<PAGE>
Money Market Fund
U.S. Government Money Fund
service and guidance
professional management
goals
1998
Semi-Annual Report
[Photo of illustration from money market brochure]
<PAGE>
June 6, 1998
money
market
fund
1
Dear Shareholder:
U.S. Government Money Fund A
Class and Consultant Class each provided a total return of +2.16% with dividends
reinvested for the six months ended June 30, 1998. Both classes had a 4.35%
seven-day annualized yield while the portfolio's average effective maturity was
reduced from 43 days to 21 days.
The U.S. economy continued to
grow and create new jobs without any significant increase to inflation during
the first half of the year. Unemployment remained low. A weakening factory job
market was offset by impressive gains in the services sector, suggesting strong
economic growth will continue.
Lack of inflation and the potential impact of Asia's economic problems on
the U.S. economy contributed to a May 19 decision by the Federal Reserve Board
to hold the line on interest rates. The decision, however, was deemed a "close
call." This suggests that an increase in short-term interest rates remains a
possibility this autumn.
By investing in securities maturing in 91 days or less, your Fund maintains
a highly liquid portfolio. We can usually take advantage of opportunities to
improve yield when interest rates go up without any adverse effect on principal.
During periods of moderate economic growth, the Fund will pursue higher yields
by slightly extending the average maturity of its securities.
Although not designed for long-term growth, U.S. Government Money Fund
provides a sensible place for your investments as you decide on an asset
allocation plan. Offering relative safety and liquidity, the Fund helps you
maximize opportunities from your short-term investments. Delaware Investments
also offers a wide range of mutual funds designed to help meet your long-range
investment objectives. With the aid of your financial adviser, you can determine
which Funds best suit your long-term personal investment goals.
Thank you for your confidence in Delaware Investments.
/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 June 30, 1998
Seven-Day Ten Five One Six
Yield Lifetime Years Years Year Months
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
A Class (Est. 4/20/82) 4.35% +5.86% +4.84% +4.06% +4.70% +2.16%*
Consultant Class (Est. 3/29/98) 4.35% +5.85% +4.79% +4.06% +4.70% +2.16%*
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Cumulative return. 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 does strive
to maintain a net asset value of $1 per share. However, there is no guarantee
that the Fund will be able to do so.
<PAGE>
money market fund 2
Financial Statements
Delaware Group Limited-Term Government Funds, Inc. -
U.S. Government Money Fund
Statement of Net Assets
June 30, 1998 (Unaudited)
Principal Market
Amount Value
--------- ------
Federal Agency Discount Notes - 81.72%
Federal Home Loan Bank 5.255% 7/13/98 ...... $ 1,000,000 $ 998,248
Federal Home Loan Mortgage Corporation
5.40% 7/17/98 .............................. 2,000,000 1,995,200
Federal Home Loan Mortgage Corporation
5.41% 7/2/98 ............................... 1,000,000 999,850
Federal Home Loan Mortgage Corporation
5.43% 7/14/98 .............................. 1,500,000 1,497,059
Federal National Mortgage Association
5.39% 7/24/98 .............................. 1,000,000 996,556
Federal National Mortgage Association
5.40% 7/27/98 .............................. 1,000,000 996,100
Federal National Mortgage Association
5.40% 8/24/98 .............................. 1,558,000 1,545,380
Federal National Mortgage Association
5.40% 9/14/98 .............................. 500,000 494,417
Federal National Mortgage Association
5.42% 7/10/98 .............................. 2,000,000 1,997,290
Federal National Mortgage Association
5.45% 8/14/98 .............................. 1,250,000 1,241,674
-----------
Total Federal Agency Discount Notes ........ 12,761,774
-----------
*Floating Rate Notes - 9.60%
Federal Home Loan Bank 5.601% 10/23/98 ..... 500,000 500,000
Student Loan Marketing Association
5.621% 11/12/98 ............................ 1,000,000 1,000,000
-----------
Total Floating Rate Notes .................. 1,500,000
-----------
<PAGE>
Principal Market
Amount Value
--------- ------
Repurchase Agreements - 9.37%
With Chase Manhattan 5.85% 7/1/98
(dated 6/30/98 collateralized by $553,000
U.S. Treasury Notes 5.375% due 6/30/03,
market value $550,799) ....................... $ 540,000 $ 540,000
With J.P. Morgan Securities 5.75% 7/1/98
(dated 6/30/98 collateralized by $461,000
U.S. Treasury Notes 6.25% due 6/30/02,
market value $471,994) ....................... 462,000 462,000
With PaineWebber 5.75% 7/1/98
(dated 6/30/98 collateralized by $451,000
U.S. Treasury Notes 6.625% due 4/30/02,
market value $472,095) ....................... 462,000 462,000
----------
Total Repurchase Agreements ...................... 1,464,000
Total market value of securities owned - 100.69%
(which approximates cost for financial
reporting and income tax purposes) $15,725,774
Liabilities Net of Receivables and
Other Assets - (0.69%) (108,448)
-----------
Net assets applicable to 15,094,127 U.S. Government
Money Fund A class shares and 523,199
U.S. Government Money Fund Consultant Class
Shares $0.001 par value) outstanding;
1,000,000,000 shares authorized equivalent to
$1.00 per share - 100% $15,617,326
===========
- -------------
* Floating Rate Notes - The interest rate shown is the rate as of June 30, 1998
and the maturity shown is the longer of the next interest readjustment date or
the date the principal amount shown can be recovered through demand.
See accompanying notes
<PAGE>
3 money market fund
Delaware Group Limited-Term
Government Funds, Inc. -
U.S. Government Money Fund
Statement of Operations
Six months ended June 30, 1998 (Unaudited)
Investment Income:
Interest ............................................ $ 442,241
Expenses:
Management fees ..................................... $ 37,938
Registration fees ................................... 22,425
Dividend disbursing and transfer agent fees
and expenses .................................... 20,365
Reports and statements to shareholders .............. 12,273
Custodian fees ...................................... 6,300
Accounting and Administration ....................... 5,854
Taxes (other than taxes on income) .................. 3,000
Directors' fees ..................................... 1,463
Professional fees ................................... 444
Other ............................................... 8,215 118,277
--------- -------
Expenses absorbed by Delaware Management Company .... (21,440)
-------
Total expenses ...................................... 96,837
-------
Net Investment Income ............................... 345,404
-------
See accompanying notes
<PAGE>
Delaware Group Limited-Term
Government Funds, Inc. -
U.S. Government Money Fund
Statements Of Changes In Net Assets
Six Months Year
Ended Ended
6/30/98 12/31/97
(Unaudited)
----------------------------
Increase In Net Assets From Operations:
Net investment income .......................... $ 345,404 $ 807,121
------------ ------------
Distribution To Shareholders From:
Net investment income:
A Class .................................... (328,474) (780,254)
Consultant Class ........................... (16,930) (26,867)
------------ ------------
(345,404) (807,121)
------------ ------------
Capital Share Transactions:
Proceeds from shares sold:
A Class .................................... 21,776,039 38,230,061
Consultant Class ........................... 205,232 769,674
Net asset value of shares issued upon
reinvestment of dividends from net
investment income:
A Class .................................... 319,995 719,039
Consultant Class ........................... 9,498 25,221
------------ ------------
22,310,764 39,743,995
------------ ------------
Cost of shares repurchased:
A Class .................................... (23,752,756) (37,280,612)
Consultant Class ........................... (186,776) (730,126)
------------ ------------
(23,939,532) (38,010,738)
------------ ------------
Increase (decrease) in net assets derived from
capital share transactions ................. (1,628,768) 1,733,257
------------ ------------
Net Increase (Decrease) In Net Assets .......... (1,628,768) 1,733,257
Net Assets:
Beginning of period ............................ 17,246,094 15,512,837
------------ ------------
End of period .................................. $ 15,617,326 $ 17,246,094
============ ============
See accompanying notes
<PAGE>
4 money market fund
Delaware Group Limited-Term Government Funds, Inc. -
U.S. Government Money Fund
Financial Highlights
Selected data for each share of the Fund outstanding throughout the period was
as follows:
<TABLE>
<CAPTION>
U.S. Government Money Fund A Class
----------------------------------------------------------------------
Six
months ended Year Ended
6/30/981 12/31/97 12/31/96 12/31/95 12/31/94 12/31/93
(Unaudited)
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period .................... $1.000 $1.000 $1.000 $1.000 $1.000 $1.000
Income from investment operations:
Net investment income ............................... 0.021 0.048 0.047 0.045 0.029 0.020
------- ------- ------- -------- ------- -------
Total from investment operations .................... 0.021 0.048 0.047 0.045 0.029 0.020
------- ------- ------- -------- ------- -------
Less dividends:
Dividend from net investment income ................. (0.021) (0.048) (0.047) (0.045) (0.029) (0.020)
------- ------- ------- -------- ------- -------
Total dividends ..................................... (0.021) (0.048) (0.047) (0.045) (0.029) (0.020)
------- ------- ------- -------- ------- -------
Net asset value, end of period .......................... $1.000 $1.000 $1.000 $1.000 $1.000 $1.000
======= ======= ======= ======== ======= =======
Total return ............................................ 2.16% 4.94% 4.76% 4.57% 2.93% 2.01%
Ratios and supplemental data:
Net assets, end of period (000 omitted) ............. $15,094 $16,751 $15,082 $13,787 $17,119 $20,919
Ratio of expenses to average net assets ............. 1.01% 0.70% 0.74% 1.39% 1.26% 1.04%
Ratio of expenses to average net assets prior to
expense limitation ............................... 1.23% 1.56% 1.22% 1.39% 1.26% 1.04%
Ratio of net investment income to average net assets 3.60% 4.84% 4.66% 4.45% 2.91% 2.06%
Ratio of net investment income to average net assets
prior to expense limitation ....................... 3.38% 3.98% 4.18% 4.45% 2.91% 2.06%
U.S. Government Money Fund Consultant Class
----------------------------------------------------------------------
Six
months ended Year Ended
6/30/981 12/31/97 12/31/96 12/31/95 12/31/94 12/31/93
(Unaudited)
Net asset value, beginning of period .................... $1.000 $1.000 $1.000 $1.000 $1.000 $1.000
Income from investment operations:
Net investment income ............................... 0.021 0.048 0.047 0.045 0.029 0.020
------- ------- ------- -------- ------- -------
Total from investment operations .................... 0.021 0.048 0.047 0.045 0.029 0.020
------- ------- ------- -------- ------- -------
Less dividends:
Dividend from net investment income ................. (0.021) (0.048) (0.047) (0.045) (0.029) (0.020)
------- ------- ------- -------- ------- -------
Total dividends ..................................... (0.021) (0.048) (0.047) (0.045) (0.029) (0.020)
------- ------- ------- -------- ------- -------
Net asset value, end of period .......................... $1.000 $1.000 $1.000 $1.000 $1.000 $1.000
======= ======= ======= ======== ======= =======
Total return ............................................ 2.16% 4.94% 4.76% 4.57% 2.93% 2.01%
Ratios and supplemental data:
Net assets, end of period (000 omitted) ............ $523 $495 $431 $329 $1,077 $555
Ratio of expenses to average net assets ............ 1.01% 0.70% 0.74% 1.39% 1.26% 1.04%
Ratio of expenses to average net assets prior to
expense limitation ................................. 1.23% 1.56% 1.22% 1.39% 1.26% 1.04%
Ratio of net investment income to average net assets 3.60% 4.84% 4.66% 4.45% 2.91% 2.06%
Ratio of net investment income to average net assets
prior to expense limitation ...................... 3.38% 3.98% 4.18% 4.45% 2.91% 2.06%
</TABLE>
1 Ratios have been annualized and total return has not been annualized.
See accompanying notes
<PAGE>
5 money market fund
Delaware Group Limited-Term Government Funds, Inc. -
U.S. Government Money Fund
Notes To Financial Statements
June 30, 1998 (Unaudited)
Delaware Group Limited-Term Government Funds, Inc. - U.S. Government Money Fund,
(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. Both classes carry no
sales charges.
The investment objective of the U.S. Government Money Fund is to seek maximum
current income, while preserving principal and maintaining liquidity.
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 - Money market instruments having less than 60 days to
maturity 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. Income and capital gain distributions are determined in
accordance with federal income tax regulations which may differ from generally
accepted accounting principles.
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.
Repurchase Agreements - The Fund may invest in a pooled cash account along with
other members of the Delaware Investments Family of Funds. The aggregate 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 at 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.
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). Premiums and discounts are amortized on a pro-rata basis and
are included in interest income. The Fund declares dividends daily from net
investment income and pays such dividends monthly.
Certain Fund expenses are paid through "soft dollar" arrangements with brokers.
The amount of these expenses is less than 0.01% of the Fund's average daily net
assets.
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.
<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 of the Fund, 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.
DMC elected to waive that portion, if any, of the management fee and reimburse
the Fundto the extent that annual operating expenses exclusive of taxes,
interest, brokerage commissions and extraordinary expenses, exceed 0.70% of
average daily net assets of the Fund through February 10, 1998. Total expenses
absorbed by DMC for the period ended February 10, 1998 were $21,440.
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 six months ended June 30, 1998, the Fund expensed $20,365 for
dividend disbursing and transfer agent services and $3,174 for accounting
services.
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. Distribution expenses relating to
a specific class are charged directly to that class.
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
6/30/98 12/31/97
----------- -----------
Shares sold:
A Class ................................ 21,776,039 38,230,061
Consultant Class ....................... 205,232 769,674
Shares issued upon reinvestment
of dividends from net investment income:
A Class ................................ 319,995 719,039
Consultant Class ....................... 9,498 25,221
----------- -----------
22,310,764 39,743,995
----------- -----------
Shares repurchased:
A Class ................................ (23,752,756) (37,280,612)
Consultant Class ....................... (186,776) (730,126)
----------- -----------
(23,939,532) (38,010,738)
----------- -----------
Net increase (decrease) .................... (1,628,768) 1,733,257
=========== ===========
<PAGE>
This Semi-Annual Report is for the Information of U.S. Government Money Fund
Shareholders, But it may be used with prospective investors when preceded or
accompanied by a current Prospectus for U.S. Government Money Fund, which sets
forth details about charges, expenses, investment objectives and operating
policies of each Fund. You should read the prospectus carefully before you
invest. Summary investment results are documented in the Fund's current
Statement of Additional Information. The figures in this report represent past
results which are not a guarantee of future results.
Board of Directors
Affiliated Officers
WAYNE A. STORK
Chairman
Delaware Investments Family of Funds
Philadelphia, PA
JEFFERY J. NICK
President and Chief Executive Officer
Delaware Investments Family of Funds
Philadelphia, PA
WALTER P. BABICH
Board Chairman, Citadel Constructors, Inc.
King of Prussia, PA
JOHN DURHAM
Partner, Complete Care Services
Horsham, PA
ANTHONY D. KNERR
Consultant, Anthony Knerr & Associates
New York, NY
ANN R. LEVEN
Treasurer, National Gallery of Art
Washington, DC
W. THACHER LONGSTRETH
City Councilman
Philadelphia, PA
THOMAS F. MADISON
President and Chief Executive Officer
MLM Partners, Inc.
Minneapolis, MN
CHARLES E. PECK
Secretary/Treasurer, Enterprise Homes, Inc.
Fredericksburg, VA
SHAREHOLDER SERVICING,
DIVIDEND DISBURSING
AND TRANSFER AGENT
Delaware Service Company, Inc.
Philadelphia, Pennsylvania
1818 Market Street
Philadelphia, PA 19103-3682
<PAGE>
Affiliated Officers
DAVID K. DOWNES
Executive Vice President, Chief Financial Officer
and Chief Operating Officer
Delaware Investments Family of Funds
Philadelphia, PA
GEORGE M. CHAMBERLAIN, JR.
Senior Vice President, Secretary
and General Counsel
Delaware Investments Family of Funds
Philadelphia, PA
BRUCE D. BARTON
President and Chief Executive Officer
Delaware Distributors, L.P.
Philadelphia, PA
(photo of globes)
directors &
officers
INVESTMENT MANAGER
Delaware Management Company
Philadelphia, Pennsylvania
INTERNATIONAL AFFILIATE
Delaware International Advisers Ltd.
London, England
NATIONAL DISTRIBUTOR
Delaware Distributors, L.P.
Philadelphia, Pennsylvania
<PAGE>
This Semi-Annual Report is for the information of U.S. Government Money Fund
shareholders, but it may be used with prospective investors when preceded or
accompanied by a current Prospectus for U.S. Government 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. Summary investment results are documented in the Fund's current
Statement of Additional Information. The figures in this report represent past
results which are not a guarantee of future results. The return and principal
value of an investment in the Fund will fluctuate so that shares, when redeemed,
may be worth more or less than their original cost.
- ------------------------------------------------------------------------------
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
(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.
Printed in the USA
on recycled paper
SA-005[6/98] PP8/98
(902)
