<PAGE>
Supplement Dated April 15, 1995
to the Current Prospectuses
of the Following Delaware Group Funds
Delaware Group Delaware Fund, Inc., Delaware
Group Trend Fund, Inc., Delaware Group Value
Fund, Inc., Delaware Group Decatur Fund, Inc.,
Delaware Group DelCap Fund, Inc., Delaware
Group Delchester High-Yield Bond Fund, Inc.,
Delaware Group Government Fund, Inc.,
Delaware Group Tax-Free Fund, Inc., Delaware
Group Treasury Reserves, Inc., Delaware Group
Tax-Free Money, Inc., Delaware Group Cash
Reserve, Inc.
On March 29, 1995, shareholders of each of the above
referenced Funds or, as relevant, the series thereof, approved a new
Investment Management Agreement with Delaware Management
Company, Inc. ("DMC"), an indirect wholly-owned subsidiary of
Delaware Management Holdings, Inc. ("DMH"). The approval of
new Investment Management Agreements was subject to the
completion of the merger (the "Merger") between DMH and a wholly-
owned subsidiary of Lincoln National Corporation ("Lincoln
National") which occurred on April 3, 1995. Accordingly, the
previous Investment Management Agreements terminated and the new
Investment Management Agreements became effective on that date.
As a result of the Merger, DMC and its two affiliates,
Delaware Service Company, Inc., the Funds' shareholder servicing,
dividend disbursing and transfer agent and Delaware Distributors,
L.P., the Funds' national distributor became indirect wholly-owned
subsidiaries of Lincoln National. Lincoln National, with headquarters
in Fort Wayne, Indiana, is a diversified organization with operations
in many aspects of the financial services industry, including insurance
and investment management.
Under the new Investment Management Agreements, DMC
will be paid at the same annual fee rates and on the same terms as it
was under the previous Investment Management Agreements. In
addition, the investment approach and operation of each Fund and, as
relevant, each series of a Fund, will remain substantially unchanged.
PS-OTH-4/95
<PAGE>
NOVEMBER 9, 1994
DELAWARE CASH RESERVE
A CLASS
(May 30, 1994)
DELAWARE CASH RESERVE
B CLASS
(May 30, 1994)
DELAWARE CASH RESERVE
CONSULTANT CLASS
(May 30, 1994)
U.S. GOVERNMENT MONEY FUND
A CLASS
(March 25, 1994)
U.S. GOVERNMENT MONEY FUND
CONSULTANT CLASS
(March 25, 1994)
TAX-FREE MONEY FUND
A CLASS
(June 29, 1994)
TAX-FREE MONEY FUND
CONSULTANT CLASS
(June 29, 1994)
Supplement To Prospectuses As Noted Above
The following supplements the information appearing on the front cover of
the Prospectus:
Shares of this Fund are not federally insured by the Federal Deposit
Insurance Corporation, the Federal Reserve Board, or any other agency. Shares
are not deposits, obligations of, guaranteed or endorsed by any bank and
involve investment risks including possible loss of principal.
Shares of the Fund are not NCUSIF insured, are not guaranteed by the credit
union, are not obligations of the credit union, and involve investment risk,
including the possible loss of principal. Shares of the Fund are not credit
union deposits.
PS-MM
<PAGE> 1
PROSPECTUS
JUNE 29, 1994
- ----------------------------------------------------------------------------
TAX-FREE MONEY FUND
- ----------------------------------------------------------------------------
CONSULTANT CLASS
- ----------------------------------------------------------------------------
1818 Market Street
Philadelphia, PA 19103
- ----------------------------------------------------------------------------
For Prospectus and Performance:
Nationwide 800-523-4640
Philadelphia 988-1333
Information on Existing Accounts:
(SHAREHOLDERS ONLY)
Nationwide 800-523-1918
Philadelphia 988-1241
Dealer Services:
(BROKER/DEALERS ONLY)
Nationwide 800-362-7500
Philadelphia 988-1050
- ----------------------------------------------------------------------------
TABLE OF CONTENTS
- ----------------------------------------------------------------------------
Cover Page 1
- ----------------------------------------------------------------------------
Synopsis 2
- ----------------------------------------------------------------------------
Summary of Expenses 3
- ----------------------------------------------------------------------------
Financial Highlights 4
- ----------------------------------------------------------------------------
Investment Objective and Policies
Suitability 5
Investment Strategy 5
- ----------------------------------------------------------------------------
The Delaware Difference
Plans and Services 7
- ----------------------------------------------------------------------------
Buying Shares 8
- ----------------------------------------------------------------------------
Redemption and Exchange 10
- ----------------------------------------------------------------------------
Dividends and Distributions 12
- ----------------------------------------------------------------------------
Taxes 13
- ----------------------------------------------------------------------------
Net Asset Value Per Share 13
- ----------------------------------------------------------------------------
Management of the Fund 13
- ----------------------------------------------------------------------------
This Prospectus describes the Tax-Free Money Fund Consultant Class (the
"Class") of shares of Delaware Group Tax-Free Money Fund, Inc. (the "Fund").
Shares of the Class are available for sale through brokers, financial
institutions and other entities which have a dealer agreement with the Fund's
Distributor or a service agreement with the Fund. The Fund is a
professionally-managed mutual fund of the series type, currently offering two
classes of shares of a single series. The Fund seeks a high level of current
income, exempt from federal income tax, while preserving principal and
maintaining liquidity. The Fund intends to achieve its objective by investing
its assets in a diversified portfolio of municipal money market instruments, the
interest from which is, in the opinion of bond counsel for the issuer, exempt
from federal income tax.
The Fund is a money market fund. The minimum initial investment is $1,000;
subsequent investments must be at least $25. The Fund has adopted for the Class
a 12b-1 Plan covering distribution expenses, but no fees are currently being
paid. There is no front-end or contingent deferred sales charge.
This Prospectus sets forth information that you should read and consider
before you invest. Please retain it for future reference. Part B of the
registration statement, dated June 29, 1994, as it may be amended from time to
time, contains additional information about the Fund and has been filed with the
Securities and Exchange Commission. Part B is incorporated by reference into
this Prospectus and is available, without charge, by writing to Delaware
Distributors, Inc. at the above address or by calling the above numbers. The
Fund's financial statements appear in its Annual Report, which will accompany
any response to requests for Part B.
The Fund also offers the Tax-Free Money Fund A Class of shares. Shares of that
class can be purchased directly from the Fund or its Distributor, and have no
annual 12b-1 Plan distribution expenses. A prospectus for that class can be
obtained by writing to Delaware Distributors, Inc. at the above address or by
calling the above numbers. See Tax-Free Money Fund A Class.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
1
<PAGE> 2
SYNOPSIS
Capitalization
The Fund offers the Tax-Free Money Fund Consultant Class and the Tax-Free
Money Fund A Class. The Fund has a present authorized capitalization of five
hundred million shares of common stock with a $.001 par value per share. One
hundred million shares of the Fund have been allocated to each class of shares.
See Shares under Management of the Fund.
Investment Manager, Distributor and Service Agent
Delaware Management Company, Inc. (the "Manager") is the investment manager
for the Fund. The Manager or its affiliate, Delaware International Advisers
Ltd., manages the other funds in the Delaware Group. Delaware Distributors,
Inc. (the "Distributor") is the national distributor for the Fund and for all
of the other mutual funds in the Delaware Group. Delaware Service Company,
Inc. (the "Transfer Agent") is the shareholder servicing, dividend disbursing
and transfer agent for the Fund and for all of the other mutual funds in the
Delaware Group. See Management of the Fund.
Purchase Price
Shares of the Class offered by this Prospectus are available at net asset
value, without a sales charge and are subject to distribution fees under a Rule
12b-1 distribution plan. There are no payments being made under the Plan at this
time. See Buying Shares; Distribution (12b-1) and Service under Management of
the Fund.
Minimum Investment
Shares of the Class are available for sale through brokers, financial
institutions and other entities which have a dealer agreement with the Fund's
Distributor or a service agreement with the Fund. The minimum initial investment
is $1,000 and all subsequent investments must be at least $25. See Buying
Shares.
Investment Objective
The objective of the Fund is to seek a high level of current income, exempt
from federal income tax, while preserving principal and maintaining liquidity.
The Fund intends to achieve its objective by investing its assets in a
diversified portfolio of municipal money market instruments, the interest from
which is, in the opinion of bond counsel for the issuer, exempt from federal
income tax. Although exempt from regular federal income tax, interest paid on
certain types of municipal obligations is deemed to be a preference item under
federal tax law and is subject to the federal alternative minimum tax. Up to 20%
of the Fund's net assets may be invested in bonds, the income from which is
subject to the federal alternative minimum tax. See Investment Objective and
Policies.
Open-End Investment Company
The Fund, which was organized as a Maryland corporation in April 1980, is a
diversified, open-end management investment company. See Shares under
Management of the Fund.
Investment Management Fees
The Manager furnishes investment management services to the Fund, subject
to the supervision and direction of the Board of Directors. Under the
Investment Management Agreement, the annual compensation paid to the Manager
is equal to 1/2 of 1% of average daily net assets of the Fund, less all
directors' fees paid to the unaffiliated directors by the Fund. See Management
of the Fund.
Redemption and Exchange
Shares of the Fund are redeemed or exchanged at the net asset value
calculated after receipt of the redemption or exchange request. See Redemption
and Exchange.
2
<PAGE> 3
SUMMARY OF EXPENSES
<TABLE>
<CAPTION>
Annual Operating Expenses
Shareholder Transaction Expenses (as a percentage of average daily net assets)
- -------------------------------------------------------------------- -----------------------------------------------------------
<S> <C> <C> <C>
Maximum Sales Charge Imposed on Purchases Management Fees............................ 0.47%
(as a percentage of offering price)....................... None 12b-1 Fees................................. None***
Maximum Sales Charge Imposed on Reinvested Dividends Other Operating Expenses................... 0.52%
(as a percentage of offering price)....................... None -----
Redemption Fees............................................. None* Total Operating Expenses................. 0.99%
Exchange Fees............................................... None** =====
</TABLE>
The purpose of this table is to assist the investor in understanding the
various costs and expenses that an investor in the Class will bear directly or
indirectly. *CoreStates Bank, N.A. currently charges $7.50 per redemption for
redemptions payable by wire. **Exchanges are subject to the requirements of each
fund and a sales charge may apply. See Redemption and Exchange. ***Shares of
the Class are subject to a 12b-1 Plan; however, the Board of Directors of the
Fund has suspended 12b-1 Plan payments from the Class to the Distributor
effective June 1, 1990. (See Distribution (12b-1) and Service.) Also, see
Tax-Free Money Fund A Class for expense information about that class.
The following example illustrates the expenses that you would pay on a $1,000
investment over various time periods assuming (1) a 5% annual rate of return and
(2) redemption at the end of each time period. As noted in the table above, the
Fund charges no redemption fees.
1 year 3 years 5 years 10 years
------ ------- ------- --------
$10 $32 $55 $121
This example should not be considered a representation of past or future
expenses or performance. Actual expenses may be greater or less than those
shown.
3
<PAGE> 4
FINANCIAL HIGHLIGHTS
The following financial highlights are derived from the financial statements of
Delaware Group Tax-Free Money Fund and have been audited by Ernst & Young,
independent auditors. The data should be read in conjunction with the financial
statements, related notes, and the report of Ernst & Young covering such
financial information and highlights, all of which are incorporated by reference
into Part B. Further information about the Fund's performance is contained in
its Annual Report to shareholders, a copy of which (including the report of
Ernst & Young) may be obtained from the Fund upon request and without charge.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
Period
3/15/88(1)
Year Ended through
4/30/94 4/30/93 4/30/92 4/25/91 4/26/90 4/27/89 4/28/88
<S> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period(2)........ $1.0000 $1.0000 $1.0000 $1.0000 $1.0000 $1.0000 $1.0000
Income From Investment Operations
- ---------------------------------
Net Investment Income.......................... 0.0158 0.0201 0.0347 0.0473 0.0505 0.0478 0.0044
Net Gains or Losses on Securities (both realized
and unrealized).............................. none none none none none none none
------- ------- ------- ------- ------- ------- -------
Total From Investment Operations............. 0.0158 0.0201 0.0347 0.0473 0.0505 0.0478 0.0044
------- ------- ------- ------- ------- ------- -------
Less Distributions
- ------------------
Dividends (from net investment income)......... (0.0158) (0.0201) (0.0347) (0.0473) (0.0505) (0.0478) (0.0044)
Distributions (from capital gains)............. none none none none none none none
Returns of Capital............................. none none none none none none none
------- ------- ------- ------- ------- ------- -------
Total Distributions.......................... (0.0158) (0.0201) (0.0347) (0.0473) (0.0505) (0.0478) (0.0044)
------- ------- ------- ------- ------- ------- -------
Net Asset Value, End of Period................. $1.0000 $1.0000 $1.0000 $1.0000 $1.0000 $1.0000 $1.0000
======= ======= ======= ======= ======= ======= =======
- --------------------------------------------------------------------------------------------------------------------------------
Total Return................................... 1.59% 2.03% 3.52% 4.84% 5.17% 4.88% (1)
- ------------
- --------------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
- ------------------------
Net Assets, End of Period (000 omitted)........ $1,407 $1,846 $1,920 $3,517 $3,556 $3,100 $39
Ratio of Expenses to Average Daily Net Assets.. 0.99% 0.94% 0.84% 0.86% 1.08% 1.04% (1)
Ratio of Net Investment Income to Average
Daily Net Assets............................. 1.58% 2.03% 3.43% 4.74% 5.05% 4.79% (1)
</TABLE>
- -----------------
(1)March 15, 1988 was the date of the initial public sale of shares of the
Class; the total return and the ratios of expenses and net investment income
to average daily net assets have been omitted as management believes that
such ratios for this relatively short period are not meaningful.
(2)All share and per share figures have been restated to reflect the ten-to-one
stock split on January 1, 1991.
4
<PAGE> 5
INVESTMENT OBJECTIVE AND POLICIES
The Fund is a money market fund with the objective of seeking a high level of
current income, free from federal income tax, while preserving principal and
maintaining liquidity. The Fund seeks to do this by investing in a diversified
portfolio of municipal money market instruments, the interest from which is, in
the opinion of bond counsel for the issuer, exempt from federal income tax. The
portfolio of the Fund will be managed to maintain a constant $1.00 per share
value. While the Fund will make every effort to maintain a fixed net asset value
of $1.00 per share, there can be no assurance that this objective will be
achieved.
SUITABILITY
The Fund is suited for investors seeking current income exempt from federal
income tax. Investors should be willing to accept the risk of investments in
municipal bonds. Ownership of Fund shares also reduces the bookkeeping and
administrative inconveniences of directly purchasing money market securities.
Shares of the Class are offered for sale through brokers, financial
institutions and other entities that have a dealer agreement with the Fund's
Distributor or a service agreement with the Fund. The Class may be suitable for
investors who desire the additional investment and administrative services
offered by such brokers and other entities.
INVESTMENT STRATEGY
The Fund seeks to attain its objective by investing at least 80% of its assets
under normal circumstances in short-term municipal money market instruments. The
Fund may invest up to 20% of its net assets in securities the income from which
is subject to the federal alternative minimum tax. Although exempt from regular
federal income tax, interest paid on certain municipal obligations (commonly
referred to as "private activity" or "private purpose" bonds) is deemed to be a
preference item under federal tax law and is subject to the federal alternative
minimum tax. While there is no assurance its objective can be achieved, the Fund
must follow certain policies that can only be changed by shareholder approval.
Quality Restrictions
The Fund limits its investments to those which the Board of Directors has
determined present minimal credit risk and which are of high quality and
otherwise will meet the conditions with which tax-exempt money market funds must
comply.
The Fund's investments include municipal bonds, tax-free commercial paper and
short-term tax-free notes. They will also include construction loan notes,
project notes, tax anticipation notes, bond anticipation notes and revenue
anticipation notes issued by states, territories and possessions of the United
States, the District of Columbia, political subdivisions of the above and duly
constituted authorities and corporations, the interest from which is
wholly-exempt from federal income tax.
If a security or, as relevant, its issuer is considered to be rated at the
time of a proposed purchase it or, as relevant, its issuer must be so rated in
one of the two highest rating categories (e.g. for municipal bonds, AA or better
by Standard & Poor's Corporation ("S&P") or Aa or better by Moody's Investors
Service, Inc. ("Moody's"); for tax-free commercial paper and short-term tax-free
notes, A-2 or better by S&P or P-2 or better by Moody's; and for state or
municipal notes, MIG-2 or better by Moody's) by at least two nationally-
recognized statistical rating organizations (or if rated by only one such
organization, so rated by such organization) or, if the security or, as
relevant, its issuer has not been rated, to be comparable to securities that are
so rated in accordance with the conditions with which tax-exempt money market
funds must comply. The Fund may also invest in U.S. government securities (as
defined by the Investment Company Act of 1940).
Consistent with the above, the Fund may also invest in short-term municipal
obligations. "Municipal obligations" include "general obligation" and "revenue"
issues. General obligation issues are secured by the issuer's pledge of its full
faith, credit and taxing power for the payment of principal and interest.
Revenue issues are payable only from the revenues derived from a particular
facility or class of facilities.
The Fund may also invest in variable or floating rate demand obligation
instruments and other municipal securities with a maturity in excess of 13
months, but which have a demand feature whereby the Fund may tender the
instrument or security back to the issuer or another entity as described below,
consistent with the conditions with which tax-exempt money market funds must
comply. Such obligations may be backed by a Letter of Credit or other guarantee.
The Fund will consider the rating of the guarantor and the nature of the
guarantee in evaluating the quality of the obligation.
5
<PAGE> 6
Generally, a demand feature entitles the Fund to require the provider of the
demand feature to purchase the securities from the Fund at their principal
amount (usually with accrued interest) within a fixed period (generally seven
days, but the period may be longer) following a demand by the Fund. Certain
securities with a demand feature permit the Fund to tender the security only at
the time of an interest rate adjustment or at other fixed intervals. The demand
feature may be provided by the issuer of the underlying security, a bank, a
dealer in the securities or by another third party, and may not be transferred
separately from the underlying security. Certain demand features are conditional
which means that they may not be exercised or may terminate under certain
limited circumstances. The bankruptcy or receivership of, or default by, the
provider of the demand feature, or a default on the underlying security or other
event that terminates the demand feature before its exercise will adversely
affect the liquidity of the underlying security.
The Fund may not, at the time of purchase, invest more than 25% of its assets
in securities of governmental subdivisions located in any one state, territory
or U.S. possession. It may invest up to 25% of its assets in short-term,
tax-exempt project notes guaranteed by the U.S. government, regardless of the
location of the issuing municipality.
Appendix A of Part B describes Moody's and S&P's ratings.
Maturity Restrictions
The Fund maintains an average maturity of not more than 90 days. Also, it does
not purchase any instruments with an effective remaining maturity of more than
13 months.
Investment Techniques
The Fund intends to hold its investments until maturity, but may sell them
prior to maturity for a number of reasons. These reasons include: to shorten or
lengthen the average maturity, to increase the yield, to maintain the quality of
the portfolio or to maintain a stable share value.
Up to 20% of the Fund's portfolio may be invested in issues which are not
exempt from federal income tax such as commercial paper, corporate notes,
certificates of deposit of U.S. commercial banks and domestic savings and loan
associations, obligations of the U.S. government, its agencies or
instrumentalities, certificates of deposit, when-issued securities and
repurchase agreements of the above issuers. Any such investments will meet the
conditions with which tax-exempt money market funds must comply when purchasing
such instruments.
The Fund may invest in "when-issued securities." When-issued securities
involve commitments to buy a new issue with settlement up to 45 days later.
During the time between the commitment and settlement the Fund does not accrue
interest, but the market value may fluctuate. This can result in the Fund's
share value increasing or decreasing. If the Fund invests in securities of this
type, it will maintain a segregated account to pay for them and mark it to
market daily.
The Tax Reform Act of 1986 (the "Act") limits the amount of new "private
purpose" bonds that each state can issue and subjects interest income from these
bonds to the federal alternative minimum tax. "Private purpose" bonds are issues
the proceeds of which are used to finance certain nongovernment activities, and
could include some types of industrial revenue bonds such as privately-owned
sports and convention facilities. The Act also makes the tax-exempt status of
certain bonds depend on the issuer's compliance with specific requirements after
the bonds are issued. The Fund intends to seek to achieve a high level of
tax-exempt income. However, if the Fund invests in newly-issued private purpose
bonds, a portion of its distributions would be subject to the federal
alternative minimum tax. The Fund may invest up to 20% of its assets in bonds
the income from which is subject to the federal alternative minimum tax.
The Fund may also use repurchase agreements which are at least 100%
collateralized by securities in which the Fund can invest directly. Repurchase
agreements help the Fund to invest cash on a temporary basis. Under a repurchase
agreement, the Fund acquires ownership and possession of a security, and the
seller agrees to buy the security back at a specified time and higher price. If
the seller is unable to repurchase the security, the Fund could experience
delays and losses in liquidating the securities. To minimize this possibility,
the Fund considers the creditworthiness of banks and dealers when entering into
repurchase agreements. Earnings on repurchase agreements are not tax-exempt.
The Fund may borrow money as a temporary measure for extraordinary purposes or
to facilitate redemptions, but it does not presently intend to do so.
6
<PAGE> 7
Asset-Backed Securities
The Fund may also invest in securities which are backed by assets such as
receivables on home equity and credit card loans, and receivables regarding
automobile, mobile home and recreational vehicle loans, wholesale dealer floor
plans and leases. All such securities must be rated in the highest rating
category by a reputable credit rating agency (e.g., AAA by S&P or Aaa by
Moody's). Such receivables are securitized in either a pass-through or a
pay-through structure. Pass-through securities provide investors with an income
stream consisting of both principal and interest payments in respect of the
receivables in the underlying pool. Pay-through asset-backed securities are debt
obligations issued usually by a special purpose entity, which are collateralized
by the various receivables and in which the payments on the underlying
receivables provide the funds to pay the debt service on the debt obligations
issued. The Fund may invest in these and other types of asset-backed securities
that may be developed in the future. It is the Fund's current policy to limit
asset-backed investments to those represented by interests in credit card
receivables, wholesale dealer floor plans, home equity loans and automobile
loans.
The rate of principal payment on asset-backed securities generally depends
upon the rate of principal payments received on the underlying assets. Such rate
of payments may be affected by economic and various other factors such as
changes in interest rates. Therefore, the yield may be difficult to predict and
actual yield to maturity may be more or less than the anticipated yield to
maturity. Such asset-backed securities involve other risks, including the risk
that security interests cannot be adequately or in many cases, ever,
established. In addition, with respect to credit card receivables, a number of
state and federal consumer credit laws give debtors the right to set off certain
amounts owed on the credit cards, thereby reducing the outstanding balance. In
the case of automobile receivables, there is a risk that the holders may not
have either a proper or first security interest in all of the obligations
backing such receivables due to the large number of vehicles involved in a
typical issuance and technical requirements under state laws. Therefore,
recoveries on repossessed collateral may not always be available to support
payments on the securities. For further discussion concerning the risks of
investing in such asset-backed securities, see Part B.
Part B provides more information on the Fund's investment policies and
restrictions.
THE DELAWARE DIFFERENCE
PLANS AND SERVICES
The Delaware Difference is our commitment to provide you with superior
information and quality service on your investments in the Delaware Group of
funds.
SHAREHOLDER PHONE DIRECTORY
Investor Information Center
800-523-4640
(Philadelphia 988-1333)
Fund Information; Literature;
Price, Yield and Performance Figures
Shareholder Service Center
800-523-1918
(Philadelphia 988-1241)
Information on Existing Regular Investment
Accounts and Retirement Plan Accounts;
Wire Investments; Wire Liquidations;
Telephone Liquidations; Telephone Exchanges
Delaphone
800-362-FUND (800-362-3863)
Performance Information
You can call the Investor Information Center anytime to get current yield
information. Yield information is updated each weekday and is based on the
annualized yield over the past seven-day or longer period.
Shareholder Services
During business hours, you can call the Fund's Shareholder Service Center. The
representatives can answer any of your questions about your account, the Fund,
the various service features and other funds in the Delaware Group.
Delaphone Service
Delaphone is an account inquiry service for investors with Touch-Tone(R) phone
service. It enables you to get information on your account faster than the
mailed statements and confirmations seven days a week, 24 hours a day.
Account Statements
A statement of account will be mailed each quarter summarizing all
transactions during the period. However, accounts in which there has been
activity, other than regular investment programs such as Automatic Investing or
Direct Deposit Plans, will receive monthly statements reflecting transactions
for that period. You should examine statements and confirmations immediately and
promptly report any discrepancy by calling the Shareholder Service Center.
7
<PAGE> 8
Duplicate Confirmations
If your investment dealer is noted on your investment application, we will
send your dealer a duplicate confirmation. This makes it easier for your
investment dealer to help you manage your investments.
Dividend Reinvestment Plan
You can elect to have your distributions (capital gains and/or dividend
income) paid to you by check or reinvested in your account without a sales
charge or you may be permitted to reinvest your distributions in other funds in
the Delaware Group without a sales charge, subject to eligibility and minimum
purchase requirements set forth in each fund's prospectus. Dividends on shares
of the Class may not be invested in the Class B Shares that are offered by
certain other funds in the Delaware Group ("Class B Funds"). For more
information about reinvestments in shares of other funds in the Delaware Group,
call the Shareholder Service Center.
Exchange Privilege
The Exchange Privilege permits shareholders to exchange all or part of their
Class shares into shares of the other funds in the Delaware Group, subject to
the eligibility and minimum purchase requirements set forth in each fund's
prospectus, including any applicable front-end sales charges. Exchanges are not
permitted between Class shares and the Class B Shares of the Class B Funds. See
Redemption and Exchange.
The exchange feature is available only in states where shares of the fund
being acquired can be sold. The Fund reserves the right to suspend or terminate,
or amend the terms of, the exchange privilege upon 60 days' written notice to
shareholders. See Redemption and Exchange.
Wealth Builder Option
You may be permitted to elect to have amounts in your account automatically
invested in other funds in the Delaware Group. Investments under this feature
are exchanges and are therefore subject to the same conditions and limitations
as other exchanges of Class shares. See Redemption and Exchange.
Financial Information about the Fund
Each fiscal year, you will receive an annual report containing financial
statements audited by Ernst & Young (the Fund's independent auditors), and an
unaudited semi-annual report. These reports provide detailed information about
the Fund's investments and performance. The Fund's fiscal year ends on April 30.
The Delaware Digest
You will receive newsletters covering topics of interest about your
investment alternatives and services from the Delaware Group.
BUYING SHARES
The Distributor serves as the national distributor for the Fund.
Shares of the Class may be purchased through brokers, financial
institutions and other entities that have a dealer agreement with the Fund's
Distributor or a service agreement with the Fund. The minimum for initial
investments is $1,000 and all subsequent investments must be at least $25. All
purchases are at net asset value. There is no sales charge.
The Fund makes it easy to invest by mail, by wire, by exchange and by
arrangement with your investment dealer.
Investing through Your Investment Dealer
You can make a purchase through most investment dealers who, as part of the
service they provide, must transmit orders promptly. They may charge for this
service. If you want a dealer but do not have one, we can refer you to one.
Investing by Mail
1. Initial Purchases--An Investment Application must be completed, signed and
sent with a check payable to Tax-Free Money Fund Consultant Class, P.O. Box
7977, Philadelphia, PA 19101.
2. Subsequent Purchases--Additional purchases may be made at any time by mailing
a check payable to Tax-Free Money Fund Consultant Class. Your check should be
identified with your name(s) and account number. An investment slip (similar to
a deposit slip) is provided at the bottom of transaction confirmations and
dividend statements that you will receive from the Fund, and should be used when
you are making additional purchases. You can expedite processing by including an
investment slip with your check when making additional purchases. Your
investment may be delayed if you send additional purchases by certified mail.
Investing by Wire
You may purchase shares by requesting your bank to transmit funds by wire to
CoreStates Bank, N.A., ABA #031000011, account number 0114-2596 (include your
name(s) and your account number for the Class in which you are investing).
1. Initial Purchases--Before you invest, telephone the Fund's Shareholder
Service Center to get an account number. If you do not call first, it may delay
processing your investment. In addition, you must promptly send your Investment
Application to Tax-Free Money Fund Consultant Class, New Accounts, P.O. Box
7977, Philadelphia, PA 19101.
2. Subsequent Purchases--You may make additional investments anytime by wiring
funds to CoreStates Bank, N.A., as described above. You should advise the Fund's
Shareholder Service Center by telephone of each wire you send.
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<PAGE> 9
Investing by Exchange
If you have an investment in another mutual fund in the Delaware Group, you
may write and authorize an exchange of part or all of your investment into the
Class. The Class B Shares of the Class B Funds may not be exchanged into the
Class. If you wish to open an account by exchange, call the Shareholder Service
Center for more information.
Additional Methods of Adding to Your Investment
Call the Shareholder Service Center for more information if you wish to use
the following services:
1. Direct Deposit
You may wish your employer or bank to make regular investments directly to
your account for you (for example: payroll deduction, pay by phone, annuity
payments). The Fund also accepts preauthorized recurring government and
private payments by Electronic Fund Transfer, which avoids mail time and
check clearing holds on payments such as social security, federal salaries,
Railroad Retirement benefits, etc.
2. Automatic Investing Plan
The Automatic Investing Plan enables you to make regular monthly investments
without writing or mailing checks. You may authorize the Fund to transfer a
designated amount monthly from your checking account to your Class account.
Shareholders should allow a reasonable amount of time for initial purchases and
changes to these plans to become effective.
* * *
Should investments by these two methods be reclaimed or returned for some
reason, the Fund has the right to liquidate your shares to reimburse the
government or transmitting bank. If there are insufficient funds in your Class
account, you are obligated to reimburse the Fund.
Dividend Orders
Some shareholders want the dividends earned in one fund automatically invested
in another Delaware Group fund with a different investment objective. For more
information on the requirements of the other funds, please call the Shareholder
Service Center.
Purchase Price and Effective Date
The offering price (net asset value) of the Class is determined as of the
close of regular trading on the New York Stock Exchange (ordinarily, 4 p.m.,
Eastern time) on days when such exchange is open.
Investments by Federal Funds wire will be effective upon receipt. If the wire
is received after the time the offering price of shares is determined, as noted
above, it will be effective the next business day. If the investment is made by
check, the check must be converted to Federal Funds before your purchase can be
effective (normally one business day after receipt).
Your purchase begins earning dividends the next business day after becoming
effective. See Dividends and Distributions for additional information.
The Conditions of Your Purchase
The Fund reserves the right to reject any purchase or exchange. If a purchase
is cancelled because your check is returned unpaid, you are responsible for any
loss incurred. The Fund can redeem shares from your account(s) to reimburse
itself for any loss, and you may be restricted from making future purchases in
any of the funds in the Delaware Group. The Fund reserves the right, upon 60
days' written notice, to redeem accounts that remain under $1,000 as a result of
redemptions. An investor making the minimum initial investment will be subject
to involuntary redemption if he or she redeems any portion of his or her
account.
Tax-Free Money Fund A Class
In addition to offering the Tax-Free Money Fund Consultant Class shares, the
Fund offers the Tax-Free Money Fund A Class shares, which are described in a
separate prospectus. The Tax-Free Money Fund A Class shares can be purchased
directly from the Fund or its Distributor, and have no front-end or contingent
deferred sales charge or annual 12b-1 Plan expenses. In the event 12b-1 Plan
payments are reinstituted under the Tax-Free Money Fund Consultant Class' Plan,
sales or service compensation available in respect of such class may differ from
that available to the Tax-Free Money Fund Consultant Class shares. Both classes
of the Fund's shares have a proportionate interest in the underlying portfolio
of securities of the Fund. For the fiscal year ended April 30, 1994, the Total
Operating Expenses for the Tax-Free Money Fund A Class shares were 0.99%. To
obtain a prospectus which describes the Tax-Free Money Fund A Class, contact the
Distributor.
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<PAGE> 10
REDEMPTION AND EXCHANGE
You can redeem or exchange your shares in a number of different ways. The
exchange service is useful if your investment requirements change and you want
an easy way to invest in other tax-advantaged funds, equity funds or more
aggressive bond funds. Exchanges are subject to the eligibility and minimum
purchase requirements set forth in each fund's prospectus. Any applicable
front-end sales charge will apply to exchanges from money market funds, like the
Fund, to other funds, except for exchanges from money market funds involving
assets that were previously invested in a fund with a front-end sales charge and
exchanges from a money market fund involving the reinvestment of dividends.
Class shares may not be exchanged for Class B Shares of any Class B Fund. Shares
acquired in an exchange must be registered in the state where they are so
purchased. You may want to call us for more information or consult your
financial adviser or investment dealer to discuss which funds in the Delaware
Group will best meet your changing objectives.
Your shares will be redeemed or exchanged out of the Class based on the net
asset value next determined after we receive your request in good order.
Redemption or exchange requests received in good order after the time the
offering price of shares is determined, as noted above, will be processed the
next business day. See Purchase Price and Effective Date under Buying Shares.
Except as otherwise noted below, for a redemption request to be in "good order,"
you must provide your Class account number, account registration, and the total
number of shares or dollar amount of the transaction. Exchange instructions and
redemption requests must be signed by the record owner(s) exactly as the shares
are registered. With regard to exchanges, you must also provide the name of the
fund you want to receive the proceeds. You may request a redemption or an
exchange by calling the Fund at 800-523-1918 (in Philadelphia, 988-1241).
The Fund will not honor check, telephone or wire redemptions for Class shares
recently purchased by check unless it is reasonably satisfied that the purchase
check has cleared, which may take up to 15 days from the purchase date. The Fund
may honor written redemption requests, but will not mail the proceeds until it
is reasonably satisfied the purchase check has cleared. You can avoid this
potential delay if you purchase shares by wiring Federal Funds. You may call the
Shareholder Service Center to determine if your funds are available for
redemption. The Fund reserves the right to reject a telephone redemption request
or delay payment of telephone redemption proceeds if there has been a recent
change to the shareholder's address of record.
Different redemption and exchange methods are outlined below. There is no fee
charged by the Fund or the Distributor for redeeming or exchanging your shares,
but such fees could be charged in the future. You may also have your investment
dealer arrange to have your shares redeemed or exchanged. Your investment dealer
may charge for this service.
All authorizations given by shareholders with respect to an account, including
selection of any of the features described below, shall continue in effect until
revoked or modified in writing and until such time as such written revocation or
modification has been received by the Fund or its agent.
All exchanges involve a purchase of shares of the fund into which the exchange
is made. As with any purchase, an investor should obtain and carefully read that
fund's prospectus before buying shares in an exchange. The prospectus contains
more complete information about the fund, including charges and expenses.
Class A Shares of the Delaware Group funds that carry a front-end sales charge
will be subject to a contingent deferred sales charge ("Limited CDSC") upon
redemption if the shares were purchased at net asset value without payment of a
front-end sales charge and if a dealer's commission was paid to a financial
adviser, except in certain limited instances. Such shares may be exchanged for
shares of the Class without the imposition of the Limited CDSC at the time of
the exchange. However, upon subsequent redemption from the Class or after a
subsequent exchange into a fund that is subject to the Limited CDSC, such shares
will be subject to the Limited CDSC imposed by the original fund whose shares
were initially exchanged into the Class. Shareholders will be given credit for
the period during which the Class shares were held.
Checkwriting Feature
Checkwriting is a convenient access feature that allows you to earn dividends
until your check is presented to the Fund.
You can request special checks by marking the box on the Investment
Application. There is a one-time $5 charge for this service.
Checks must be drawn for $500 or more and, unless otherwise indicated on the
Investment Application or checkwriting authorization form, must be signed by all
owners of the account.
You will be subject to CoreStates Bank, N.A.'s rules and regulations governing
similar accounts. If the amount of the check is greater than the value of the
shares in your account, the check will be returned and you may be subject to a
charge.
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<PAGE> 11
You may request a stop payment on checks by providing the Fund with a written
authorization (oral requests will be accepted only if followed promptly with a
written authorization). Such requests will remain in effect for six months
unless renewed or cancelled. There will be a $5 charge per check for each
six-month period.
Checks paid will be returned to you semi-annually (January and July). If you
need a copy of a check prior to the regular mailing you may call the Shareholder
Service Center.
Since dividends are declared daily, you may not use the Checkwriting Feature
to close your account. (See Part B for additional information.)
Written Redemption
You can write to the Fund at 1818 Market Street, Philadelphia, PA 19103 to
redeem some or all of your Class shares. The request must be signed by all
owners of the account or your investment dealer of record. For redemptions of
more than $50,000, or when the proceeds are not sent to the shareholder(s) at
the address of record, the Fund requires a signature by all owners of the
account and a signature guarantee for each owner. Each signature guarantee must
be supplied by an eligible guarantor institution. The Fund reserves the right to
reject a signature guarantee supplied by an eligible institution based on its
creditworthiness. The Fund may require further documentation from corporations,
executors, retirement plans, administrators, trustees or guardians.
The redemption request is effective when it is received in good order. Payment
is normally mailed the next business day, but no later than seven days, after
receipt of the request. The Fund does not issue certificates for shares unless
you submit a specific request. If your shares are in certificate form, the
certificate must accompany your request and also be in good order.
Written Exchange
You can also write to the Fund (at 1818 Market Street, Philadelphia, PA 19103)
to request an exchange of any or all of your Class shares into another mutual
fund in the Delaware Group, subject to the same conditions and limitations as
other exchanges noted above.
Telephone Redemption and Exchange
To get the added convenience of the telephone redemption and exchange methods,
you must have the Transfer Agent hold your shares (without charge) for you. If
you choose to have your shares in certificate form, you can only redeem or
exchange by written request and you must return your certificates.
The Telephone Redemption service enabling you to have redemption proceeds
mailed to your address of record and the Telephone Exchange service, both of
which are described below, are automatically provided unless the Fund receives
written notice from the shareholder to the contrary. The Fund reserves the right
to modify, terminate or suspend these procedures upon 60 days' written notice to
shareholders. It may be difficult to reach the Fund by telephone during periods
when market or economic conditions lead to an unusually large volume of
telephone requests.
Neither the Fund nor the Transfer Agent is responsible for any shareholder
loss incurred in acting upon written or telephone instructions for redemption or
exchange of Class shares which are reasonably believed to be genuine. With
respect to such telephone transactions, the Fund will follow reasonable
procedures to confirm that instructions communicated by telephone are genuine
(including verification of a form of personal identification) as, if it does
not, the Fund or the Transfer Agent may be liable for any losses due to
unauthorized or fraudulent transactions. Instructions received by telephone are
generally tape recorded, and a written confirmation will be provided for all
purchase, exchange and redemption transactions initiated by telephone. By
exchanging shares by telephone, the shareholder is acknowledging prior receipt
of a prospectus for the fund into which shares are being exchanged.
Telephone Redemption--Check to Your Address of Record
The Telephone Redemption feature is a quick and easy method to redeem shares.
You or your investment dealer of record can have redemption proceeds of $50,000
or less mailed to you at your record address. Checks will be payable to the
shareholder(s) of record, and will normally be sent the next business day, but
no later than seven days, after receipt of the request. This service is only
available to individual, joint and individual fiduciary-type accounts.
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<PAGE> 12
Telephone Redemption--Proceeds to Your Bank
Redemption proceeds of $1,000 or more can be transferred to your predesignated
bank account by wire or by check. You should authorize this service when you
open your account. If you change your predesignated bank account, the Fund
requires an Authorization Form with your signature guaranteed. For your
protection, your authorization must be on file. If you request a wire, your
funds will normally be sent the next business day. CoreStates Bank, N.A.'s fee
(currently $7.50) will be deducted from your redemption. If you ask for a
check, it will normally be mailed the next business day, but no later than seven
days after receipt of your request, to your predesignated bank account. There
are no fees for this method, but the mail time may delay getting funds into your
bank account. Simply call the Fund's Shareholder Service Center prior to the
time the offering price of shares is determined, as noted above.
Telephone Exchange
The Telephone Exchange feature is a convenient and efficient way to adjust
your investment holdings as your liquidity requirements and investment
objectives change.
You or your investment dealer of record can authorize an exchange of shares
into any fund in the Delaware Group under the same registration. Any such
exchange is subject to the same conditions and limitations as other exchanges
noted above. Telephone exchanges may be subject to limitations as to amounts or
frequency.
Systematic Withdrawal Plan
This plan provides shareholders with a consistent monthly (or quarterly)
payment. This is particularly useful to shareholders living on fixed incomes,
since it provides them with a stable supplemental amount. With accounts of at
least $5,000, you may elect monthly withdrawals of $25 (quarterly $75) or
more. The Fund does not recommend any particular monthly amount, as each
shareholder's situation and needs vary.
Wealth Builder Option
Shareholders may elect to invest in other mutual funds in the Delaware Group
through our Wealth Builder Option. Under this automatic exchange program,
shareholders can authorize regular monthly amounts (minimum of $100 per fund) to
be liquidated from their Class account and invested automatically into one or
more funds in the Delaware Group, subject to the same conditions and limitations
as other exchanges noted above. Shareholders can also use the Wealth Builder
Option to invest in the Class through regular liquidations of shares in their
accounts in other funds in the Delaware Group, subject to the same conditions
and limitations as other exchanges noted above. See Investing by Exchange under
Buying Shares. Shareholders can terminate their participation at any time by
written notice to the Fund.
DIVIDENDS AND DISTRIBUTIONS
The Fund declares a dividend to all Class shareholders of record at the time
the offering price of shares is determined. See Purchase Price and Effective
Date under Buying Shares. Thus, when redeeming shares, dividends continue to
accrue up to and including the date of redemption.
Purchases of Fund shares by wire begin earning dividends when converted into
Federal Funds and available for investment, normally the next business day after
receipt. However, if the Fund is given prior notice of Federal Funds wire and an
acceptable written guarantee of timely receipt from an investor satisfying the
Fund's credit policies, the purchase will start earning dividends on the date
the wire is received. Purchases by check earn dividends upon conversion to
Federal Funds, normally one business day after receipt.
The Fund's dividends are declared daily and paid monthly on the last day of
each month. Payment by check of cash dividends will ordinarily be mailed within
three business days after the payable date. Short-term realized securities
profits, if any, may be paid with the daily dividend; otherwise, they will be
distributed annually during the first quarter following the close of the fiscal
year.
Each class of shares of the Fund will share proportionately in the investment
income and expenses of the Fund, except that until June 1, 1990 the Class
incurred distribution fees under the 12b-1 Plan. The Board of Directors of the
Fund has suspended 12b-1 Plan payments from the Class to the Distributor
effective June 1, 1990. See Distribution (12b-1) and Service.
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<PAGE> 13
Both dividends and distributions will be automatically reinvested in your
account unless you elect otherwise. Any check in payment of dividends or other
distributions which cannot be delivered by the Post Office or which remains
uncashed for a period of more than one year may be reinvested in the
shareholder's account at the then-current net asset value and the dividend
option may be changed from cash to reinvest. Information as to the tax status of
dividends will be provided annually. (See The Delaware Difference for additional
information.)
TAXES
The Fund has qualified as a regulated investment company under Subchapter M of
the Internal Revenue Code (the "Code"). As such, the Fund will not be subject to
federal income tax, or to any excise tax, to the extent its earnings are
distributed as provided in the Code.
The Fund intends to distribute substantially all of its net investment income
and net capital gains.
Federal Income Tax
Distributions of tax-exempt interest income are not includable in the
shareholder's gross income for federal income tax purposes. Distributions of net
investment income received by the Fund from investments in securities other than
municipal obligations, and any net short-term capital gains realized by the
Fund, will be taxable to the shareholder as ordinary income whether received in
cash or reinvested in additional shares. Distributions of taxable net interest
income, if any, will not qualify for the deduction for dividends received by
corporations. For the fiscal year 1994, all of the Fund's net income was exempt
from federal income taxes.
State and Local Taxes
The exemption of distributions for federal income tax purposes may not result
in similar exemptions under the laws of a particular state or local taxing
authority. It is recommended that shareholders consult their tax advisers in
this regard.
Shares of the Fund will be exempt from Pennsylvania county personal property
taxes. The Fund will report annually the percentage of interest income earned on
municipal obligations on a state-by-state basis during the preceding calendar
year.
NET ASSET VALUE PER SHARE
The purchase and redemption price of the Fund's shares is equal to the net
asset value ("NAV") per share that is next computed after the order is received.
The NAV is computed as of the close of regular trading on the New York Stock
Exchange (ordinarily, 4 p.m., Eastern time) on days when such exchange is open.
The NAV per share is computed by adding the value of all securities and other
assets in the portfolio, deducting any liabilities (expenses and fees are
accrued daily) and dividing by the number of shares outstanding.
The Fund's total net assets are determined by valuing the portfolio securities
at amortized cost. Under the direction of the Board of Directors, certain
procedures have been adopted to monitor the value of the Fund's securities and
stabilize the price per share at $1.00. Prior to January 1, 1991, the portfolio
of the Fund was managed to maintain a fixed net asset value of $10 per share.
The Fund accomplished this change by effecting a ten-to-one stock split for
shareholders of record on January 1, 1991.
See Part B for additional information.
MANAGEMENT OF THE FUND
Directors
The business and affairs of the Fund are managed under the direction of its
Board of Directors. Part B contains additional information regarding the
directors and officers.
Investment Manager
The Manager furnishes investment management services to the Fund.
The Manager and its predecessors have been managing the funds in the
Delaware Group since 1938. On April 30, 1994, the Manager and its affiliate,
Delaware International Advisers Ltd., were supervising in the aggregate more
than $26 billion in various institutional (approximately $16,540,034,000) and
investment company (approximately $9,648,317,000) accounts.
The Manager is an indirect, wholly-owned subsidiary of Delaware Management
Holdings, Inc. ("DMH"). By reason of its percentage ownership of DMH common
stock and through a Voting Trust Agreement with certain other DMH shareholders,
Legend Capital Group, L.P. ("Legend") controls DMH and the Manager. As General
Partners of Legend, Leonard M. Harlan and John K. Castle have the ability to
direct the voting of more than a majority of the shares of DMH common stock and
thereby control the Manager.
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<PAGE> 14
The Manager manages the Fund's portfolio and makes investment decisions which
are implemented by the Fund's Trading Department. The Manager also pays the
salaries of all the directors, officers and employees of the Fund who are
affiliated with the Manager. The annual compensation paid by the Fund for
investment management services is equal to 1/2 of 1% of average daily net assets
of the Fund, less all directors' fees paid to the unaffiliated directors by the
Fund. Investment management fees paid by the Fund were 0.47% of average daily
net assets for the fiscal year ended April 30, 1994.
Portfolio Trading Practices
Portfolio trades are generally made on a net basis without brokerage
commissions. However, the price may include a mark-up or mark-down.
Banks, brokers or dealers are selected to execute the Fund's portfolio
transactions.
The Fund uses its best efforts to obtain the best available price and most
favorable execution for portfolio transactions. Orders may be placed with
brokers or dealers who provide brokerage and research services to the Manager or
its advisory clients. These services may be used by the Manager in servicing any
of its accounts. Subject to best price and execution, the Fund may consider a
broker/dealer's sales of Fund shares in placing portfolio orders, and may place
orders with broker/dealers that have agreed to defray certain Fund expenses such
as custodian fees.
Performance Information
From time to time, the Fund may publish the "yield" and "effective yield" for
the Class. Both yield figures are based on historical earnings and are not
intended to indicate future performance. The "yield" of the Class refers to the
income generated by an investment in the Class over a specified seven-day
period. This income is then "annualized," which means the amount of income
generated by the investment during that week is assumed to be generated each
week over a 52-week period and is shown as a percentage of the investment. The
"effective yield" is calculated in a similar manner but, when annualized, the
income earned by an investment in the Class is assumed to be reinvested. The
"effective yield" will be slightly higher than the "yield" because of the
compounding effect of this assumed reinvestment. The Fund may also publish
aggregate and average annual total return information concerning the Class which
will reflect the compounded rate of return of an investment in the Class over a
specified period of time and will assume the investment of all distributions at
net asset value. The Fund may also publish a tax-equivalent yield based on
federal and, if applicable, state tax rates, which demonstrates the taxable
yield necessary to produce an after-tax yield equivalent to the Class' yield.
Yield fluctuates and is not guaranteed. Past performance is not an indication of
future results.
Distribution (12b-1) and Service
The Distributor, Delaware Distributors, Inc., serves as the national
distributor for the Fund under a Distribution Agreement dated June 1, 1992.
The Fund has adopted a distribution plan under Rule 12b-1 (the "Plan") for the
Class which permits the Fund to pay the Distributor from Class assets a monthly
fee for its services and expenses in distributing and promoting sales of Class
shares. These expenses include preparing and distributing advertisements, sales
literature, and prospectuses and reports used for sales purposes, compensating
sales and marketing personnel, holding special promotions for specified periods
of time, and paying distribution and maintenance fees to brokers, dealers and
other entities which sell Class shares. In connection with the promotion of
Class shares, the Distributor may, from time to time, pay to participate in
dealer-sponsored seminars and conferences, and reimburse dealers for expenses
incurred in connection with preapproved seminars, conferences and advertising.
The Distributor may pay or allow additional promotional incentives to dealers as
part of preapproved sales contests and/or to dealers who provide extra training
and information concerning the Class and increase sales of shares of the Class.
In addition, the Fund may make payments from Class assets directly to others,
such as banks, who aid in the distribution of Class shares or provide services
to the Class, pursuant to service agreements with the Fund. Registered
representatives of brokers, dealers or other entities, who have sold a specified
level of Delaware Group funds having a 12b-1 Plan were, prior to June 1, 1990,
paid a .25% continuing trail fee by the Distributor from 12b-1 Plan payments of
the Class for assets maintained in the Class. Payment of such fees has been
suspended but may be reinstituted in the future with prior approval of the Board
of Directors.
The aggregate fees paid by the Fund from Class assets to the Distributor and
others under the Plan may not exceed .30% of the Class' average daily net assets
in any year. The Class will not incur any distribution expenses beyond this
limit, which may not be increased without shareholder approval. The Board of
Directors previously had set the fee for the Class at .25% of average daily net
assets. The Distributor may, however, incur additional expenses and make
additional payments to dealers from its own resources to promote the
distribution of Class shares.
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<PAGE> 15
The Plan does not apply to the Tax-Free Money Fund A Class of shares. Those
shares are not included in calculating the Plan's fees, and the Plan is not used
to assist in the distribution and marketing of Tax-Free Money Fund A Class
shares.
While Plan payments may not exceed .30% annually, the Plan does not limit fees
to amounts actually expended by the Distributor. It is therefore possible that
if a distribution fee were to be paid, the Distributor could realize a profit in
any particular year. However, the Distributor currently expects that its
distribution expenses will likely equal or exceed payments to it under the Plan.
The monthly fee paid to the Distributor is subject to the review and approval of
the Fund's unaffiliated directors who may reduce the fee or terminate the Plan
at any time. The Board of Directors has suspended 12b-1 Plan payments from the
Class to the Distributor effective June 1, 1990. Such payments may be
reinstituted in the future with prior approval of the Board of Directors.
The staff of the Securities and Exchange Commission ("SEC") has proposed
amendments to Rule 12b-1 and other related regulations that could impact Rule
12b-1 Distribution Plans. The Fund intends to amend the Plan, if necessary, to
comply with any new rules or regulations the SEC may adopt with respect to Rule
12b-1.
The National Association of Securities Dealers, Inc. has adopted amendments
to its Rules of Fair Practice relating to investment company sales charges.
The Fund and the Distributor intend to operate in compliance with these
rules.
The Transfer Agent, Delaware Service Company, Inc., serves as the shareholder
servicing, dividend disbursing and transfer agent for the Fund under an
Agreement dated June 29, 1988. The directors annually review service fees paid
to the Transfer Agent.
The Distributor and the Transfer Agent are also indirect, wholly-owned
subsidiaries of DMH.
Expenses
The Fund is responsible for all of its own expenses other than those borne by
the Manager under the Investment Management Agreement and those borne by the
Distributor under the Distribution Agreement. The ratio of expenses to average
daily net assets of the Class was 0.99% for the fiscal year ended April 30,
1994.
Shares
The Fund is a diversified, open-end management investment company. Commonly
known as a mutual fund, the Fund was organized as a Maryland corporation in
April 1980. The Fund's shares have a par value of $.001, equal voting rights and
are equal in all other respects.
The Fund also offers the Tax-Free Money Fund A Class of shares which
represents a proportionate interest in the assets of the Fund and has the same
voting and other rights and preferences as the Class, except that shares of the
Tax-Free Money Fund A Class are not subject to, and may not vote on matters
affecting, the Distribution Plan under Rule 12b-1 relating to the Class. While
the Fund's Board of Directors has authority to create additional series and
classes of shares, there is currently only one such series, which consists of
two classes of shares.
All Fund shares have noncumulative voting rights which means that the holders
of more than 50% of the Fund's shares voting for the election of directors can
elect 100% of the directors if they choose to do so. Under Maryland law, the
Fund is not required, and does not intend, to hold annual meetings of
shareholders unless, under certain circumstances, it is required to do so under
the Investment Company Act of 1940. Shareholders of 10% or more of the Fund's
shares may request that a special meeting be called to consider the removal of a
director.
Prior to January 1992, the Tax-Free Money Fund Consultant Class was known as
the consultant class, between January 1992 and November 1992, it was known as
the Tax-Free Money Fund (Institutional) class and between November 1992 and
February 1994, it was known as the Tax-Free Money Fund Consultant class. In
addition, prior to January 1992, the Tax-Free Money Fund A Class was known as
the original class and between January 1992 and February 1994, it was known as
the Tax-Free Money Fund class.
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<PAGE> 16
SHARES OF THIS FUND ARE NOT Tax-Free
FEDERALLY INSURED BY THE FEDERAL Money Fund
DEPOSIT INSURANCE CORPORATION, ---------------
THE FEDERAL RESERVE BOARD, OR CONSULTANT
ANY OTHER AGENCY. SHARES ARE NOT CLASS
DEPOSITS, OBLIGATIONS OF,
GUARANTEED OR ENDORSED BY ANY NO SALES CHARGE
BANK.
PROSPECTUS
- -------------------------------------------------
JUNE 29, 1994
The Delaware Group includes 20 different
funds with a wide range of investment objectives.
Stock funds, income funds, tax-free funds, money
market funds and closed-end equity funds give
investors the ability to create a portfolio that
fits their personal financial goals. For more
information contact your financial adviser or
call the Delaware Group at 800-523-4640, in
Philadelphia 215-988-1333.
Investment Manager (Photo of George Washington
Delaware Management Company, Inc. Crossing the Delaware River)
One Commerce Square
Philadelphia, PA 19103
National Distributor
Delaware Distributors, Inc.
1818 Market Street
Philadelphia, PA 19103
Shareholder Servicing,
Dividend Disbursing
and Transfer Agent
Delaware Service Company, Inc.
1818 Market Street
Philadelphia, PA 19103
Legal Counsel THE SHARES OF THE FUND ARE NEITHER
Stradley, Ronon, Stevens & Young INSURED NOR GUARANTEED BY THE U.S.
One Commerce Square GOVERNMENT. WHILE THE FUND WILL MAKE
Philadelphia, PA 19103 EVERY EFFORT TO MAINTAIN A STABLE NET
ASSET VALUE OF $1 PER SHARE, THERE IS
Independent Auditors NO ASSURANCE THAT THE FUND WILL BE
Ernst & Young ABLE TO DO SO.
Two Commerce Square
Philadelphia, PA 19103
Custodian
Morgan Guaranty Trust Company of New York
60 Wall Street
New York, NY 10260
DELAWARE
P-026-6/94-RRD GROUP
Printed in the U.S.A. ========
