<PAGE>
July 17, 1996
Dear
- --------------------------
Shareholder:
- --------------------------
For the six months ended June 30, 1996, U.S. Government Money Fund provided
a positive total return of +2.31% (for Class A and Consultant Class shares
with dividends reinvested).
U.S. Government Money Fund's seven-day yield for both classes was
4.69% as of June 30. The average maturity of securities in your Fund's
portfolio was 59 days.
Your Fund's 16-year lifetime has spanned a wide variety of economic
and interest rate cycles, and through each one, it has achieved the goals it
set out to accomplish -- providing shareholders with relative safety,
liquidity and current income.
The first half of 1996 has been a period marked by increased market
volatility, especially for fixed-income investments. Fear of inflation has
prompted a sharp rise in interest rates. Yields on 30-year U.S. government
bonds have risen more than one percentage point (1%) since January to more
than 7%. Many economists anticipate that the Federal Reserve Board will
increase its target for the Federal Funds rate -- the rate banks charged on
overnight loans between banks -- in the coming months.
While this could have negative implications for stocks and long-term
bonds, a rise in interest rates is good news for money market investors
because it generally boosts current income potential. Your Fund focuses on
high quality government securities maturing in 90 days or less. As always, we
strive to maintain a stable net asset value of $1 a share.
Money market funds like U.S. Government Money Fund can be appropriate places
for cash intended for future investment -- and provide relative safety during
periods of high market volatility. But money market funds are not designed for
long-term growth, nor is principal insured or guaranteed.
With the help of your financial adviser, you can review a complete
family of Delaware Group fixed-income and equity investments that may be
suitable for your portfolio as you strive to achieve your long-term goals.
As always, U.S. Government Money Fund aims to maintain the highest
quality holdings and maximize current income while preserving principal and
maintaining liquidity through a diversified portfolio.
Sincerely,
/s/ Wayne A. Stork
- ---------------------------
Wayne A. Stork
CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE OFFICER
Average annual rates of return for the 10-, five- and one year periods ended
June 30, 1996 for U.S. Government Money Fund Class A are +4.97% +3.48% and
+4.58% respectively, and the returns for the Consultant Class are +4.91%, +3.48%
and +4.58%, respectively. These returns reflect the reinvestment of all
distributions. An expense limitation of 0.70% has been in effect since January
26, 1996. The Fund's performance would have been lower had the limitation not
been in effect. Money market funds strive to maintain a stable share value of
$1. However, there is no guarantee that this goal will be met. Yields fluctuate
with changing interest rates.
1
<PAGE>
Financial
- ------------------------
Statements
- ------------------------
DELAWARE GROUP
LIMITED-TERM GOVERNMENT FUNDS, INC. -
U.S. GOVERNMENT MONEY SERIES
STATEMENT OF NET ASSETS
JUNE 30, 1996
(UNAUDITED)
Prinicpal
Amount Value
FEDERAL AGENCY DISCOUNT NOTES - 66.58%
Federal Home Loan Bank 5.00% 7/09/96 ............... $ 170,000 $ 169,811
Federal Home Loan Bank 5.00% 7/12/96 ............... 100,000 99,847
Federal Home Loan Bank 5.25% 8/07/96 ............... 500,000 497,302
Federal Home Loan Bank 5.53% 5/12/97 ............... 490,000 466,290
Federal Home Loan Mortgage Corporation
5.17% 7/11/96 ....................................... 750,000 748,923
Federal Home Loan Mortgage Corporation
5.17% 7/22/96 ....................................... 750,000 747,738
Federal Home Loan Mortgage Corporation
5.25% 7/05/96 ....................................... 1,000,000 999,417
Federal Home Loan Mortgage Corporation
5.25% 9/03/96 ....................................... 750,000 743,000
Federal Home Loan Mortgage Corporation
5.27% 7/19/96 ....................................... 1,000,000 997,365
Federal Home Loan Mortgage Corporation
5.27% 8/19/96 ....................................... 100,000 99,283
Federal Home Loan Mortgage Corporation
5.28% 8/12/96 ....................................... 750,000 745,380
Federal National Mortgage Association
4.83% 8/09/96 ....................................... 1,100,000 1,094,177
Federal National Mortgage Association
5.14% 9/27/96 ....................................... 500,000 493,718
Federal National Mortgage Association
5.21% 11/27/96 ...................................... 500,000 489,218
Federal National Mortgage Association
5.25% 7/12/96 ....................................... 500,000 499,198
Federal National Mortgage Association
5.29% 8/14/96 ....................................... 750,000 745,151
Federal National Mortgage Association
5.29% 12/10/96 ...................................... 750,000 732,146
Federal National Mortgage Association
5.30% 7/18/96 ....................................... 1,000,000 997,497
----------
Total Federal Agency Discount Notes ................. 11,365,461
----------
FLOATING RATE NOTES - 16.40%+
Student Loan Marketing Association
5.28% 10/04/96 ...................................... 500,000 500,000
Student Loan Marketing Association
5.41% 12/12/96 ...................................... 500,000 500,000
Student Loan Marketing Association
5.47% 10/10/96 ...................................... 500,000 499,951
Student Loan Marketing Association
5.50% 9/23/96 ....................................... 800,000 800,000
Student Loan Marketing Association
5.60% 8/04/97 ....................................... 500,000 499,814
----------
Total Floating Rate Notes ........................... 2,799,765
----------
MEDIUM-TERM NOTES - 6.73%
Federal National Mortgage Association
4.97% 03/10/97 ...................................... 250,000 249,490
Federal National Mortgage Association
5.36% 05/02/97 ...................................... 500,000 499,632
Federal National Mortgage Association
5.64% 09/09/96 ...................................... 400,000 399,864
----------
1,148,986
----------
2
<PAGE>
Statement of Net Assets (Continued)
Prinicpal
Amount Value
REPURCHASE AGREEMENTS - 10.31%
With Chase Manhattan 5.40% 7/1/96
(dated 6/28/96, collateralized by
$593,000 U.S. Treasury Notes
7.75% due 1/31/00 market value $637,401 .............. $ 623,000 $ 623,000
With Morgan (J.P.) 5.40% 7/1/96
(dated 6/28/96, collateralized by
$575,000 U.S. Treasury Notes
6.25% due 8/31/00 market value $582,242) ............. 568,000 568,000
With PaineWebber 5.40% 7/1/96
(dated 6/28/96, collateralized by
$118,000 U.S. Treasury Notes
8.50% due 4/15/97 market value
$122,440 and $449,000 U.S. Treasury Notes
6.875% due 4/30/97 market value $457,848).............. 568,000 568,000
----------
Total Repurchase Agreements ............................ 1,759,000
----------
TOTAL MARKET VALUE OF SECURITIES OWNED -
100.02% (WHICH APPROXIMATES COST FOR
FINANCIAL REPORTING AND INCOME
TAX PURPOSES) ........................................ 17,073,212
LIABILITIES NET OF RECEIVABLES
AND OTHER ASSETS - (.02%) ............................ (3,441)
------
NET ASSETS APPLICABLE TO 16,720,170
U.S. GOVERNMENT MONEY FUND A CLASS SHARES
AND 349,601 U.S. GOVERNMENT MONEY FUND
CONSULTANT CLASS SHARES ($.001 PAR VALUE)
OUTSTANDING; EQUIVALENT TO $1.00 PER SHARE - 100.00%... $17,069,771
------------
- --------------
+For Floating Rate Notes, the maturity date shown is the
next interest reset date.
See accompanying notes
3
<PAGE>
DELAWARE GROUP
LIMITED-TERM GOVERNMENT FUNDS, INC.-
U.S. GOVERNMENT MONEY SERIES
STATEMENT OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1996
(UNAUDITED)
INVESTMENT INCOME:
Interest .......................................... $410,125
EXPENSES:
Management fees ($36,828) and
directors' fees ($3,361) ........................ 40,189
Dividend disbursing and transfer
agent fees and expenses .......................... 17,941
Federal and state registration fees ............... 13,450
Custodian fees .................................... 9,190
Professional fees ................................. 7,221
Reports and statement to shareholders ............. 6,106
Salaries .......................................... 2,162
Other ............................................. 772
--------
97,031
Less expenses absorbed by
Delaware Management Company, Inc. ................ (37,212) 59,189
-------- --------
NET INVESTMENT INCOME ............................. $350,306
--------
See accompanying notes
<PAGE>
DELAWARE GROUP
LIMITED-TERM GOVERNMENT FUNDS, INC.-
U.S. GOVERNMENT MONEY SERIES
STATEMENT OF CHANGES IN NET ASSETS
Six Months Ended Year Ended
6/30/96 12/31/95
(Unaudited)
OPERATIONS:
Net investment income ...................... $ 350,306 $ 705,172
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS
FROM NET INVESTMENT INCOME:
U.S. Government Money Fund A Class ......... (336,151) (668,878)
U.S. Government Money Fund
Consultant Class .......................... (14,155) (36,294)
------------ ------------
(350,306) (705,172)
------------ ------------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold:
U.S. Government Money Fund A Class ........ 16,869,166 11,699,903
U.S. Government Money Fund
Consultant Class ......................... 120,706 732,776
Net asset value of shares issued upon
reinvestment of dividends from net
investment income:
U.S. Government Money Fund A Class ........ 269,583 641,733
U.S. Government Money Fund
Consultant Class ......................... 5,922 35,120
------------ ------------
17,265,377 13,109,532
------------ ------------
Cost of shares repurchased:
U.S. Government Money Fund A Class ........ (14,205,014) (15,674,682)
U.S. Government Money Fund
Consultant Class ......................... (106,095) (1,515,439)
------------ ------------
(14,311,109) (17,190,121)
------------ ------------
Increase (decrease)in net assets
derived from capital share transactions ... 2,954,268 (4,080,589)
------------ ------------
NET INCREASE (DECREASE)
IN NET ASSETS ............................. 2,954,268 (4,080,589)
------------ ------------
NET ASSETS:
Beginning of period ........................ 14,115,503 18,196,092
------------ ------------
End of period .............................. $ 17,069,771 $ 14,115,503
============ ============
See accompanying notes
4
<PAGE>
DELAWARE GROUP
LIMITED-TERM GOVERNMENT FUNDS, INC.-
U.S. GOVERNMENT MONEY SERIES
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1996
(UNAUDITED)
Delaware Group Limited-Term Government Funds, Inc.- U.S. Government Money
Series (the "Fund"), is a series of Delaware Group Limited-Term Government
Funds, Inc., (the "Company"), a diversified open-end investment company
registered under the Investment Company Act of 1940. The Company is organized
as a Maryland corporation. The Fund offers two classes of shares.
1. Significant Accounting Policies
The accounting policies are in accordance with generally accepted accounting
principles and are consistently followed by the Fund for financial
statement preparation:
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 is required in the
financial statements.
Repurchase Agreements - The Fund may invest in a pooled cash account along
with other members of the Delaware Group of Funds. The aggregated daily
balance of the pooled cash account is invested in repurchase agreements
secured by obligations of the U.S. government. The respective collateral is
held by the Fund's custodian bank until the maturity of the respective
repurchase agreements. Each repurchase agreement is a least 100%
collateralized. However, in the event of default or bankruptcy by the
counterparty to the agreement, realization of the collateral may be subject
to legal proceedings.
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.
Other - Expenses common to all funds within the Delaware Group 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). Premiums and discounts are amortized on a pro-rata basis and
included in interest income. The Fund declares dividends daily from net
investment income and pays such dividends monthly.
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.
Effective January 26, 1996, DMC has elected voluntarily to waive that
portion, if any, of the annual management fees payable by the Fund to the
extent necessary to ensure that the annual operating expenses exclusive of
taxes, interest, brokerage commissions, extraordinary expenditures and
12b-1 expenses do not exceed 0.70% of average net assets for each Class
through January 31, 1997.
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 0.25% 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. For the
six months ended June 30, 1996, the Fund expensed $17,941 for these services.
Certain officers of the Investment Manager are officers, directors, and/or
employees of the Fund. These officers, directors, and employees are paid no
compensation by the Fund.
<PAGE>
3. Fund Shares
Transactions in capital stock shares of
the Fund were as follows:
Six Months Year
Ended Ended
6/30/96 12/31/95
Shares sold:
U.S. Government Money Fund A Class ........... 16,869,165 11,699,903
U.S. Government Money Fund
Consultant Class ............................ 120,705 732,776
Shares issued upon reinvestment
of dividends from net investment income:
U.S. Government Money Fund A Class ........... 269,583 641,733
U.S. Government Money Fund
Consultant Class ............................ 5,922 35,120
------------ ------------
17,265,375 13,109,532
------------ ------------
Shares repurchased:
U.S. Government Money Fund A Class ........... (14,205,014) (15,674,682)
U.S. Government Money Fund
Consultant Class ............................ (106,095) (1,515,439)
------------ ------------
(14,311,109) (17,190,121)
------------ ------------
Net increase (decrease) ...................... 2,954,266 (4,080,589)
============ ===========
5
<PAGE>
Notes to Financial Statements (Continued)
4.Financial Highlights
Selected data for each share of the Fund outstanding throughout each period
were as follows:
<TABLE>
<CAPTION>
U.S. Government Money Fund A Class
Six Months
Ended Year Ended December 31,
6/30/96* 1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $1.0000 $1.0000 $1.0000 $1.0000 $1.0000 $1.0000
Income from investment operations:
Net investment income. . . . . . . . . . 0.0225 0.0448 0.0289 0.0200 0.0308 0.0519
Net realized gain from security transactions none none none none none none
------- ------- ------- ------- ------- -------
Total from investment operations 0.0225 0.0448 0.0289 0.0200 0.0308 0.0519
------- ------- ------- ------- ------- -------
Less distributions:
Dividends from net investment income (0.0225) (0.0448) (0.0289) (0.0200) (0.0308) (0.0519)
------- ------- ------- ------- ------- -------
Total distributions. . . . . . . . . . . (0.0225) (0.0448) (0.0289) (0.0200) (0.0308) (0.0519)
------- ------- ------- ------- ------- -------
Net asset value, end of period. $1.0000 $1.0000 $1.0000 $1.0000 $1.0000 $1.0000
======= ======= ======= ======= ======= =======
Total return. . . . . . . . . . . . . . . 2.31% 4.57% 2.93% 2.01% 3.13% 5.32%
Ratios/supplemental data:
Net assets, end of period (000 omitted) $16,720 $13,787 $17,119 $20,919 $41,049 $45,933
Ratio of expenses to average net assets 0.79%(1) 1.39% 1.26% 1.04% 0.91% 0.85%
Ratio of net investment income to
average net assets. . . . . . . . . . . . . 4.61%(2) 4.45% 2.91% 2.06% 3.11% 5.23%
</TABLE>
* Ratios have been annualized and total return has not been annualized.
1 Ratio of expenses to average net assets prior to expense limitation was
1.28% for the six months ended 6/30/96.
2 Ratio of net investment income to average net assets prior to expense
limitation was 4.12% for the six months ended 6/30/96.
6
<PAGE>
Notes to Financial Statements (Continued)
4.Financial Highlights
Selected data for each share of the Fund outstanding throughout each period
were as follows:
<TABLE>
<CAPTION>
U.S. Government Money Fund Consultant Class
Six Months
Ended Year Ended December 31,
6/30/96* 1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $1.0000 $1.0000 $1.0000 $1.0000 $1.0000 $1.0000
Income from investment operations:
Net investment income..................... 0.0225 0.0448 0.0289 0.0200 0.0308 0.0519
------- ------- ------- ------- ------- -------
Net realized gain from security transactions none none none none none none
------- ------- ------- ------- ------- -------
Total from investment operations.......... 0.0225 0.0448 0.0289 0.0200 0.0308 0.0519
------- ------- ------- ------- ------- -------
Less distributions:
Dividends from net investment income...... (0.0225) (0.0448) (0.0289) (0.0200) (0.0308) (0.0519)
------- ------- ------- ------- ------- -------
Total distributions....................... (0.0225) (0.0448) (0.0289) (0.0200) (0.0308) (0.0519)
------- ------- ------- ------- ------- -------
Net asset value, end of period............ $1.0000 $1.0000 $1.0000 $1.0000 $1.0000 $1.0000
======= ======= ======= ======= ======= =======
Total return.............................. 2.31% 4.57% 2.93% 2.01% 3.13% 5.32%
Ratios/supplemental data:
Net assets, end of period (000 omitted)... $350 $329 $1,077 $555 $747 $1,399
Ratio of expenses to average net assets... 0.79%(1) 1.39% 1.26% 1.04% 0.91% 0.85%
Ratio of net investment income to
average net assets........................ 4.61%(2) 4.45% 2.91% 2.06% 3.11% 5.23%
</TABLE>
- -------------
* Ratios have been annualized and total return has not been annualized.
1 Ratio of expenses to average net assets prior to expense limitation was
1.28% for the six months ended 6/30/96.
2 Ratio of net investment income to average net assets prior to expense
limitation was 4.12% for the six months ended 6/30/96.
7
<PAGE>
Be sure to consult your financial adviser when making investment decisions.
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, are not obligations of any bank or any credit union, and
involve investment risk, including the possible loss of principal. Shares of
the Fund are not bank or credit union deposits.
THE GOAL OF A MONEY MARKET FUND IS TO MAINTAIN A CONSTANT SHARE PRICE OF $1.
HOWEVER, THERE CAN BE NO GUARANTEE THAT THIS GOAL WILL BE MET. THE FUND'S
YIELD AND RETURN FLUCTUATE AND ARE NOT GUARANTEED. AN INVESTMENT IN A MONEY
MARKET FUND IS NEITHER INSURED NOR GUARANTEED BY THE U.S. GOVERNMENT.
This report must be preceded or accompanied
by a current U.S. Government Money
Fund prospectus.
INVESTMENT MANAGER
Delaware Management Company, Inc.
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
Nationwide (800) 523-4640
SECURITIES DEALERS ONLY
Nationwide (800) 362-7500
Copy Rights Delaware Distributors, L.P.
Printed in the U.S.A. on recycled paper.
SA - 005 [6/96] PP8/96
<PAGE>
- -----------------------------
U.S.
GOVERNMENT
MONEY
FUND
- --------------
1996
Semi-Annual
Report
A Tradition of Sound Investing Since 1929
DELAWARE
GROUP
- ---------
Philadelphia * London
U.S. Government Money Fund - 104511
