<PAGE>
Money Market Fund
Tax-Free Money Fund
[photo of illustration from Money Market Brochure]
service and guidance
professional management
goals
1999
Semi-Annual
Report
DELAWARE
INVESTMENTS
- ---------------------
Philadelphia * London
<PAGE>
November 5, 1998
money
market
fund
1
Dear Shareholder:
TAX-FREE MONEY FUND A AND Consultant Classes provided a total return of +1.29%
for the first half of fiscal 1999. As of October 31, 1998, the seven-day
annualized SEC yield for both Fund classes was 2.38%.
During much of calendar 1998, the U.S. economy has exhibited strong growth
while the global economy weakened considerably. To maintain domestic growth, the
Federal Reserve Board reduced its target for short-term interest rates this past
autumn by 50 basis points (0.50%) to 5%.
We anticipate that interest rates will decline even further during calendar
1999, reducing your Fund's income potential. In anticipation of this, we have
repositioned the Fund to focus on tax-exempt commercial paper with relatively
longer maturities. We have also purchased more floating rate notes with very
short maturities to maintain liquidity.
This "barbell" positioning has given the Fund an average weighted maturity of
35 days as of October 31, 1998. We anticipate lengthening the Fund's average
weighted maturity during the second half of fiscal 1999. As always, Tax-Free
Money Fund seeks a high level of current income, exempt from federal income tax,
while preserving principal and maintaining liquidity.
Although Tax-Free Money Fund is not designed for long-term investors, it has
the potential to be a safer haven than some other investments and can be a
valuable part of your diversified portfolio. For your longer term needs,
Delaware Investments offers a wide range of tax-advantaged investments,
including Tax-Efficient Equity Fund, single-state and national municipal bond
funds and variable annuities.*
With Delaware's help, you and your financial adviser can work together to
select investments suitable for your long-term investment goals.
Sincerely,
/s/ Wayne A. Stork
- ------------------
Wayne A. Stork
Chairman
/s/ Jeffrey J. Nick
- -------------------
Jeffrey J. Nick
President and Chief Executive Officer
<TABLE>
<CAPTION>
TAX-FREE MONEY FUND
- ------------------------------------------------------------------------------------------------------------------
Average Annual Total Returns Through October 31, 1998
Ten Five One Six Seven-day
Lifetime Years Years Year Months** SEC Yield
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
A Class (Est. 9/17/81) +4.01% +3.26% +2.64% +2.61% +1.29% +2.38%
Consultant Class (Est. 3/15/88) +3.98% +3.22% +2.64% +2.61% +1.29% +2.38%
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
* Complete information on any Delaware Investments mutual fund can be found
in each fund's current prospectus. Prospectuses for all Delaware
Investments mutual funds are available from your financial adviser. Please
read the prospectus carefully before you invest or send money.
** Cumulative return. Past performance does not guarantee future results.
Return and yield 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.
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.
<PAGE>
FINANCIAL STATEMENTS
DELAWARE GROUP TAX-FREE MONEY FUND, INC.
STATEMENT OF NET ASSETS
OCTOBER 31, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
Principal Market
Amount Value
----------------------------
<S> <C> <C>
*Variable Rate Demand Notes - 68.38%
Allegheny County, Pennsylvania Hospital Development
Authority Revenue - Presbyterian University
Hospital Series D 3.25% 11/05/98 (MBIA) .......... $ 600,000 $ 600,000
Allegheny County, Pennsylvania Industrial
Development Authority - Longwood At
Oakmont - 97D 3.20% 11/02/98
(LOC, Dresdner Bank) ............................. 1,600,000 1,600,000
Brazos River Authority Texas Pollution
Control - Monsanto County Project
3.40% 11/04/98 ................................... 1,100,000 1,100,000
Broward County, Florida Housing Finance Authority
Multifamily Housing Revenue - Sanctuary
Apartments Project 3.30% 11/06/98 ................ 1,600,000 1,600,000
Chester County, Pennsylvania Industrial Development
Authority - Philadelphia Archdiocese
3.75% 11/02/98 (LOC, First Union Bank) ........... 800,000 800,000
Cuyahoga County, Ohio Hospital Revenue -
The Cleveland Clinic-D 3.30% 11/02/98 ............ 1,000,000 1,000,000
Harrisburg, Pennsylvania Authority Revenue -
PA Pool Financing Fund 3.25% 11/06/98 ............ 300,000 300,000
Hurley, New Mexico Pollution Control Revenue -
Kennecott Santa Fe 3.30% 11/02/98 ................ 500,000 500,000
Illinois Health Facilities Authority Revenue -
Hospital Sisters Series E
3.20% 11/02/98 (MBIA) ............................ 400,000 400,000
Lynchburg, Virginia Industrial Development Authority
Series C 3.30% 11/06/98 (AMBAC) .................. 1,000,000 1,000,000
Montgomery County, Maryland Housing Opportunities
Community Multifamily Housing Revenue -
Falkland Apartments 3.15% 11/06/98
(CG Life) ........................................ 1,600,000 1,600,000
Montgomery County, Pennsylvania Industrial
Development Authority Revenue - Ikea Property
Project 3.15% 11/06/98 (LOC, Morgan
Guaranty Trust Company) .......................... 1,600,000 1,600,000
Municipal Electric Authority, Georgia
3.25% 11/06/98 ................................... 1,500,000 1,500,000
Northampton County, Pennsylvania Higher Education
Authority Revenue - Lafayette College Project
Series B 3.25% 11/05/98
(LOC, Landesbank Hessen) ......................... 600,000 600,000
Ohio Housing Finance Agency Multifamily Housing
Revenue - Kenwood Congregate Retirement
3.50% 11/30/98 (LOC, Morgan Guaranty
Trust Company) ................................... 1,000,000 1,000,000
Pennsylvania State Turnpike Commonwealth
Revenue Series Q 3.35% 11/02/98 .................. 1,200,000 1,200,000
Pittsburgh, Pennsylvania Urban Development
Authority - Wood Street Commons
4.125% 11/06/98 (LOC , PNC Bank) AMT ............. 1,205,000 1,205,000
</TABLE>
<PAGE>
money market fund 2
<TABLE>
<CAPTION>
Principal Market
Amount Value
----------------------------
<S> <C> <C>
*Variable Rate Demand Notes (Continued)
Port of Seattle, Washington 3.20% 11/04/98
(LOC Canadian Imperial Bank
of Commerce) AMT .................................. $ 1,700,000 $ 1,700,000
Red River, Texas Pollution Control - Southwestern
Power 3.45% 11/06/98 (Union Bank
of Switzerland) ................................... 300,000 300,000
Sayre, Pennsylvania Health Care Facilities Authority
Revenue - Pennsylvania Capital Funding Project
Series B 3.25% 11/06/98 (AMBAC) ................... 800,000 800,000
Vermont Educational & Health Buildings Financing
Agency Revenue - VHA New England Inc. .............
Series A 3.40% 11/04/98 (AMBAC) ................... 400,000 400,000
Vermont Educational & Health Buildings Financing
Agency Revenue - VHA New England Inc. .............
Series B 3.40% 11/04/98 (AMBAC) ................... 500,000 500,000
Vermont Educational & Health Buildings Financing
Agency Revenue - VHA New England Inc. .............
Series D 3.40% 11/04/98 (AMBAC) ................... 600,000 600,000
Winston Salem, North Carolina (Certificates of
Participation) 3.05% 11/06/98 ..................... 1,650,000 1,650,000
----------
23,555,000
----------
Municipal Bonds - 15.08%
Mississippi State - Series C
4.50% 12/01/98 .................................... 1,000,000 1,000,678
New Mexico State Severance Tax Series A
4.50% 07/01/99 .................................... 1,000,000 1,005,742
++Maryland State Health and Higher Educational
Facilities Authority Revenue - Franklin Square
Hospital 7.50% 07/01/19-99 (MBIA) ................. 1,600,000 1,677,152
++Manheim Township, Pennsylvania School District
Series 1994 5.70% 05/01/12-99 (FGIC) .............. 1,000,000 1,009,641
Tennessee State Higher Educational Facilities
Authority 3.40% 05/01/99 .......................... 500,000 500,000
----------
5,193,213
----------
**Put Bonds - 6.55%
Greater Texas Student Loan Revenue Adjustable
Series A 3.70% 05/01/38-02/01/99 .................. 1,500,000 1,500,000
New Hampshire Higher Educational & Health
Facilities Authority Revenue - Dartmouth
Educational 3.90% 06/01/11-06/01/99 ............... 755,000 755,000
----------
2,255,000
----------
Commercial Paper - 10.16%
Independence, Missouri Water Utilities Revenue
3.00% 01/07/99
(LOC, Westdeutsche Bank) .......................... 1,000,000 1,000,000
Orlando Florida Capital
Improvement 3.25% 02/12/99 ........................ 1,100,000 1,100,000
Sweetwater, Wyoming - Pacificorp
3.20% 01/06/99 .................................... 1,400,000 1,400,000
----------
3,500,000
----------
</TABLE>
<PAGE>
3 money market fund
STATEMENT OF NET ASSETS (CONTINUED)
- ---------------------------------------------------------------------------
Market
Value
------------
TOTAL MARKET VALUE OF SECURITIES - 100.17%
(cost $34,503,213)+ $34,503,213
LIABILITIES NET OF RECEIVABLES
AND OTHER ASSETS - (0.17%) (58,614)
-----------
NET ASSETS APPLICABLE TO 34,444,599 SHARES
($0.001 PAR VALUE) OUTSTANDING - 100.00% $34,444,599
===========
NET ASSET VALUE - TAX-FREE MONEY FUND A CLASS
($29,448,348 / 29,448,348 SHARES) $1.00
=====
NET ASSET VALUE - TAX-FREE MONEY FUND CONSULTANT CLASS
($4,996,251/ 4,996,251 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 stated maturity is followed
by the put date.
+ Also cost for federal income tax purposes.
++ For Pre-refunded bonds, the stated maturity is followed by the year in which
each bond will be pre-refunded.
------------------------
AMBAC - Insured by the AMBAC Indemnity Corporation
AMT - Alternative Minimum Tax
FGIC - Insured by the Financial Guaranty Insurance Company
LOC - Letter of Credit
MBIA - Insured by the Municipal Bond Insurance Association
DELAWARE GROUP TAX-FREE MONEY FUND, INC.
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED OCTOBER 31, 1998
(UNAUDITED)
INVESTMENT INCOME:
Interest $561,794
--------
EXPENSES:
Management fees $76,194
Dividend disbursing and transfer agent fees
and expenses 25,330
Professional fees 15,218
Taxes (other than taxes on income) 12,967
Registration fees 12,450
Reports and statements to shareholders 6,300
Accounting and Administration 6,162
Directors' fees 2,856
Custodian fees 375
Other 561
------
158,413
-------
NET INVESTMENT INCOME 403,381
-------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $403,381
========
See accompanying notes
<PAGE>
4 money market fund
DELAWARE GROUP TAX-FREE MONEY FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE SIX YEAR
MONTHS ENDED ENDED
10/31/98 4/30/98
(UNAUDITED)
--------------------------------
<S> <C> <C>
INCREASE IN NET ASSETS FROM OPERATIONS:
Net investment income ................................ $ 403,381 $ 937,219
------------ ------------
DIVIDENDS TO SHAREHOLDERS FROM:
Net investment income:
A Class ........................................... (379,391) (865,335)
Consultant Class .................................. (23,990) (71,884)
------------ ------------
(403,381) (937,219)
------------ ------------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold:
A Class ........................................... 16,824,087 32,198,458
Consultant Class .................................. 4,759,986 10,201,793
Netasset value of shares issued upon reinvestment
of dividends from net investment income:
A Class ........................................... 362,252 809,603
Consultant Class .................................. 23,613 68,633
------------ ------------
21,969,938 43,278,487
------------ ------------
Cost of shares repurchased:
A Class ........................................... (18,002,266) (35,402,936)
Consultant Class .................................. (4,359,900) (7,227,205)
------------ ------------
(22,362,166) (42,630,141)
------------ ------------
Increase (decrease) in net assets derived from capital
share transactions ................................ (392,228) 648,346
------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS ................ (392,228) 648,346
NET ASSETS:
Beginning of year .................................... 34,836,827 34,188,481
------------ ------------
End of period ........................................ $ 34,444,599 $ 34,836,827
------------ ------------
</TABLE>
See accompanying notes
<PAGE>
5 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
----------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED
10/31/1998(1) 4/30/98 4/30/97 4/30/96 4/30/95 4/30/94
(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 .................................... 0.013 0.028 0.028 0.029 0.026 0.016
------ ------ ------ ------ ------ ------
Total from investment operations ......................... 0.013 0.028 0.028 0.029 0.026 0.016
------ ------ ------ ------ ------ ------
Less dividends and distributions:
Dividends from net investment income ..................... (0.013) (0.028) (0.028) (0.029) (0.026) (0.016)
------ ------ ------ ------ ------ ------
Total dividends and distributions ........................ (0.013) (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 $1.000
====== ====== ====== ====== ====== ======
Total return ................................................ 1.29% 2.78% 2.79% 2.97% 2.59% 1.59%
Ratios and supplemental data:
Net assets, end of year (000 omitted) .................... $29,449 $30,264 $32,659 $35,479 $54,444 $44,707
Ratio of expenses to average net assets .................. 1.00% 0.91% 0.82% 0.90% 0.96% 0.99%
Ratio of net investment income to average net assets ..... 2.55% 2.75% 2.75% 2.95% 2.57% 1.58%
</TABLE>
- --------------------
(1) Ratios have been annualized and total return has not been annualized.
<TABLE>
<CAPTION>
TAX-FREE MONEY FUND CONSULTANT CLASS
-----------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED
10/31/1998(1) 4/30/98 4/30/97 4/30/96 4/30/95 4/30/94
(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 ..................................... 0.013 0.028 0.028 0.029 0.026 0.016
------ ------ ------ ------ ------ ------
Total from investment operations .......................... 0.013 0.028 0.028 0.029 0.026 0.016
------ ------ ------ ------ ------ ------
Less dividends and distributions:
Dividends from net investment income ...................... (0.013) (0.028) (0.028) (0.029) (0.026) (0.016)
------ ------ ------ ------ ------ ------
Total dividends and distributions ......................... (0.013) (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 $1.000
====== ====== ====== ====== ====== ======
Total return ................................................. 1.29% 2.78% 2.79% 2.97% 2.59% 1.59%
Ratios and supplemental data:
Net assets, end of year (000 omitted) ..................... $4,996 $4,573 $1,529 $1,452 $1,614 $1,407
Ratio of expenses to average net assets ................... 1.00% 0.91% 0.82% 0.90% 0.96% 0.99%
Ratio of net investment income to average net assets ...... 2.55% 2.75% 2.75% 2.95% 2.57% 1.58%
</TABLE>
- -----------------
(1) Ratios have been annualized and total return has not been annualized.
See accompanying notes
<PAGE>
6 money market fund
DELAWARE GROUP TAX-FREE MONEY FUND, INC.
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1998 (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 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.
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.
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.
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 October 31,
1998, the Fund had a liability for investment management fees and other expenses
payable to DMC of $13,811.
<PAGE>
The Fund has engaged Delaware Service Company, Inc. (DSC), an affiliate of DMC,
to provide dividend disbursing, transfer agent and administrative services. The
Fund pays DSC a monthly fee based on the number of shareholder accounts,
shareholder transactions and average net assets, subject to certain minimums. At
October 31, 1998, the Fund had a liability for such fees and other expenses
payable to DSC of $2,138.
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:
SIX MONTHS YEAR
ENDED ENDED
10/31/98 4/30/98
Shares sold:
A Class ......................................... 16,824,087 32,198,458
Consultant Class ................................ 4,759,986 10,201,793
Shares issued upon reinvestment of
dividends from net investment income:
A Class ......................................... 362,252 809,603
Consultant Class ................................ 23,613 68,633
---------- ----------
21,969,938 43,278,487
---------- ----------
Shares repurchased:
A Class ......................................... (18,002,266) (35,402,936)
Consultant Class ................................ (4,359,900) (7,227,205)
---------- ----------
(22,362,166) (42,630,141)
---------- ----------
Net increase (decrease) ............................ (392,228) 648,346
========== ==========
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>
THIS SEMI-ANNUAL REPORT IS FOR THE INFORMATION OF TAX-FREE MONEY FUND
SHAREHOLDERS, BUT IT MAY BE USED WITH prospective investors when preceded or
accompanied by a current Prospectus for Tax-Free Money Fund, which sets forth
details about charges, expenses, investment objectives and operating policies of
the Fund. You should read the prospectus carefully before you invest or send
money. 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 Investment 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.delawarefunds.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.
DELAWARE
INVESTMENTS
- ---------------------
Philadelphia * London
(C) Delaware Distributors, L.P.
Printed in the USA
on recycled paper
(1252)
SA-006[10/98] PP12/98
