12b-1 fee. Class B shares do
not have 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 5% if redeemed before the end of the sixth year. Class C shares 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 lifetime, 10-year, five-year and
one-year periods ended June 30, 2000 for Delaware Trend Fund Institutional Class
were +11.68%, +22.19%, +28.77% and +64.37%, respectively. The Institutional
Class was originally made available without sales charges only to certain
eligible institutional accounts on November 23, 1992. Institutional Class
performance prior to that date is based on Class A performance and was adjusted
to eliminate sales charges, but not the asset-based distribution charge of
Class A.
Nasdaq Symbol Institutional Class: DGTIX
6
<PAGE>
Statement of Net Assets
DELAWARE TREND FUND
===================
Number of Market
June 30, 2000 Shares Value
------------------------------------------------------------------------------
Common Stock - 92.01%
Banking, Finance & Insurance - 2.19%
Doral Financial ..................................... 493,200 $ 5,640,975
Metris .............................................. 625,950 15,726,994
Radian .............................................. 40,300 2,052,781
Webster Financial ................................... 415,100 9,210,031
-----------
32,630,781
-----------
Business Services - 5.87%
*Bisys ............................................... 372,600 22,914,900
*Corporate Executive Board ........................... 403,400 24,153,575
*Diamond Technology .................................. 166,200 14,625,600
*Heidrick & Struggles ................................ 72,500 4,576,562
True North Communications ........................... 192,200 8,456,800
*West Teleservices ................................... 493,700 12,496,781
-----------
87,224,218
-----------
Cable, Media & Publishing - 3.86%
*Acme Communications ................................. 158,100 2,885,325
*Getty Images ........................................ 419,000 15,529,187
*Insight Communications .............................. 115,900 1,810,937
*Radio One ........................................... 349,500 10,332,094
*Radio One - Class D ................................. 699,000 15,421,688
*Westwood One ........................................ 335,000 11,431,875
-----------
57,411,106
-----------
Computers & Technology - 24.28%
*Broadbase Software .................................. 432,900 13,257,562
*Carescience ......................................... 454,500 4,800,656
*Cysive .............................................. 311,600 7,439,450
*Digital Insight ..................................... 162,500 5,525,000
*Digital Island ...................................... 323,000 15,705,875
*eLoyalty ............................................ 226,700 2,890,425
*eSpeed .............................................. 273,000 11,858,438
*Exchange Applications ............................... 365,400 9,728,775
*Extensity ........................................... 205,100 7,024,675
*Exult ............................................... 28,500 285,000
*Hall, Kinion & Associates ........................... 145,100 4,833,644
Henry (Jack) & Associates ........................... 757,400 37,964,675
*i2 Technologies ..................................... 244,585 25,501,808
*NetIQ ............................................... 343,300 20,469,263
*Network Appliance ................................... 795,000 63,997,500
*New Era of Networks ................................. 559,300 23,770,250
*Onyx Software ....................................... 340,100 10,096,719
*Register.com ........................................ 182,400 5,574,600
*RSA Security ........................................ 182,100 12,610,425
*Sanchez Computer Associates ......................... 41,300 980,875
*Teradyne ............................................ 333,700 24,526,950
*Veritas Software .................................... 461,400 52,145,409
-----------
360,987,974
-----------
<PAGE>
Number of Market
Shares Value
------------------------------------------------------------------------------
Common Stock (continued)
Consumer Products - 1.92%
*Gemstar International ............................... 464,200 $28,526,541
-----------
28,526,541
-----------
Consumer Services - 0.78%
*Bright Horizons Family Solutions .................... 546,100 11,672,887
-----------
11,672,887
-----------
Electronics & Electrical - 16.78%
*Applied Micro Circuits .............................. 505,800 49,947,750
*Dycom ............................................... 804,150 36,990,900
*Lam Research ........................................ 369,400 13,852,500
*LTX 498,500 17,416,344
*Micrel ..............................................1,312,800 57,024,750
*Novellus Systems .................................... 251,700 14,236,781
*PMC - Sierra ........................................ 338,300 60,111,681
-----------
249,580,706
-----------
Food, Beverage & Tobacco - 0.76%
*American Italian Pasta .............................. 368,200 7,617,137
Morrison Management Specialists ..................... 129,580 3,652,536
-----------
11,269,673
-----------
Health Care & Pharmaceuticals - 9.47%
*CIMA Labs ........................................... 303,400 6,046,820
*Cubist Pharmaceuticals .............................. 334,400 16,469,200
*Exelixis ............................................ 125,300 4,181,887
*Inhale Therapeutic Systems .......................... 128,800 13,069,175
*Intrabiotics Pharmaceuticals ........................ 598,800 15,980,475
*Neurocrine Biosciences .............................. 198,300 7,052,044
*Pharmacopeia ........................................ 339,100 15,725,762
*Trimeris ............................................ 406,600 28,436,588
*United Therapeutics ................................. 268,000 29,044,500
*Wesley Jessen VisionCare ............................ 128,400 4,823,025
-----------
140,829,476
-----------
Industrial Machinery - 1.39%
*Advanced Energy ..................................... 327,600 19,307,925
*Spinnaker ........................................... 135,500 1,363,469
-----------
20,671,394
-----------
Leisure, Lodging & Entertainment - 5.23%
*CEC Entertainment ................................... 836,300 21,430,188
*Extended Stay America ............................... 747,000 6,909,750
Ruby Tuesday ........................................ 705,800 8,866,613
*Sonic ............................................... 652,500 19,167,188
*The Cheesecake Factory .............................. 776,100 21,342,750
-----------
77,716,489
-----------
7
<PAGE>
Statement of Net Assets (continued)
Number of Market
Delaware Trend Fund Shares Value
--------------------------------------------------------------------------------
Common Stock (continued)
Retail - 10.83%
*Cost Plus ...................................... 786,275 $ 22,556,264
*Dollar Tree Stores ............................. 1,170,075 46,291,092
*Duane Reade .................................... 691,700 17,811,275
*Hot Topic ...................................... 436,800 13,977,600
*Linens N Things ................................ 726,800 19,714,450
*MSC Industrial Direct .......................... 68,300 1,430,031
+Schultz Sav-O Stores ........................... 341,500 3,543,063
*TOO ............................................ 570,600 14,514,638
*Tweeter Home Entertainment ..................... 669,100 20,323,913
*West Marine .................................... 134,500 920,484
--------------
161,082,810
--------------
Telecommunications - 6.59%
*Concord Communications ......................... 236,400 9,426,450
*Ditech Communications .......................... 8,000 756,500
*Nextlink Communications ........................ 1,029,800 39,068,037
*Pinnacle Holdings .............................. 590,500 31,887,000
*SBA Communications ............................. 323,600 16,806,975
--------------
97,944,962
--------------
Miscellaneous - 2.06%
*Mettler-Toledo InternationaL ................... 766,400 30,656,000
--------------
30,656,000
--------------
Total Common Stock (cost $821,372,054) 1,368,205,017
--------------
Principal
Amount
---------
Repurchase Agreements - 7.63%
With J.P. Morgan Securities 6.40%
7/3/00 (dated 6/30/00, collateralized by
$22,925,000 U.S. Treasury Notes 5.875%
due 11/15/04, market value $22,767,181
and $14,774,000 U.S. Treasury Notes
7.875% due 11/15/04,
market value $15,796,844) ........................$37,768,000 37,768,000
With PaineWebber 6.50%
7/3/00 (dated 6/30/00, collateralized by
$9,170,000 U.S. Treasury Notes 5.25%
due 05/31/01, market value $9,115,798
and $10,316,000 U.S. Treasury Notes
6.125% due 12/31/01, market value
$10,269,620 and $7,241,000
U.S. Treasury Notes 6.25% due 10/31/01,
market value $7,294,534 and $11,462,000
U.S. Treasury Notes 7.25% due 05/15/04,
market value $11,931,124) ........................ 37,825,000 37,825,000
<PAGE>
Principal Market
Amount Value
--------------------------------------------------------------------------------
Repurchase Agreements (continued)
With Prudential Securities 6.50% 7/3/00
(dated 6/30/00, collateralized by
$10,316,000 U.S. Treasury Notes 4.50%
due 9/30/00, market value $10,396,590
and $2,939,000 U.S. Treasury Notes 4.625%
due 11/30/00, market value $2,931,897
and $11,462,000 U.S. Treasury Notes
11.875% due 11/15/03, market value
$13,520,464 and $10,316,000 U.S. Treasury
Notes 15.75% due 11/15/01,
market value $11,757,423) ........................$37,826,000 $ 37,826,000
--------------
Total Repurchase Agreements
(cost $113,419,000) .............................. 113,419,000
--------------
Total Market Value of Securities - 99.64%
(cost $934,791,054) .............................. 1,481,624,017
Receivables and Other Assets
Net of Liabilities - 0.36% ....................... 5,387,578
--------------
Net Assets Applicable To 53,853,579
Shares Outstanding - 100.00% ..................... $1,487,011,595
==============
Net Asset Value - Delaware Trend
Fund A Class
($922,397,505 / 33,176,454 Shares) ............... $27.80
------
Net Asset Value - Delaware Trend
Fund B Class
($231,855,568 / 8,856,067 Shares) ................ $26.18
------
Net Asset Value - Delaware Trend
Fund C Class
($74,924,041 / 2,816,588 Shares) ................. $26.60
------
Net Asset Value - Delaware Trend
Fund Institutional Class
($257,834,481 / 9,004,470 Shares) ................ $28.63
------
----------------------
*Non-income producing security for the year ended June 30, 2000.
+Considered an affiliated company as the Fund owns more than 5% of the
outstanding voting securities of such company.
Components of Net Assets at June 30, 2000:
Shares of beneficial interest
(unlimited authorization - no par ) ............ $ 834,283,770
Accumulated net realized gain on investments ..... 105,894,862
Net unrealized appreciation of investments ....... 546,832,963
--------------
Total net assets ................................. $1,487,011,595
==============
Net Asset Value and Offering Price per Share -
Delaware Trend Fund
Net asset value A Class (A) ...................... $27.80
Sales charge (5.75% of offering price or 6.12% of
the amount invested per share) (B) ............. 1.70
------
Offering price ................................... $29.50
======
----------------------
(A) Net asset value per share, as illustrated, is the estimated amount which
would be paid upon redemption or repurchase of shares.
(B) See the current prospectus for purchases of $50,000 or more.
See accompanying notes
8
<PAGE>
Statement of Operations
Year Ended June 30, 2000 Delaware Trend Fund
--------------------------------------------------------------------------------
Investment Income:
Interest ........................................ $4,394,960
Dividends ....................................... 765,183 $ 5,160,143
----------
Expenses:
Management fees ................................. 7,405,992
Distribution expense ............................ 3,770,025
Dividend disbursing and transfer agent
fees and expenses .............................. 2,180,990
Accounting and administration ................... 420,501
Reports and statements to shareholders .......... 180,700
Registration fees ............................... 77,000
Professional fees ............................... 60,266
Taxes (other than taxes on income) .............. 49,838
Custodian fees .................................. 41,186
Trustees' fees .................................. 19,251
Other ........................................... 104,035 14,309,784
---------- ------------
Less expenses paid indirectly ................... (45,860)
------------
Total expenses .................................. 14,263,924
------------
Net Investment Loss ............................. (9,103,781)
------------
Net Realized and Unrealized Gain
on Investments:
Net realized gain on investments ................ 190,915,137
Net change in unrealized appreciation/depreciation
of investments ................................. 289,916,704
------------
Net Realized and Unrealized Gain
on Investments ................................. 480,831,841
------------
Net Increase in Net Assets Resulting
from Operations ................................ $471,728,060
------------
See accompanying notes
9
<PAGE>
Statements of Changes in Net Assets
Delaware Trend Fund
--------------------------------------------------------------------------------
Year Ended
6/30/00 6/30/99
Increase (Decrease) in Net Assets from Operations:
Net investment loss ..............................$ (9,103,781) $ (5,459,525)
Net realized gain on investments ................. 190,915,137 49,556,238
Net change in unrealized appreciation/depreciation
of investments .................................. 289,916,704 97,315,848
-------------- ------------
Net increase in net assets resulting
from operations ................................. 471,728,060 141,412,561
-------------- ------------
Distributions to Shareholders:
From net realized gain on investments:
A Class ......................................... (78,626,723) (63,040,188)
B Class ......................................... (15,755,215) (10,391,880)
C Class ......................................... (3,777,093) (2,060,376)
Institutional Class ............................. (13,226,766) (7,689,241)
-------------- ------------
(111,385,797) (83,181,685)
-------------- ------------
Capital Share Transactions:
Proceeds from shares sold:
A Class ......................................... 435,914,838 801,415,672
B Class ......................................... 111,700,059 20,583,538
C Class ......................................... 59,725,016 13,073,466
Institutional Class ............................. 203,103,443 29,375,062
Net asset value of shares issued upon reinvestment of
distributions from net realized gain on investments:
A Class ......................................... 73,178,682 59,761,204
B Class ......................................... 14,182,715 9,305,352
C Class ......................................... 3,360,375 1,973,688
Institutional Class ............................. 13,226,020 7,688,052
-------------- ------------
914,391,148 943,176,034
-------------- ------------
Cost of shares repurchased:
A Class ......................................... (338,044,803) (871,474,004)
B Class ......................................... (29,371,107) (20,851,723)
C Class ......................................... (22,003,185) (10,491,571)
Institutional Class ............................. (73,953,502) (39,095,070)
-------------- ------------
(463,372,597) (941,912,368)
-------------- ------------
Increase in net assets derived from capital
share transactions .............................. 451,018,551 1,263,666
-------------- ------------
Net Increase in Net Assets ....................... 811,360,814 59,494,542
Net Assets:
Beginning of period .............................. 675,650,781 616,156,239
-------------- ------------
End of period ....................................$1,487,011,595 $675,650,781
============== ============
See accompanying notes
10
<PAGE>
Financial Highlights
<TABLE>
<CAPTION>
Selected data for each share of the Fund outstanding
throughout each period were as follows: Delaware Trend Fund A Class
------------------------------------------------------------------------------------------------------------------------
Year Ended
6/30/00 6/30/99 6/30/98 6/30/97 6/30/96
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period ...................... $ 19.630 $ 18.550 $ 16.730 $ 18.160 $ 14.210
Income (loss) from investment operations:
Net investment loss(1) ................................... (0.188) (0.140) (0.126) (0.075) (0.127)
Net realized and unrealized gain on investments .......... 11.333 3.820 3.886 0.155 4.977
----------------------------------------------------------
Total from investment operations ......................... 11.145 3.680 3.760 0.080 4.850
----------------------------------------------------------
Less distributions:
Distributions from net realized gain on investments ...... (2.975) (2.600) (1.940) (1.510) (0.900)
----------------------------------------------------------
Total distributions ...................................... (2.975) (2.600) (1.940) (1.510) (0.900)
----------------------------------------------------------
Net asset value, end of period ............................ $ 27.800 $ 19.630 $ 18.550 $ 16.730 $ 18.160
==========================================================
Total return(2) ........................................... 63.86% 24.76% 23.97% 1.67% 35.53%
Ratios and supplemental data:
Net assets, end of period (000 omitted) .................. $922,398 $504,007 $469,152 $428,309 $497,188
Ratio of expenses to average net assets .................. 1.29% 1.45% 1.34% 1.34% 1.31%
Ratio of net investment (loss) to average net assets ..... (0.80%) (0.87%) (0.70%) (0.47%) (0.79%)
Portfolio turnover ........................................ 77% 86% 114% 115% 90%
</TABLE>
----------
(1) Per share information was based on the average shares outstanding method.
(2) Total investment return is based on the change in net asset value of a
share during the period and assumes reinvestment of distributions at net
asset value and does not reflect the impact of a sales charge.
See accompanying notes
11
<PAGE>
Financial Highlights (continued)
<TABLE>
<CAPTION>
Selected data for each share of the Fund
outstanding throughout each period were as follows: Delaware Trend Fund B Class
------------------------------------------------------------------------------------------------------------------------
Year Ended
6/30/00 6/30/99 6/30/98 6/30/97 6/30/96
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period ...................... $ 18.750 $17.960 $16.370 $17.920 $14.130
Income (loss) from investment operations:
Net investment loss(1) ................................... (0.348) (0.248) (0.252) (0.189) (0.248)
Net realized and unrealized gain on investments .......... 10.753 3.638 3.782 0.149 4.938
----------------------------------------------------------
Total from investment operations ......................... 10.405 3.390 3.530 (0.040) 4.690
----------------------------------------------------------
Less distributions:
Distributions from net realized gain on investments ...... (2.975) (2.600) (1.940) (1.510) (0.900)
----------------------------------------------------------
Total distributions ...................................... (2.975) (2.600) (1.940) (1.510) (0.900)
----------------------------------------------------------
Net asset value, end of period ............................ $ 26.180 $18.750 $17.960 $16.370 $17.920
==========================================================
Total return(2) ........................................... 62.74% 23.83% 23.09% 0.96% 34.55%
Ratios and supplemental data:
Net assets, end of period (000 omitted) .................. $231,856 $86,463 $71,470 $55,047 $35,090
Ratio of expenses to average net assets .................. 2.01% 2.17% 2.09% 2.09% 2.06%
Ratio of net investment (loss) to average net assets ..... (1.52%) (1.59%) (1.45%) (1.25%) (1.54%)
Portfolio turnover ........................................ 77% 86% 114% 115% 90%
</TABLE>
----------
(1) Per share information was based on the average shares outstanding method.
(2) Total investment return is based on the change in net asset value of a
share during the period and assumes reinvestment of distributions at net
asset value and does not reflect the impact of a sales charge.
See accompanying notes
12
<PAGE>
Financial Highlights (continued)
<TABLE>
<CAPTION>
Selected data for each share of the Fund outstanding
throughout each period were as follows: Delaware Trend Fund C Class
---------------------------------------------------------------------------------------------------------------------------
Period from
Year Ended 11/29/95(3) to
6/30/00 6/30/99 6/30/98 6/30/97 6/30/96
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period ....................... $19.010 $18.170 $16.540 $18.090 $15.460
Income (loss) from investment operations:
Net investment loss(1) .................................... (0.353) (0.250) (0.255) (0.197) (0.253)
Net realized and unrealized gain on investments ........... 10.918 3.690 3.825 0.157 3.233
----------------------------------------------------------
Total from investment operations .......................... 10.565 3.440 3.570 (0.040) 2.980
----------------------------------------------------------
Less distributions:
Distributions from net realized gain on investments ....... (2.975) (2.600) (1.940) (1.510) (0.350)
----------------------------------------------------------
Total distributions ....................................... (2.975) (2.600) (1.940) (1.510) (0.350)
----------------------------------------------------------
Net asset value, end of period ............................. $26.600 $19.010 $18.170 $16.540 $18.090
==========================================================
Total return(2) ............................................ 62.72% 23.82% 23.09% 0.95% 19.66%
Ratios and supplemental data:
Net assets, end of period (000 omitted) ................... $74,924 $20,566 $14,259 $11,447 $6,359
Ratio of expenses to average net assets ................... 2.01% 2.17% 2.09% 2.09% 2.06%
Ratio of net investment (loss) to average net assets ...... (1.52%) (1.59%) (1.45%) (1.28%) (1.54%)
Portfolio turnover ......................................... 77% 86% 114% 115% 90%
</TABLE>
----------
(1) Per share information was based on the average shares outstanding method.
(2) Total investment return is based on the change in net asset value of a
share during the period and assumes reinvestment of distributions at net
asset value and does not reflect the impact of a sales charge.
(3) Date of initial public offering: ratios have been annualized and total
return has not been annualized.
See accompanying notes
13
<PAGE>
Financial Highlights (continued)
<TABLE>
<CAPTION>
Selected data for each share of the Fund outstanding
throughout each period were as follows: Delaware Trend Fund Institutional Class
------------------------------------------------------------------------------------------------------------------------
Year Ended
6/30/00 6/30/99 6/30/98 6/30/97 6/30/96
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 20.080 $18.870 $16.950 $ 18.330 $ 14.300
Income (loss) from investment operations:
Net investment loss(1) ................................... (0.121) (0.095) (0.082) (0.034) (0.087)
Net realized and unrealized gain on investments .......... 11.646 3.905 3.942 0.164 5.017
-----------------------------------------------------------
Total from investment operations ......................... 11.525 3.810 3.860 0.130 4.930
-----------------------------------------------------------
Less distributions:
Distributions from net realized gain on investments ...... (2.975) (2.600) (1.940) (1.510) (0.900)
-----------------------------------------------------------
Total distributions ...................................... (2.975) (2.600) (1.940) (1.510) (0.900)
-----------------------------------------------------------
Net asset value, end of period ............................ $ 28.630 $20.080 $18.870 $ 16.950 $ 18.330
===========================================================
Total return(2) ........................................... 64.37% 25.07% 24.35% 1.94% 35.88%
Ratios and supplemental data
Net assets, end of period (000 omitted) .................. $257,834 $64,615 $61,275 $120,319 $150,695
Ratio of expenses to average net assets .................. 1.01% 1.17% 1.09% 1.08% 1.06%
Ratio of net investment (loss) to average net assets ..... (0.52%) (0.59%) (0.45%) (0.21%) (0.54%)
Portfolio turnover ........................................ 77% 86% 114% 115% 90%
</TABLE>
----------
(1) Per share information was based on the average shares outstanding method.
(2) Total investment return is based on the change in net asset value of a
share during the period and assumes reinvestment of distributions at net
asset value.
See accompanying notes
14
<PAGE>
Notes to Financial Statements
June 30, 2000
--------------------------------------------------------------------------------
Delaware Group Equity Funds III (the "Company") is organized as a Delaware
business trust and offers five funds: Delaware Trend Fund, Delaware Technology
and Innovation Fund, Delaware American Services Fund, Delaware Large Cap Growth
Fund, and Delaware Research Fund. These financial statements and related notes
pertain to the Delaware Trend Fund (the "Fund"). The Delaware Trend Fund is
registered as a diversified open-end investment company under the Investment
Company Act of 1940, as amended. The Fund offers four classes of shares. The A
Class carries a maximum front-end sales charge of 5.75%. The B Class carries a
back-end deferred sales charge. The C Class carries a level load deferred sales
charge and the Institutional Class has no sales charge.
The Delaware Trend Fund's objective is to provide long-term 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 accounting principles
generally accepted in the United States and are consistently followed by the
Fund.
Security Valuation - Securities listed on an exchange are valued at the last
quoted sales price as of the regular close of the NYSE 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. Other securities and assets for which market quotations are not
readily available are valued at fair value as determined in good faith by or
under the direction of the Fund's Board of Trustees.
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 in the
financial statements. Income and capital gain distributions are determined in
accordance with federal income tax regulations, which may differ from accounting
principles generally accepted in the United States.
Class Accounting - Investment income, common expenses and realized and
unrealized 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.
Repurchase Agreements - The Fund may invest in a pooled cash account along with
other members of the Delaware Investments Family of Funds. The aggregate daily
balance of the pooled cash account is invested in repurchase agreements secured
by obligations of the U.S. government. The respective collateral is held by the
Fund's custodian bank until the maturity of the respective repurchase
agreements. Each repurchase agreement is 102% collateralized. However, in the
event of default or bankruptcy by the counterparty to the agreement, realization
of the collateral may be subject to legal proceedings.
<PAGE>
Use of Estimates - The preparation of financial statements in conformity with
accounting principles generally accepted in the United States requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual results
could differ from those estimates.
Other - Expenses common to all funds within the Delaware Investments Family 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 the accrual basis. The Fund declares and pays dividends from net
investment income and capital gains, if any, semi-annually.
Certain expenses of the Fund are paid through commission arrangements with
brokers. These transactions are done subject to best execution. The amount of
these expenses was approximately $23,730 for the year ended June 30, 2000. In
addition, the Fund receives earnings credits from its custodian when positive
cash balances are maintained, which are used to offset custody fees. These
credits were $22,130 for the year ended June 30, 2000. The expenses paid under
the above arrangements are included in their respective expense captions on the
Statement of Operations with the corresponding expense shown as "Expenses paid
indirectly".
2. Investment Management and Other Transactions with Affiliates
In accordance with the terms of the Investment Management Agreement, the Fund
pays Delaware Management Company (DMC), the Investment Manager of the Fund, an
annual fee which is calculated daily at the rate of 0.750% on the first $500
million of average daily net assets of the Fund, 0.700% on the next $500
million, 0.650% on the next $1.5 billion and 0.600% on the average daily net
assets in excess $2.5 billion. At June 30, 2000, the Fund had a liability for
investment management fees and other expenses payable to DMC of $256,354.
The Fund has engaged Delaware Service Company, Inc. (DSC), an affiliate of DMC,
to provide dividend disbursing, transfer agent, accounting and administration
services. The Fund pays DSC a monthly fee based on the number of shareholder
accounts, shareholder transactions and average net assets, subject to certain
minimums. At June 30, 2000, the Fund had a liability for such fees and other
expenses payable to DSC of $338,809.
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 the B and C Classes. At June 30, 2000, the Fund had
a liability for such fees payable to DDLP of $449,452.
15
<PAGE>
Notes to Financial Statements (continued)
--------------------------------------------------------------------------------
For the year ended June 30, 2000, DDLP earned $265,311 for commissions on sales
of the Fund A Class shares.
Certain officers of DMC, DSC and DDLP are officers, trustees and/or employees of
the Fund. These officers, trustees and employees are paid no compensation by the
Fund.
3. Investments
During the year ended June 30, 2000, the Fund made purchases of $989,485,120 and
sales of $737,948,035 of investment securities other than U.S. government
securities and temporary cash investments.
At June 30, 2000, net unrealized appreciation for federal income tax purposes
aggregated $543,573,941 of which $581,913,157 related to unrealized appreciation
of securities and $38,339,216 related to unrealized depreciation of securities.
At June 30, 2000, the aggregate cost of securities for federal income tax
purposes was $938,050,076.
4. Capital Shares
Transactions in capital shares were as follows:
Year Ended
6/30/00 6/30/99
Shares sold:
A Class ................................. 18,922,302 51,759,227
B Class ................................. 4,790,455 1,341,460
C Class ................................. 2,510,202 832,368
Institutional Class ..................... 7,982,908 1,815,083
Shares issued upon reinvestment of
distributions from net investment
income and net realized gain on
investments:
A Class ................................. 3,685,443 4,112,939
B Class ................................. 746,956 666,093
C Class ................................. 173,136 139,286
Institutional Class ..................... 638,948 518,412
----------- -----------
39,450,350 61,184,868
----------- -----------
Shares repurchased:
A Class ................................. (15,111,575) (55,479,338)
B Class ................................. (1,291,904) (1,375,488)
C Class ................................. (948,686) (674,406)
Institutional Class ..................... (2,835,318) (2,363,001)
----------- -----------
(20,187,483) (59,892,233)
----------- -----------
Net increase .............................. 19,262,867 1,292,635
=========== ===========
<PAGE>
5. Lines of Credit
Effective October 8, 1999, the Fund, along with certain other funds in the
Delaware Investments Family of Funds (the "Participants"), participates in a
$683,500,000 revolving line of credit facility to be used for temporary or
emergency purposes as an additional source of liquidity to fund redemptions of
investor shares. The Participants are charged an annual commitment fee, which is
allocated across the Participants on the basis of each Fund's allocation of the
entire facility. The Participants may borrow up to a maximum of one third of
their net assets under the agreement. Prior to October 8, 1999, the Delaware
Trend Fund had a committed line of credit of $24,300,000. The Fund had no
amounts outstanding at June 30, 2000 or at any time during the fiscal year.
6. Market and Credit Risk
The Fund may invest up to 10% of its total assets in illiquid securities which
may include securities with contractual restrictions on resale, securities
exempt from registration under Rule 144A of the Securities Act of 1933, as
amended, and other securities which may not be readily marketable. The relative
illiquidity of some of these 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.
The Fund invests a significant portion of its assets in small companies and may
be subject to certain risks associated with ownership of securities of small
companies. Investments in smaller companies may be more volatile than
investments in larger companies because of the limited financial resources of
smaller companies or their dependence on narrow product lines.
7. Tax Information (unaudited)
The information set forth below is for the Fund's fiscal year as required by
federal laws. Shareholders, however, must report distributions on a calendar
year basis for income tax purposes, which may include distributions for portions
of two fiscal years of a fund. Accordingly, the information needed by
shareholders for income tax purposes will be sent to them in early 2001. Please
consult your tax advisor for proper treatment of this information.
For the fiscal year ended June 30, 2000, the Fund designates as long-term
capital gains and ordinary income distributions paid during the year as follows:
(A) (B)
Long-Term Ordinary (C)
Capital Gain Income Total (D)
Distributions Distributions Distributions Qualifying
(Tax Basis) (Tax Basis) (Tax Basis) Dividends(1)
------------- ------------- ------------- -------------
92% 8% 100% --
(A) and (B) are based on a percentage of the Fund's total distributions.
(D) is based on a percentage of ordinary income of the Fund.
----------------------
(1) Qualifying dividends represent dividends which qualify for the
corporate dividends received deduction.
16
<PAGE>
Report of Independent Auditors
--------------------------------------------------------------------------------
To the Shareholders and Board of Trustees
Delaware Group Equity Funds III - Delaware Trend Fund
We have audited the accompanying statement of net assets of Delaware Trend Fund
(the "Fund") as of June 30, 2000, and the related statement of operations for
the year then ended, the statements of changes in net assets for each of the two
years in the period then ended, and the financial highlights for each of the
periods indicated therein. These financial statements and financial highlights
are the responsibility of the Fund's management. Our responsibility is to
express an opinion on these financial statements and financial highlights based
on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. 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 and financial highlights. Our procedures included
confirmation of securities owned as of June 30, 2000, 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 Trend Fund at June 30, 2000, 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 its financial highlights for each of the periods
indicated therein, in conformity with accounting principles generally accepted
in the United States.
/s/ Ernest & Young LLP
Philadelphia, Pennsylvania
August 4, 2000
17
<PAGE>
DELAWARE(SM)
INVESTMENTS
----------------------
Philadelphia [] London
For Shareholders
1.800.523.1918
For Securities Dealers
1.800.362.7500
For Financial Institutions
Representatives Only
1.800.659.2265
www.delawareinvestments.com
This annual report is for the information of Delaware Trend Fund shareholders,
but it may be used with prospective investors when preceded or accompanied by a
current Prospectus for Delaware Trend Fund and the Delaware Investments
Performance Update for the most recently completed calendar quarter. The
prospectus sets forth details about charges, expenses, investment objectives and
operating policies of the Fund. You should read the prospectus carefully before
you invest. 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 OF TRUSTEES
Wayne A. Stork
Chairman
Delaware Investments Family of Funds
Philadelphia, PA
Walter P. Babich
Board Chairman
Citadel Constructors, Inc.
King of Prussia, PA
David K. Downes
President and Chief Executive Officer
Delaware Investments Family of Funds
Philadelphia, PA
John H. Durham
Private Investor
Horsham, PA
Anthony D. Knerr
Consultant, Anthony Knerr & Associates
New York, NY
Ann R. Leven
Former Treasurer, National Gallery of Art
Washington, DC
Thomas F. Madison
President and Chief Executive Officer
MLM Partners, Inc.
Minneapolis, MN
Charles E. Peck
Retired
Fredericksburg, VA
Janet L. Yeomans
Vice President and Treasurer
3M Corporation
St. Paul, MN
<PAGE>
AFFILIATED OFFICERS
Charles E. Haldeman, Jr.
President and Chief Executive Officer
Delaware Management Holdings, Inc.
Philadelphia, PA
Richard J. Flannery
Executive Vice President
and General Counsel
Delaware Investments Family of Funds
Philadelphia, PA
Bruce D. Barton
President and Chief Executive Officer
Delaware Distributors, L.P.
Philadelphia, PA
Investment Manager
Delaware Management Company
Philadelphia, PA
International Affiliate
Delaware International Advisers Ltd.
London, England
National Distributor
Delaware Distributors, L.P.
Philadelphia, PA
Shareholder Servicing, Dividend
Disbursing and Transfer Agent
Delaware Service Company, Inc.
Philadelphia, PA
1818 Market Street
Philadelphia, PA 19103-3682
(3500) Printed in the USA
AR-003 [6/00] PPL 8/00 (J6145)
