<PAGE>
MONEY MARKET FUND
Delaware Tax-Free Money Fund
service and guidance
professional management
goals
2000
Semi-Annual
Report
(photo of illustration from
Money Market Brochure)
DELAWARE(SM)
INVESTMENTS
- ---------------------
Philadelphia o London
<PAGE>
money
market
fund
2
November 17, 1999
Dear Shareholder:
DURING THE SIX MONTHS ENDED
October 31, 1999, Delaware Tax-Free Money Fund provided a total return of +1.19%
(Class A shares with dividends reinvested). In addition, the dividends paid by
the Delaware Tax-Free Money Fund were exempt from federal income taxation,
providing for higher returns on an after-tax basis.
The past six months have been challenging for fixed-income investors in
general. The Federal Reserve's interest rate cuts in the fall of 1998 set the
stage for a stock market recovery that started in the fourth quarter of 1998 and
has continued with little interruption since then. Consequently, investors
generally remained focused on the equity markets. While inflation remains
benign, concerns have been raised over tight labor markets. The end result has
been increased volatility in fixed-income markets.
The most significant news for money market investors in the past six months
has been the Federal Reserve Board's reversal of its policy of low short-term
interest rates. On June 30, August 24 and November 16, the Federal Reserve
raised interest rates to help mitigate inflationary pressures while allowing the
nation's economic expansion to continue. As of this writing, the Fed's target
rate on overnight loans between banks stands at 5.50%. These three increases
took back the three reductions made in the fall of 1998, and returned the rate
to its level of 14 months ago.
Any change in short-term interest rates directly affects a money market
fund's income potential--in general, lower rates mean lower yields, and higher
rates mean higher yields. Anticipating the Fed's rate increases, Delaware
Tax-Free Money Fund's portfolio manager, Michael Buckley, modestly shortened the
Fund's average maturity during the second and third quarters of 1999. Average
maturity stood at 47 days as of October 31, 1999.
At this point, we cannot be sure what course the Fed will take for the
remainder of the year. We will monitor the interest rate situation carefully and
adjust the average maturity of Delaware Tax-Free Money Fund as needed to attain
our investment goal.
Although Delaware Tax-Free Money Fund is not designed for long-term
investors, it has the potential to be a safe haven compared to other investments
and can be a valuable part of your diversified portfolio.
Thank you for your continued commitment to Delaware Tax-Free Money Fund.
Sincerely,
/s/ Wayne A. Stork
- ----------------------
WAYNE A. STORK
Chairman,
Delaware Investments Family of Funds
/s/ David K. Downes
- -----------------------
DAVID K. DOWNES
President and Chief Executive Officer,
Delaware Investments Family of Funds
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
- ------------------------------------------------------------------------------------------------------------------------------------
THROUGH OCTOBER 31, 1999
Ten Five One Six 7-Day Yield
Lifetime Years Years Year Months (10/31/99)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Tax-Free Money Fund Class A (Est. 9/17/81) +3.92% +2.93% +2.73% +2.30% +1.19% +2.59%
- ------------------------------------------------------------------------------------------------------------------------------------
Tax-Free Money Fund Consultant Class (Est. 3/15/88) +3.89% +2.92% +2.73% +2.30% +1.19% +2.59%
</TABLE>
Past performance does not guarantee future results. Returns and yields
fluctuate. All performance reflects reinvestment of dividends. An investment in
the Fund is not insured or guaranteed by the Federal Deposit Insurance
Corporation or any other government agency.
<PAGE>
money market fund 3
Financial Statements
DELAWARE GROUP TAX-FREE MONEY FUND, INC.
STATEMENT OF NET ASSETS
OCTOBER 31, 1999 (UNAUDITED)
- --------------------------------------------------------------------------------
PRINCIPAL MARKET
AMOUNT VALUE
---------------------------------------------
*VARIABLE RATE DEMAND NOTES - 56.01%
Erie, Pennsylvania Higher Education Building Authority
- Gannon University Project - Series F
3.60% 11/5/99 (LOC, PNC Bank) .........................$1,000,000 $1,000,000
Frederick County, Maryland Retirement Community
Buckinghams Choice - Series E 3.55% 11/5/99
(LOC, LaSalle National Bank) .......................... 1,500,000 1,500,000
Illinois Development Finance Authority - Pollution
Control Revenue - Illinois Power - Series D 3.65%
11/5/99 (LOC, Morgan Guaranty Trust Company) (AMT) .... 600,000 600,000
Illinois Health Facilities Authority Revenue Decatur
Memorial Hospital Project - Series A 3.55%
11/5/99 (SPA, First National Bank) (MBIA) ............. 1,500,000 1,500,000
Metropolitan Nashville, Tennessee Airport Authority -
American Airlines Project - Series A
3.10% 11/1/99 (LOC, Credit Suisse) .................... 1,000,000 1,000,000
Montgomery County, Maryland Housing
Opportunities Community Multifamily Housing
Revenue - Falkland Apartments 3.52% 11/5/99
(LOC, Connecticut General Life) ....................... 1,500,000 1,500,000
Montgomery County, Pennsylvania Industrial
Development Authority Revenue - IKEA Property
Project 3.60% 4/1/04 .................................. 1,500,000 1,500,000
Northampton County, Pennsylvania Higher Education
Authority Revenue - Lafayette College Project -
Series B 3.60% 11/5/99
(LOC, LandesBank Hessen) .............................. 700,000 700,000
North Alabama Environmental Improvement
Pollution Control Revenue Authority - Reynolds
Metals (LOC, Bank Of Nova Scotia)
3.10% 11/1/99 ......................................... 1,000,000 1,000,000
Ohio Housing Finance Agency Multifamily Housing
Revenue - Kenwood Congregate Retirement
3.70% 12/1/99 (LOC, Morgan Guaranty
Trust Company) ........................................ 900,000 900,000
Philadelphia, Pennsylvania Hospital & Higher
Education - Temple East - Series B (LOC, First
Union National Bank) 3.60% 11/5/99 .................... 1,500,000 1,500,000
Philadelphia, Pennsylvania Hospitals & Higher
Education Facilities Authority - Philadelphia School
- Series A-3 3.60% 11/5/99
(LOC, First Union National Bank) ...................... 500,000 500,000
Pittsburgh, Pennsylvania Urban Development
Authority - Wood Street Commons 4.13%
12/1/99 (LOC, PNC Bank) (AMT) ......................... 1,105,000 1,105,000
Washington County, Pennsylvania Authority Lease
Revenue (Series B-1 Subser C - Eye & Ear) 3.60%
11/5/99 (LOC, PNC Bank) ............................... 800,000 800,000
<PAGE>
- --------------------------------------------------------------------------------
PRINCIPAL MARKET
AMOUNT VALUE
---------------------------------------------
VARIABLE RATE DEMAND NOTES (CONTINUED)
Winston Salem, North Carolina - Certificates of
Participation 3.55% 11/5/99
(LOC, Credit Suisse) ............................ $ 1,500,000 $ 1,500,000
-----------
Total Variable Rate Demand Notes ................. 16,605,000
-----------
MUNICIPAL BONDS - 18.48%
Arizona State Transportation Board Excise Tax
(Maricopa County Regional Area)
4.50% 7/1/00 .................................... 1,500,000 1,506,285
Bloomington, Minnesota Port Authority Special Tax -
Mall Of America Project 4.00% 2/1/00 (FSA) ...... 1,300,000 1,301,464
Deadwood, South Dakota Certificates of
Participation 4.00% 11/1/99 (AMBAC) ............. 1,500,000 1,500,000
Pittsburgh, Pennsylvania Urban Redevelopment
Authority - Series D 3.15% 12/1/99 .............. 1,170,000 1,170,000
-----------
Total Municipal Bonds ............................ 5,477,749
-----------
**PUT BONDS - 7.51%
New Hampshire Higher Educational & Health
Facilities Authority Revenue - Dartmouth
Educational Loan Corporation 3.90% 6/1/00 ....... 725,000 725,000
Oklahoma State Water Resources Board 3.55%
3/1/00 (LOC, Bayerische LandesBank) ............. 1,500,000 1,500,000
-----------
Total Put Bonds .................................. 2,225,000
-----------
COMMERCIAL PAPER - 25.97%
Converse County, Wyoming Pollution Control
Revenue - Pacificorp Project 3.65% 1/18/00
(LOC, Deutsche Bank) ............................ 1,500,000 1,500,000
District of Columbia - National Academy Of Sciences
3.40% 12/15/99 (SPA Nationsbank) (AMBAC) ........ 1,000,000 1,000,000
New York City Municipal Water
3.60% 12/23/99 .................................. 1,000,000 1,000,000
Prince William County - Virginia Electric & Power
Company 3.70% 1/18/00 ........................... 1,500,000 1,500,000
Sweetwater County, Wyoming Pollution Control -
Pacificorp Project - Series 88-A 3.65% 1/14/00
(LOC, Union Bank of Switzerland) ................ 1,400,000 1,400,000
Toledo - Lucas Port Authority, Ohio -
CSX Transportation Project 3.45% 12/10/99
(LOC, Bank Of Nova Scotia) ...................... 1,300,000 1,300,000
-----------
Total Commercial Paper ........................... 7,700,000
-----------
<PAGE>
4 money market fund
STATEMENT OF NET ASSETS (CONTINUED)
- --------------------------------------------------------------------------------
TOTAL MARKET VALUE OF SECURITIES - 107.97%
(COST $32,007,749) ++ ....................................... $32,007,749
LIABILITIES NET OF RECEIVABLES AND
OTHER ASSETS (7.97%) ........................................ (2,362,266)
-----------
NET ASSETS APPLICABLE TO 29,645,483 SHARES
($0.001 PAR VALUE) OUTSTANDING - 100.00% .................... $29,645,483
===========
NET ASSET VALUE - TAX-FREE MONEY FUND A CLASS
($28,399,775 / 28,399,775 SHARES) .......................... $1.00
=====
NET ASSET VALUE - TAX-FREE MONEY FUND CONSULTANT CLASS
($1,245,708 / 1,245,708 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 the cost for federal income tax purposes.
AMBAC - Insured by the American Municipal Bond Assurance Indemnity Corporation
AMT - Alternative Minimum Tax
FSA - Insured by Financial Security Assurance
LOC - Letter of Credit
MBIA - Insured by the Municipal Bond Insurance Association
See accompanying notes
DELAWARE GROUP TAX-FREE MONEY FUND, INC.
STATEMENT OF OPERATIONS
SIX MONTHS ENDED OCTOBER 31, 1999
(UNAUDITED)
- --------------------------------------------------------------------------------
INVESTMENT INCOME:
Interest ............................. $539,421
--------
EXPENSES:
Management fees ...................... $ 72,490
Dividend disbursing and
transfer agent fees and expenses .. 24,110
Professional fees .................... 13,740
Taxes (other than taxes on income) ... 1,020
Registration fees .................... 21,580
Reports and statements to shareholders 11,600
Accounting and administration ........ 6,303
Directors' fees ...................... 1,713
Custodian fees ....................... 4,889
Other ................................ 7,313
--------
164,758
--------
Less expenses paid indirectly ........ (4,174)
--------
Total expenses ....................... 160,584
NET INVESTMENT INCOME ................ 378,837
--------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS ................... $378,837
========
See accompanying notes
<PAGE>
money market fund 5
DELAWARE GROUP TAX FREE MONEY FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
SIX MONTHS YEAR
ENDED ENDED
10/31/99 4/30/99
(UNAUDITED)
----------------------------------
INCREASE IN NET ASSETS FROM OPERATIONS:
Net investment income ........................ $ 378,837 $ 766,038
----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income:
A Class ................................... (339,794) (699,127)
Consultant Class .......................... (39,043) (66,911)
----------- -----------
(378,837) (766,038)
----------- -----------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold:
A Class ................................... 14,272,903 34,725,830
Consultant Class .......................... 6,713,650 16,825,418
Net asset value of shares issued upon
reinvestment of dividends from net
investment income:
A Class ................................... 321,325 668,055
Consultant Class .......................... 38,176 67,810
----------- -----------
21,346,054 52,287,113
----------- -----------
Cost of shares repurchased:
A Class ................................... (14,330,577) (37,522,036)
Consultant Class .......................... (6,878,655) (20,093,243)
----------- -----------
(21,209,232) (57,615,279)
----------- -----------
Increase (decrease) in net assets derived from
capital share transactions ................. 136,822 (5,328,166)
----------- -----------
NET INCREASE (DECREASE) IN NET ASSETS ........ 136,822 (5,328,166)
----------- -----------
NET ASSETS:
Beginning of period .......................... 29,508,661 34,836,827
----------- -----------
End of period ................................ $29,645,483 $29,508,661
=========== ===========
See accompanying notes
<PAGE>
6 money market fund
DELAWARE GROUP TAX-FREE MONEY FUND, INC.
FINANCIAL HIGHLIGHTS
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Selected data for each share of the Fund outstanding throughout each period were
as follows:
<TABLE>
<CAPTION>
TAX-FREE MONEY FUND A CLASS
---------------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
10/31/99(1) 4/30/99 4/30/98 4/30/97 4/30/96 4/30/95
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of year .................... $1.000 $1.000 $1.000 $1.000 $1.000 $1.000
Income from investment operations:
Net investment income .............................. 0.012 0.024 0.028 0.028 0.029 0.026
------ ------ ------ ------ ------ ------
Total from investment operations ................... 0.012 0.024 0.028 0.028 0.029 0.026
------ ------ ------ ------ ------ ------
Less dividends:
Dividends from net investment income ............... (0.012) (0.024) (0.028) (0.028) (0.029) (0.026)
------ ------ ------ ------ ------ ------
Total dividends .................................... (0.012) (0.024) (0.028) (0.028) (0.029) (0.026)
------ ------ ------ ------ ------ ------
Net asset value, end of period ........................ $1.000 $1.000 $1.000 $1.000 $1.000 $1.000
====== ====== ====== ====== ====== ======
Total return .......................................... 1.19% 2.40% 2.78% 2.79% 2.97% 2.59%
Ratios and supplemental data:
Net assets, end of period (000 omitted) ............ $28,400 $28,136 $30,264 $32,659 $35,479 $54,444
Ratio of expenses to average net assets ............ 1.01% 1.02% 0.91% 0.82% 0.90% 0.96%
Ratio of net investment income to average net assets 2.38% 2.37% 2.75% 2.75% 2.95% 2.57%
TAX-FREE MONEY FUND CONSULTANT CLASS
---------------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
10/31/99(1) 4/30/99 4/30/98 4/30/97 4/30/96 4/30/95
(UNAUDITED)
Net asset value, beginning of year .................... $1.000 $1.000 $1.000 $1.000 $1.000 $1.000
Income from investment operations:
Net investment income .............................. 0.012 0.024 0.028 0.028 0.029 0.026
------ ------ ------ ------ ------ ------
Total from investment operations ................... 0.012 0.024 0.028 0.028 0.029 0.026
------ ------ ------ ------ ------ ------
Less dividends:
Dividends from net investment income................ (0.012) (0.024) (0.028) (0.028) (0.029) (0.026)
------ ------ ------ ------ ------ ------
Total dividends .................................... (0.012) (0.024) (0.028) (0.028) (0.029) (0.026)
------ ------ ------ ------ ------ ------
Net asset value, end of period ........................ $1.000 $1.000 $1.000 $1.000 $1.000 $1.000
====== ====== ====== ====== ====== ======
Total return .......................................... 1.19% 2.40% 2.78% 2.79% 2.97% 2.59%
Ratios and supplemental data:
Net assets, end of period (000 omitted)............. $1,245 $1,373 $4,573 $1,529 $1,452 $1,614
Ratio of expenses to average net assets ............ 1.01% 1.02% 0.91% 0.82% 0.90% 0.96%
Ratio of net investment income to average net assets 2.38% 2.37% 2.75% 2.75% 2.95% 2.57%
</TABLE>
- ----------------
(1) Ratios have been annualized and total return has not been annualized.
See accompanying notes
<PAGE>
money market fund 7
DELAWARE GROUP TAX-FREE MONEY FUND, INC.
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1999
(UNAUDITED)
- --------------------------------------------------------------------------------
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 Delaware Business Trust 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.
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 Investments Family of
Funds are allocated amongst the funds on the basis of average net assets.
Security transactions are recorded on the date the securities are purchased or
sold (trade date). Costs used in calculating realized gains and losses on the
sale of investment securities are those of the specific securities sold.
Interest income is recorded on the accrual basis. 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.
Certain expenses of the Fund are paid through "soft dollar" arrangements with
brokers. These transactions are done subject to best price and execution. The
amount of these expenses was approximately $735 for the period ended October 31,
1999. The Fund may receive earnings credit used to offset custody fees when
positive balances are maintained at the custodian. These credits were $3,439 for
the period ended October 31, 1999. The "soft dollar" reimbursement and the
earnings credit are combined as expenses paid indirectly in the Statement of
Operations.
<PAGE>
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 following rates; 0.45% on the first $500
million of average daily net assets, 0.40% on the next $500 million, 0.35% on
the next $1.5 billion and 0.30% on the average daily net assets in excess of
$2.5 billion. On October 31, 1999, the Fund had a liability for investment
management fees and other expenses payable to DMC of $461.
The Fund has engaged Delaware Service Company, Inc. (DSC), an affiliate of DMC,
to provide dividend disbursing, transfer agent and accounting services. The Fund
pays DSC a monthly fee based on the number of shareholder accounts, shareholder
transactions and average net assets, subject to certain minimums. On October 31,
1999, the Fund had a liability for such fees and other expenses payable to DSC
of $2,699.
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.
3. Capital Stock
Transactions in capital stock shares were as follows:
SIX MONTHS YEAR
ENDED ENDED
10/31/99 04/30/99
-------- --------
Shares sold:
A Class ...................................... 14,272,903 34,725,830
Consultant Class ............................. 6,713,650 16,825,418
Shares issued upon reinvestment of dividends
from net investment income:
A Class ...................................... 321,325 668,055
Consultant Class ............................. 38,176 67,810
----------- -----------
21,346,054 52,287,113
----------- -----------
Shares repurchased:
A Class ...................................... (14,330,577) (37,522,036)
Consultant Class ............................. (6,878,655) (20,093,243)
----------- -----------
(21,209,232) (57,615,279)
----------- -----------
Net increase (decrease).......................... 136,822 (5,328,166)
=========== ===========
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 values
may fluctuate for other reasons and there is no assurance that the insurance
company will meet its obligations.
<PAGE>
THIS SEMI-ANNUAL REPORT IS FOR THE INFORMATION OF DELAWARE TAX-FREE MONEY FUND
SHAREHOLDERS, BUT IT MAY BE USED with prospective investors when preceded or
accompanied by a current Prospectus for Delaware Tax-Free Money Fund and the
Delaware Investments Performance Update for the most recently completed calendar
quarter. The Prospectus sets forth details about charges, expenses, investment
objectives and operating policies of the Fund. You should read the prospectus
carefully before you invest. The figures in this report represent past results
which are not a guarantee of future results.
- --------------------------------------------------------------------------------
INVESTMENT MANAGER
Delaware Management Company
Philadelphia, Pennsylvania
INTERNATIONAL AFFILIATE
Delaware International Advisers Ltd.
London, England
NATIONAL DISTRIBUTOR
Delaware Distributors, L.P.
Philadelphia, Pennsylvania
SHAREHOLDER SERVICING,
DIVIDEND DISBURSING
AND TRANSFER AGENT
Delaware Service Company, Inc.
Philadelphia, Pennsylvania
1818 Market Street
Philadelphia, PA 19103-3682
For Shareholders
1.800.523.1918
For Securities Dealers
1.800.362.7500
For Financial Institutions
Representatives Only
1.800.659.2265
www.delawareinvestments.com
An investment in the Fund is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency. Although the Fund seeks to
preserve the value of your investment at $1.00 per share, it is possible to lose
money by investing in the Fund.
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(SM)
INVESTMENTS
- ---------------------
Philadelphia o London
Printed in the USA
on recycled paper
SA-006 [10/99] PP12/99
(2429) (J5339)
(Photo of Globes)
