<PAGE>
DELAWARE GROUP
U.S.Government
Money Fund
[Various photos demonstrating service and guidance, professional management
and goals]
service and guidance
professional management
1996
goals Annual
Report
DELAWARE
GROUP
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MONEY MARKET FUND
<PAGE>
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JANUARY 17, 1997
[Photo of Wayne A. Stork, Chairman]
Dear Shareholder:
For the fiscal year ended December 31, 1996, U.S. Government Money Fund
provided a total return of +4.76% (for Class A and Consultant Class shares
with dividends reinvested).
U.S. Government Money Fund's seven-day annualized yield for both
classes was 4.70% as of December 31. The weighted average maturity of
securities in your Fund's portfolio was 44 days.
Your Fund's 15-year lifetime has spanned a wide variety of economic
and interest rate cycles, and through each one, it has provided shareholders
with relative safety, liquidity and current income.
Fiscal 1996 was marked by substantial fluctuation in interest rates.
Since the summer, fear of inflation has abated amid a slowdown in U.S.
economic growth. However, some economists anticipate that the Federal Reserve
Board could increase its target for the Federal Funds rate the rate banks
charged on overnight loans between banks in the coming months.
While this would have negative implications for stocks and long-term
bonds, a rise in interest rates is good news for money market investors
because it boosts current income potential.
A money market fund like U.S. Government Money Fund can be an
appropriate place for cash intended for future investment. But a money market
fund is not designed for long-term growth, nor is principal guaranteed.
With the help of your financial adviser, you can review the complete
family of Delaware Group fixed-income and equity investments to help you
achieve your long-term goals.
Sincerely,
/s/ Wayne A. Stork
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Wayne A. Stork
Chairman, President and Chief Executive Officer
Average annual rates of return for the lifetime, 10-, five- and one-year
periods ended December 31, 1996 for U.S. Government Money Fund Class A are
+5.98%, +4.95% +3.47% and +4.76% respectively, and the returns for the
Consultant Class are +5.96%, +4.89%, +3.47% and +4.76%, respectively, with
distributions reinvested. An expense limitation of 0.70% has been in effect
since January 1996. One-year returns would have been lower had the limitation
not been in effect.
1 1996 annual report
<PAGE>
Financial Statements
Delaware Group Limited-Term Government Funds, Inc. --
U.S. Government Money Fund
Statement of Net Assets/December 31, 1996
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Principal
Amount Value
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FEDERAL AGENCY DISCOUNT
NOTES -- 80.88%
Federal Farm Credit Bank
5.20% 02/10/97 ........................ $ 690,000 $ 686,013
Federal Home Loan Bank
5.22% 01/14/97 ........................ 1,000,000 998,115
Federal Home Loan Bank --
5.30% 1/31/97 ........................ 890,000 886,069
Federal Home Loan Bank --
5.25% 2/10/97 ........................ 710,000 705,858
Federal Home Loan Bank --
5.53% 5/12/97 ........................ 490,000 480,140
Federal Home Loan Mortgage Corp. --
5.29% 1/14/97 ........................ 1,000,000 998,090
Federal Home Loan Mortgage Corp. --
5.26% 1/31/97 ........................ 1,000,000 995,617
Federal Home Loan Mortgage Corp. --
5.43% 2/03/97 ........................ 1,347,000 1,340,399
Federal Home Loan Mortgage Corp. --
5.27% 2/13/97 ........................ 1,000,000 993,705
Federal National Mortgage Association --
5.22% 1/28/97 ........................ 1,000,000 996,085
Federal National Mortgage Association --
5.34% 2/26/97 ........................ 1,750,000 1,735,697
Federal National Mortgage Association
5.36% 3/04/97 ........................ 750,000 743,077
Federal National Mortgage Association
5.30% 3/21/97 ......................... 1,000,000 988,369
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Total Federal Agency Discount Notes ... 12,547,234
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+FLOATING RATE NOTES -- 11.28%
Federal National Mortgage Association --
5.42% 5/02/97 ........................ 500,000 499,632
Student Loan Marketing Association
5.47% 8/04/97 ........................ 500,000 499,814
Student Loan Marketing Association --
5.23% 10/03/97 ....................... 750,000 749,672
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Total Floating Rate Notes .............. 1,749,118
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MEDIUM TERM NOTES -- 1.61%
Federal National Mortgage Association
4.97% 3/10/97 ........................ 250,000 249,490
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Total Medium Term Notes ................ 249,490
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<PAGE>
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Principal
Amount Value
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REPURCHASE AGREEMENTS --
5.56%
With Chase Manhattan 6.50% 1/2/97 (dated
12/31/96, collateralized by $438,000
U.S. Treasury Notes 6.50% due 4/30/99,
market value $447,669)................... $439,000 $ 439,000
With Morgan (J.P.) 6.60% 1/2/97 (dated
12/31/96, collateralized by $386,000
U.S. Treasury Notes 8.75% due 8/15/00,
market value $433,039)................... 424,000 424,000
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Total Repurchase Agreements .............. 863,000
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TOTAL MARKET VALUE OF SECURITIES OWNED -- 99.33%
(WHICH EQUALS COST FOR FINANCIAL REPORTING
AND INCOME TAX PURPOSES) ............... 15,408,842
RECEIVABLES AND OTHER ASSETS NET OF
LIABILITIES -- 0.67% ................... 103,995
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NET ASSETS APPLICABLE TO 15,082,361 U.S. GOVERNMENT
MONEY FUND A CLASS SHARES AND 430,476 U.S.
GOVERNMENT MONEY FUND CONSULTANT CLASS SHARES
($0.001 PAR VALUE) OUTSTANDING; 1,000,000,000 shares
authorized EQUIVALENT TO 1 PER SHARE -- 100%........ $15,512,837
===========
+For Floating Rate Notes, the maturity date shown is the next interest
reset date.
See accompanying notes
2
1996 annual report
<PAGE>
Delaware Group
Limited-Term Government Funds, Inc. --
U.S. Government Money Fund
Statement of Operations
Year Ended December 31, 1996
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INVESTMENT INCOME:
Interest .................................. $ 864,489
EXPENSES:
Management fees ($78,833) and directors'
fees ($5,900) ........................... 84,733
Dividend disbursing and transfer agent fees
and expenses ............................. 30,448
Federal and state registration fees ....... 25,563
Custodian fees ............................ 18,684
Professional fees ......................... 15,866
Reports and statement to shareholders ..... 8,735
Accounting fees and salaries .............. 4,716
Taxes (other than income) ................. 177
Other ..................................... 6,885
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195,807
Less expenses absorbed by
Delaware Management Company, Inc. ........ (77,189) 118,618
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NET INVESTMENT INCOME ..................... $ 745,871
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See accompanying notes
<PAGE>
Delaware Group
Limited-Term Government Funds, Inc. --
U.S. Government Money Fund
Statement of Changes in Net Assets
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Year Ended Year Ended
12/31/96 12/31/95
---------------------------------
OPERATIONS:
Net investment income ................... $ 745,871 $ 705,172
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DISTRIBUTIONS TO SHAREHOLDERS
FROM NET INVESTMENT INCOME:
A Class ................................ (721,027) (668,878)
Consultant Class ....................... (24,844) (36,294)
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(745,871) (705,172)
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CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold:
A Class ................................ 25,564,845 11,699,903
Consultant Class ....................... 581,297 732,776
Net asset value of shares issued upon
reinvestment of dividends from net
investment income:
A Class ................................ 694,448 641,733
Consultant Class ....................... 17,385 35,120
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26,857,975 13,109,532
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Cost of shares repurchased:
A Class ................................ (24,963,369) (15,674,682)
Consultant Class ....................... (497,272) (1,515,439)
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(25,460,641) (17,190,121)
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Increase (decrease) in net assets
derived from capital share transactions 1,397,334 (4,080,589)
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NET INCREASE (DECREASE) IN NET ASSETS ... 1,397,334 (4,080,589)
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NET ASSETS:
Beginning of year ....................... 14,115,503 18,196,092
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End of year ............................. $ 15,512,837 $ 14,115,503
============ ============
See accompanying notes
3
1996 annual report
<PAGE>
Delaware Group
Limited-Term Government Funds, Inc. --
U.S. Government Money Fund
Notes to Financial Statements
December 31, 1996
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Delaware Group Limited-Term Government Funds, Inc. -- U.S. Government
Money Fund (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
and seeks to provide maximum current income, while preserving principal and
maintaining liquidity.
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 has been made 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 or
decline in the value of the collateral, realization of the collateral may be
subject to legal proceedings and may be delayed or limited.
Class Accounting -- Investment income and common expenses are allocated to the
two 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.
Certain Fund expenses are paid by brokers. The amount of these expenses is less
than 0.01% of the the Fund's average net assets, for the year ended December 31,
1996.
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 of 0.50% of the average daily net assets of the Fund, less
fees paid to the independent directors.
<PAGE>
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 July 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 0.30% of the average daily net assets of the Consultant Class. Effective
June 1, 1990, 12b-1 Plan payments from the Consultant Class to DDLP were
suspended but may be reinstated in the future.
The Funds have engaged Delaware Service Company Inc. (DSC), an affiliate of DMC
to serve as dividend disbursing and transfer agent of the Funds. Effective
August 19, 1996, the Fund also engaged DSC to provide accounting services for
the Fund. Previously, Fund personnel provided this service and the related costs
were recorded in salaries and other expense categories in the statement of
operations. For the year ended December 31, 1996, the Fund expensed $30,448 for
dividend disbursing and transfer agent services, $1,627 for accounting services
and had liabilities for such fees and other expenses payable to DSC of $1,132.
Certain officers of DMC are officers, directors, and/or employees of the Fund.
These officers, directors, and employees are paid no compensation by the Fund.
3. Fund Shares
Transactions in capital stock shares of the Fund were as follows:
Year Ended Year Ended
12/31/96 12/31/95
Shares sold:
A Class ................................... 25,564,845 11,699,903
Consultant Class .......................... 581,297 732,776
Shares issued upon reinvestment of dividends
from net investment income:
A Class ................................... 694,448 641,733
Consultant Class .......................... 17,385 35,120
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26,857,975 13,109,532
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Shares repurchased:
A Class ................................... (24,963,369) (15,674,682)
Consultant Class .......................... (497,272) (1,515,439)
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(25,460,641) (17,190,121)
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Net increase (decrease) .................. 1,397,334 (4,080,589)
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4
1996 annual report
<PAGE>
Notes to Financial Statements (Continued)
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4. Financial Highlights
Selected data for each share of the Fund outstanding throughout each year
were as follows:
<TABLE>
<CAPTION>
U.S. Government Money Fund A Class
----------------------------------------------------
Year Ended December 31,
1996 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year ...................................... $1.0000 $1.0000 $1.0000 $1.0000 $1.0000
Income from investment operations:
Net investment income ............................................... 0.0466 0.0448 0.0289 0.0200 0.0308
------- ------- ------ ------ ------
Total from investment operations .................................... 0.0466 0.0448 0.0289 0.0200 0.0308
------- ------- ------ ------ ------
Less distributions:
Dividends from net investment income ................................ (0.0466) (0.0448) (0.0289) (0.0200) (0.0308)
------- ------- ------ ------ ------
Total distributions ................................................. (0.0466) (0.0448) (0.0289) (0.0200) (0.0308)
------- ------- ------ ------ ------
Net asset value, end of period ...................................... $1.0000 $1.0000 $1.0000 $1.0000 $1.0000
======= ======= ====== ====== ======
Total return 4.76% 4.57% 2.93% 2.01% 3.13%
Ratios/supplemental data:
Net assets, end of period (000 omitted) ............................. $15,082 $13,787 $17,119 $20,919 $41,049
Ratio of expenses to average net assets(1) .......................... 0.74% 1.39% 1.26% 1.04% 0.91%
Ratio of net investment income to average net assets(2) ............. 4.66% 4.45% 2.91% 2.06% 3.11%
U.S. Government Money Fund Consultant Class
----------------------------------------------------
Year Ended December 31,
1996 1995 1994 1993 1992
Net asset value, beginning of period .................................... $1.0000 $1.0000 $1.0000 $1.0000 $1.0000
Income from investment operations:
Net investment income ............................................... 0.0466 0.0448 0.0289 0.0200 0.0308
------ ------ ------ ------ ------
Total from investment operations .................................... 0.0466 0.0448 0.0289 0.0200 0.0308
------ ------ ------ ------ ------
Less distributions:
Dividends from net investment income ................................ (0.0466) (0.0448) (0.0289) (0.0200) (0.0308)
------- ------- ------- ------- -------
Total distributions ................................................. (0.0466) (0.0448) (0.0289) (0.0200) (0.0308)
------- ------- ------- ------- -------
Net asset value, end of period ...................................... $1.0000 $1.0000 $1.0000 $1.0000 $1.0000
======= ======= ======= ======= =======
Total return ............................................................ 4.76% 4.57% 2.93% 2.01% 3.13%
Ratios/supplemental data:
Net assets, end of period (000 omitted) ............................. $431 $329 $1,077 $555 $747
Ratio of expenses to average net assets1 ............................ 0.74% 1.39% 1.26% 1.04% 0.91%
Ratio of net investment income to average net assets(2) ............. 4.66% 4.45% 2.91% 2.06% 3.11%
</TABLE>
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1 Ratio of expenses to average net assets prior to expense limitation was
1.22% for the year ended December 31, 1996.
2 Ratio of net investment income to average net assets prior to expense
limitation was 4.18% for the year ended December 31, 1996.
5
1996 annual report
<PAGE>
Delaware Group
Limited-Term Government Funds, Inc. --
U.S. Government Money Fund
Report of Independent Auditors
- --------------------------------------------------------------------------------
To the Shareholders and Board of Directors
Delaware Group Limited-Term Government Funds, Inc. -- U.S. Government
Money Fund
We have audited the accompanying statement of net assets of Delaware Group
Limited-Term Government Funds, Inc. -- U.S. Government Money Fund (the "Fund")
as of December 31, 1996, 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. Our procedures included confirmation of securities owned as of
December 31, 1996 by correspondence with the Fund's 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 Limited-Term Government Funds, Inc. -- U.S. Government Money Fund
at December 31, 1996, the results of its operations for the year then ended, the
changes in its net assets for each of the two years in the period then ended,
and the financial highlights for each of the five years in the period then ended
in conformity with generally accepted accounting principles.
Ernst & Young LLP
Philadelphia, Pennsylvania
February 12, 1997
6
1996 annual report
<PAGE>
This report must be preceded or accompanied by a current U.S Government Money
Fund prospectus and the Delaware Group Fund Performance Update for the most
recently completed calendar quarter. For a prospectus of any other Delaware
Group fund, contact your financial adviser or Delaware Group.
FOR SHAREHOLDERS
1.800.523.1918
FOR SECURITIES DEALERS
1.800.362.7500
FOR FINANCIAL INSTITUTIONS REPRESENTATIVES ONLY
1.800.659.2265
Money market funds strive to maintain a net asset value of $1 a share.
However, there is no guarantee this goal will be met. Yields fluctuate with
market conditions.
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
principal. Shares of the Fund are not bank or credit union deposits.
(Photo of Globes)
DELAWARE
GROUP
========
Philadelphia o London
Copy Rights Delaware Distributors, L.P.
Printed in the USA on
recycled paper
USGM-AR[12/96]TKO2/97
R-93
