<PAGE>
Delaware Group
Money Market Fund
Tax-Free
Money Fund
(various photos demonstrating service and guidance, professional
management and goals)
service and guidance
professional management
goals
1997
Annual
Report
DELAWARE
GROUP
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<PAGE>
May 9, 1997
Dear Shareholder:
For the fiscal year ended April 30, 1997, Tax-Free Money Fund A Class and
Consultant Class provided a total return of +2.79%. The seven-day annualized
yield for both classes was 3.18% as of April 30 while the average effective
maturity of securities in the Fund's portfolio was 36 days.
Interest rates on long-term fixed income securities have been volatile
since autumn, while the yields available on money market funds have remained
within a relatively narrow range. During the period, the U.S. economy grew more
rapidly than was expected while the Federal Reserve Board's monetary policy
effectively kept inflation in check.
Unlike longer term bond funds, a money market fund such as Tax-Free
Money Fund derives all of its total return from income and does not offer any
opportunities for capital gains. Still, it can be a sensible place for money you
plan to move to other investments in the future.
For investors seeking to broaden their municipal bond investment
opportunities, I am pleased to report that the Voyageur fund family of
Minneapolis joined Delaware Group on April 30, 1997. Our acquisition doubled
Delaware's municipal bond assets under management to more than $5 billion,
providing us with a greater depth of expertise in this asset class.
Delaware now offers 32 single-state and national municipal bond funds
covering 17 states, including California, Florida and New York.
As always, Delaware remains committed to providing our Tax-Free Money
Fund shareholders with share price stability, liquidity and tax-exempt income. I
thank you for the opportunity you've given us to serve your investing needs.
Sincerely,
/s/ Wayne A. Stork
- ------------------
Wayne A. Stork
Chairman, President and Chief Executive Officer
current income
Tax-Free Money Fund Performance
Average Annual Total Return Through April 30, 1997
- ---------------------------------------------------
One Year Five Years Ten Years Lifetime
- -------------------------------------------------------------------------------
Tax-Free Money Fund A Class +2.79% +2.39% +3.50% +4.14%
- -------------------------------------------------------------------------------
U.S. Consumer Price Index +2.80% +2.82% +3.79% +3.52%
Past performance does not guarantee future results. Tax-Free Money Fund A Class
shares were initially offered 9/17/81. Average annual returns of Tax-Free Money
Consultant Class, initially offered 3/15/88, were +2.79%, +2.39%, +3.44% and
+4.10% for the one-year, five-year, 10-year and lifetime periods ended April 30,
1997. Source of inflation data: Bloomberg Business News.
1 1997 annual report
<PAGE>
Financial Statements
Delaware Group Tax-Free Money Fund, Inc.
Statement of Net Assets
April 30, 1997
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------
Principal Market
Amount Value
-------------------------
<S> <C> <C>
*VARIABLE RATE DEMAND NOTES -
66.85%
Allegheny County, Pennsylvania Hospital Development
Authority Revenue (Presbyterian University
Hospital) Series D (MBIA) 4.60% 05/01/97 ............ $ 100,000 $ 100,000
Allegheny County, Pennsylvania - Series
C-41 4.60% 05/01/97 ................................. 800,000 800,000
Florida Housing Finance Agency Multifamily
(Guaranteed Housing Revenue Town Colony
II Project CG Life) 4.65% 05/07/97 .................. 1,700,000 1,700,000
Georgia Municipal Electric Authority, Ser 85C
(Loc Bayersiche Bank) 4.50% 05/07/97 ................ 1,500,000 1,500,000
Illinois Development Finance Authority Pollution
Control Revenue - (Amoco Oil Co Project)
4.00% 05/01/97 ...................................... 1,100,000 1,100,000
Jackson County, Mississippi Port Facility Revenue
(Chevron USA Project) 4.00% 05/01/97 ................ 400,000 400,000
Louisiana Public Facilities Authority
(Louisiana Water Company) (LOC,
Bank One) 4.55% 05/07/97 ............................ 1,000,000 1,000,000
Lynchburg, Virginia Industrial Development
Authority (VHA Mid Atlantic) (AMBAC)
4.60% 05/07/97 ...................................... 1,000,000 1,000,000
Montgomery, Alabama BMC/VHA-85A (AMBAC)
4.60% 05/07/97 ...................................... 300,000 300,000
Montgomery County, Maryland Housing
Opportunities Community Multifamily Housing
Revenue (Falkland Apartments) (LOC,
CG Life) 4.55% 05/07/97. ............................ 1,600,000 1,600,000
Montgomery County, Pennsylvania Industrial
Development Authority Revenue
(Ikea Property Project) (LOC,
Morgan Guaranty Trust Company)
4.60% 05/01/97....................................... 1,400,000 1,400,000
Montgomery, Alabama BMC Special Care Facilities -
Series C (AMBAC) 4.60% 05/07/97 ..................... 400,000 400,000
New York, New York,Series B-2 (LOC Morgan
Guaranty) 4.25% 05/01/97 ............................ 500,000 500,000
Ohio Housing Finance Agency Multifamily Housing
Revenue (Kenwood Congregate Retirement)
(LOC, Morgan Guaranty)
3.35% 05/01/97....................................... 1,000,000 1,000,000
Pittsburgh, Pennsylvania Urban Development
Authority (Wood Street Commons)
(LOC PNC) 4.13% 05/07/97 ............................ 1,205,000 1,205,000
Port of Seattle, Washington 97 - (LOC,
Canadian Imperial Bank) 4.05% 05/07/97 .............. 1,800,000 1,800,000
Red River, Authority of Texas Pollution Control
Revenue 4.50% 05/01/97............................... 300,000 300,000
</TABLE>
<PAGE>
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Market
Amount Value
-------------------------
<S> <C> <C>
VARIABLE RATE DEMAND NOTES
(Continued)
Sayre, Pennsylvania Health Care Facilities
Authority Revenue (Pennsylvania Capital
Funding Project - Series B) (AMBAC)
4.55% 05/07/97.......................................$ 800,000 $ 800,000
Sayre, Pennsylvania Health Care Facilities
Authority Revenue (Pennsylvania Capital
Funding Project - Series J) (AMBAC)
4.55% 05/07/97....................................... 200,000 200,000
St. Charles Parish, Louisiana Pollution Control
Revenue (Shell Oil - Project B)
4.00% 05/01/97....................................... 1,100,000 1,100,000
Vermont Educational & Health Buildings Financing
Agency Revenue (VHA New England Inc. -
Series A) (AMBAC) 4.65% 05/07/97 .................... 400,000 400,000
Vermont Educational & Health Buildings Financing
Agency Revenue (VHA New England Inc. -
Series B) (AMBAC) 4.65% 05/07/97 .................... 500,000 500,000
Vermont Educational & Health Buildings Financing
Agency Revenue (VHA New England Inc. -
Series D) (AMBAC) 4.65% 05/07/97 .................... 600,000 600,000
Washington County, Pennsylvania Authority Lease
Revenue, (Eye & Ear Properties)
Series B-1E - 4.60% 05/01/97 (LOC-PNB) .............. 400,000 400,000
Series B-1C 4.60% 05/01/97
(LOC-PNB)............................................ 1,100,000 1,100,000
Winston Salem (North Carolina Certificates of
Participation) (LOC, Credit Suisse)
4.65% 05/01/97....................................... 1,650,000 1,650,000
-----------
Total Variable Rate Demand Notes ....................... 22,855,000
-----------
ANTICIPATION NOTES - 16.72%
Burlington County, New Jersey Bond Anticipation
Notes - 96 4.25% 06/13/97 ........................... 1,500,000 1,500,765
Iowa State School Cash Anticipation Program
Warrants - Series B FSA 4.25% 01/30/98 .............. 1,500,000 1,506,508
Maricopa County, Arizona School District #214
Tolleson (Tax Anticipation Notes - Series B)
4.55% 07/31/97....................................... 1,200,000 1,201,302
Texas State Tax & Revenue Anticipation Notes
4.75% 08/29/97....................................... 1,500,000 1,507,480
-----------
Total Anticipation Notes ............................... 5,716,055
-----------
**PUT BONDS - 5.26%
New Hampshire Higher Educational & Health
Facilities Authority Revenue (Dartmouth
Educational) AMT 3.63% 06/01/97 ..................... 1,000,000 1,000,000
New Hampshire Higher Educational & Health
Facilities Authority Revenue (Dartmouth
Educational) 4.10% 06/01/11 ......................... 800,000 800,000
-----------
Total Put Bonds........................................ 1,800,000
-----------
</TABLE>
1997 annual report 2
<PAGE>
Statement of Net Assets (Continued)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Market
Amount Value
------------------------
<S> <C> <C>
OTHER NOTES - 10.26%
Allegheny County, Pennsylvania Hospital Development
Authority (Health Center - University of Pittsburgh -
Series A) 3.90% 04/01/98 ............................$ 750,000 $ 750,000
Temple University of the Commonwealth System of
Higher Education, Pennsylvania
4.63% 05/20/97....................................... 1,800,000 1,800,835
Tulsa, Oklahoma Industrial Authority Hospital
Revenue (Hillcrest Medical Center Project)
Connie Lee 5.25% 06/01/97 ........................... 955,000 955,822
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Total Other Notes...................................... 3,506,657
----------
TOTAL MARKET VALUE OF SECURITIES OWNED - 99.09%
(COST $33,877,712)***................................ 33,877,712
RECEIVABLES AND OTHER ASSETS NET OF LIABILITIES - 0.91% 310,769
----------
NET ASSETS APPLICABLE TO 32,659,150 TAX-FREE MONEY FUND
A CLASS SHARES AND 1,529,331 CONSULTANT CLASS SHARES
OUTSTANDING; EQUIVALENT TO $1.00 PER SHARE - 100.00% $34,188,481
===========
</TABLE>
- ------------------
AMBAC - Insured by AMBAC Indemnity Corporation.
Connie Lee - Insured by College Construction Insurance Association.
LOC - Scheduled principal and interest payments are guaranteed by a
letter of credit with the named Company or Bank.
MBIA - Insured by the Municipal Bond Insurance Association.
* Variable Rate Demand Notes - The interest rate shown is the rate as of
April 30, 1997, and the maturity shown is the longer of the next interest
readjustment date or the date the principal amount shown can be recovered
through demand.
** Put Bonds - The maturity date shown is the same as the put date.
*** Also the cost for federal income tax purposes.
See accompanying notes
Delaware Group Tax-Free Money Fund, Inc.
Statement of Operations
Year ended April 30, 1997
- ---------------------------------------------------------------------------
INVESTMENT INCOME:
Interest................................ $1,268,066
EXPENSES:
Management fees ($167,125) and
directors' fees (8,664)................ $175,789
Dividend disbursing, transfer agent
and shareholder servicing fees ........ 55,662
Professional fees....................... 18,618
Custodian fees.......................... 13,925
Reports and statements to shareholders.. 12,932
Accounting fees and salaries............ 11,270
Other................................... 3,392 291,588
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NET INVESTMENT INCOME................... $ 976,478
==========
See accompanying notes
<PAGE>
Delaware Group Tax-Free Money Fund, Inc.
Statement of Changes in Net Assets
- --------------------------------------------------------------------
Year Ended
4/30/97 4/30/96
---------------------------
OPERATIONS:
Net investment income.................... $ 976,478 $ 1,377,972
DISTRIBUTIONS TO SHAREHOLDERS FROM
NET INVESTMENT INCOME:
Tax-Free Money Fund A Class ............ (935,545) (1,324,068)
Tax-Free Money Fund Consultant Class ... (40,933) (53,904)
----------- -----------
(976,478) (1,377,972)
----------- -----------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold:
Tax-Free Money Fund A Class .......... 33,819,386 45,058,526
Tax-Free Money Fund Consultant Class . 1,911,756 2,587,979
Net asset value of shares issued upon
reinvestment of dividends from net
investment income:
Tax-Free Money Fund A Class .......... 898,384 1,272,749
Tax-Free Money Fund Consultant Class . 40,638 53,808
---------- ----------
36,670,164 48,973,062
---------- ----------
Cost of shares repurchased:
Tax-Free Money Fund A Class ........... (37,537,625) (65,295,936)
Tax-Free Money Fund Consultant Class .. (1,875,259) (2,804,135)
------------ -----------
(39,412,884) (68,100,071)
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Decrease in net assets derived from
capital share transactions............. (2,742,720) (19,127,009)
------------ ------------
NET DECREASE IN NET ASSETS ............. (2,742,720) (19,127,009)
------------ ------------
NET ASSETS:
Beginning of year..................... 36,931,201 56,058,210
----------- -----------
End of year........................... $34,188,481 $36,931,201
=========== ===========
See accompanying notes
3 1997 annual report
<PAGE>
Delaware Group Tax-Free Money Fund, Inc.
Financial Highlights
- ------------------------------------------------------------------------------
Selected data for each share of the Fund outstanding throughout each year were
as follows:
<TABLE>
<CAPTION>
TAX-FREE MONEY FUND A CLASS
------------------------------------------------
Year Ended
4/30/97 4/30/96 4/30/95 4/30/94 4/30/93
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year................ $1.0000 $1.0000 $1.0000 $1.0000 $1.0000
Income from investment operations:
Net investment income........................... 0.0275 0.0293 0.0255 0.0158 0.0201
------- ------- ------ -------- -------
Total from investment operations................ 0.0275 0.0293 0.0255 0.0158 0.0201
------- ------- ------ ------- -------
Less distributions:
Dividends from net investment income............ (0.0275) (0.0293) (0.0255) (0.0158) (0.0201)
------- ------- ------- -------- -------
Total distributions............................. (0.0275) (0.0293) (0.0255) (0.0158) (0.0201)
------- ------- ------- ------- -------
Net asset value, end of year.................... $1.0000 $1.0000 $1.0000 $1.0000 $1.0000
======= ======= ====== ======= =======
Total return...................................... 2.79% 2.97% 2.59% 1.59% 2.03%
Ratios/supplemental data:
Net assets, end of year (000 omitted)........... $32,659 $35,479 $54,444 $44,707 $43,886
Ratio of expenses to average net assets......... 0.82% 0.90% 0.96% 0.99% 0.94%
Ratio of net investment income to average net
assets......................................... 2.75% 2.95% 2.57% 1.58% 2.03%
TAX-FREE MONEY FUND CONSULTANT CLASS
------------------------------------------------
Year Ended
4/30/97 4/30/96 4/30/95 4/30/94 4/30/93
Net asset value, beginning of year................ $1.0000 $1.0000 $1.0000 $1.0000 $1.0000
Income from investment operations:
Net investment income............................ 0.0275 0.0293 0.0255 0.0158 0.0201
------ ------ ------ ------ ------
Total from investment operations................. 0.0275 0.0293 0.0255 0.0158 0.0201
------ ------ ------ ------- ------
Less distributions:
Dividends from net investment income............. (0.0275) (0.0293) (0.0255) (0.0158) (0.0201)
-------- -------- -------- ------- -------
Total distributions.............................. (0.0275) (0.0293) (0.0255) (0.0158) (0.0201)
-------- -------- -------- ------- -------
Net asset value, end of year..................... $1.0000 $1.0000 $1.0000 $1.0000 $1.0000
======= ======= ======= ======= =======
Total return....................................... 2.79% 2.97% 2.59% 1.59% 2.03%
Ratios/supplemental data:
Net assets, end of year (000 omitted)............ $1,529 $1,452 $1,614 $1,407 $1,846
Ratio of expenses to average net assets.......... 0.82% 0.90% 0.96% 0.99% 0.94%
Ratio of net investment income to average
net assets...................................... 2.75% 2.95% 2.57% 1.58% 2.03%
</TABLE>
See accompanying notes
4 1997 annual report
<PAGE>
Delaware Group Tax-Free Money Fund, Inc.
Notes to Financial Statements
April 30, 1997
- -------------------------------------------------------------------------------
Delaware Group Tax-Free Money Fund, Inc. (the "Fund") is registered as a
diversified open-end investment company under the Investment Company Act of
1940. The Fund is organized as a Maryland corporation and offers two
classes of shares.
The investment objective of the Tax-Free Money Fund is to seek a high level of
current income, exempt from federal income tax, while preserving principal and
maintaining liquidity consistent with prudent investment management.
1. Significant Accounting Policies
The following accounting policies are in accordance with generally accepted
accounting principles and are consistently followed by the Fund:
Security Valuation - Securities are valued at amortized cost which approximates
market value. Security transactions are recorded on the date the securities are
purchased or sold (trade date). Premiums and discounts are amortized on a
pro-rata basis and included in interest income.
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 generally
accepted accounting principles.
Class Accounting - Investment income and common expenses are allocated to the
various classes of the Fund on the basis of daily net assets. Distribution
expenses relating to a specific class are charged directly to that class.
Use of Estimates - The preparation of financial statements in conformity with
generally accepted accounting principles 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 Group of Funds are
allocated amongst the funds on the basis of average net assets. The Fund
declares dividends daily from net investment income and pays such dividends
monthly. Realized gains, if any, will be distributed annually.
2. Investment Management Fee and Distribution Agreements In accordance with the
terms of the Investment Management Agreement, the Fund pays Delaware Management
Company, Inc. (DMC), the investment manager of the Fund, an annual fee which is
calculated daily at 0.50% of the average daily net assets of the Fund, less fees
paid to the independent directors. At April 30, 1997, the Fund had a liability
for Investment Management fees and other expenses payable to DMC of $15,548.
Pursuant to the Distribution Agreement, the Fund may pay Delaware Distributors
L.P. (DDLP), the Distributor and an affiliate of DMC, an annual 12b-1fee not to
exceed 0.30% of the average daily net assets of the Consultant Class. Effective
June 1, 1990, 12b-1 Plan payments from the Consultant Class to DDLP were
suspended but may be reinstated in the future.
The Fund has engaged Delaware Service Company, Inc. (DSC), an affiliate of DMC,
to serve as dividend disbursing and transfer agent for the Fund. Effective
August 19, 1996, the Fund also engaged DSC to provide accounting services for
the Fund. Previously, Fund personnel provided this service and the related costs
were recorded in salaries and other expense categories in the Statement of
Operations. The Fund expensed $6,768 for accounting services. At April 30, 1997,
the Fund had a liability for such fees and other expenses payable to DSC for
$9,088.
3. Capital Stock
Transactions in capital shares of the Fund were as follows:
Year Ended
4/30/97 4/30/96
Shares sold:
Tax-Free Money Fund A Class ............... 33,819,386 45,058,526
Tax-Free Money Fund Consultant Class ...... 1,911,756 2,587,979
Shares issued upon reinvestment of dividends:
from net investment income:
Tax-Free Money Fund A Class ............... 898,384 1,272,749
Tax-Free Money Fund Consultant Class ...... 40,638 53,808
---------- -----------
36,670,164 48,973,062
---------- -----------
Shares repurchased:
Tax-Free Money Fund A Class ............... (37,537,625) (65,295,936)
Tax-Free Money Fund Consultant Class ...... (1,875,259) (2,804,135)
------------ -----------
(39,412,884) (68,100,071)
------------ ----------
Net decrease .............................. (2,742,720) (19,127,009)
============ ============
4. Concentration of Credit Risk
The Fund concentrates its investments in securities issued by municipalities.
The value of these investments may be adversely affected by new legislation
within the states, regional or local economic conditions, and differing levels
of supply and demand for municipal bonds. Many municipalities insure repayment
of their obligations. Although bond insurance reduces the risk of loss due to
default by an issuer, such bonds remain subject to the risk that market value
may fluctuate for other reasons and there is no assurance that the insurance
company will meet its obligations.
5 1997 annual report
<PAGE>
Delaware Group
Tax-Free Money Fund, Inc.
Report of Independent Auditors
- -------------------------------------------------------------------------------
To the Shareholders and Board of Directors
Delaware Group Tax-Free Money Fund, Inc.
We have audited the accompanying statement of net assets of Delaware Group
Tax-Free Money Fund, Inc. (the "Fund") as of April 30, 1997, and the related
statement of operations for the year then ended, the statement of changes in net
assets for each of the two years in the period then ended and the financial
highlights for each of the five years in the period the ended. 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 generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and financial highlights. Our procedures included confirmation of
investments owned as of April 30, 1997 by correspondence with the custodian. 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 materials respects, the financial position of
Delaware Group Tax-Free Money Fund, Inc. at April 30, 1997, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended and the financial highlights for each of
the five years in the period then ended, in conformity with generally accepted
accounting principles.
Ernst & Young LLP
Philadelphia, Pennsylvania
June 5, 1997
6 1997 annual report
<PAGE>
This report must be preceded or
accompanied by a current Tax-Free Money
Fund prospectus and the Delaware Group
Fund Performance Update for the most
recently completed calendar quarter. For
a prospectus of any other Delaware Group
fund, contact your financial adviser or
Delaware Group.
For Shareholders
1.800.523.1918
For Securities Dealers
1.800.362.7500
For Financial Institutions Representatives Only
1.800.659.2265
Money market funds strive to maintain a net asset value of $1 a share. However,
there is no guarantee this goal will be met. Yields fluctuate with market
conditions. The Fund is neither insured nor guaranteed by the U.S.
Government.
Be sure to consult your financial adviser when making investments. Mutual funds
can be a valuable part of your financial plan; however, shares of the Fund are
not FDIC or NCUSIF insured, are not guaranteed by any bank or any credit union,
and involve investment risk, including the possible loss of the principal amount
invested. Shares of the Fund are not bank or credit union deposits.
Copy Right Delaware Distributors, L.P.
DELAWARE
GROUP
- --------
Philadelphia o London
Printed in the USA on
recycled paper
AR-006[3/97]TKO6/97
(J-42)
