<PAGE>
MONEY MARKET FUND
Tax-Free Money Fund
service and guidance
professional management
goals
1998
ANNUAL
REPORT
[various photos demonstrating service and guidance,
professional management and goals]
DELAWARE
INVESTMENTS
- -------------
Philadelphia * London
<PAGE>
May 4, 1998
money
market fund
1
DEAR SHAREHOLDER:
For the 12 months ended April 30, 1998, Tax-Free Money Fund provided a total
return of +2.78% (Class A shares with distributions reinvested). This was
approximately twice the rate of inflation, as shown below.
A strong U.S. economy drove down the unemployment rate to its lowest level
in over a generation. We were concerned that wage pressures and increased
consumer confidence would be forerunners to higher inflation. However, the
Federal Reserve Board's monetary policy kept a lid on both consumer and
producer price increases.
Interest rates remained low during fiscal 1998. However, the difference
between long-term and short-term interest rates steadily narrowed throughout
the year. This trend benefited money market investors. Securities maturing in
90 days or less provided much of the same yield as longer term bonds, but with
much less potential price risk. At year's end, your Fund had an average
weighted maturity of 36 days.
As of April 30, 1998, the seven-day annualized yield of Tax-Free Money
Fund's A Class shares was 2.95%, measured according to Securities and Exchange
Commission guidelines. This represents a taxable equivalent yield of 4.28% for
an investor in the highest federal tax bracket.
In seeking to maximize income, we carefully monitor the credit quality of
municipalities we invest in. We only purchase money market securities with a
rating of A1 or MIG-1, the highest credit ratings available according to
Standard & Poor's and Moody's Investors Service, two independent bond rating
agencies.
At the end of the 1998 fiscal period, some Federal Reserve Board officials
reportedly favored modestly higher interest rates. We believe that if the U.S.
economy continues to grow at a robust pace, the Federal Reserve Board may
raise rates this autumn. As always, we will seek to maximize your Fund's yield
consistent with preserving principal.
Sincerely,
/s/ Wayne A. Stork
- -------------------------
Wayne A. Stork
Chairman
/s/ Jeffrey J. Nick
- -------------------------
Jeffrey J. Nick
President and Chief Executive Officer
<TABLE>
<CAPTION>
Average Annual Total Returns Through April 30, 1998
- -------------------------------------------------------------------------------------------------------------------------------
One Year Five Years Ten Years Lifetime
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Tax-Free Money Fund
A Class (Est. 9/17/81) +2.78% +2.54% +3.36% +4.06%
Consultant Class (Est. 3/15/88) +2.78% +2.54% +3.31% +4.02%
U.S. Consumer Price Index (Inflation) +1.40% +2.65% +3.47% +3.73%
</TABLE>
Past performance does not guarantee future results. Return and yield
fluctuate. All performance reflects reinvestment of dividends. The Fund is
neither insured nor guaranteed by the U.S. government but strives to maintain
a net asset value of $1 a share. However, there is no guarantee that the Fund
will be able to do so. The Consumer Price Index is the U.S. government's
measure of inflation. Source: Bloomberg Business News.
<PAGE>
money market fund 2
FINANCIAL STATEMENTS
DELAWARE GROUP TAX-FREE MONEY FUND, INC.
STATEMENT OF NET ASSETS
APRIL 30, 1998
- -------------------------------------------------------------------------------
PRINCIPAL MARKET
AMOUNT VALUE
--------- --------
* VARIABLE RATE DEMAND NOTES - 63.68%
Allegheny County, Pennsylvania Hospital
Development Authority Revenue
(Presbyterian University Hospital)
Series D 4.10% 05/07/98 ..................... $ 930,000 $ 930,000
Allegheny County, Pennsylvania Industrial
Development Authority - Longwood At
Oakmont - 97D 4.25% 05/01/98 ................ 1,600,000 1,600,000
Allegheny County, Pennsylvania -
Series C-41 4.10% 05/07/98 .................. 500,000 500,000
Brazos River Authority Texas Pollution Control
Variable Reference Monsanto County Project
4.20% 05/06/98 .............................. 1,100,000 1,100,000
Broward County, Florida Housing Finance
Authority (Multifamily Housing Revenue)
4.10% 05/07/98 .............................. 100,000 100,000
Davies County, Kentucky Solid Waste Disposal
Facilities Revenue - Scott Paper Company
Project - Series B 4.30% 05/01/98 ........... 800,000 800,000
Harrisburg, Pennsylvania Authority Revenue -
Pool Financing Fund 4.25% 05/07/98 .......... 1,700,000 1,700,000
Lynchburg, Virginia Industrial Development
Authority (AMBAC) 4.15% 05/06/98 ............ 1,000,000 1,000,000
Montgomery County, Maryland Housing
Opportunities Community Multifamily Housing
Revenue (Letter of Credit, CG Life)
4.15% 05/07/98 .............................. 1,600,000 1,600,000
Montgomery County, Pennsylvania Industrial
Development Authority Revenue (Letter of
Credit, Morgan Guaranty Trust Company)
4.20% 05/07/98 .............................. 1,600,000 1,600,000
Municipal Electric Authority, Georgia
4.10% 05/06/98 .............................. 1,500,000 1,500,000
Ohio Housing Finance Agency Multifamily Housing
Revenue (Letter of Credit, Morgan Guaranty
Trust Company) 3.60% 05/07/98 ............... 1,000,000 1,000,000
Pennsylvania State Higher Educational Facilities
Authority, Variable Independent Colleges -
A2 4.10% 05/07/98 ........................... 1,600,000 1,600,000
Pittsburgh, Pennsylvania Urban Development
Authority (Wood Street Commons)
4.25% 05/06/98 .............................. 1,205,000 1,205,000
Port of Seattle, Washington 97 -
(Canadian Imperial Bank of Commerce)
AMT 4.15% 05/06/98 .......................... 1,700,000 1,700,000
Red River, Texas Pollution Control - Southwestern
Power (Union Bank of Switzerland)
4.30% 05/07/98 .............................. 300,000 300,000
Sayre, Pennsylvania Health Care Facilities
Authority Revenue (AMBAC)
4.10% 05/06/98 .............................. 800,000 800,000
<PAGE>
PRINCIPAL MARKET
AMOUNT VALUE
--------- --------
* VARIABLE RATE DEMAND NOTES (CONTINUED)
Vermont Educational & Health Buildings Financing
Agency Revenue (VHA New England Inc. -
Series A, AMBAC) 4.15% 05/06/98 ...............$ 400,000 $ 400,000
Vermont Educational & Health Buildings Financing
Agency Revenue (VHA New England Inc. -
Series B, AMBAC) 4.15% 05/06/98 ............... 500,000 500,000
Vermont Educational & Health Buildings Financing
Agency Revenue (VHA New England Inc. -
Series D, AMBAC) 4.15% 05/06/98 ............... 600,000 600,000
Winston Salem, North Carolina (Certificates of
Participation, Letter of Credit, Credit Suisse)
4.20% 05/06/98 ................................ 1,650,000 1,650,000
-----------
TOTAL VARIABLE RATE DEMAND NOTES .................. 22,185,000
-----------
MUNICIPAL BONDS - 13.18%
Illinois State 5.25% 07/01/98 ..................... 1,275,000 1,278,578
Mississippi State - Series C 4.50% 12/01/98 ....... 1,000,000 1,004,838
Seattle, Washington Series A 4.50% 09/01/98 ....... 1,500,000 1,504,634
South Dakota State Health and Educational
Facilities Authority Revenue Reference Rapid
City Regional Hospital 4.50% 09/01/98 ......... 800,000 802,182
-----------
TOTAL MUNICIPAL BONDS ............................. 4,590,232
-----------
** PUT BONDS - 8.90%
Greater Texas Student Loan Revenue Adjustable
Series A 3.70% 02/01/99 ....................... 1,500,000 1,500,000
New Hampshire Higher Education - Dartmouth
3.90% 06/01/98 ................................ 800,000 800,000
New Hampshire Higher Educational & Health
Facilities Authority Revenue (Dartmouth
Educational) 3.95% 06/01/98 ................... 800,000 800,000
-----------
TOTAL PUT BONDS ................................... 3,100,000
-----------
COMMERCIAL PAPER - 9.76%
Independence, Missouri Water - WDL
3.80% 06/19/98 ................................ 1,000,000 1,000,000
Orlando, Florida Capital Improvement
3.50% 09/11/98 ................................ 1,000,000 1,000,000
Sweetwater, Wyoming - Pacificorp
3.60% 08/04/98 ................................ 1,400,000 1,400,000
-----------
TOTAL COMMERCIAL PAPER ............................ 3,400,000
-----------
OTHER NOTES - 2.87%
Temple University of The Commonwealth System
of Higher Education, Pennsylvania (University
Funding Obligations) 4.75% 05/18/98 ........... 1,000,000 1,000,381
-----------
TOTAL OTHER NOTES ................................. 1,000,381
-----------
<PAGE>
3 money market fund
STATEMENT OF NET ASSETS (CONTINUED)
- -------------------------------------------------------------------------------
TOTAL MARKET VALUE OF SECURITIES - 98.39%
(COST $34,275,613)+ ....................................... $34,275,613
RECEIVABLES AND OTHER ASSETS NET OF LIABILITIES - 1.61% ....... 561,214
------------
NET ASSETS APPLICABLE TO 34,836,827 SHARES
($0.001 PAR VALUE) OUTSTANDING - 100.00% .................. $34,836,827
============
NET ASSET VALUE - TAX-FREE MONEY FUND A CLASS
($30,264,275 / 30,264,275 SHARES) ......................... $1.00
=======
NET ASSET VALUE - TAX-FREE MONEY FUND CONSULTANT CLASS
($4,572,552 / 4,572,552 SHARES) ........................... $1.00
=======
- ---------------------
*The Maturity date shown is the longer of the next interest reset date or
the date in which the principal amount can be recovered through demand.
**Put Bonds - Securities are variable rate and the maturity date shown is
the same as the Put date.
+ Also cost for federal income tax purposes.
AMBAC - Insured by the AMBAC Indemnity Corporation
AMT - Alternative Minimum Tax
See accompanying notes
DELAWARE GROUP TAX-FREE MONEY FUND, INC.
STATEMENT OF OPERATIONS
YEAR ENDED APRIL 30, 1998
- -------------------------------------------------------------------------------
INVESTMENT INCOME:
Interest .................................. $1,246,744
Expenses:
Management fees ........................... $ 164,249
Dividend disbursing and transfer agent fees
and expenses .......................... 65,097
Registration fees ......................... 30,708
Accounting and administration ............. 17,310
Reports and statements to shareholders .... 10,568
Professional fees ......................... 8,904
Directors' fees ........................... 6,435
Taxes (other than taxes on income) ........ 4,286
Custodian fees ............................ 1,198
Other ..................................... 770 309,525
---------- ----------
NET INVESTMENT INCOME ..................... 937,219
----------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS ....................... $ 937,219
==========
See accompanying notes
<PAGE>
DELAWARE GROUP TAX-FREE MONEY FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
- -------------------------------------------------------------------------------
YEAR ENDED YEAR ENDED
4/30/98 4/30/97
----------------------------
INCREASE IN NET ASSETS FROM OPERATIONS:
Net investment income ........................ $ 937,219 $ 976,478
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income:
A Class .................................. (865,335) (935,545)
Consultant Class ......................... (71,884) (40,933)
------------ ------------
(937,219) (976,478)
------------ ------------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold:
A Class .................................. 32,198,458 33,819,386
Consultant Class ......................... 10,201,793 1,911,756
Net asset value of shares issue
upon reinvestment
of dividends from net
investment income:
A Class .................................. 809,603 898,384
Consultant Class ......................... 68,633 40,638
------------ ------------
43,278,487 36,670,164
------------ ------------
Cost of shares repurchased:
A Class .................................. (35,402,936) (37,537,625)
Consultant Class ......................... (7,227,205) (1,875,259)
------------ ------------
(42,630,141) (39,412,884)
------------ ------------
Increase (decrease) in net assets derived from
capital share transactions ............... 648,346 (2,742,720)
------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS ........ 648,346 (2,742,720)
------------ ------------
NET ASSETS:
Beginning of year ............................ 34,188,481 36,931,201
------------ ------------
End of year .................................. $ 34,836,827 $ 34,188,481
============ ============
See accompanying notes
<PAGE>
4 money market fund
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 YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
4/30/98 4/30/97 4/30/96 4/30/95 4/30/94
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $1.000 $1.000 $1.000 $1.000 $1.000
Income from investment operations:
Net investment income 0.028 0.028 0.029 0.026 0.016
-------- -------- -------- -------- --------
Total from investment operations 0.028 0.028 0.029 0.026 0.016
-------- -------- -------- -------- --------
Less dividends and distributions:
Dividends from net investment income (0.028) (0.028) (0.029) (0.026) (0.016)
-------- -------- -------- -------- --------
Total dividends and distributions (0.028) (0.028) (0.029) (0.026) (0.016)
-------- -------- -------- -------- --------
Net asset value, end of year $1.000 $1.000 $1.000 $1.000 $1.000
======== ======== ======== ======== ========
Total return 2.78% 2.79% 2.97% 2.59% 1.59%
Ratios and supplemental data:
Net assets, end of year (000 omitted) $30,264 $32,659 $35,479 $54,444 $44,707
Ratio of expenses to average net assets 0.91% 0.82% 0.90% 0.96% 0.99%
Ratio of net investment income to
average net assets 2.75% 2.75% 2.95% 2.57% 1.58%
TAX-FREE MONEY FUND CONSULTANT CLASS
---------------------------------------------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
4/30/98 4/30/97 4/30/96 4/30/95 4/30/94
Net asset value, beginning of year $1.000 $1.000 $1.000 $1.000 $1.000
Income from investment operations:
Net investment income 0.028 0.028 0.029 0.026 0.016
-------- -------- -------- -------- --------
Total from investment operations 0.028 0.028 0.029 0.026 0.016
-------- -------- -------- -------- --------
Less dividends and distributions:
Dividends from net investment income (0.028) (0.028) (0.029) (0.026) (0.016)
-------- -------- -------- -------- --------
Total dividends and distributions (0.028) (0.028) (0.029) (0.026) (0.016)
-------- -------- -------- -------- --------
Net asset value, end of year $1.000 $1.000 $1.000 $1.000 $1.000
======== ======== ======== ======== ========
Total return 2.78% 2.79% 2.97% 2.59% 1.59%
Ratios and supplemental data:
Net assets, end of year (000 omitted) $4,573 $1,529 $1,452 $1,614 $1,407
Ratio of expenses to average net assets 0.91% 0.82% 0.90% 0.96% 0.99%
Ratio of net investment income to average net 2.75% 2.75% 2.95% 2.57% 1.58%
See accompanying notes
</TABLE>
<PAGE>
5 money market fund
DELAWARE GROUP TAX-FREE MONEY FUND, INC.
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 1998
- -------------------------------------------------------------------------------
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, as amended. The Fund is organized as a Maryland corporation and offers
two classes of shares, the Tax-Free Money Class A and the Tax-Free Money
Consultant Class. Neither class has a sales charge. The Fund's objective is to
seek maximum current income, exempt from federal income tax, while preserving
principal and maintaining liquidity consistent with prudent investment
management. Though there is no guarantee that this goal will be met, the Fund
strives to maintain a stable net asset value of $1.00.
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.
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.
CLASS ACCOUNTING - Investment income and common expenses are allocated to the
various classes of the Fund on the basis of daily net assets of each class.
Distribution expenses relating to a specific class are charged directly to
that class.
OTHER - Expenses common to all funds within the Delaware Investments Family of
Mutual Funds are allocated amongst the funds on the basis of average net
assets. Security transactions are recorded on the date the securities are
purchased or sold (trade date). Costs used in calculating realized gains and
losses on the sale of investment securities are those of the specific
securities sold. Discounts and premiums on securities purchased are amortized
to interest income over the lives of the respective securities. The Fund
declares dividends daily from net investment income and pays such dividends
monthly. Realized gains, if any, will be distributed annually.
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.
2. INVESTMENT MANAGEMENT AND OTHER TRANSACTIONS WITH AFFILIATES
In accordance with the terms of the Investment Management Agreement, the Fund
pays Delaware Management Company (DMC), the investment manager, an annual fee
which is calculated daily at the rate of 0.50% on the average daily net assets
of the Fund less the fees paid to the unaffiliated directors. At April 30,
1998, the Fund had a liability for investment management fees and other
expenses payable to DMC of $30,714.
<PAGE>
The Fund has engaged Delaware Service Company, Inc. (DSC), an affiliate of
DMC, to provide dividend disbursing, transfer agent and accounting services
for the Fund. For the year ended April 30, 1998, the Fund expensed $65,097 for
dividend disbursing and transfer agent services and $13,170 for accounting
services. At April 30, 1998, the Fund had a liability for such fees and other
expenses payable to DSC of $3,310.
Pursuant to the Distribution Agreement, the Fund may pay Delaware
Distributors, L.P. (DDLP), the Distributor and an affiliate of DMC, an annual
12b-1 fee not to exceed 0.30% of the average daily net assets of the Fund.
Effective June 1, 1990, 12b-1 Plan payments to DDLP were suspended but may be
reinstated in the future.
Certain officers of DMC, DSC and DDLP are officers, directors and/or employees
of the Fund. These officers, directors and employees are paid no compensation
by the Fund.
3. CAPITAL STOCK
Transactions in capital stock shares were as follows:
YEAR ENDED YEAR ENDED
4/30/98 4/30/97
---------------------------
Shares sold:
A Class ..................... 32,198,458 33,819,386
Consultant Class ............ 10,201,793 1,911,756
Shares issued upon reinvestment
of dividends from net investment
income:
A Class ..................... 809,603 898,384
Consultant Class ............ 68,633 40,638
----------- -----------
43,278,487 36,670,164
----------- -----------
Shares repurchased:
A Class ..................... (35,402,936) (37,537,625)
Consultant Class ............ (7,227,205) (1,875,259)
----------- -----------
(42,630,141) (39,412,884)
----------- -----------
Net increase (decrease) ......... 648,346 (2,742,720)
=========== ===========
4. MARKET AND CREDIT RISK
The Fund concentrates its investments in securities issued by municipalities.
The value of these investments may be adversely affected by 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.
<PAGE>
6 money market fund
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, 1998, and the related
statement of operations for the year then ended, the statements of changes in
net assets for each of the two years in the period then ended, and the
financial highlights for each of the five years in the period then ended.
These financial statements and financial highlights are the responsibility of
the Fund's management. Our responsibility is to express an opinion on these
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 securities owned as of April 30, 1998, by correspondence with
the custodian and brokers. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Delaware Group Tax-Free Money Fund, Inc. at April 30, 1998, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended, and its financial highlights for each
of the five years in the period then ended, in conformity with generally
accepted accounting principles.
Ernst & Young LLP
Philadelphia, Pennsylvania
May 29, 1998
<PAGE>
This report must be preceded or accompanied by a current Tax-Free Money Fund
Prospectus and the Delaware Investments Performance Update for the most
recently completed calendar quarter. For a prospectus of any other mutual fund
from Delaware Investments, contact your financial adviser or Delaware
Investments.
[PHOTO OF GLOBES]
For Shareholders
1.800.523.1918
For Securities Dealers
1.800.362.7500
For Financial Institutions
Representatives Only
1.800.659.2265
www.delawarefunds.com
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.
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.
(C) Delaware Distributors, L.P.
DELAWARE
INVESTMENTS
- ----------------
Philadelphia * London
Printed in the USA
on recycled paper
(742)
AR-006[4/98]TKO6/98
