DELAWARE GROUP LIMITED TERM GOVERNMENT FUNDS INC, 485BPOS, 1998-04-29

DELAWARE GROUP LIMITED TERM GOVERNMENT FUNDS INC
485BPOS, 1998-04-29

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<PAGE>

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM N-1A File No. 2-75526
File No. 811-3363

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 /X/

Pre-Effective Amendment No. ____

Post-Effective Amendment No. 46 /X/

AND

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 /X/

Amendment No. 46

DELAWARE GROUP LIMITED-TERM GOVERNMENT FUNDS, INC.
- --------------------------------------------------------------------------------

(Exact Name of Registrant as Specified in Charter)

1818 Market Street, Philadelphia, Pennsylvania 19103
- --------------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)

Registrant's Telephone Number, including Area Code: (215) 255-2923
--------------

George M. Chamberlain, Jr., 1818 Market Street, Philadelphia, PA 19103
- --------------------------------------------------------------------------------
(Name and Address of Agent for Service)

Approximate Date of Public Offering: April 29, 1998
--------------

It is proposed that this filing will become effective:

___ immediately upon filing pursuant to paragraph (b)
X on April 29, 1998 pursuant to paragraph (b)
___ 60 days after filing pursuant to paragraph (a)(1) on (date)
___ pursuant to paragraph (a)(1) 75 days after filing pursuant
to paragraph (a)(2)
___ on (date) pursuant to paragraph (a)(2) of Rule 485

If appropriate:

_____ this post-effective amendment designates a new effective
date for a previously filed post-effective amendment

Title of Securities Being Registered
------------------------------------
U.S. Government Money Fund A Class
U.S. Government Money Fund Consultant Class

<PAGE>

--- C O N T E N T S ---

This Post-Effective Amendment No. 46 to Registration File No. 2-75526
includes the following:

1. Facing Page

2. Contents Page

3. Cross-Reference Sheets

4. Part A - Prospectus

5. Part B - Statement of Additional Information

6. Part C - Other Information

7. Signatures

<PAGE>

CROSS-REFERENCE SHEET
---------------------

PART A
------
<TABLE>
<CAPTION>
Item No. Description Location in Prospectus
- -------- ----------- ----------------------
<S> <C> <C>
1 Cover Page............................................. Cover

2 Synopsis............................................... Synopsis; Summary
of Expenses

3 Condensed Financial Information....................... Financial Highlights

4 General Description of Registrant .................... Investment Objective
and Policies; Shares;
Additional Information
on Policies and Risk
Factors

5 Management of the Fund................................. Management of the Fund

6 Capital Stock and Other Securities .................... Dividends and Distributions;
Taxes; Shares

7 Purchase of Securities Being Offered................... Cover; How to Buy
Shares; Calculation of
Net Asset Value Per
Share; Management of
the Fund

8 Redemption or Repurchase............................... How to Buy Shares;
Redemption and Exchange

9 Legal Proceedings...................................... None

</TABLE>
<PAGE>

CROSS-REFERENCE SHEET
---------------------

PART B
------
<TABLE>
<CAPTION>

Location in Statement
Item No. Description of Additional Information
- -------- ----------- -------------------------
<S> <C> <C>
10 Cover Page........................................... Cover

11 Table of Contents..................................... Table of Contents

12 General Information and History....................... General Information

13 Investment Objectives and Policies.................... Investment Objective and Policies

14 Management of the Registrant.......................... Officers and Directors

15 Control Persons and Principal Holders
of Securities......................................... Officers and Directors

16 Investment Advisory and Other Services................ Plan Under Rule 12b-1 for Consultant
Class Shares (under Purchasing Shares);
Investment Management Agreement;
Officers and Directors; General
Information; Financial Statements

17 Brokerage Allocation.................................. Trading Practices

18 Capital Stock and Other Securities.................... Capitalization and Noncumulative Voting
(under General Information)

19 Purchase, Redemption and Pricing of
Securities Being Offered.............................. Purchasing Shares; Offering
Price; Redemption and
Repurchase; Exchange Privilege

20 Tax Status............................................ Taxes

21 Underwriters.......................................... Purchasing Shares

22 Calculation of Performance Data....................... Performance Information

23 Financial Statements.................................. Financial Statements

</TABLE>
<PAGE>

CROSS REFERENCE SHEET
---------------------

PART C
------
<TABLE>
<CAPTION>
Item No. Description Location in Part C
-------- ----------- ------------------
<S> <C> <C>
24 Financial Statements and Exhibits.................................... Item 24

25 Persons Controlled by or under
Common Control with Registrant....................................... Item 25

26 Number of Holders of Securities...................................... Item 26

27 Indemnification...................................................... Item 27

28 Business and Other Connections of
Investment Adviser................................................... Item 28

29 Principal Underwriters............................................... Item 29

30 Location of Accounts and Records..................................... Item 30

31 Management Services.................................................. Item 31

32 Undertakings......................................................... Item 32

</TABLE>

<PAGE>

PROSPECTUS
APRIL 29,1998

U.S. Government Money Fund
A Class
Consultant Class

------------------------------------------
1818 Market Street, Philadelphia, PA 19103

For Prospectus and Performance: Nationwide 800-523-4640

Information on Existing Accounts: Nationwide 800-523-1918

Representatives of Financial Institutions:
Nationwide 800-659-2265

This Prospectus describes the U.S. Government Money Fund A Class ("Class A
Shares") and the U.S. Government Money Fund Consultant Class ("Consultant Class
Shares") (individually, a "Class" and collectively, the "Classes") of shares of
the U.S. Government Money Fund (the "Fund") of Delaware Group Limited-Term
Government Funds, Inc. ("Limited-Term Funds, Inc."). The Fund is a
professionally-managed mutual fund of the series type. The Fund's investment
objective is to seek maximum current income while preserving principal and
maintaining liquidity. The Fund intends to achieve its investment objective by
investing its assets only in short-term securities issued or guaranteed as to
principal and interest by the U.S. government, its agencies or
instrumentalities, and repurchase agreements secured by the same.

The Fund is a money market fund. There are no front-end or contingent
deferred sales charges for either Class. Class A Shares are not subject to 12b-1
distribution expenses. Consultant Class Shares are offered for sale through
broker/dealers, financial institutions and other entities that have a dealer
agreement with the Fund's Distributor or a service agreement with the Fund's
Distributor or a service agreement with the Fund. Though Consultant Class Shares
are subject to a 12b-1 distribution plan, at the present time 12b-1 distribution
fees are not being charged to the Fund nor paid to financial professionals.
While the Fund will make every effort to maintain a stable net asset value of
$1.00 per share, there is no assurance that the Fund will be able to do so. The
Fund invests primarily in securities that are issued or guaranteed as to the
prompt payment of principal and interest by the U.S. government, its agencies
and instrumentalities. The shares of the Fund, however, are neither insured nor
guaranteed by the U.S. government.

This Prospectus relates only to the Classes listed above and sets forth
information that you should read and consider before you invest. Please retain
it for future reference. The Fund's Statement of Additional Information ("Part
B" of Limited-Term Funds, Inc.'s registration statement), dated April 29, 1998,
as it may be amended from time to time, contains additional information about
the Fund and has been filed with the Securities and Exchange Commission (the
"SEC"). Part B is incorporated by reference into this Prospectus and is
available, without charge, by writing to Delaware Distributors, L.P. at the
above address or by calling the above number. The Fund's financial statements
appear in its Annual Report, which will accompany any response to requests for
Part B. The SEC also maintains a Web site (http://www.sec.gov) that contains
Part B, material we incorporated by reference and other information regarding
registrants that electronically file with the SEC.

<PAGE>

Limited-Term Funds, Inc. also offers the Limited-Term Government Fund
series, a prospectus for which may be obtained by calling the number listed
above.

Table of Contents

COVER PAGE
SYNOPSIS
SUMMARY OF EXPENSES
FINANCIAL HIGHLIGHTS
INVESTMENT OBJECTIVE AND POLICIES
Suitability
Investment Strategy
THE DELAWARE DIFFERENCE

Plans and Services

BUYING SHARES
REDEMPTION AND EXCHANGE
DIVIDENDS AND DISTRIBUTIONS
TAXES
NET ASSET VALUE PER SHARE

MANAGEMENT OF THE FUND

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

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,
ARE NOT OBLIGATIONS OF 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.

-2-
<PAGE>

SYNOPSIS

Investment Objective
The investment objective of the Fund is to seek maximum current income
while preserving principal and maintaining liquidity. The Fund intends to
achieve its investment objective by investing its assets only in short-term
securities issued or guaranteed as to principal and interest by the U.S.
government, its agencies or instrumentalities, and repurchase agreements
secured by the same. For further details, see Investment Objective
and Policies.

Investment Manager, Distributor and Transfer Agent
Delaware Management Company (the "Manager") furnishes investment
management services to the Fund, subject to the supervision and direction of
Limited-Term Funds, Inc.'s Board of Directors. The Manager also provides
investment management services to certain of the other funds in the Delaware
Investments family. Delaware Distributors, L.P. (the "Distributor") is the
national distributor for the Fund and for all of the other mutual funds in the
Delaware Investments family. Delaware Service Company, Inc. (the "Transfer
Agent") is the shareholder servicing, dividend disbursing, accounting services
and transfer agent for the Fund and for all of the other mutual funds in the
Delaware Investments family.

See Summary of Expenses and Management of the Fund for further information
regarding the Manager and the fees payable under the Fund's Investment
Management Agreement.

Purchase Price
Class A Shares offered by this Prospectus are available at net asset
value, without a sales charge, and are not subject to distribution fees under a
Rule 12b-1 distribution plan.

Consultant Class Shares offered by this Prospectus are available at net
asset value, without a sales charge, but are subject to distribution fees under
a Rule 12b-1 distribution plan, although no fees are being charged under the
Plan at this time.

See Buying Shares; and Distribution (12b-1) and Service under Management
of the Fund.

Minimum Investment
The minimum initial investment for each Class generally is $1,000.
Subsequent investments generally must be at least $100. The minimum and maximum
purchase amounts for retirement plans may vary. See Buying Shares.

Redemption and Exchange
Shares of the Fund are redeemed or exchanged at the net asset value
calculated after receipt of the redemption or exchange request. See Redemption
and Exchange.

Open-End Investment Company
Limited-Term Funds, Inc. is an open-end management investment company. The
Fund's portfolio of assets is diversified as defined by the Investment Company
Act of 1940 (the "1940 Act") and Rule 2a-7 under the 1940 Act. Limited-Term
Funds, Inc. was organized as a Pennsylvania business trust in 1981 and
reorganized as a Maryland corporation in 1990. See Shares under Management of
the Fund.

-3-
<PAGE>

SUMMARY OF EXPENSES

U.S. Government U.S. Government
Money Fund Money Fund
Shareholder Transaction Expenses A Class Consultant Class
- ---------------------------------------------------- ----------------- -----------------
<S> <C> <C>
Maximum Sales Charge Imposed on Purchases
(as a percentage of offering price) ............... None None
Maximum Sales Charge Imposed on Reinvested Dividends
(as a percentage of offering price) ............... None None
Redemption Fees .................................... None(1) None(1)
Exchange Fees ...................................... None(2) None(2)
</TABLE>

<TABLE>
<CAPTION>
U.S. Government U.S. Government
Annual Operating Expenses Money Fund Money Fund
(as a percentage of average daily net assets) A Class Consultant Class
- ----------------------------------------------- ----------------- -----------------
<S> <C> <C>
Management Fees .................................... 0.49% 0.49%
12b-1 Fees ......................................... None None(3)
Other Operating Expenses ........................... 0.90% 0.90%
----- -------
Total Operating Expenses ......................... 1.39% 1.39%
===== =======

</TABLE>

(1) CoreStates Bank, N.A. currently charges $7.50 per redemption for redemptions
payable by wire.
(2) Exchanges are subject to the requirements of each Class and a sales charge
may apply.
(3) Consultant Class Shares are subject to a Rule 12b-1 distribution plan;
however, the Board of Directors of the Fund suspended 12b-1 plan payments
from the Class effective June 1, 1990. See Distribution (12b-1) and Service
under Management of the Fund.

Investors utilizing the Asset Planner asset allocation service also
typically incur an annual maintenance fee of $35 per strategy. However,
effective November 1, 1996, the annual maintenance fee is waived until further
notice. Investors who utilize the Asset Planner for an Individual Retirement
Account ("IRA") will pay an IRA fee of $15 per Social Security number. See
Asset Planner in Part B.

-4-
<PAGE>

The following example illustrates the expenses that an investor would pay
on a $1,000 investment over various time periods, assuming (1) a 5% annual rate
of return and (2) redemption at the end of each time period. As noted in the
table above, the Fund charges no redemption fees.

1 year 3 years 5 years 10 years
-------- --------- --------- ---------
U.S. Government Money Fund
A Class .......... $14 $44 $76 $167

1 year 3 years 5 years 10 years
-------- --------- --------- ---------
U.S. Government Money Fund
Consultant Class .......... $14 $44 $76 $167

This example should not be considered a representation of past or future
expenses or performance. Actual expenses may be greater or less than those
shown.

The purpose of the above tables is to assist the investor in understanding
the various costs and expenses they will bear directly or indirectly in owning
shares of the Fund.

-5-
<PAGE>

- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS

The following financial highlights are derived from the financial statements of
Delaware Group Limited-Term Government Funds, Inc. -- U.S. Government Money
Fund and have been audited by Ernst & Young LLP, independent auditors. The data
should be read in conjunction with the financial statements, related notes, and
the report of Ernst & Young LLP, all of which are incorporated by reference
into Part B. Further information about the Fund's performance is contained in
its Annual Report to shareholders. A copy of the Fund's Annual Report
(including the report of Ernst & Young LLP) may be obtained from Limited-Term
Funds, Inc. upon request at no charge.
- --------------------------------------------------------------------------------

-6-
<PAGE>

GMF-CHT

U.S. Government Money Fund A Class
-----------------------------------------------------------------------
Year Ended
12/31/97 12/31/96 12/31/95 12/31/94 12/31/93
------------ ------------ ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of
Period(1) ........................... $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
Income From Investment
Operations
Net Investment Income ................ 0.048 0.047 0.045 0.029 0.020
-------- -------- --------- --------- ---------
Total From Investment
Operations ........................ 0.048 0.047 0.045 0.029 0.020
-------- -------- --------- --------- ---------
Less Dividends
Dividends (from net investment
income) ............................. (0.048) (0.047) (0.045) (0.029) (0.020)
-------- -------- --------- --------- ---------
Total Dividends .................... (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
======== ======== ========= ========= =========
- ---------------
Total Return ......................... 4.94%(2) 4.76%(2) 4.57% 2.93% 2.01%
- -------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
Net Assets, End of Period
(000's omitted) ..................... $16,751 $15,082 $13,787 $17,119 $20,919
Ratio of Expenses to Average Daily
Net Assets .......................... 0.70%(3) 0.74%(3) 1.39% 1.26% 1.04%
Ratio of Net Investment Income to
Average Daily Net Assets ............ 4.84%(4) 4.66%(4) 4.45% 2.91% 2.06%
- -------------------------------------------------------------------------------------------------------------
[RESTUBBED FROM TABLE ABOVE]

<CAPTION>
U.S. Government Money Fund A Class
-------------------------------------------------------------------------
Year Ended
12/31/92 12/31/91 12/28/90 12/29/89 12/31/88
------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of
Period(1) ........................... $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
Income From Investment
Operations
Net Investment Income ................ 0.031 0.052 0.071 0.077 0.061
--------- --------- --------- --------- ---------
Total From Investment
Operations ........................ 0.031 0.052 0.071 0.077 0.061
--------- --------- --------- --------- ---------
Less Dividends
Dividends (from net investment
income) ............................. (0.031) (0.052) (0.071) (0.077) (0.061)
--------- --------- --------- --------- ---------
Total Dividends .................... (0.031) (0.052) (0.071) (0.077) (0.061)
--------- --------- --------- --------- ---------
Net Asset Value, End of Period ....... $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
========= ========= ========= ========= =========
- ---------------
Total Return ......................... 3.13% 5.32% 7.35% 7.96% 6.26%
- ----------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
Net Assets, End of Period
(000's omitted) ..................... $41,049 $45,933 $49,907 $34,572 $35,013
Ratio of Expenses to Average Daily
Net Assets .......................... 0.91% 0.85% 0.82% 1.21% 1.20%
Ratio of Net Investment Income to
Average Daily Net Assets ............ 3.11% 5.23% 7.11% 7.69% 6.11%
- ----------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

- -----------
(1) Effective January 1, 1991, Limited-Term Funds, Inc. will attempt to maintain
a constant net asset value of $1.00 per share. Limited-Term Funds, Inc.
accomplished this change by effecting a ten-to-one stock split for
shareholders of record on that date. All figures prior to January 1, 1991
have been restated to reflect this stock split.
(2) Total return reflects the voluntary expense waiver noted under Summary of
Expenses.
(3) Ratio of expenses to average net assets prior to expense limitation was
1.22% for the fiscal year ended December 31, 1996 and 1.56% for fiscal year
ended December 31, 1997.
(4) Ratio of net investment income to average net assets prior to expense
limitation was 4.18% for the fiscal year ended December 31, 1996 and 3.98%
for fiscal year ended December 31, 1997.

-7-
<PAGE>

GMF-CHT
U.S. Government Money Fund Consultant Class
-----------------------------------------------------------------------
Year Ended
12/31/97 12/31/96 12/31/95 12/31/94 12/31/93
------------ ------------ ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period(1)... $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
Income From Investment
Operations
Net Investment Income .................... 0.048 0.047 0.045 0.029 0.020
-------- -------- --------- --------- ---------
Total From Investment
Operations ............................ 0.048 0.047 0.045 0.029 0.020
-------- -------- --------- --------- ---------
Less Distributions
Dividends (from net investment
income) ................................. (0.048) (0.047) (0.045) (0.029) (0.020)
-------- -------- --------- --------- ---------
Total Distributions .................... (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
======== ======== ========= ========= =========
- -----------------
Total Return ............................. 4.94%(3) 4.76%(3) 4.57% 2.93% 2.01%
- ------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
Net Assets, End of Period
(000's omitted) ......................... $ 495 $ 431 $ 329 $ 1,077 $ 555
Ratio of Expenses to Average Daily
Net Assets .............................. 0.70%(4) 0.74%(4) 1.39% 1.26% 1.04%
Ratio of Net Investment Income to
Average Daily Net Assets ................ 4.84%(5) 4.66%(5) 4.45% 2.91% 2.06%
- ------------------------------------------------------------------------------------------------------------------

[RESTUBBED FROM TABLE ABOVE]

<CAPTION>
U.S. Government Money Fund Consultant Class
-------------------------------------------------------------------------
Period
3/29/88(1)
Year Ended through
12/31/92 12/31/91 12/31/90 12/28/89 12/29/88
------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period(2)... $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
Income From Investment
Operations
Net Investment Income .................... 0.031 0.052 0.070 0.074 0.046
--------- --------- --------- --------- ---------
Total From Investment
Operations ............................ 0.031 0.052 0.070 0.074 0.046
--------- --------- --------- --------- ---------
Less Distributions
Dividends (from net investment
income) ................................. (0.031) (0.052) (0.070) (0.074) (0.046)
--------- --------- --------- --------- ---------
Total Distributions .................... (0.031) (0.052) (0.070) (0.074) (0.046)
--------- --------- --------- --------- ---------
Net Asset Value, End of Period ........... $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
========= ========= ========= ========= =========
- -----------------
Total Return ............................. 3.13% 5.32% 7.23% 7.69% 6.20%
- --------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
Net Assets, End of Period
(000's omitted) ......................... $ 747 $ 1,399 $ 1,604 $ 1,638 $ 483
Ratio of Expenses to Average Daily
Net Assets .............................. 0.91% 0.85% 0.94% 1.46% 1.45%
Ratio of Net Investment Income to
Average Daily Net Assets ................ 3.11% 5.23% 6.99% 7.44% 6.44%
- ------------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

- -----------
(1) The initial public sale of the Class was March 29, 1988; ratios and total
return for this period have been annualized.
(2) Effective January 1, 1991, Limited-Term Funds, Inc. will attempt to maintain
a constant net asset value of $1.00 per share. Limited-Term Funds, Inc.
accomplished this change by effecting a ten-to-one stock split for
shareholders of record on that date. All figures prior to January 1, 1991
have been restated to reflect this stock split.
(3) Total return reflects the voluntary expense waiver noted under Summary of
Expenses.
(4) Ratio of expenses to average net assets prior to expense limitation was
1.22% for the fiscal year ended December 31, 1996 and 1.56% for fiscal year
ended December 31, 1997.
(5) Ratio of net investment income to average net assets prior to expense
limitation was 4.18% for the fiscal year ended December 31, 1996 and 3.98%
for fiscal year ended December 31, 1997.

-8-
<PAGE>

INVESTMENT OBJECTIVE AND POLICIES

As a money market fund, the Fund's investment objective is to provide
maximum current income, while preserving principal and maintaining liquidity.
The Fund seeks to do this by investing only in short-term securities issued or
guaranteed as to principal and interest by the U.S. government, its agencies or
instrumentalities, and repurchase agreements secured by such permitted
investments. All securities purchased by the Fund mature within 13 months from
the date of purchase, although repurchase agreements may be collateralized by
securities maturing in more than 13 months.

The Fund attempts to manage the portfolio to maintain a constant net asset
value of $1.00 per share. While the Fund will make every effort to maintain a
fixed net asset value of $1.00 per share, there can be no assurance that this
objective will be achieved.

SUITABILITY
The Fund is suitable for investors who seek high yields along with easy
access to their money and stable principal value. Ownership of Fund shares can
reduce the bookkeeping and administrative inconvenience which is typically
connected with direct purchases of money
market securities.

Consultant Class Shares of the Fund are available through brokers,
financial planners, financial institutions and other entities to investors who
desire the investment and administrative services provided by such
financial professionals.

An investor should not consider a purchase of shares of the Fund as
equivalent to a complete investment program. Delaware Investments offers funds,
generally available through registered dealers, which may be used together to
create a more complete investment program.

INVESTMENT STRATEGY
The Fund invests principally in short-term U.S. government securities in
order to achieve its investment objective. While there is no assurance this
investment objective can be achieved, the Fund must follow certain policies
that can only be changed by shareholder approval.

Quality Restrictions
The Fund limits its investments to those which the Board of Directors has
determined present minimal credit risks and are of high quality and which are
otherwise in accordance with the maturity, quality and diversification
conditions with which taxable money market funds
must comply.

The Fund's investments include direct obligations issued by the U.S.
Treasury which include bills, notes and bonds which differ from each other
principally in interest rates, maturities and dates of issuance. These issues,
plus some federal agency obligations, are guaranteed by the full faith and
credit of the U.S. government. Examples include Federal Housing Administration,
Farmers Home Administration, Government National Mortgage Association and
Export-Import Bank of the United States. Other federal agency obligations only
have the guarantee of the agency. Examples include Federal Home Loan Banks,
Federal Land Banks, Federal Home Loan Mortgage Corporation, The Tennessee
Valley Authority and the International Bank for Reconstruction and Development.
Although obligations of agencies and instrumentalities are not direct
obligations of the U.S. Treasury, payment of the interest and principal on such
obligations is generally backed directly or indirectly by the U.S. government.
This support can range from the backing of the full faith and credit of the
United States, to U.S. Treasury guarantees, or to the backing solely of the
issuing agency or instrumentality itself.

-9-
<PAGE>

Maturity Restrictions
The Fund maintains an average maturity of not more than 90 days. Also, it
does not purchase any instruments with an effective remaining maturity of more
than 13 months.

Investment Strategy
The Fund intends to hold its investments until maturity, but may sell them
prior to maturity for a number of reasons. These reasons include: to shorten or
lengthen the average maturity, to increase the yield, to maintain the quality
of the portfolio or to maintain a stable share value.

The Fund may invest up to 10% of its assets, together with any other
illiquid investments, in fully-insured deposits maturing in 60 days or less
from members of
the FDIC.

The Fund may also use repurchase agreements which are at least 102%
collateralized by securities in which the Fund can invest directly. Repurchase
agreements help the Fund to invest cash on a short-term basis. Under a
repurchase agreement, the Fund acquires ownership and possession of a security,
and the seller agrees to buy the security back at a specified time and higher
price. If the seller is unable to repurchase the security, the Fund could
experience delays and losses in liquidating the securities. To minimize this
possibility, the Fund considers the creditworthiness of banks and dealers when
entering into repurchase agreements.

The Fund may borrow money as a temporary measure for extraordinary
purposes or to facilitate redemptions, but it does not presently intend to do
so.

Rule 144A Securities
The Fund may invest in restricted securities, including securities
eligible for resale without registration pursuant to Rule 144A ("Rule 144A
Securities") under the Securities Act of 1933 (the "1933 Act"). Rule 144A
permits many privately placed and legally restricted securities to be freely
traded among certain institutional buyers such as the Fund. The Fund may invest
no more than 10% of the value of its net assets in illiquid securities.

While maintaining oversight, the Board of Directors has delegated to the
Manager the day-to-day function of determining whether or not individual Rule
144A Securities are liquid for purposes of the Fund's 10% limitation on
investments in illiquid assets. The Board has instructed the Manager to
consider the following factors in determining the liquidity of a Rule 144A
Security: (i) the frequency of trades and trading volume for the security; (ii)
whether at least three dealers are willing to purchase or sell the security and
the number of potential purchasers; (iii) whether at least two dealers are
making a market in the security; and (iv) the nature of the security and the
nature of the marketplace trades (e.g., the time needed to dispose of the
security, the method of soliciting offers, and the mechanics of transfer).

If the Manager determines that a Rule 144A Security which was previously
determined to be liquid is no longer liquid and, as a result, the Fund's
holdings of illiquid securities exceed the Fund's 10% limit on investments in
such securities, the Manager will determine what action to take to ensure that
the Fund continues to adhere to such limitation.

Part B sets forth other more specific investment restrictions. A brief
discussion of those factors that materially affected the Fund's performance
during its most recently completed fiscal year appears in the Fund's Annual
Report.

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THE DELAWARE DIFFERENCE

PLANS AND SERVICES
The Delaware Difference is our commitment to provide you with superior
information and quality service on your investments in funds in the Delaware
Investments family.

SHAREHOLDER PHONE DIRECTORY

Investor Information Center
800-523-4640
Fund Information; Literature; Price; Yield and Performance Figures

Shareholder Service Center
800-523-1918
Information on Existing Regular Investment Accounts and Retirement Plan
Accounts; Wire Investments; Wire Liquidations; Telephone Liquidations
and Telephone Exchanges

Delaphone
800-362-FUND
(800-362-3863)

Performance Information
During business hours, you can call the Investor Information Center for
current yield information. Yield information is updated each weekday and is
based on the annualized yield over the past seven-day or longer period. Current
yield and total return information may also be included in advertisements and
information given to shareholders.

Shareholder Services
During business hours, you can call the Delaware Investments' Shareholder
Service Center. The representatives can answer any of your questions about your
account, the Fund, the various service features and other funds in the Delaware
Investments family.

Delaphone Service
Delaphone is an account inquiry service for investors with Touch-Tone(R)
phone service. It enables you to get information on your account faster than
the mailed statements and confirmations. Delaphone also provides current
performance information on the Fund, as well as other funds in the Delaware
Investments family. Delaphone is available seven days a week, 24 hours a day.

Statements and Confirmations
You will receive quarterly statements of your account summarizing all
transactions during the period. Accounts in which there has been activity,
other than a reinvestment of dividends, will receive a monthly statement
confirming each transaction. You should examine statements and confirmations
immediately and promptly report any discrepancy by calling the Shareholder
Service Center.

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Duplicate Confirmations
If your financial adviser or investment dealer is noted on your investment
application, we will send a duplicate confirmation to him or her. This makes it
easier for your adviser to help you manage your investments.

Tax Information
Each year, Limited-Term Funds, Inc. will mail
to you information on the tax status of your dividends
and distributions.

Dividend Payments
Dividends, capital gains and other distributions are automatically
reinvested in your account, unless you elect to receive them in cash. You may
also elect to have the dividends earned in one fund automatically invested in
another fund in the Delaware Investments family with a different investment
objective, subject to certain exceptions and limitations.

For more information, see Additional Methods of Adding to Your Investment
- -- Dividend Reinvestment Plan under Buying Shares or call the Shareholder
Service Center.

Retirement Planning
An investment in the Fund may be a suitable investment option for
tax-deferred retirement plans. Delaware Investments offers a full spectrum of
qualified and non-qualified retirement plans, including the popular 401(k)
deferred compensation plan, IRA, and the new Roth IRA. Please call Delaware
Investments at 1-800-5230-1918 for more information.

MoneyLine(SM) Services
The Delaware Investments family offers the following services for fast and
convenient transfer of funds between your personal bank account and your Fund
account:

1. MoneyLine(SM) Direct Deposit Service
If you elect to have your dividends and distributions paid in cash and
such dividends and distributions are in an amount of $25 or more, you may
choose the MoneyLine(SM) Direct Deposit Service and have such payments
transferred from your Fund account to your predesignated bank account. See
Dividends and Distributions. In addition, you may elect to have your Systematic
Withdrawal Plan payments transferred from your Fund account to your
predesignated bank account through this service. See Systematic Withdrawal
Plans under Redemption and Exchange. This service is not available for certain
retirement plans.

2. MoneyLine(SM) On Demand
You or your investment dealer may request purchases and redemptions of Fund
shares by using MoneyLine(SM) On Demand. When you authorize the Fund to accept
such requests from you or your investment dealer, funds will be withdrawn from
(for share purchases) or deposited to (for share redemptions) your predesignated
bank account. Your request will be processed the same day if you call prior to 4
p.m., Eastern time. There is a $25 minimum and a $50,000 maximum limit for
MoneyLine(SM) On Demand transactions. This service is not available for
retirement plans, except for purchases of shares by IRAs.

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<PAGE>

For each MoneyLine(SM) Service, it may take up to four business days for
the transactions to be completed. You can initiate either service by completing
an Account Services form. If the name and address on your designated bank
account are not identical to the name and address on your Fund account, you must
have your signature guaranteed. The Fund does not charge a fee for any
MoneyLineSM Service; however, your bank may charge a fee. Please call the
Shareholder Service Center for additional information about these services.

Exchange Privilege
The Exchange Privilege permits you to exchange all or part of your shares
into shares of the other mutual funds available from the Delaware Investments
family, subject to the eligibility and minimum purchase requirements set forth
in each fund's prospectus, including any applicable front-end sales charge. For
additional information on exchanges, see Investing by Exchange under Buying
Shares; and Redemption and Exchange.

Wealth Builder Option
You may elect to invest in the Fund through regular liquidations of shares
in your accounts in other funds in the Delaware Investments family. Investments
under this feature are exchanges and are therefore subject to the same
conditions and limitations as other exchanges of Fund shares. See Additional
Methods of Adding to Your Investment -- Wealth Builder Option and Investing by
Exchange under Buying Shares; and Redemption and Exchange.

Financial Information about the Fund
Each fiscal year, you will receive an audited annual report and an
unaudited semi-annual report. These reports provide detailed information about
the Fund's investments and performance. Limited-Term Funds, Inc.'s fiscal year
ends on December 31.

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<PAGE>

BUYING SHARES

Shares of the Fund may be purchased through brokers, financial
institutions and other entities that have a dealer agreement with the Fund's
Distributor or a service agreement with the Fund's Distributor or a service
agreement with the Fund. Investors who do not wish to receive the additional
services that are typically offered by such financial professionals may also
purchase Class A Shares directly by contacting the Fund or the Distributor.

Purchase Amounts
Generally, the minimum initial investment for Class A Shares and
Consultant Class Shares is $1,000. Subsequent purchases of shares of either
Class generally must be $100 or more. For purchases under the Uniform Gifts to
Minors Act or Uniform Transfers to Minors Act or through an Automatic
Investment Plan, there is a minimum initial purchase of $250 and a minimum
subsequent purchase of $25. All purchases for each Class are at net asset
value. There is no sales charge.

Minimum purchase requirements do not apply to retirement plans other than
IRAs for which there is a minimum initial purchase of $250, and a minimum
subsequent purchase of $25, regardless of which Class
is selected.

The Fund makes it easy to invest by mail, by wire, by exchange and by
arrangement with your investment dealer.

Investing through Your Investment Dealer
You can make a purchase of shares of the Fund through most investment
dealers who, as part of the service they provide, must transmit orders
promptly. They may charge for this service. If you want a dealer but do not
have one, Delaware Investments can refer you to one.

Investing by Mail
1. Initial Purchases--An Investment Application or, in the case of a retirement
plan account, an appropriate retirement plan application, must be completed,
signed and sent with a check, payable to U.S. Government Money Fund A Class or
U.S. Government Money Fund Consultant Class at P.O. Box 7977, Philadelphia,
PA 19101.

2. Subsequent Purchases--Additional purchases may be made at any time by
mailing a check payable to U.S. Government Money Fund A Class or U.S.
Government Money Fund Consultant Class. Your check should be identified with
your name(s) and account number. An investment slip (similar to a deposit slip)
is provided at the bottom of dividend statements that you will receive from
Limited-Term Funds, Inc. Use of this investment slip can help expedite
processing of your check when making additional purchases. Your investment may
be delayed if you send additional purchases by certified mail.

Investing by Wire
You may purchase shares by requesting your bank to transmit funds by wire
to CoreStates Bank, N.A., ABA #031000011, account number 1412893401 (include
your name(s) and your account number for the Class in which you are investing).

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<PAGE>

1. Initial Purchases--Before you invest, telephone the Shareholder Service
Center to get an account number. If you do not call first, processing your
investment may be delayed. In addition, you must promptly send your Investment
Application or, in the case of a retirement plan account, an appropriate
retirement plan application to U.S. Government Money Fund A Class or U.S.
Government Money Fund Consultant Class, at P.O. Box 7977, Philadelphia, PA
19101.

2. Subsequent Purchases--You may make additional investments anytime by wiring
funds to CoreStates Bank, N.A., as described above. You should advise the
Shareholder Service Center by telephone of each wire
you send.

If you want to wire investments to a retirement plan account, call the
Shareholder Service Center for special wiring instructions.

Investing by Exchange
If you have an investment in another mutual fund in the Delaware
Investments family, you may write and authorize an exchange of part or all of
your investment into shares of the Fund. Class B Shares and Class C Shares of a
fund may not be exchanged into either Class of the Fund. If you wish to open an
account by exchange, call the Shareholder Service Center for more information.
All exchanges are subject to the eligibility and minimum purchase requirements
set forth in each fund's prospectus. See Redemption and Exchange for more
complete information concerning your exchange privilege.

Additional Methods of Adding to Your Investment
Call the Shareholder Service Center for more information if you wish to
use the following services:

1. Automatic Investing Plan
The Automatic Investing Plan enables you to make regular monthly
investments without writing or mailing checks. You may authorize Limited-Term
Funds, Inc. to transfer a designated amount monthly from your checking account
to your Fund account. Many shareholders use this as an automatic savings plan
for IRAs and other purposes. Shareholders should allow a reasonable amount of
time for initial purchases and changes to these plans to become effective.

This option is not available to participants in the following plans:
SAR/SEP, SEP/IRA, SIMPLE IRA, SIMPLE 401(k), Profit Sharing and Money Purchase
Pension Plans, 401(k) Defined Contribution Plans, or 403(b)(7) or 457 Deferred
Compensation Plans.

2. Direct Deposit
You may wish your employer or bank to make regular investments directly to
your account for you (for example: payroll deduction, pay by phone, annuity
payments). The Fund also accepts preauthorized recurring government and private
payments by Electronic Fund Transfer, which avoids mail time and check clearing
holds on payments such as social security, federal salaries, Railroad
Retirement benefits, etc.

* * *

Should investments through an Automatic Investing Plan or by direct
deposit be reclaimed or returned for some reason, Limited-Term Funds, Inc. has
the right to liquidate your shares to reimburse the government or transmitting
bank. If there are insufficient funds in your account, you are obligated to
reimburse the Fund.

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<PAGE>

3. MoneyLine(SM) On Demand
Through the MoneyLine(SM) On Demand service, you or your investment dealer
may call the Fund to request a transfer of funds from your predesignated bank
account to your Fund account. See MoneyLine(SM) Services under The Delaware
Difference for additional information about
this service.

4. Wealth Builder Option
You can use the Wealth Builder Option to invest in the Fund through
regular liquidations of shares in your accounts in other funds in the Delaware
Investments family, subject to the same conditions and limitations as other
exchanges noted above. You may also elect to invest in other mutual funds in
the Delaware Investments family through the Wealth Builder Option through
exchanges of shares in your Fund account.

Under this automatic exchange program, you can authorize regular monthly
amounts (minimum of $100 per fund) to be liquidated from your account in one or
more funds in the Delaware Investments family and invested automatically into
any other account in a mutual fund available from the Delaware Investments
family that you specify. If in connection with the election of the Wealth
Builder Option, you wish to open a new account to receive the automatic
investment, such new account must meet the minimum initial purchase
requirements described in the prospectus of the fund that you select. All
investments under this option are exchanges and are therefore subject to the
same conditions and limitations as other exchanges noted above. You can
terminate your participation in Wealth Builder at any time by giving written
notice to the fund from which the exchanges are made. See Redemption and
Exchange.

5. Dividend Reinvestment Plan
You can elect to have your distributions (dividend income or other
distributions) paid to you by check or reinvested in your account without a
sales charge or you may be permitted to reinvest your distributions in certain
other funds in the Delaware Investments family without a sales charge, subject
to eligibility and minimum purchase requirements set forth in each fund's
prospectus. Dividends on shares of either Class may not be invested in Class B
Shares or Class C Shares that are offered by certain other funds in the
Delaware Investments family. For more information about reinvestment in shares
of other funds in the Delaware Investments family, call the Shareholder Service
Center.

Dividends for participants in the following retirement plans are
automatically reinvested into the same fund in the Delaware Investments family
in which their investments are held: SAR/SEP, SEP/IRA, SIMPLE IRA, SIMPLE
401(k), Profit Sharing and Money Purchase Pension Plans, 401(k) Defined
Contribution Plan, or 403(b)(7) or 457 Deferred Compensation Plans.

Purchase Price and Effective Date
The offering price (net asset value) of each Class is determined as of the
close of regular trading on the New York Stock Exchange (ordinarily, 4 p.m.,
Eastern time) on days when the Exchange is open.

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<PAGE>

Investments by Federal Funds wire will be effective upon receipt. If the
wire is received after the time the offering price of shares is determined, as
noted above, it will be effective the next business day. If the investment is
made by check, the check must be converted to Federal Funds before your purchase
can be effective (normally one business day after receipt).

Your purchase begins earning dividends the next business day after
becoming effective. See Dividends and Distributions for additional information.

The Conditions of Your Purchase
The Fund reserves the right to reject any purchase order. If a purchase is
canceled because your check is returned unpaid, you are responsible for any
loss incurred. The Fund can redeem shares from your account(s) to reimburse
itself for any loss, and you may be restricted from making future purchases in
any of the funds in the Delaware Investments family. The Fund reserves the
right to reject purchase orders paid by third-party checks or checks that are
not drawn on a domestic branch of a United States financial institution. If a
check drawn on a foreign financial institution is accepted, you may be
subject to additional bank charges for clearance and currency conversion.

The Fund also reserves the right, following shareholder notification, to
charge a service fee on non-retirement accounts that, as a result of
redemption, have remained below the minimum stated account balance for a period
of three or more consecutive months. Holders of such accounts may be notified
of their insufficient account balance and advised that they have until the end
of the current calendar quarter to raise their balance to the stated minimum.
If the account has not reached the minimum balance requirement by that time,
the Fund will charge a $9 fee for that quarter and each subsequent quarter
until the account is brought up to the minimum balance. The service fee will be
deducted from the account during the first week of each calendar quarter for
the previous quarter, and will be used to help defray the cost of maintaining
low-balance accounts. No fees will be charged without proper notice.

The Fund also reserves the right, upon 60 days' written notice, to
involuntarily redeem accounts that remain under the minimum initial purchase
amount as a result of redemptions. An investor making the minimum initial
investment may be subject to involuntary redemption if he or she redeems any
portion of his or her account.

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<PAGE>

REDEMPTION AND EXCHANGE

You can redeem or exchange your shares in a number of different ways. The
exchange service is useful if your investment requirements change and you want
an easy way to invest in tax-advantaged funds, equity funds, bond funds or
other money market funds. Exchanges are subject to the requirements of each
fund and all exchanges of shares constitute taxable events. All exchanges are
subject to the eligibility and minimum purchase requirements set forth in each
fund's prospectus. Any applicable front-end sales charge will apply to
exchanges from this Fund and any other money market fund to other funds, except
for exchanges involving assets that were previously invested in a fund with a
front-end sales charge and/or resulted from the reinvestment of dividends.
Shares of the Fund may not be exchanged for Class B Shares or Class C Shares.
Shares acquired in an exchange must be registered in the state where they are
so purchased. You may want to consult your financial adviser or investment
dealer to discuss which funds available from the Delaware Investments family
will best meet your changing objectives, and the consequences of any exchange
transaction. You may also call Delaware Investments directly for fund
information.

Your shares will be redeemed or exchanged at a price based on the net
asset value next determined after the Fund receives your request in good order.
For example, redemption or exchange requests received in good order after the
time the offering price of shares is determined will be processed on the next
business day. See Purchase Price and Effective Date under Buying Shares.

Except as noted below, for a redemption request to be in "good order," you
must provide your account number, account registration, and the total number of
shares or dollar amount of the transaction. For exchange requests, you must also
provide the name of the fund you want to receive the proceeds. Exchange
instructions and redemption requests must be signed by the record owner(s)
exactly as the shares are registered. You may request a redemption or an
exchange by calling the Shareholder Service Center at 800-523-1918. The Fund may
suspend, terminate or amend the terms of, the exchange privilege upon 60 days'
written notice to shareholders. Redemption proceeds will be distributed
promptly, as described below, but not later than seven days after receipt of a
redemption request.

The Fund will process written and telephone redemption requests to the
extent that the purchase orders for the shares being redeemed have already
settled. The Fund will honor redemption requests as to shares for which a check
was tendered as payment, but the Fund will not mail or wire the proceeds until
it is reasonably satisfied that the purchase check has cleared, which may take
up to 15 days from the purchase date. You can avoid this potential delay if you
purchase shares by wiring Federal Funds. You may call the Shareholder Service
Center to determine if your funds are available for redemption. The Fund
reserves the right to reject a written or telephone redemption request or delay
payment of redemption proceeds if there has been a recent change to the
shareholder's address of record.

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<PAGE>

Various redemption and exchange methods are outlined below. There is no
fee charged by the Fund or the Distributor for redeeming or exchanging your
shares, but such fees could be charged in the future. You may also have your
investment dealer arrange to have your shares redeemed or exchanged. Your
investment dealer may charge for this service.

All authorizations given by shareholders, including selection of any of
the features described below, shall continue in effect until such time as a
written revocation or modification has been received by the Fund or its agent.

Class A Shares of funds available from the Delaware Investments family
that carry a front-end sales charge will be subject to a contingent deferred
sales charge ("Limited CDSC") upon redemption if the shares were purchased at
net asset value without payment of a front-end sales charge and if a dealer's
commission was paid to a financial adviser, except in certain limited
instances. Such shares may be exchanged for shares of either Class of the Fund
without the imposition of the Limited CDSC at the time of the exchange.
However, upon subsequent redemption from the Fund or after a subsequent
exchange into a fund that is subject to the Limited CDSC, such shares will be
subject to the Limited CDSC imposed by the original fund whose shares were
initially exchanged into this Fund. Shareholders will be given credit for the
period during which the Fund shares were held.

Checkwriting Feature
Checkwriting is a convenient access feature that allows you to earn
dividends until your check is presented to the Fund.

You can request special checks by marking the box on the Investment
Application.

Checks must be drawn for $500 or more and, unless otherwise indicated on
the Investment Application or your checkwriting authorization form, must be
signed by all owners of the account.

You will be subject to CoreStates Bank, N.A.'s rules and regulations
governing similar accounts. If the amount of the check is greater than the
value of the shares in your account, the check will be returned and you may be
subject to a charge.

You may request a stop payment on checks by providing the Fund with a
written authorization (oral requests will be accepted only if followed promptly
with a written authorization). Such requests will remain in effect for six
months unless renewed or canceled.

Checks paid will be returned to you semi-annually (January and July). If
you need a copy of a check prior to the regular mailing, you may call the
Shareholder Service Center.

Since dividends are declared daily, you may not use the Checkwriting
Feature to close your account. (See below and Part B for additional
information.)

Written Redemption
You can write to the Fund at 1818 Market Street, Philadelphia, PA 19103 to
redeem some or all of your shares. The request must be signed by all owners of
the account or your investment dealer of record. For redemptions of more than
$50,000, or when the proceeds are not sent to the shareholder(s) at the address
of record, the Fund requires a signature by all owners of the account and a

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<PAGE>

signature guarantee for each owner. Each signature guarantee must be supplied
by an eligible guarantor institution. The Fund reserves the right to reject a
signature guarantee supplied by an eligible institution based on its
creditworthiness. The Fund may require further documentation from corporations,
executors, retirement plans, administrators, trustees or guardians.

The redemption request is effective when it is received in good order.
Payment is normally mailed the next business day after receipt of the
redemption request. If your shares are in certificate form, the certificate(s)
must accompany your request and also be in good order. Certificates are issued
for shares only if a shareholder submits a specific request.

Written Exchange
You can also write to the Fund (at 1818 Market Street, Philadelphia, PA
19103) to request an exchange of any or all of your shares into another mutual
fund in the Delaware Investments family, subject to the same conditions and
limitations as other exchanges noted above.

Telephone Redemption and Exchange
To get the added convenience of the telephone redemption and exchange
methods, you must have the Transfer Agent hold your shares (without charge) for
you. If you choose to have your shares in certificate form, you may redeem or
exchange only by written request and you must return your certificate(s).

The Telephone Redemption -- Check to Your Address of Record service and
the Telephone Exchange service, both of which are described below, are
automatically provided unless you notify the Fund in writing that you do not
wish to have such services available with respect to your account. The Fund
reserves the right to modify, terminate or suspend these procedures upon 60
days' written notice to shareholders. It may be difficult to reach the Fund by
telephone during periods when market or economic conditions lead to an
unusually large volume of telephone requests.

Neither the Fund nor its Transfer Agent is responsible for any shareholder
loss incurred in acting upon written or telephone instructions for redemption
or exchange of Fund shares which are reasonably believed to be genuine. With
respect to such telephone transactions, the Fund will follow reasonable
procedures to confirm that instructions communicated by telephone are genuine
(including verification of a form of personal identification) as, if it does
not, the Fund or the Transfer Agent may be liable for any losses due to
unauthorized or fraudulent transactions. Instructions received by telephone are
generally tape recorded, and a written confirmation will be provided for all
purchase, exchange and redemption transactions initiated by telephone. By
exchanging shares by telephone, you are acknowledging prior receipt of a
prospectus for the fund into which shares are being exchanged.

Telephone Redemption--Check to Your Address of Record
The Telephone Redemption feature is a quick and easy method to redeem
shares. You or your investment dealer of record can have redemption proceeds of
$50,000 or less mailed to you at your record address. Checks will be payable to
the shareholder(s) of record. Payment is normally mailed the next business day
after receipt of the redemption request. This service is only available to
individual, joint and individual fiduciary-type accounts.

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Telephone Redemption--Proceeds to Your Bank
Redemption proceeds of $1,000 or more can be transferred to your
predesignated bank account by wire or by check. You should authorize this
service when you open your account. If you change your predesignated bank
account, you must complete an Authorization Form and have your signature
guaranteed. For your protection, your authorization must be on file. If you
request a wire, your funds will normally be sent the next business day.
CoreStates Bank, N.A.'s fee (currently $7.50) will be deducted from your
redemption. If you ask for a check, it will normally be mailed the next
business day after receipt of your redemption request to your predesignated
bank account. There are no fees for this redemption method, but the mail time
may delay getting funds into your bank account. Simply call the Shareholder
Service Center prior to the time the offering price and net asset value are
determined, as noted above.

MoneyLine(SM) On Demand
Through the MoneyLine(SM) On Demand service, you or your investment dealer
may call the Fund to request a transfer of funds from your Fund account to your
predesignated bank account. See MoneyLine(SM) Services under The Delaware
Difference for additional information about this service.

Telephone Exchange
The Telephone Exchange feature is a convenient and efficient way to adjust
your investment holdings as your liquidity requirements and investment
objectives change. You or your investment dealer of record can exchange your
shares into any other funds available from the Delaware Investments family
under the same registration, subject to the same conditions and limitations as
other exchanges noted above. Telephone exchanges may be subject to limitations
as to amounts or frequency.

Systematic Withdrawal Plans
1. Regular Plans
This plan provides shareholders with a consistent monthly (or quarterly)
payment. This is particularly useful to shareholders living on fixed incomes,
since it provides them with a stable supplemental amount. With accounts of at
least $5,000, you may elect monthly withdrawals of $25 (quarterly $75) or more.
The Fund does not recommend any particular monthly amount, as each
shareholder's situation and needs vary. Payments are normally made by check. In
the alternative, you may elect to have your payments transferred from your Fund
account to your predesignated bank account through the MoneyLine(SM) Direct
Deposit Service. Through the MoneyLine(SM) Direct Deposit Service, it may take
up to four business days for the transaction to be completed. There are no
separate fees for this redemption method. See MoneyLineSM Services under The
Delaware Difference for more information about this service.

2. Retirement Plans
For shareholders eligible under the applicable retirement plan to receive
benefits in periodic payments, the Systematic Withdrawal Plan provides you with
maximum flexibility. A number of formulas are available for calculating your
withdrawals, depending upon whether the distributions are required or optional.
Withdrawals must be for $25 or more; however, no minimum account balance is
required. The MoneyLine(SM) Direct Deposit Service described above is not
available for certain retirement plans.

* * *

Shareholders should not purchase additional shares while participating in
a Systematic Withdrawal Plan. For more information on Systematic Withdrawal
Plans, please call the Shareholder Service Center.

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DIVIDENDS AND DISTRIBUTIONS

The Fund's dividends are declared daily and paid monthly on the last day
of each month. Payment by check of cash dividends will ordinarily be mailed
within three business days after the payable date.

Purchases of Fund shares by wire begin earning dividends when converted
into Federal Funds and available for investment, normally the next business day
after receipt. However, if the Fund is given prior notice of Federal Funds wire
and an acceptable written guarantee of timely receipt from an investor
satisfying the Fund's credit policies, the purchase will start earning
dividends on the date the wire is received. Purchases by check earn dividends
upon conversion to Federal Funds, normally one business day after receipt.

Limited-Term Funds, Inc. declares a dividend to all Class shareholders of
record at the time the offering price of shares is determined. See Purchase
Price and Effective Date under Buying Shares. Thus, when redeeming shares,
dividends continue to accrue up to and including the date of redemption.

Each class of shares of the Fund will share proportionately in the
investment income and expenses of the Fund, except that Class A Shares will not
incur any distribution fee under the 12b-1 Plan for Consultant Class Shares. No
distribution fee under the 12b-1 Plan for Consultant Class Shares is currently
being paid.

Short-term capital gains distributions, if any, may be paid with the daily
dividend; otherwise, they will be distributed annually during the first quarter
following the close of the fiscal year.

Both dividends and distributions, if any, will be automatically reinvested
in your account unless you elect otherwise. Any check in payment of dividends
or other distributions which cannot be delivered by the United States Post
Office or which remains uncashed for a period of more than one year may be
reinvested in your account at the then-current net asset value and the dividend
option may be changed from cash to reinvest. If you elect to take your
dividends and distributions in cash and such dividends and distributions are in
an amount of $25 or more, you may choose the MoneyLineSM Direct Deposit Service
and have such payments transferred from your Fund account to your predesignated
bank account. This service is not available for certain retirement plans. See
MoneyLineSM Services under The Delaware Difference for more information about
this service.

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TAXES

The Fund has qualified, and intends to continue to qualify, as a regulated
investment company under Subchapter M of the Internal Revenue Code of 1986, as
amended (the "Code"). As such, the Fund will not be subject to federal income
tax, or to any excise tax, to the extent its earnings are distributed as
provided in the Code and it satisfies certain other requirements relating to
the source of its income and diversification of its assets. Each fund of
Limited-Term Funds, Inc. is treated as a separate tax entity for federal income
tax purposes.

On August 5, 1997, President Clinton signed into law the Taxpayer Relief
Act of 1997 (the "1997 Act"). This new law makes sweeping changes in the Code.
Because many of these changes are complex, and only indirectly affect the Fund
and its distributions to you, they are discussed in Part B. Changes in the
treatment of capital gains, however, are discussed in this section.

The Fund intends to distribute substantially all of its net investment
income and net capital gains. Dividends from net investment income or net
short-term capital gains, if any, will be taxable to you as ordinary income,
whether received in cash or in additional shares. No portion of the Fund's
distributions will be eligible for the dividends-received deduction for
corporations.

In addition to federal taxes, shareholders may be subject to state and
local taxes on distributions. Distributions of interest income and capital
gains realized from certain types of U.S. government securities may be exempt
from state and local personal income tax. You should consult your tax adviser
with respect to the tax status of distributions from the Fund in your state and
locality. Shares of the Fund are exempt from Pennsylvania county personal
property taxes.

The Treatment of Capital Gain Distributions
under the Taxpayer Relief Act of 1997
The 1997 Act creates a category of long-term capital gain for individuals
who will be taxed at new lower tax rates. For investors who are in the 28% or
higher federal income tax brackets, these gains will be taxed at a maximum rate
of 20%. For investors who are in the 15% federal income tax bracket, these
gains will be taxed at a maximum rate of 10%. Capital gain distributions will
qualify for these new maximum tax rates, depending on when the Fund's
securities were sold and how long they were held by the Fund before they were
sold. Investors who want more information on holding periods and other
qualifying rules relating to these new rates should review the expanded
discussion in Part B, or should contact their own tax advisers.

Limited-Term Funds, Inc. will advise you in its annual information
reporting at calendar year end of the amount of its capital gain distributions
which will qualify for these maximum federal tax rates.
Dividends or capital gains which are declared in October, November or
December to shareholders of record on a specified date in one of those months
but which, for operational reasons, may not be paid to the shareholder until
the following January, will be treated for tax
purposes as if paid by the Fund and received by the shareholder on December 31
of the calendar year in which they are declared.

Each year, Limited-Term Funds, Inc. will mail to you information on the tax
status of dividends and distributions. Shareholders will receive each year
information as to the portion of distributions that came from U.S. government
securities. Of course, shareholders who are not subject to tax on their income
would not be required to pay tax on amounts distributed to them by the Fund.

-23-
<PAGE>

NET ASSET VALUE PER SHARE

The purchase and redemption price of the shares of each Class is equal to
the Class' net asset value ("NAV") per share that is next computed after the
order is received. The NAV is computed as of the close of regular trading on
the New York Stock Exchange (ordinarily, 4 p.m., Eastern time) on days when the
Exchange is open.

The NAV per share is computed by adding the value of all securities and
other assets in the portfolio, deducting any liabilities (expenses and fees are
accrued daily) and dividing by the number of shares outstanding.

The Fund's total net assets are determined by valuing the portfolio
securities at amortized cost. Under the direction of the Board of Directors,
certain procedures have been adopted to monitor the value of the Fund's
securities and stabilize the net asset value per share at $1.00. Prior to
January 1, 1991, the portfolio of the Fund was managed to maintain a fixed net
asset value of $10.00 per share. The Fund reduced the net asset value per share
from $10.00 to $1.00 by effecting a ten-to-one stock split for shareholders of
record on that date.

See Part B for additional information.

-24-
<PAGE>

MANAGEMENT OF THE FUND

Directors
The business and affairs of Limited-Term Funds, Inc. are managed under the
direction of its Board of Directors. Part B contains additional information
regarding Limited-Term Funds, Inc.'s directors and officers.

Investment Manager
The Manager furnishes investment management services to the Fund.

The Manager and its predecessors have been managing the funds in the
Delaware Investments family since 1938. On December 31, 1997, the Manager and
its affiliates within Delaware Investments, including Delaware International
Advisers Ltd., were managing in the aggregate more than $40 billion in assets
in the various institutional or separately managed (approximately
$24,040,760,000) and investment company (approximately $16,482,523,000)
accounts.

The Manager is a series of Delaware Management Business Trust. The Manager
changed its form of organization from a corporation to a business trust on
March 1, 1998. The Manager is an indirect, wholly owned subsidiary of Delaware
Management Holdings, Inc. ("DMH"). On April 3, 1995, a merger between DMH and a
wholly owned subsidiary of Lincoln National Corporation ("Lincoln National")
was completed. DMH and the Manager are now indirect, wholly owned subsidiaries,
and subject to the ultimate control, of Lincoln National. Lincoln National,
with headquarters in Fort Wayne, Indiana, is a diversified organization with
operations in many aspects of the financial services industry, including
insurance and investment management. In connection with the merger, a new
Investment Management Agreement between Limited-Term Funds, Inc. on behalf of
the Fund and the Manager was executed following shareholder approval.

The Manager manages the Fund's portfolio, makes investment decisions and
implements them. The Manager also administers Limited-Term Funds, Inc.'s
affairs and also pays the salaries of all the directors, officers and employees
of Limited-Term Funds, Inc. who are affiliated with the Manager. The annual
compensation paid by the Fund for investment management services is equal to
1/2 of 1% of average daily net assets of the Fund, less a proportionate share
of all directors' fees paid to the unaffiliated directors by the Fund.
Investment management fees incurred by the Fund for the fiscal year ended
December 31, 1997 were 0.49% of average daily net assets and no fees were paid
by the Fund as a result of the voluntary waiver of fees by the Manager as
described below. The directors of Limited-Term Funds, Inc. annually review fees
paid to the Manager.

From the period January 26, 1996 through February 9, 1998, the Manager
elected voluntarily to waive that portion, if any, of the annual management
fees payable by the Fund and to pay the Fund's expenses to the extent necessary
to ensure that the total operating expenses of the Fund did not exceed 0.70%
(exclusive of taxes, interest, brokerage commissions, extraordinary expenses
and, in the case of Consultant Class Shares, 12b-1 fees).

Portfolio Trading Practices
Portfolio trades are generally made on a net basis without brokerage
commissions. However, the price may include a mark-up or mark-down.

Banks, brokers or dealers are selected to execute the Fund's portfolio
transactions.

-25-
<PAGE>

The Manager uses its best efforts to obtain the best available price and
most favorable execution for portfolio transactions. Orders may be placed with
brokers or dealers who provide brokerage and research services to the Manager
or its advisory clients. These services may be used by the Manager in servicing
any of its accounts. Subject to best price and execution, the Manager may
consider a broker/dealer's sales of Fund shares in placing portfolio orders,
and may place orders with broker/dealers that have agreed to defray certain
Fund expenses such as custodian fees.

Performance Information
From time to time, the Fund may publish the "yield" and "effective yield"
for the Classes. Both yield figures are based on historical earnings and are
not intended to indicate future performance. The "yield" of a Class refers to
the income generated by an investment in the Class over a specified seven-day
period. This income is then "annualized," which means the amount of income
generated by the investment during that week is assumed to be generated each
week over a 52-week period and is shown as a percentage of the investment. The
"effective yield" is calculated in a similar manner but, when annualized, the
income earned by an investment in the Class is assumed to be reinvested. The
"effective yield" will be slightly higher than the "yield" because of the
compounding effect of this assumed reinvestment. Yield fluctuates and is not
guaranteed.

The Fund may also publish aggregate and average annual total return
information concerning a Class which will reflect the compounded rate of return
of an investment in the Class over a specified period of time and will assume
the investment of all distributions at net asset value. Past performance is not
a guarantee of future results.

Distribution (12b-1) and Service
The Distributor, Delaware Distributors, L.P. (which formerly conducted
business as Delaware Distributors, Inc.), serves as the national distributor
for the Fund under a Distribution Agreement dated April 3, 1995.

The Fund has adopted a distribution plan under Rule 12b-1 (the "Plan") for
Consultant Class Shares, which permits the Fund to pay the Distributor from the
assets of this Class a monthly fee for its services and expenses in
distributing and promoting sales of Consultant Class Shares. These expenses
include preparing and distributing advertisements, sales literature, and
prospectuses and reports used for sales purposes, compensating sales and
marketing personnel, holding special promotions for specified periods of time
and paying distribution and maintenance fees to brokers, dealers and other
entities which sell Consultant Class Shares. In connection with the promotion
of Consultant Class Shares, the Distributor may, from time to time, pay to
participate in dealer-sponsored seminars and conferences, and reimburse dealers
for expenses incurred in connection with preapproved seminars, conferences and
advertising. The Distributor may pay or allow additional promotional incentives
to dealers as part of preapproved sales contests and/or to dealers who provide
extra training and information concerning Consultant Class Shares and increase
sales of shares of this Class. In addition, the Fund may make payments from
Consultant Class Shares assets directly to others, such as banks, who aid in
the distribution of Class shares or provide services to the Class, pursuant to
service agreements with the Fund. Registered representatives of brokers,
dealers or other entities who have sold a specified level of funds in the
Delaware Investments family having a 12b-1 Plan were, prior to June 1, 1990,
paid a 0.25% continuing trail fee by the Distributor from 12b-1 Plan payments
of Consultant Class Shares for assets maintained in the Class. Payment of such
fees has been suspended but may be reinstituted in the future with prior
approval of the Board of Directors.

-26-
<PAGE>

The aggregate fees paid by the Fund from Consultant Class Shares assets to
the Distributor and others under the Plan may not exceed 0.30% of the Class'
average daily net assets in any year. The Class will not incur any distribution
expenses beyond this limit, which may not be increased without shareholder
approval. While Plan payments may not exceed 0.30% annually, the Plan does not
limit fees to amounts actually expended by the Distributor. It is therefore
possible that if a distribution fee were to be paid, the Distributor could
realize a profit in any particular year. However, the Distributor currently
expects that its distribution expenses will likely equal or exceed payments to
it under the Plan. The Distributor may incur such additional expenses and make
additional payments to dealers from its own resources to promote the
distribution of Consultant Class Shares. The monthly fee paid to the
Distributor under the Plan is subject to the review and approval of the Fund's
unaffiliated directors who may reduce the fee or terminate the Plan at any
time. Prior to June 1, 1990, the Board of Directors had set the fee for
Consultant Class Shares at 0.25% of average daily net assets. However, the
Board of Directors suspended 12b-1 Plan payments from Consultant Class Shares
to the Distributor effective June 1, 1990. Such payments may be reinstituted in
the future with prior approval of the Board of Directors.

The Plan does not apply to Class A Shares. Those shares are not included
in calculating the Plan's fees, and the Plan is not used to assist in the
distribution and marketing of Class A Shares.

The National Association of Securities Dealers, Inc. (the "NASD") has
adopted Conduct Rules, as amended, relating to investment company sales
charges. The Fund and the Distributor intend to operate in compliance with
these rules.

The Transfer Agent, Delaware Service Company, Inc., serves as the
shareholder servicing, dividend disbursing and transfer agent for the Fund
under an Agreement dated December 20, 1990. The Transfer Agent also provides
accounting services to the Fund pursuant to the terms of a separate Fund
Accounting Agreement.

The directors of Limited-Term Funds, Inc. annually review fees paid to the
Distributor and the Transfer Agent. The Distributor and the Transfer Agent are
also indirect, wholly owned subsidiaries of DMH.

Expenses
The Fund is responsible for all of its own expenses other than those borne
by the Manager under the Investment Management Agreement and those borne by the
Distributor under the Distribution Agreement. The ratio of expenses to average
daily net assets for each Class for the fiscal year ended December 31, 1997 was
0.70% after voluntary fee waivers and expense payments by the Manager and 1.56%
prior to voluntary fee waivers and expense payments by the Manager.

* * *

As with other mutual funds, financial and business organizations and
individuals around the world, the Fund could be adversely affected if the
computer systems used by its service providers do not properly process and
calculate date-related information from and after January 1, 2000. This is
commonly known as the "Year 2000 Problem." Limited-Term Funds, Inc. is taking
steps to obtain satisfactory assurances that the Fund's major service providers
are taking steps reasonably designed to address the Year 2000 Problem with
respect to the computer systems that such service providers use. There can be no
assurance that these steps will be sufficient to avoid any adverse impact on the
business of the Fund.

-27-
<PAGE>

Shares
Limited-Term Funds, Inc. is an open-end management investment company. The
Fund's portfolio of assets is diversified as defined by the 1940 Act. Commonly
known as a mutual fund, Limited-Term Funds, Inc. was organized as a
Pennsylvania business trust in 1981 and was reorganized as a Maryland
corporation in 1990. Limited-Term Funds, Inc. currently offers two series of
shares -- U.S. Government Money Series and Limited-Term Government Fund series.
Limited-Term Funds, Inc. currently has authorized capital of three billion
shares of common stock. The Fund consists of one billion shares of common
stock, with a $.001 par value per share. The Fund's shares have equal voting
rights, except as noted below, and are equal in all other respects.

Shares of each fund of Limited-Term Funds, Inc. will vote separately on
any matter which affects only that fund. Shares of the U.S. Government Money
Series will have a priority over shares of Limited-Term Funds, Inc.'s other
series in the assets and income of the U.S. Government Money Series and will
vote separately on any matter that affects only this Fund.

Each Class represents a proportionate interest in the assets of the Fund
and has the same voting and other rights and preferences, except that shares of
U.S. Government Money Fund A Class are not subject to, and may not vote on
matters affecting, the Distribution Plan under Rule 12b-1 relating to U.S.
Government Money Fund Consultant Class.

All Fund shares have noncumulative voting rights which means that the
holders of more than 50% of Limited-Term Funds, Inc.'s shares voting for the
election of directors can elect 100% of the directors if they choose to do so.
Under Maryland law, Limited-Term Funds, Inc. is not required, and does not
intend, to hold annual meetings of shareholders unless, under certain
circumstances, it is required to do so under the 1940 Act. Shareholders of 10%
or more of Limited-Term Funds, Inc.'s outstanding shares may request that a
special meeting be called to consider the removal of a director.

Prior to August 29, 1995, Delaware Group Limited-Term Government Funds,
Inc. was named Delaware Group Treasury Reserves, Inc. Prior to March 1994, U.S.
Government Money Fund A Class was known as the U.S. Government Money Fund
class.

-28-
<PAGE>

- -----------------------------
U.S. GOVERNMENT MONEY FUND
- -----------------------------
A CLASS
- -----------------------------
CONSULTANT CLASS
- -----------------------------
No Sales Charge

PROSPECTUS
- -----------------------------
APRIL 29, 1998

Delaware Investments includes funds with a wide range of investment
objectives. Stock funds, income funds, national and state-specific tax-exempt
funds, money market funds, global and international funds and closed-end funds
give investors the ability to create a portfolio that fits their personal
financial goals. For more information, contact your financial adviser or call
Delaware Investments at 800-523-4640.

INVESTMENT MANAGER
Delaware Management Company
One Commerce Square
Philadelphia, PA 19103

NATIONAL DISTRIBUTOR
Delaware Distributors, L.P.
1818 Market Street
Philadelphia, PA 19103

SHAREHOLDER SERVICING,
DIVIDEND DISBURSING,
ACCOUNTING SERVICES
AND TRANSFER AGENT
Delaware Service Company, Inc.
1818 Market Street
Philadelphia, PA 19103

LEGAL COUNSEL
Stradley, Ronon, Stevens & Young, LLP
One Commerce Square
Philadelphia, PA 19103

INDEPENDENT AUDITORS
Ernst & Young LLP
Two Commerce Square
Philadelphia, PA 19103

CUSTODIAN
Bankers Trust Company
One Bankers Trust Plaza
New York, NY 10006

[GRAPHIC OMITTED]

www.delawarefunds.com

<PAGE>

- --------------------------------------------------------------------------------
PART B--STATEMENT OF ADDITIONAL INFORMATION

APRIL 29, 1998

- --------------------------------------------------------------------------------
DELAWARE GROUP LIMITED-TERM GOVERNMENT FUNDS, INC.
- --------------------------------------------------------------------------------
1818 Market Street
Philadelphia, PA 19103
- --------------------------------------------------------------------------------
For Prospectus and Performance: Nationwide 800-523-4640

Information on Existing Accounts:
(SHAREHOLDERS ONLY) Nationwide 800-523-1918

Dealer Services:
(BROKER/DEALERS ONLY) Nationwide 800-362-7500

- --------------------------------------------------------------------------------
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
Cover Page
- --------------------------------------------------------------------------------
Investment Objective and Policy
- --------------------------------------------------------------------------------
Performance Information
- --------------------------------------------------------------------------------
Trading Practices
- --------------------------------------------------------------------------------
Purchasing Shares
- --------------------------------------------------------------------------------
Retirement Plans
- --------------------------------------------------------------------------------
Offering Price
- --------------------------------------------------------------------------------
Redemption
- --------------------------------------------------------------------------------

Dividends and Realized Securities Profits Distributions

- --------------------------------------------------------------------------------
Taxes
- --------------------------------------------------------------------------------
Investment Management Agreement
- --------------------------------------------------------------------------------
Officers and Directors
- --------------------------------------------------------------------------------
Exchange Privilege
- --------------------------------------------------------------------------------
General Information
- --------------------------------------------------------------------------------

Financial Statements
- --------------------------------------------------------------------------------

-1-

<PAGE>

(LTGF/USGMF-SAI/PART B)

Delaware Group Limited-Term Government Funds, Inc. ("Limited-Term
Funds, Inc.") is a professionally-managed mutual fund of the series type
presently offering two series of portfolios: U.S. Government Money Fund (the
"Fund") and Limited-Term Government Fund. This Statement of Additional
Information ("Part B" of Limited-Term Funds, Inc.'s registration statement)
describes the Fund.

The Fund offers two classes of shares--U.S. Government Money Fund A
Class ("Class A Shares") and U.S. Government Money Fund Consultant Class
("Consultant Class Shares") (individually, a "Class" and collectively, the
"Classes").

This Part B supplements the information contained in the current
Prospectus of the Fund dated April 29, 1998, as it may be amended from time to
time. Part B should be read in conjunction with the Prospectus. Part B is not
itself a prospectus but is, in its entirety, incorporated by reference into the
Prospectus. A Prospectus may be obtained by writing or calling your investment
dealer or by contacting the Fund's national distributor, Delaware Distributors,
L.P. (the "Distributor"), 1818 Market Street, Philadelphia, PA 19103.

All references to "shares" in this Part B refer to each Class of shares
of the Fund, except where noted.

-2-

<PAGE>

(LTGF/USGMF-SAI/PART B)

INVESTMENT OBJECTIVE AND POLICY

The objective of the Fund is to obtain maximum current income consistent
with preservation of principal and maintenance of liquidity. There is no
assurance that this objective can be achieved. This objective is a matter of
fundamental policy and may not be changed without approval by the holders of a
majority of the outstanding voting securities of the Fund, which is the lesser
of more than (i) 50% of the outstanding voting securities; or (ii) 67% of the
voting securities present at a shareholder meeting if 50% or more of the voting
securities are present in person or represented by proxy. See General
Information.

The Fund intends to achieve its objective by investing only in short-term
securities issued or guaranteed as to principal and interest by the U.S.
government, its agencies or instrumentalities, and repurchase agreements secured
by such permitted investments. All securities purchased by the Fund mature
within 13 months from the date of purchase, although repurchase agreements may
be collateralized by securities maturing in more than 13 months.

Direct obligations issued by the U.S. Treasury include bills, notes and
bonds which differ from each other only in interest rates, maturities and dates
of issuance. These issues, plus some federal agency obligations, are guaranteed
by the full faith and credit of the U.S. government. Examples include Federal
Housing Administration, Farmers Home Administration, Government National
Mortgage Association and Export-Import Bank of the United States. Other federal
agency obligations only have the guarantee of the agency. Examples include
Federal Home Loan Banks, Federal Land Banks, Federal Home Loan Mortgage
Corporation, The Tennessee Valley Authority and the International Bank for
Reconstruction and Development. Although obligations of agencies and
instrumentalities are not direct obligations of the U.S. Treasury, payment of
the interest and principal on such obligations is generally backed directly or
indirectly by the U.S. government. This support can range from the backing of
the full faith and credit of the United States, to U.S. Treasury guarantees, or
to the backing solely of the issuing agency or instrumentality itself.

The Fund may invest up to 10% of its assets, together with any illiquid
investments, in fully-insured deposits maturing in 60 days or less from members
of the FDIC. While the Fund is permitted under certain circumstances to borrow
money, it does not normally do so.

The Fund maintains its net asset value at $1.00 per share by valuing its
securities on an amortized cost basis. See Offering Price. The Fund maintains a
dollar weighted average portfolio maturity of not more than 90 days and does not
purchase any issue having a remaining maturity of more than 13 months. In
addition, the Fund limits its investments, including repurchase agreements, to
those instruments which the Board of Directors determines present minimal credit
risks and which are of high quality and which are otherwise in accordance with
the maturity, quality and diversification conditions with which taxable money
market funds must comply. In the event of a marked increase in current interest
rates or of a national credit crisis, principal values could be adversely
affected. While the Fund will make every effort to maintain a fixed net asset
value of $1.00 per share, there can be no assurance that this objective will be
achieved.

The Fund will invest in securities for income earnings rather than
trading for profit. The Fund will not vary portfolio investments, except to:

(1) eliminate unsafe investments and investments not consistent with the
preservation of the capital or the tax status of the investments of the Fund;

-3-

<PAGE>

(LTGF/USGMF-SAI/PART B)

(2) honor redemption orders, meet anticipated redemption requirements and
negate gains from discount purchases;

(3) reinvest the earnings from securities in like securities;

(4) defray normal administrative expenses; or

(5) maintain a constant net asset value per unit pursuant to, and in
compliance with, an order or rule of the Securities and Exchange Commission (the
"SEC").

While the Fund intends to hold its investments until maturity when they
will be redeemable at their full principal value plus accrued interest, attempts
may be made from time to time to increase its yield by trading to take advantage
of market variations. Also, redemptions may cause sales of portfolio investments
prior to maturity or at times when such sales might otherwise not be desirable.
The Fund's right to borrow to facilitate redemptions may reduce but does not
guarantee a reduction in the need for such sales. The Fund will not purchase new
securities while any borrowings are outstanding. See Dividends and Realized
Securities Profits Distributions and Taxes for effect of any capital gains
distributions.

A shareholder's rate of return will vary with the general interest rate
levels applicable to the instruments in which the Fund invests. The rate of
return and the net asset value will be affected by such other factors as sales
of portfolio securities prior to maturity and the Fund's operating expenses.

Repurchase Agreements

The Fund may also invest in repurchase agreements sold by banks or
brokers secured by the foregoing securities. A repurchase agreement is an
instrument under which securities are purchased from a bank or securities dealer
with an agreement by the seller to repurchase the securities. Under a repurchase
agreement, the purchaser acquires ownership of the security but the seller
agrees, at the time of sale, to repurchase it at a mutually agreed-upon time and
price. The Fund will take custody of the collateral under repurchase agreements.
Repurchase agreements may be construed to be collateralized loans by the
purchaser to the seller secured by the securities transferred. The resale price
is in excess of the purchase price and reflects an agreed-upon market rate
unrelated to the coupon rate or maturity of the purchased security. Such
transactions afford an opportunity for the Fund to invest temporarily available
cash on a short-term basis. The Fund's risk is limited to the seller's ability
to buy the security back at the agreed-upon sum at the agreed-upon time, since
the repurchase agreement is secured by the underlying government obligation.
Should such an issuer default, Delaware Management Company (the "Manager")
believes that, barring extraordinary circumstances, the Fund will be entitled to
sell the underlying securities or otherwise receive adequate protection for its
interest in such securities, although there could be a delay in recovery. The
Fund considers the creditworthiness of the bank or dealer from whom it purchases
repurchase agreements. The Fund will monitor such transactions to assure that
the value of the underlying securities subject to repurchase agreements is at
least equal to the repurchase price. The underlying securities will be limited
to those described above.

Investment Restrictions
Limited-Term Funds, Inc. has adopted the following restrictions and
fundamental policies for the Fund, which cannot be changed without approval by
the holders of a majority of the outstanding voting securities of the Fund, as
described above. The Fund may not under any circumstances:

1. Invest in issues other than those described under Investment
Objective and Policy above.

-4-

<PAGE>

(LTGF/USGMF-SAI/PART B)

2. Borrow money in excess of one-third of the value of its net assets
and then only as a temporary measure for extraordinary purposes or to facilitate
redemptions. The Fund has no intention of increasing its net income through
borrowing. Any borrowing will be done from a bank and, to the extent that such
borrowing exceeds 5% of the value of the Fund's net assets, asset coverage of at
least 300% is required. In the event that such asset coverage shall at any time
fall below 300%, the Fund shall, within three days thereafter (not including
Sunday or holidays) or such longer period as the SEC may prescribe by rules and
regulations, reduce the amount of its borrowings to such an extent that the
asset coverage of such borrowings shall be at least 300%. The Fund will not
pledge more than 10% of its net assets. The Fund will not issue senior
securities as defined in the Investment Company Act of 1940 (the "1940 Act"),
except for notes to banks. Any outstanding borrowing shall be repaid before
additional securities are purchased.

3. Sell securities short or purchase securities on margin.

4. Write or purchase put or call options.

5. Underwrite the securities of other issuers.

6. Purchase or sell commodities or commodity contracts.

7. Purchase or sell real estate, but this shall not prevent the Fund
from investing in securities secured by real estate or interests therein.

8. Make loans to other persons except by the purchase of obligations in
which the Fund is authorized to invest and to enter into repurchase agreements.
Not more than 10% of the Fund's total assets will be invested in repurchase
agreements maturing in more than seven days and in other illiquid assets.

9. Invest for purposes of exercising control.

10. Invest in securities of other investment companies, except as they
may be acquired as part of a merger, consolidation or acquisition of assets.

11. Invest in direct interests in oil, gas or other mineral exploration
or development programs.

Although not a fundamental investment restriction, the Fund currently
does not invest its assets in real estate limited partnerships.

-5-

<PAGE>

(LTGF/USGMF-SAI/PART B)

PERFORMANCE INFORMATION

For the seven-day period ended December 31, 1997, the annualized current
yield of Class A Shares and Consultant Class Shares was 4.94% for each Class and
the compounded effective yield was 5.06% for each Class. These yields will
fluctuate daily as income earned fluctuates. On that date the weighted average
portfolio maturity was 43 days for both Classes. The current yield of Class A
Shares is expected to be slightly higher than that of Consultant Class Shares
during any period that the distribution fee under the Fund's 12b-1 Plan for
Consultant Class Shares is being paid. The Board of Directors of the Fund
suspended 12b-1 Plan payments from Consultant Class Shares to the Distributor
effective June 1, 1990. Such payments may be reinstituted in the future with
prior approval of the Board of Directors.

Shareholders and prospective investors will be interested in learning
from time to time the current and the effective compounded yield of a Class of
shares. As explained under Dividends and Realized Securities Profits
Distributions, dividends are declared daily from net investment income. In order
to determine the current return, yield is calculated as follows:

The calculation begins with the value of a hypothetical account of one
share at the beginning of a seven-day period; this is compared with the value of
that same account at the end of the same period (including shares purchased for
the account with dividends earned during the period). The net change in the
account value is generally the net income earned per share during the period,
which consists of accrued interest income plus or minus amortized purchase
discount or premium, less all accrued expenses (excluding expenses reimbursed by
the investment manager) but does not include realized gains or losses or
unrealized appreciation or depreciation.

The current yield of the Fund represents the net change in this
hypothetical account annualized over 365 days. In addition, a shareholder may
achieve a compounding effect through reinvestment of dividends which is
reflected in the effective yield shown below.

-6-

<PAGE>

(LTGF/USGMF-SAI/PART B)

The following is an example, for purpose of illustration only, of the
current and effective yield calculations for the seven-day period ended December
31, 1997:

<TABLE>
<CAPTION>
U.S. U.S. Government
Government Money Fund
Money Fund Consultant
A Class Class
<S> <C> <C>
Value of a hypothetical account with one share at
the beginning of the period....................................... $1.00000000 $1.00000000

Value of the same account at the end of the period................... $1.00094786 $1.00094786
---------- ----------

Net change in account value.......................................... 0.00094786(1) 0.00094786(1)
---------- ----------

Base period return = net change in account value/
beginning account value........................................... 0.00094786 0.00094786
---------- ----------

Current yield [base period return x (365/7)]....................... 4.94%(2) 4.94%(2)
---------- ----------

Effective yield (1 + base period) 365/7 - 1......................... 5.06%(3) 5.06%(3)
---------- ----------
</TABLE>

Weighted average life to maturity of the portfolio on December 31, 1997
was 43 days.

(1) This represents the net income per share for the seven calendar days
ended December 31, 1997.

(2) This represents the average of annualized net investment income per
share for the seven calendar days ended December 31, 1997.

(3) This represents the current yield for the seven calendar days ended
December 31, 1997 compounded daily. The Manager has elected to waive
voluntarily the portion of its annual compensation under its Investment
Management Agreement with Limited-Term Funds, Inc. on behalf of the Fund
to limit operating expenses to 0.70% (exclusive of taxes, interest,
brokerage commissions, extraordinary expenses and in the case of
Consultant Class Shares, 12b-1 fees) from January 26, 1996 through
February 9, 1998. In the absence of such voluntary waivers, performance
would have been affected negatively.

Total return performance of each Class will reflect the reinvestment of
all dividends and any capital gains, if any, during the indicated period. Shares
of the Fund are sold without a sales charge. The results will not reflect any
income taxes payable by shareholders on the reinvested distributions included in
the calculations. An illustration of past Fund performance should not be
considered as representative of future results.

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(LTGF/USGMF-SAI/PART B)

The average annual total compounded rate of return is based on a
hypothetical $1,000 investment that includes capital appreciation and
depreciation during the stated periods. The following formula will be used for
the actual computations:

n
P(1+T) = ERV

Where: P = a hypothetical initial purchase order of $1,000;

T = average annual total return;

n = number of years;

ERV = redeemable value of the hypothetical $1,000 purchase at
the end of the period.

The performance, as shown below, is the average annual total return
quotations of each Class through December 31, 1997, calculated as an average
annual compounded rate of return for the period indicated. For this purpose, the
calculations assume the reinvestment of all dividend distributions paid during
the indicated periods. Interest rates fluctuated during the period covered by
the table and the Fund's results should not be considered as representative of
future performance. Total return for Consultant Class Shares for the periods
prior to the commencement of operations of such Class is based on the
performance of Class A Shares. For periods prior to the commencement of
operations of Consultant Class Shares, the total return does not reflect the
12b-1 payments applicable to such Class during the period March 29, 1988 through
June 1, 1990. If such payments were reflected in the calculations, performance
would have been affected.

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(LTGF/USGMF-SAI/PART B)

Average Annual Total Return
U.S. Government
U.S. Government Money Fund
Money Fund Consultant
A Class (1) Class (1)(2)

1 year ended
12/31/97 4.94% 4.94%
-------- ---- ----

3 years ended
12/31/97 4.76% 4.76%
-------- ---- ----

5 years ended
12/31/97 3.84% 3.84%
-------- ---- ----

10 years ended
12/31/97 4.91% 4.85%
-------- ---- ----

15 years ended
12/31/97 5.70% 5.67%
-------- ---- ----

Period
4/20/82(3)
through
12/31/97 5.91% 5.90%
-------- ----- ----

(1) The Manager elected to waive voluntarily the portion of its
annual compensation under its Investment Management Agreement
with Limited-Term Funds, Inc. on behalf of the Fund to limit
operating expenses to 0.70% (exclusive of taxes, interest,
brokerage commissions, extraordinary expenses and in the case
of Consultant Class Shares, 12b-1 fees) from January 26, 1996
through February 9, 1998. In the absence of such voluntary
waivers, performance would have been affected negatively.

(2) Date of initial public offering of Consultant Class Shares was
March 29, 1988. Pursuant to applicable regulation, total
return shown for Consultant Class Shares for the periods prior
to the commencement of operations of such Class is calculated
by taking the performance of A Class Shares and adjusting it
to reflect the elimination of all sales charges. However, for
those periods no adjustment has been made to eliminate the
impact of 12b-1 payments, and performance would have been
affected had such an adjustment been made.

(3) Date of initial public offering of U.S. Government Money
Fund.

From time to time, the Fund may also quote current yield information of
the Classes with the sample average rates paid on bank money market deposit
accounts. The bank money market deposit averages are the stated rates of 100
large banks and thrifts in the top five standard metropolitan statistical areas
as determined by the Bank Rate Monitor. The Fund's figures for a Class will be
the annualized yields representing an average of that Class'

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(LTGF/USGMF-SAI/PART B)

after-expense per share earnings divided by cost per share for each day of the
fiscal month, or period, noted. Yield fluctuates depending on portfolio type,
quality, maturity and operating expenses. Principal is not insured and the
results shown should not be considered as representative of the yield which may
be realized from an investment made in the Fund at any time in the future.

In addition, the Fund may quote actual yield and total return
performance of each Class in advertising and other types of literature compared
to indices or averages of alternative financial products available to
prospective investors. For example, the performance comparisons may include the
average return of various bank instruments, some of which may carry certain
return guarantees offered by leading banks and thrifts, as monitored by the Bank
Rate Monitor, and those of corporate and government security price indices of
various durations prepared by Lehman Brothers and Salomon Brothers, Inc. These
indices are not managed for any investment goal.

Statistical and performance information and various indices compiled
and maintained by organizations such as the following may also be used in
preparing exhibits comparing certain industry trends and competitive mutual fund
performance to comparable Fund activity and performance. From time to time,
certain mutual fund performance ranking information, calculated and provided by
these organizations, may also be used in the promotion of sales in the Fund. Any
indices used are not managed for any investment goal.

CDA Investment Technologies, Lipper Analytical Services, Inc. and
IBC/Donoghue are performance evaluation services that maintain
statistical performance databases, as reported by a diverse universe of
independently-managed mutual funds.

Interactive Data Corporation is a statistical access service that
maintains a database of various international industry indicators, such
as historical and current price/earning information, individual equity
and fixed-income price and return information.

Salomon Brothers and Lehman Brothers are statistical research firms
that maintain databases of international market, bond market, corporate
and government-issued securities of various maturities. This
information, as well as unmanaged indices compiled and maintained by
these firms, will be used in preparing comparative illustrations. In
addition, the performance of multiple indices compiled and maintained
by these firms may be combined to create a blended performance result
for comparative performances. Generally, the indices selected will be
representative of the types of securities in which the Funds may invest
and the assumptions that were used in calculating the blended
performance will be described.

Current interest rate and yield information on government debt
obligations of various durations, as reported weekly by the Federal Reserve
(Bulletin H.15), may also be used. Also, current rate information on municipal
debt obligations of various durations, as reported daily by the Bond Buyer, may
also be used. The Bond Buyer is published daily and is an industry-accepted
source for current municipal bond market information.

Comparative information on the Consumer Price Index may also be
included. The Consumer Price Index, as prepared by the U.S. Bureau of Labor
Statistics, is the most commonly used measure of inflation. It indicates the
cost fluctuations of a representative group of consumer goods. It does not
represent a return on investment.

The following table presents examples, for purposes of illustration
only, of cumulative total return performance for each Class of the Fund through
December 31, 1997. Total return for Consultant Class Shares for the periods
prior to commencement of such Class is based on the performance of Class A
Shares. For periods prior to the commencement of operations of Consultant Class
Shares, the total return calculation does not reflect the

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(LTGF/USGMF-SAI/PART B)

12b-1 payments that were applicable to such Class during the periods March 29,
1988 through June 1, 1990. If such payments were reflected in the calculations,
performance would have been affected.

Cumulative Total Return
U.S. Government U.S. Government
Money Fund Money Fund
A Class (1) Consultant Class (1)(2)

3 months ended

12/31/97 1.24% 1.24%
-------- ---- ----

6 months ended
12/31/97 2.49% 2.49%
-------- ---- ----

9 months ended
12/31/97 3.74% 3.74%
-------- ---- ----

1 year ended
12/31/97 4.94% 4.94%
-------- ---- ----

3 years ended
12/31/97 14.96% 14.96%
-------- ----- -----

5 years ended
12/31/97 20.71% 20.71%
-------- ----- -----

10 years ended
12/31/97 61.45% 60.57%
-------- ----- -----

15 years ended
12/31/97 129.80% 128.55%
-------- ------ ------

Period
4/20/82(3)
through
12/31/97 146.36% 145.80%
-------- ------ ------

(1) The Manager elected to waive voluntarily the portion of its annual
compensation under its Investment Management Agreement with
Limited-Term Funds, Inc. on behalf of the Fund to limit operating
expenses to 0.70% (exclusive of taxes, interest, brokerage commissions,
extraordinary expenses and in the case of Consultant Class Shares,
12b-1 fees) from January 26, 1996 through February 9, 1998. In the
absence of such voluntary waivers, performance would have been affected
negatively.

(2) Date of initial public offering of Consultant Class Shares was March
29, 1988. Pursuant to applicable regulation, total return shown for
Consultant Class Shares for the periods prior to the commencement of
operations of such Class is calculated by taking the performance of
Class A Shares and adjusting it to reflect the elimination of all sales
charges. However, for those periods no

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(LTGF/USGMF-SAI/PART B)

adjustment has been made to eliminate the impact of 12b-1 payments, and
performance would have been affected had such an adjustment been made.

(3) Date of initial public offering of U.S. Government Money Fund.

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(LTGF/USGMF-SAI/PART B)

Because every investor's goals and risk threshold are different, the
Distributor, as distributor for the Fund and other mutual funds available from
the Delaware Investments family, will provide general information about
investment alternatives and scenarios that will allow investors to assess their
personal goals. This information will include general material about investing
as well as materials reinforcing various industry-accepted principles of prudent
and responsible personal financial planning. One typical way of addressing these
issues is to compare an individual's goals and the length of time the individual
has to attain these goals to his or her risk threshold. In addition, the
Distributor will provide information that discusses the overriding investment
philosophy of the Manager and how that philosophy impacts the Fund's, and other
Delaware Investments funds', investment disciplines employed in seeking their
objectives. The Distributor may also from time to time cite general or specific
information about the institutional clients of the Manager, including the number
of such clients serviced by the Manager.

Dollar-Cost Averaging

Money market funds, which are generally intended for your short-term
investment needs, can often be used as a basis for building a long-term
investment plan. For many people, deciding when to purchase long-term
investments, such as stock or longer-term bond funds, can be a difficult
decision. Unlike money market fund shares, prices of other securities, such as
stocks and bonds, tend to move up and down over various market cycles. Though
logic says to invest when prices are low, even experts can't always pick the
highs and the lows. By using a strategy known as dollar-cost averaging, you
schedule your investments ahead of time. If you invest a set amount on a regular
basis (perhaps using assets from your money market fund) that money will always
buy more shares when the price is low and fewer when the price is high. You can
choose to invest at any regular interval--for example, monthly or quarterly--as
long as you stick to your regular schedule. Dollar-cost averaging looks simple
and it is, but there are important things to remember.

Dollar-cost averaging works best over longer time periods, and it doesn't
guarantee a profit or protect against losses in declining markets. If you need
to sell your investment when prices are low, you may not realize a profit no
matter what investment strategy you utilize. That's why dollar-cost averaging
can make sense for long-term goals. Since the potential success of a dollar-cost
averaging program depends on continuous investing, even through periods of
fluctuating prices, you should consider your dollar-cost averaging program a
long-term commitment and invest an amount you can afford and probably won't need
to withdraw. Delaware Investments offers three services -- Automatic Investing
Program, Direct Deposit Program and the Wealth Builder Option -- that can help
to keep your regular investment program on track. See Investing by Electronic
Fund Transfer - Direct Deposit Purchase Plan and Automatic Investing Plan under
Investment Plans and Wealth Builder Option under Investment Plans for a complete
description of these options including restrictions or limitations.

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(LTGF/USGMF-SAI/PART B)

The example below illustrates how dollar-cost averaging can work. In a
fluctuating market, the average cost per share of a stock or bond fund over a
period of time will be lower than the average price per share of the fund for
the same time period.
Price Number of
Investment Per Shares
Amount Share Purchased

Month 1 $100 $10.00 10
Month 2 $100 $12.50 8
Month 3 $100 $5.00 20
Month 4 $100 $10.00 10
--------------------------------------------------------------------

$400 $37.50 48

Total Amount Invested: $400
Total Number of Shares Purchased: 48
Average Price Per Share: $9.38 ($37.50/4)
Average Cost Per Share: $8.33 ($400/48 shares)

This example is for illustration purposes only. It is not intended to
represent the actual performance of the any stock or bond fund in the Delaware
Investments family. Dollar-cost averaging can be appropriate for investments in
shares of funds that tend to fluctuate in value. Please obtain the prospectus of
any fund in the Delaware Investments family in which you plan to invest through
a dollar-cost averaging program. The prospectus contains additional information,
including charges and expenses. Please read it carefully before you invest or
send money.

THE POWER OF COMPOUNDING

When you opt to reinvest your current income for additional Fund
shares, your investment is given yet another opportunity to grow. It's called
the Power of Compounding. The Fund may include illustrations showing the power
of compounding in advertisements and other types of literature.

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(LTGF/USGMF-SAI/PART B)

TRADING PRACTICES

Portfolio transactions are executed by the Manager on behalf of the
Fund in accordance with the standards described below.

Brokers, dealers and banks are selected to execute transactions for the
purchase or sale of portfolio securities on the basis of the Manager's judgment
of their professional capability to provide the service. The primary
consideration is to have brokers, dealers or banks execute transactions at best
price and execution. Best price and execution refers to many factors, including
the price paid or received for a security, the commission charged, the
promptness and reliability of execution, the confidentiality and placement
accorded the order and other factors affecting the overall benefit obtained by
the account on the transaction. When a commission is paid, the Fund pays
reasonably competitive brokerage commission rates based upon the professional
knowledge of its trading department as to rates paid and charged for similar
transactions throughout the securities industry. In some instances, the Fund
pays a minimal share transaction cost when the transaction presents no
difficulty. Trades are generally made on a net basis where securities are either
bought or sold directly from or to a broker, dealer or bank. In these instances,
there is no direct commission charged, but there is a spread (the difference
between the buy and sell price) which is the equivalent of a commission.

The Manager may allocate out of all commission business generated by
all of the funds and accounts under its management, brokerage business to
brokers or dealers who provide brokerage and research services. These services
include advice, either directly or through publications or writings, as to the
value of securities, the advisability of investing in, purchasing or selling
securities, and the availability of securities or purchasers or sellers of
securities; furnishing of analyses and reports concerning issuers, securities or
industries; providing information on economic factors and trends; assisting in
determining portfolio strategy; providing computer software and hardware used in
security analyses; and providing portfolio performance evaluation and technical
market analyses. Such services are used by the Manager in connection with its
investment decision-making process with respect to one or more funds and
accounts managed by it, and may not be used, or used exclusively, with respect
to the fund or account generating the brokerage.

As provided in the Securities Exchange Act of 1934 (the "1934 Act") and
the Fund's Investment Management Agreement, higher commissions are permitted to
be paid to broker/dealers who provide brokerage and research services than to
broker/dealers who do not provide such services, if such higher commissions are
deemed reasonable in relation to the value of the brokerage and research
services provided. Although transactions are directed to broker/dealers who
provide such brokerage and research services, Limited-Term Funds, Inc. believes
that the commissions paid to such broker/dealers are not, in general, higher
than commissions that would be paid to broker/dealers not providing such
services and that such commissions are reasonable in relation to the value of
the brokerage and research services provided. In some instances, services may be
provided to the Manager which constitute in some part brokerage and research
services used by the Manager in connection with its investment decision-making
process and constitute in some part services used by the Manager in connection
with administrative or other functions not related to its investment
decision-making process. In such cases, the Manager will make good faith
allocation of brokerage and research services and will pay out of its own
resources for services used by the Manager in connection with administrative or
other functions not related to its investment decision-making process. In
addition, so long as no fund is disadvantaged, portfolio transactions which
generate commissions or their equivalent are allocated to broker/dealers who
provide daily portfolio pricing services to the Fund and to other funds in the
Delaware Investments family. Subject to best price and execution, commissions
allocated to brokers providing such pricing services may or may not be generated
by the funds receiving the pricing service.

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(LTGF/USGMF-SAI/PART B)

The Manager may place a combined order for two or more accounts or
funds engaged in the purchase or sale of the same security if, in its judgment,
joint execution is in the best interest of each participant and will result in
best price and execution. Transactions involving commingled orders are allocated
in a manner deemed equitable to each account or fund. When a combined order is
executed in a series of transactions at different prices, each account
participating in the order may be allocated an average price obtained from the
executing broker. It is believed that the ability of the accounts to participate
in volume transactions will generally be beneficial to the accounts and funds.
Although it is recognized that, in some cases, the joint execution of orders
could adversely affect the price or volume of the security that a particular
account or fund may obtain, it is the opinion of the Manager and Limited-Term
Funds, Inc.'s Board of Directors that the advantages of combined orders outweigh
the possible disadvantages of separate transactions.

Portfolio trading will be undertaken principally to accomplish the
Fund's objective, and not for the purpose of realizing capital gains, although
capital gains may be realized on certain portfolio transactions. For example,
capital gains may be realized when a security is sold (i) so that, provided
capital is preserved or enhanced, another security can be purchased to obtain a
higher yield, (ii) to take advantage of what the Manager believes to be a
temporary disparity in the normal yield relationship between the two securities
to increase income or improve the quality of the portfolio, (iii) to purchase a
security which the Manager believes is of higher quality than its rating or
current market value would indicate, or (iv) when the Manager anticipates a
decline in value due to market risk or credit risk. Since portfolio assets will
consist of short-term instruments, replacement of portfolio securities will
occur frequently. However, since the Manager expects usually to transact
purchases and sales of portfolio securities on a net basis, it is not
anticipated that the Fund will pay any significant brokerage commissions. The
Fund is free to dispose of portfolio securities at any time, subject to
complying with the Internal Revenue Code of 1986, as amended (the "Code") and
the 1940 Act, when changes in circumstances or conditions make such a move
desirable in light of the investment objective.

Consistent with the Conduct Rules of the National Association of
Securities Dealers, Inc. (the "NASD"), and subject to seeking best price and
execution, the Manager may place orders with broker/dealers that have agreed to
defray certain expenses of the funds in the Delaware Investments family such as
custodian fees, and may, at the request of the Distributor, give consideration
to sales of shares of the funds in the Delaware Investments family as a factor
in the selection of brokers and dealers to execute Fund portfolio transactions.

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(LTGF/USGMF-SAI/PART B)

PURCHASING SHARES

The Distributor serves as the national distributor for the Fund's
shares--Class A Shares and Consultant Class Shares and has agreed to use its
best efforts to sell shares of the Fund.

Shares of the Fund may be purchased through brokers, financial
institutions and other entities that have a dealer agreement with the Fund's
Distributor or a service agreement with the Fund. Investors who do not wish to
receive the additional services that are typically offered by such financial
professionals may also purchase Class A Shares directly by contacting the Fund
or the Distributor. In some states, banks and/or other institutions effecting
transactions in Consultant Class Shares may be required to register as dealers
pursuant to state laws. The minimum initial investment is generally $1,000 for
each Class. Subsequent purchases must generally be at least $100. The initial
and subsequent investment minimums for Class A Shares will be waived for
purchases by officers, directors and employees of any fund in the Delaware
Investments family, the Manager or any of the Manager's affiliates if the
purchases are made pursuant to a payroll deduction program. Shares purchased
pursuant to the Uniform Gifts to Minors Act or Uniform Transfers to Minors Act
and shares purchased in connection with an Automatic Investing Plan are subject
to a minimum initial purchase of $250 and a minimum subsequent purchase of $25.
Accounts opened under the Asset Planner service are subject to a minimum initial
investment of $2,000 per Asset Planner strategy selected.

Shares of the Fund are offered on a continuous basis, and are sold
without a front-end or contingent deferred sales charge at the net asset value
next determined after the receipt and effectiveness of a purchase order, as
described below. See the Prospectus for information on how to invest. The Fund
reserves the right to reject any order for the purchase of its shares if, in the
opinion of management, such rejection is in the Fund's best interest.

Certificates representing shares purchased are not ordinarily issued
unless, in the case of Class A Shares, a shareholder submits a specific request.
Certificates are not issued in the case of any retirement plan accounts,
including self-directed IRAs. However, purchases not involving the issuance of
certificates are confirmed to the investor and credited to the shareholder's
account on the books maintained by Delaware Service Company, Inc. (the "Transfer
Agent"). The investor will have the same rights of ownership with respect to
such shares as if certificates had been issued. An investor that is permitted to
obtain a certificate may receive a certificate representing full share
denominations purchased by sending a letter signed by each owner of the account
to the Transfer Agent requesting the certificate. No charge is assessed by
Limited-Term Funds, Inc. for any certificate issued. A shareholder may be
subject to fees for replacement of lost or stolen certificates, under certain
conditions, including the cost of obtaining a bond covering the lost or stolen
certificate. Please contact the Fund for further information. Investors who hold
certificates representing any of their shares may only redeem those shares by
written request. The investor's certificate(s) must accompany such request.

Investing by Electronic Fund Transfer
Direct Deposit Purchase Plan--Investors may arrange for the Fund to
accept for investment, through an agent bank, preauthorized government or
private recurring payments. This method of investment assures the timely credit
to the shareholder's account of payments such as social security, veterans'
pension or compensation benefits, federal salaries, Railroad Retirement
benefits, private payroll checks, dividends, and disability or pension fund
benefits. It also eliminates lost, stolen and delayed checks.

Automatic Investing Plan--Shareholders may make regular automatic
investments by authorizing, in advance, monthly payments directly from their
checking account for deposit into their Fund account. This type of investment
will be handled in either of the following ways. (1) If the shareholder's bank
is a member of the National Automated

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(LTGF/USGMF-SAI/PART B)

Clearing House Association ("NACHA"), the amount of the investment will be
electronically deducted from the shareholder's account by Electronic Fund
Transfer ("EFT"). The shareholder's checking account will reflect a debit each
month at a specified date although no check is required to initiate the
transaction. (2) If the shareholder's bank is not a member of NACHA, deductions
will be made by preauthorized checks, known as Depository Transfer Checks.
Should the shareholder's bank become a member of NACHA in the future, his or her
investments would be handled electronically through EFT.

* * *

Initial investments under the Direct Deposit Purchase Plan and the
Automatic Investing Plan must be for $250 or more and subsequent investments
under such plans must be for $25 or more. An investor wishing to take advantage
of either service must complete an authorization form. Either service can be
discontinued by the shareholder at any time without penalty by giving written
notice.

Payments to the Fund from the federal government or its agencies on
behalf of a shareholder may be credited to the shareholder's account after such
payments should have been terminated by reason of death or otherwise. Any such
payments are subject to reclamation by the federal government or its agencies.
Similarly, under certain circumstances, investments from private sources may be
subject to reclamation by the transmitting bank. In the event of a reclamation,
the Fund may liquidate sufficient shares from a shareholder's account to
reimburse the government or the private source. In the event there are
insufficient shares in the shareholder's account, the shareholder is expected to
reimburse the Fund.

Direct Deposit Purchases by Mail
Shareholders may authorize a third party, such as a bank or employer,
to make investments directly to their Fund account. The Fund will accept these
investments, such as bank-by-phone, annuity payments and payroll allotments, by
mail directly from the third party. Investors should contact their employers or
financial institutions who in turn should contact Limited-Term Funds, Inc. for
proper instructions.

When Orders are Effective
Transactions in money market instruments in which the Fund invests
normally require same day settlement in Federal Funds. The Fund intends at all
times to be as fully invested as possible in order to maximize its earnings.
Thus, purchase orders will be executed at the net asset value next determined
after their receipt by the Fund only if the Fund has received payment in Federal
Funds by wire. Dividends begin to accrue on the next business day. Thus,
investments effective the day before a weekend or holiday will not accrue for
that period but will earn dividends on the next business day. If, however, the
Fund is given prior notice of Federal Funds wire and an acceptable written
guarantee of timely receipt from an investor satisfying the Fund's credit
policies, the purchase will start earning dividends on the date the wire is
received.

If remitted in other than the foregoing manner, such as by money order
or personal check, purchase orders will be executed as of the close of regular
trading on the New York Stock Exchange (ordinarily, 4 p.m., Eastern time) on
days when the Exchange is open, on the day on which the payment is converted
into Federal Funds and is available for investment, normally one business day
after receipt of payment. Conversion into Federal Funds may be delayed when the
Fund receives (1) a check drawn on a nonmember bank of the Federal Reserve, (2)
a check drawn

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(LTGF/USGMF-SAI/PART B)

on a foreign bank, (3) a check payable in a foreign currency, or (4) a check
requiring special handling. With respect to investments made other than by wire,
the investor becomes a shareholder after declaration of the dividend on the day
on which the order is effective.

Information on how to procure a negotiable bank draft or to transmit
Federal Funds by wire is available at any national bank or any state bank which
is a member of the Federal Reserve System. Any commercial bank can transmit
Federal Funds by wire. The bank may charge the shareholder for these services.

If a shareholder has been credited with a purchase by a check which is
subsequently returned unpaid for insufficient funds or for any other reason, the
Fund will automatically redeem from the shareholder's account the amount
credited by the check plus any dividends earned thereon.

Plan Under Rule 12b-1 for Consultant Class Shares
Pursuant to Rule 12b-1 under the 1940 Act, Limited-Term Funds, Inc. has
adopted a plan (the "Plan") for Consultant Class Shares which permits the Fund
to pay for certain distribution and promotional expenses related to marketing
shares of Consultant Class Shares.

The Plan does not apply to the Fund's Class A Shares. Such shares are
not included in calculating the Plan's fees, and the Plan is not used to assist
in the distribution and marketing of Class A Shares. Shareholders of Class A
Shares may not vote on matters affecting the Plan.

The Plan permits the Fund, pursuant to its Distribution Agreement, to
pay out of the assets of Consultant Class Shares, a monthly fee to the
Distributor for its services and expenses in distributing and promoting sales of
the shares of such Class. These expenses include, among other things, preparing
and distributing advertisements, sales literature and prospectuses and reports
used for sales purposes, compensating sales and marketing personnel, and paying
distribution and maintenance fees to securities brokers and dealers who enter
into agreements with the Distributor. Registered representatives of brokers,
dealers or other entities, who have sold a specified level of funds in the
Delaware Investments family having a 12b-1 Plan, were, prior to June 1, 1990,
paid a 0.25% continuing trail fee by the Distributor from 12b-1 payments
relating to Consultant Class Shares for assets maintained in that Class. As
noted below, payment of these fees has been suspended but may be reinstituted in
the future with prior approval of the Board of Directors.

In addition, the Fund may make payments from the assets of Consultant
Class Shares directly to other unaffiliated parties, such as banks, who either
aid in the distribution of shares of such Class or provide services to that
Class.

The maximum aggregate fee payable by the Fund under the Plan, and the
Fund's Distribution Agreement, is on an annual basis, up to 0.30% of Consultant
Class Shares' average daily net assets for the year. Limited-Term Funds, Inc.'s
Board of Directors may reduce these amounts at any time. Limited-Term Funds,
Inc.'s Board of Directors suspended 12b-1 Plan payments from the assets of
Consultant Class Shares to the Distributor effective June 1, 1990. Prior to that
time, the Board of Directors had set the fee for Consultant Class Shares at
0.25% of average daily net assets and the Distributor had agreed to waive this
distribution fee to the extent such fee for any day exceeded the net investment
income realized by that Class for such day. Payments under the Plan may be
reinstituted in the future with prior approval of the Board of Directors.

All of the distribution expenses incurred by the Distributor and
others, such as broker/dealers, in excess of the amount paid on behalf of
Consultant Class Shares will be borne by such persons without any reimbursement
from

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(LTGF/USGMF-SAI/PART B)

that Class. Subject to seeking best price and execution, the Fund may, from time
to time, buy or sell portfolio securities from or to firms which receive
payments on behalf of Consultant Class Shares under the Plan.

From time to time, the Distributor may pay additional amounts from its
own resources to dealers for aid in distribution or for aid in providing
administrative services to shareholders.

The Plan and the Distribution Agreement have been approved by the Board
of Directors of Limited-Term Funds, Inc. including a majority of the directors
who are not "interested persons" (as defined in the 1940 Act) of Limited-Term
Funds, Inc. and who have no direct or indirect financial interest in the Plan,
by vote cast in person at a meeting duly called for the purpose of voting on the
Plan and such Agreement. Continuation of the Plan and the Distribution Agreement
must be approved annually by the Board of Directors in the same manner as
specified above.

Each year, the directors must determine whether continuation of the
Plan is in the best interest of shareholders of Consultant Class Shares and that
there is a reasonable likelihood of its providing a benefit to them. The Plan
and the Distribution Agreement may be terminated at any time without penalty by
a majority of those directors who are not "interested persons" or by a majority
vote of the outstanding voting securities of Consultant Class Shares. Any
amendment materially increasing the maximum percentage payable under the Plan
must likewise be approved by a majority vote of the outstanding voting
securities of Consultant Class Shares, as well as by a majority vote of those
directors who are not "interested persons." Also, any other material amendment
to the Plan must be approved by a majority vote of the directors including a
majority of the noninterested directors of Limited-Term Funds, Inc. having no
interest in the Plan. In addition, in order for the Plan to remain effective,
the selection and nomination of directors who are not "interested persons" of
Limited-Term Funds, Inc. must be effected by the directors who themselves are
not "interested persons" and who have no direct or indirect financial interest
in the Plan. Persons authorized to make payments under the Plan must provide
written reports at least quarterly to the Board of Directors for their review.

For the fiscal year ended December 31, 1997, there were no payments
from Consultant Class Shares pursuant to the Plan.

The NASD has adopted amendments to its Conduct Rules, as amended,
relating to investment company sales charges. Limited-Term Funds, Inc. and the
Distributor intend to operate in compliance with these rules.

Reinvestment Privilege

Shareholders who have acquired Fund shares through an exchange of one
of the other mutual funds in the Delaware Investments family offered with a
sales charge and who have redeemed such shares of the Fund have one year from
the date of redemption to reinvest all or part of their redemption proceeds in
shares of any of the other funds in the Delaware Investments family, subject to
eligibility and minimum purchase requirements, in states where their shares may
be sold, at net asset value without payment of a sales charge. Any such
reinvestment cannot exceed the redemption proceeds (plus any amount necessary to
purchase a full share). The reinvestment will be made at the net asset value
next determined after receipt of remittance. A redemption and reinvestment could
have income tax consequences. It is recommended that a tax adviser be consulted
with respect to such transactions. Any reinvestment directed to a fund in which
the investor does not then have an account will be treated like all other
initial purchases of a fund's shares. Consequently, an investor should obtain
and read carefully the prospectus for the fund in which the investment is
intended to be made before investing or sending money. The prospectus contains
more complete information about the fund, including charges and expenses.

Reinvestment of Dividends in Other Delaware Investments Funds

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(LTGF/USGMF-SAI/PART B)

Subject to applicable eligibility and minimum initial purchase
requirements and the limitations set forth below, shareholders may automatically
reinvest dividends and/or distributions in any of the mutual funds in the
Delaware Investments family, including the Fund, in states where their shares
may be sold. Such investments will be at net asset value at the close of
business on the reinvestment date without any front-end sales charge or service
fee. The shareholder must notify the Transfer Agent in writing and must have
established an account in the fund into which the dividends and/or distributions
are to be invested. Any reinvestment directed to a fund in which the investor
does not then have an account will be treated like all other initial purchases
of a fund's shares. Consequently, an investor should obtain and read carefully
the prospectus for the fund in which the investment is intended to be made
before investing or sending money. The prospectus contains more complete
information about the fund, including charges and expenses. See also Additional
Methods of Adding to Your Investment - Dividend Reinvestment Plan under Buying
Shares in the Prospectus.

Dividends from the shares of each Class may be reinvested in shares of
any other mutual fund in the Delaware Investments family, other than Class B
Shares and Class C Shares of funds in the Delaware Investments family that offer
such classes of shares.

Dividend distributions to participants in the following retirement
plans are automatically reinvested into the same Delaware Investments fund in
which their investments are held: SAR/SEP, SEP/IRA, SIMPLE IRA, SIMPLE 401(k),
Profit Sharing and Money Purchase Pension Plans, 401(k) Defined Contribution
Plans, or
403(b)(7) or 457 Deferred Compensation Plans.

Wealth Builder Option

Shareholders can use the Wealth Builder Option to invest in the Fund
through regular liquidations of shares in their accounts in other mutual funds
available from the Delaware Investments family. Shareholders of the Fund may
elect to invest in one or more of the other mutual funds available from the
Delaware Investments family through the Wealth Builder Option. See Wealth
Builder Option and Redemption and Exchange in the Prospectus .

Under this automatic exchange program, shareholders can authorize
regular monthly investments (minimum of $100 per fund) to be liquidated from
their account and invested automatically into other mutual funds available from
the Delaware Investments family, subject to the conditions and limitations set
forth in the Prospectus. The investment will be made on the 20th day of each
month (or, if the fund selected is not open that day, the next business day) at
the public offering price or net asset value, as applicable, of the fund
selected on the date of investment. No investment will be made for any month if
the value of the shareholder's account is less than the amount specified for
investment.

Periodic investment through the Wealth Builder Option does not insure
profits or protect against losses in a declining market. The price of the fund
into which investments are made could fluctuate. Since this program involves
continuous investment regardless of such fluctuating value, investors selecting
this option should consider their financial ability to continue to participate
in the program through periods of low fund share prices. This program involves
automatic exchanges between two or more fund accounts and is treated as a
purchase of shares of the fund into which investments are made through the
program. See Exchange Privilege for a brief summary of the tax consequences of
exchanges. Shareholders can terminate their participation in Wealth Builder at
any time by giving written notice to the fund from which exchanges are made.

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(LTGF/USGMF-SAI/PART B)

Account Statements
You will receive quarterly statements of your account summarizing all
transactions during the period. Accounts in which there has been activity will
receive a monthly statement confirming each transaction.

Asset Planner
To invest in the funds in the Delaware Investments family using the
Asset Planner asset allocation service, you should complete a Asset Planner
Account Registration Form, which is available only from a financial adviser or
investment dealer. Effective September 1, 1997, the Asset Planner Service is
only available to financial advisers or investment dealers who have previously
used this service. The Asset Planner service offers a choice of four predesigned
asset allocation strategies (each with a different risk/reward profile) in
predetermined percentages in Delaware Investments funds. With the help of a
financial adviser, you may also design a customized asset allocation strategy.

The sales charge on an investment through the Asset Planner service is
determined by the individual sales charges of the underlying funds and their
percentage allocation in the selected Strategy. Exchanges from existing Delaware
Investments accounts into the Asset Planner service may be made at net asset
value under the circumstances described under Investing by Exchange in the
Prospectus. The minimum initial investment per Strategy is $2,000; subsequent
investments must be at least $100. Individual fund minimums do not apply to
investments made using the Asset Planner service. Class A Shares and Consultant
Class Shares are available through the Asset Planner service. Generally, only
shares within the same class may be used within the same Strategy. However,
Class A Shares of the Fund and of other funds available from Delaware
Investments may be used in the same Strategy with the Fund's Consultant Class
Shares and consultant class shares that are offered by certain other funds in
the Delaware Investments family.

An annual maintenance fee, currently $35 per Strategy, is due at the
time of initial investment and by September 30 of each subsequent year. The fee,
payable to Delaware Service Company, Inc. to defray extra costs associated with
administering the Asset Planner service, will be deducted automatically from one
of the funds within your Asset Planner account if not paid by September 30.
However, effective November 1, 1996, the annual maintenance fee is waived until
further notice. Investors who utilize the Asset Planner for an IRA will continue
to pay an annual IRA fee of $15 per Social Security number. Investors will
receive a customized quarterly Strategy Report summarizing all Asset Planner
investment performance and account activity during the prior period.
Confirmation statements will be sent following all transactions other than those
involving a reinvestment of distributions.

Certain shareholder services are not available to investors using the
Asset Planner service, due to its special design. These include Delaphone,
Checkwriting, Wealth Builder Option and Letter of Intention. Systematic
Withdrawal Plans are available after the account has been open for two years.

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(LTGF/USGMF-SAI/PART B)

RETIREMENT PLANS

An investment in the Fund may be suitable for tax-deferred retirement
plans. Delaware Investments offers a full spectrum of qualified and
non-qualified retirement plans, including the 401(k) deferred compensation
plan, Individual Retirement Account ("IRA") and the new Roth IRA.

Minimum investment limitations generally applicable to other investors
do not apply to retirement plans other than Individual Retirement Accounts for
which there is a minimum initial purchase of $250, and a minimum subsequent
purchase of $25 regardless of which Class is selected. Retirement plans may be
subject to plan establishment fees, annual maintenance fees and/or other
administrative or trustee fees. Fees are based upon the number of participants
in the plan as well as the services selected. Additional information about fees
is included in retirement plan materials. Fees are quoted upon request. Annual
maintenance fees may be shared by Delaware Management Trust Company, the
Transfer Agent, other affiliates of the Manager and others that provide services
to such plans.

Certain shareholder investment services available to non-retirement
plan shareholders may not be available to retirement plan shareholders. For
additional information on any of the plans and Delaware's retirement services,
call the Shareholder Service Center telephone number.

It is advisable for an investor considering any one of the retirement
plans described below to consult with an attorney, accountant or a qualified
retirement plan consultant. For further details, including applications for any
of these plans, contact your investment dealer or the Distributor.

Taxable distributions from the retirement plans described below may be
subject to withholding.

Please contact your investment dealer or the Distributor for the
special application forms required for the plans described below.

Prototype Profit Sharing or Money Purchase Pension Plans
Prototype Plans are available for self-employed individuals,
partnerships and corporations. These plans can be maintained as Section 401(k),
profit sharing or money purchase pension plans.

Individual Retirement Account ("IRA")
A document is available for an individual who wants to establish an IRA
and make contributions which may be tax-deductible, even if the individual is
already participating in an employer-sponsored retirement plan. Even if
contributions are not deductible for tax purposes, as indicated below, earnings
will be tax-deferred. In addition, an individual may make contributions on
behalf of a spouse who has no compensation for the year or, for years prior to
1997, elects to be treated as having no compensation for the year.

An individual can contribute up to $2,000 to his or her IRA each year.
Contributions may or may not be deductible depending upon the taxpayers adjusted
gross income and whether the taxpayer or his or her spouse is an active
participant in an employer-sponsored retirement plan. Even if a taxpayer (or his
or her spouse) is an active participant in an employer-sponsored retirement
plan, the full $2,000 deduction is still available if the taxpayer's adjusted
gross income is below $25,000 ($40,000 for taxpayers filing joint returns). A
partial deduction is allowed for married couples with incomes between $40,000
and $50,000, and for single individuals with incomes between $25,000 and
$35,000. No deductions are available for contributions to IRAs by taxpayers
whose adjusted gross income before IRA deductions exceeds $50,000 ($35,000 for
singles) and who are active participants in an

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(LTGF/USGMF-SAI/PART B)

employer-sponsored retirement plan. Taxpayers who are not allowed deductions on
IRA contributions still can make nondeductible IRA contributions of as much as
$2,000 for each working spouse ($2,250 for one-income couples for years prior to
1997), and defer taxes on interest or other earnings from the IRAs. Special
rules apply for determining the deductibility of contributions made by married
individuals filing separate returns.

Effective for tax years beginning after 1996, one-income couples can
contribute up to $2,000 to each spouse's IRA provided the combined compensation
of both spouses is at least equal to the total contributions for both spouses.
If the working spouse is an active participant in an employer-sponsored
retirement plan and earns over $40,000, the maximum deduction limit is reduced
in the same way that the limit is reduced for contributions to a non-spousal
IRA.

A company or association may establish a Group IRA for employees or
members who want to purchase shares of the Fund.

Investments generally must be held in the IRA until age 59 1/2 in order
to avoid premature distribution penalties, but distributions generally must
commence no later than April 1 of the calendar year following the year in which
the participant reaches age 70 1/2. Individuals are entitled to revoke the
account, for any reason and without penalty, by mailing written notice of
revocation to Delaware Management Trust Company within seven days after the
receipt of the IRA Disclosure Statement or within seven days after the
establishment of the IRA, except, if the IRA is established more than seven days
after receipt of the IRA Disclosure Statement, the account may not be revoked.
Distributions from the account (except for the pro-rata portion of any
nondeductible contributions) are fully taxable as ordinary income in the year
received. Excess contributions removed after the tax filing deadline, plus
extensions, for the year in which the excess contributions were made are subject
to a 6% excise tax on the amount of excess. Premature distributions
(distributions made before age 59 1/2, except for death, disability and certain
other limited circumstances) will be subject to a 10% excise tax on the amount
prematurely distributed, in addition to the income tax resulting from the
distribution.

Effective January 1, 1997, the 10% premature distribution penalty will
not apply to distributions from an IRA that are used to pay medical expenses in
excess of 7.5% of adjusted gross income or to pay health insurance premiums by
an individual who has received unemployment compensation for 12 consecutive
weeks.

Simplified Employee Pension Plan ("SEP/IRA")
A SEP/IRA may be established by an employer who wishes to sponsor a
tax-sheltered retirement program by making contributions on behalf of all
eligible employees.

Salary Reduction Simplified Employee Pension Plan ("SAR/SEP")

Although new SAR/SEP plans may not be established after December 31,
1996, existing plans may be maintained by employers having 25 or fewer
employees. An employer may elect to make additional contributions to such
existing plans.

Prototype 401(k) Defined Contribution Plan

Section 401(k) of the Code permits employers to establish qualified
plans based on salary deferral contributions. Plan documents are available to
enable employers to establish a plan. An employer may also elect to make profit
sharing contributions and/or matching contributions with investments in the Fund
or certain other funds in the Delaware Investments family.

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(LTGF/USGMF-SAI/PART B)

Deferred Compensation Plan for Public Schools and Non-Profit Organizations
("403(b)(7)")
Section 403(b)(7) of the Code permits public school systems and certain
non-profit organizations to use mutual fund shares held in a custodial account
to fund deferred compensation arrangements for their employees. A custodial
account agreement is available for those employers who wish to purchase shares
of the Fund in conjunction with such an arrangement.

Deferred Compensation Plan for State and Local Government Employees ("457")

Section 457 of the Code permits state and local governments, their
agencies and certain other entities to establish a deferred compensation plan
for their employees who wish to participate. This enables employees to defer a
portion of their salaries and any federal (and possibly state) taxes thereon.
Such plans may invest in shares of the Fund. Although investors may use their
own plan, there is available a Delaware Investments 457 Deferred Compensation
Plan. Interested investors should contact the Distributor or their investment
dealers to obtain further information.

SIMPLE IRA
A SIMPLE IRA combines many of the features of an IRA and a 401(k) Plan
but is easier to administer than a typical 401(k) Plan. It requires employers to
make contributions on behalf of their employees and also has a salary deferral
feature that permits employees to defer a portion of their salary into the plan
on a pre-tax basis.

SIMPLE 401(k)
A SIMPLE 401(k) is like a regular 401(k) except that plan sponsors are
limited to 100 employees and, in exchange for mandatory plan sponsor
contributions, discrimination testing is no longer required.

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(LTGF/USGMF-SAI/PART B)

OFFERING PRICE

The offering price of shares is the net asset value per share next to
be determined after an order is received and becomes effective. There is no
sales charge.

The purchase will be effected at the net asset value next computed
after the receipt of Federal Funds provided they are received by the close of
regular trading on the New York Stock Exchange (ordinarily, 4 p.m., Eastern
time) on days when the Exchange is open. The New York Stock Exchange is
scheduled to be open Monday through Friday throughout the year except for New
Year's Day, Martin Luther King, Jr.'s Birthday, Presidents' Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving and Christmas. When the
New York Stock Exchange is closed, the Fund will generally be closed, pricing
calculations will not be made and purchase and redemption orders will not be
processed.

An example showing how to calculate the net asset value per share is
included in the Fund's financial statements which are incorporated by reference
into this Part B.

The investor becomes a shareholder at the close of and after
declaration of the dividend on the day on which the order is effective. See
Purchasing Shares. Dividends begin to accrue on the next business day. In the
event of changes in Securities and Exchange Commission requirements or the
Fund's change in time of closing, the Fund reserves the right to price at a
different time, to price more often than once daily or to make the offering
price effective at a different time.

The Fund's net asset value per share is computed by adding the value of
all securities and other assets in the portfolio, deducting any liabilities of
the Fund and dividing by the number of shares outstanding. Expenses and fees are
accrued daily. In determining the Fund's total net assets, portfolio securities
are valued at amortized cost.

The Board of Directors has adopted certain procedures to monitor and
stabilize the Fund's price per share. Calculations are made each day to compare
part of the Fund's value with the market value of instruments of similar
character. At regular intervals all issues in the portfolio are valued at market
value. Securities maturing in more than 60 days are valued more frequently by
obtaining market quotations from market makers. The portfolio will also be
valued by market makers at such other times as is felt appropriate. In the event
that a deviation of more than 1/2 of 1% exists between the Fund's $1.00 per
share offering and redemption prices and the net asset value calculated by
reference to market quotations, or if there is any other deviation which the
Board of Directors believes would result in a material dilution to shareholders
or purchasers, the Board of Directors will promptly consider what action, if
any, should be initiated, such as changing the price to more or less than $1.00
per share.

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(LTGF/USGMF-SAI/PART B)

REDEMPTION

Any shareholder may require the Fund to redeem shares by sending a
written request, signed by the record owner or owners exactly as the shares are
registered, to the Fund at 1818 Market Street, Philadelphia, PA 19103. In
addition, certain expedited redemption methods described below are available
when stock certificates have not been issued. If stock certificates have been
issued for shares being redeemed, they must accompany the written request. For
redemptions of $50,000 or less paid to the shareholder at the address of record,
the request must be signed by all owners of the shares or the investment dealer
of record, but a signature guarantee is not required. When the redemption is for
more than $50,000 or if payment is made to someone else or to another address,
signatures of all record owners and a signature guarantee are required. Each
signature guarantee must be supplied by an eligible guarantor institution. The
Fund reserves the right to reject a signature guarantee supplied by an eligible
institution based on its creditworthiness. The Fund may request further
documentation from corporations, executors, retirement plans, administrators,
trustees or guardians. The redemption price is the net asset value next
calculated after receipt of the redemption request in good order. See Offering
Price for time of calculation of net asset value.

Payment for shares redeemed will ordinarily be mailed the next business
day, but in no case later than seven days, after receipt of a redemption request
in good order; provided, however, that each commitment to mail or wire
redemption proceeds by a certain time, as described below, is modified by the
qualifications described in the next paragraph.

The Fund will process written or telephone redemption requests to the
extent that the purchase orders for the shares being redeemed have already been
settled. The Fund will honor the redemption requests as to shares for which a
check was tendered as payment, but the Fund will not mail or wire the proceeds
until it is reasonably satisfied that the check has cleared. This potential
delay can be avoided by making investments by wiring Federal Funds. The hold
period against a recent purchase may be up to but not in excess of 15 days,
depending upon the origin of the investment check. Dividends will continue to be
earned until the redemption is processed. This potential delay can be avoided by
making investments by wiring Federal Funds. If a shareholder redeems an entire
account, all dividends accrued to the time of the withdrawal will be paid by
separate check at the end of that particular monthly dividend period. Except
with respect to the expedited payment by wire, for which there is currently a
$7.50 bank wiring cost, there is no fee charged for redemptions, but such fees
could be charged at any time in the future.

If a shareholder has been credited with a purchase by a check which is
subsequently returned unpaid for insufficient funds or for any other reason, the
Fund will automatically redeem from the shareholder's account the shares
purchased by the check plus any dividends earned thereon. Shareholders may be
responsible for any losses to the Fund or to the Distributor.

In case of a suspension of the determination of the net asset value
because the New York Stock Exchange is closed for other than weekends or
holidays, or trading thereon is restricted or an emergency exists as a result of
which disposal by the Fund of securities owned by it is not reasonably practical
or it is not reasonably practical for the Fund fairly to value its assets, or in
the event that the SEC has provided for such suspension for the protection of
shareholders, the Fund may postpone payment or suspend the right of redemption.
In such case, the shareholder may withdraw a request for redemption or leave it
standing as a request for redemption at the net asset value next determined
after the suspension has been terminated.

See Account Statements under Purchasing Shares for information relating
to the mailing of confirmations of redemptions.

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(LTGF/USGMF-SAI/PART B)

Small Accounts

Before the Fund involuntarily redeems shares from an account that,
under the circumstances noted in the Prospectus, has remained below the minimum
amounts required by the Prospectus, the shareholder will be notified in writing
that the value of the shares in the account is less than the minimum amounts
required by the Prospectus and will be allowed 60 days from the date of notice
to make an additional investment to meet the required minimum. If no such action
is taken by the shareholder, the proceeds will be sent to the shareholder. Any
redemption in an inactive account established with a minimum investment may
trigger mandatory redemption.

Checkwriting Feature
Shareholders holding shares for which certificates have not been issued
may request on the investment application that they be provided with special
forms of checks which may be issued to redeem their shares by drawing on the
Limited-Term Funds, Inc.--U.S. Government Money Fund account with CoreStates
Bank, N.A. Normally, it takes two weeks from the date the shareholder's initial
purchase check clears to receive the first order of checks. The use of any form
of check other than the Fund's check will not be permitted unless approved by
the Fund.

(1)These redemption checks must be made payable in an amount of $500
or more.

(2) Checks must be signed by the shareholder(s) of record or, in the
case of an organization, by the authorized person(s). If registration is in more
than one name, unless otherwise indicated on the investment application or your
checkwriting authorization form, these checks must be signed by all owners
before the Fund will honor them. Through this procedure, the shareholder will
continue to be entitled to distributions paid on those shares up to the time
such checks are presented for payment.

(3) If a shareholder who recently purchased shares by check seeks to
redeem all or a portion of those shares through the Checkwriting Feature, a Fund
will not honor the redemption request unless it is reasonably satisfied of the
collection of the investment check. A hold period against a recent purchase may
be up to but not in excess of 15 days, depending upon the origin of the
investment check.

(4) If the amount of the check is greater than the value of the shares
held in the shareholder's account, the check will be returned and the
shareholder's bank may charge a fee.

(5) Checks may not be used to close accounts.

The Fund reserves the right to revoke the Checkwriting Feature of
shareholders who overdraw their accounts or if, in the opinion of management,
such revocation is in the Fund's best interest.

Shareholders will be subject to CoreStates Bank, N.A.'s rules and
regulations governing similar accounts. This service may be terminated or
suspended at any time by CoreStates Bank, N.A., the Fund or the Transfer Agent.
The Fund and the Transfer Agent will not be responsible for the inadvertent
processing of post-dated checks or checks more than six months old.

Stop-Payment Requests--Investors may request a stop payment on checks
by providing the Fund with a written authorization to do so. Oral requests will
be accepted provided that the Fund promptly receives a

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(LTGF/USGMF-SAI/PART B)

written authorization. Such requests will remain in effect for six months unless
renewed or canceled. The Fund will use its best efforts to effect stop-payment
instructions, but does not promise or guarantee that such instructions will be
effective.

Return of Checks--Checks used in redeeming shares from a shareholder's
account will be accumulated and returned semi-annually. Shareholders needing a
copy of a redemption check before the regular mailing should contact the
Transfer Agent nationwide 800-523-1918.

* * *

The Fund has made available certain redemption privileges, as described
below. The Fund reserves the right to suspend or terminate the expedited payment
procedures upon 60 days' written notice to shareholders.

Expedited Telephone Redemptions
Shareholders or their investment dealers of record wishing to redeem
any amount of shares of $50,000 or less for which certificates have not been
issued may call the Shareholder Service Center at 800-523-1918 prior to the time
the offering price (net asset value) is determined, as noted above, and have the
proceeds mailed to them at the record address. Checks payable to the
shareholder(s) of record will normally be mailed the next business day, but no
later than seven days, after receipt of the redemption request. This option is
only available to individual, joint and individual fiduciary-type accounts.

In addition, redemption proceeds of $1,000 or more can be transferred
to your predesignated bank account by wire or by check by calling the phone
numbers listed above. An authorization form must have been completed by the
shareholder and filed with the Fund before the request is received. Payment will
be made by wire or check to the bank account designated on the authorization
form as follows:

1. Payment by Wire: Request that Federal Funds be wired to the bank
account designated on the authorization form. Redemption proceeds will normally
be wired on the next business day following receipt of the redemption request.
There is a $7.50 wiring fee (subject to change) charged by CoreStates Bank, N.A.
which will be deducted from the withdrawal proceeds each time the shareholder
requests a redemption. If the proceeds are wired to the shareholder's account at
a bank which is not a member of the Federal Reserve System, there could be a
delay in the crediting of the funds to the shareholder's bank account.

2. Payment by Check: Request that a check be mailed to the bank account
designated on the authorization form. Redemption proceeds will normally be
mailed the next business day, but no later than seven days, from the date of the
telephone request. This procedure will take longer than the Payment by Wire
option (1 above) because of the extra time necessary for the mailing and
clearing of the check after the bank receives it.

Redemption Requirements: In order to change the name of the bank and
the account number it will be necessary to send a written request to the Fund
with a signature guarantee. Each signature guarantee must be supplied by an
eligible guarantor institution. The Fund reserves the right to reject a
signature guarantee supplied by an eligible institution based on its
creditworthiness.

To reduce the shareholder's risk of attempted fraudulent use of the
telephone redemption procedure, payment will be made only to the bank account
designated on the authorization form.

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(LTGF/USGMF-SAI/PART B)

If expedited payment under these procedures could adversely affect the
Fund, the Fund may take up to seven days to pay the shareholder.

Neither the Fund nor its Transfer Agent is responsible for any
shareholder loss incurred in acting upon written or telephone instructions for
redemption or exchange of Fund shares which are reasonably believed to be
genuine. With respect to such telephone transactions, the Fund will follow
reasonable procedures to confirm that instructions communicated by telephone are
genuine (including verification of a form of personal identification) as, if it
does not, the Fund or the Transfer Agent may be liable for any losses due to
unauthorized or fraudulent transactions. Telephone instructions received from
shareholders are generally tape recorded, and a written confirmation will be
provided for all purchase, exchange and redemption transactions initiated by
telephone.

Systematic Withdrawal Plan
Shareholders who own or purchase $5,000 or more of shares for which
certificates have not been issued may establish a Systematic Withdrawal Plan for
monthly withdrawals of $25 or more or quarterly withdrawals of $75 or more,
although the Fund does not recommend any specific amount of withdrawal. This
$5,000 minimum does not apply for the Fund's prototype Retirement Plans. Shares
purchased with the initial investment and through reinvestment of cash dividends
and realized securities profits distributions will be credited to the
shareholder's account, and sufficient full and fractional shares will be
redeemed at the net asset value calculated on the third business day preceding
the mailing date.

Checks are dated either the 1st or the 15th of the month as selected by
the shareholder (unless such date falls on a holiday or a weekend), and are
normally mailed within two business days. Both ordinary income dividends and
realized securities profits distributions will be automatically reinvested in
additional shares of a Class at net asset value. This plan is not recommended
for all investors and should be started only after careful consideration of its
operation and effect upon the investor's savings and investment program. To the
extent that withdrawal payments from the plan exceed any dividends and/or
realized securities profits distributions paid on shares held under the plan,
the withdrawal payments will represent a return of capital and the share balance
may in time be depleted, particularly in a declining market.

The sale of shares for withdrawal payments constitutes a taxable event
and a shareholder may incur a capital gain or loss for federal income tax
purposes, although the Fund expects to maintain a fixed net asset value. If
there were a gain or loss, it would be long-term or short-term depending on the
holding period for the specific shares liquidated. Premature withdrawals from
retirement plans may have adverse tax consequences.

An investor wishing to start a Systematic Withdrawal Plan must complete
an authorization form. If the recipient of Systematic Withdrawal Plan payments
is other than the registered shareholder, the shareholder's signature on this
authorization must be guaranteed. Each signature guarantee must be supplied by
an eligible guarantor institution. The Fund reserves the right to reject a
signature guarantee supplied by an eligible institution based on its
creditworthiness. This plan may be terminated by the shareholder or the Transfer
Agent at any time by giving written notice. Shareholders should consult their
financial advisers to determine whether a Systematic Withdrawal Plan would be
suitable for them.

-30-

<PAGE>

(LTGF/USGMF-SAI/PART B)

DIVIDENDS AND REALIZED SECURITIES PROFITS DISTRIBUTIONS

Limited-Term Funds, Inc. declares a dividend of the Fund's net
investment income on a daily basis to shareholders of record of each Class of
Fund shares at the time of the previous calculation of the Fund's net asset
value each day that the Fund is open for business. The amount of net investment
income will be determined at the time the offering price and net asset value are
determined, and shall include investment income accrued, less the estimated
expenses of the Fund incurred since the last determination of net asset value.
Gross investment income consists principally of interest accrued and, where
applicable, net pro-rata amortization of premiums and discounts since the last
determination. The dividend declared, as noted above, will be deducted
immediately before the net asset value calculation is made. See Offering Price.
Net investment income earned on days when the Fund is not open will be declared
as a dividend on the next business day.

Each Class of shares of the Fund will share proportionately in the
investment income and expenses of the Fund, except that until June 1, 1990,
Consultant Class Shares incurred distribution fees under its 12b-1 Plan. The
Board of Directors of Limited-Term Funds, Inc. suspended 12b-1 Plan payments
from the assets of Consultant Class Shares to the Distributor effective June 1,
1990. See Plan Under Rule 12b-1 for Consultant Class Shares under Purchasing
Shares.

Purchases of Fund shares by wire begin earning dividends when converted
into Federal Funds and available for investment, normally the next business day
after receipt. However, if the Fund is given prior notice of Federal Funds wire
and an acceptable written guarantee of timely receipt from an investor
satisfying the Fund's credit policies, the purchase will start earning dividends
on the date the wire is received. Investors desiring to guarantee wire payments
must have an acceptable financial condition and credit history in the sole
discretion of the Fund. The Fund reserves the right to terminate this option at
any time. Purchases by check earn dividends upon conversion to Federal Funds,
normally one business day after receipt.

Payment of dividends will be made monthly on the last day of each
month. Payment by check of cash dividends will ordinarily be mailed within three
business days after the payable date. Dividends are automatically reinvested in
additional shares of the same Class of the Fund at the net asset value in effect
on the payable date, which provides the effect of compounding dividends, unless
the election to receive dividends in cash has been made. Dividend payments of
$1.00 or less will be automatically reinvested, notwithstanding a shareholder's
election to receive dividends in cash. If such a shareholder's dividends
increase to greater than $1.00, the shareholder would have to file a new
election in order to begin receiving dividends in cash again. If a shareholder
redeems an entire account, all dividends accrued to the time of the withdrawal
will be paid by separate check at the end of that particular monthly dividend
period, consistent with the payment and mailing schedule described above. Any
check in payment of dividends or other distributions which cannot be delivered
by the United States Post Office or which remains uncashed for a period of more
than one year may be reinvested in the shareholder's account at the then-current
net asset value and the dividend option may be changed from cash to reinvest.
The Fund may deduct from a shareholder's account the costs of the Fund's effort
to locate a shareholder if a shareholder's mail is returned by the Post Office
or the Fund is otherwise unable to locate the shareholder or verify the
shareholder's mailing address. These costs may include a percentage of the
account when a search company charges a percentage fee in exchange for their
location services. To the extent necessary to maintain a $1.00 per share net
asset value, Limited-Term Funds, Inc.'s Board of Directors will consider
temporarily reducing or suspending payment of daily dividends, or making a
distribution of realized securities profits or other distributions at the time
the net asset value per share has changed.

-31-

<PAGE>

(LTGF/USGMF-SAI/PART B)

Short-term realized securities profits or losses, if any, may be paid
with the daily dividend. Any such profits not so paid will be distributed
annually during the first quarter following the close of the fiscal year. See
Account Statements under Purchasing Shares for the statement mailing of dividend
information. Information as to the tax status of dividends will be provided
annually.

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<PAGE>

(LTGF/USGMF-SAI/PART B)

TAXES

The Fund has qualified, and intends to continue to qualify, as a
regulated investment company under Subchapter M of the Code, as amended. By so
qualifying, the Fund is not subject to federal income taxes to the extent that
it distributes its net investment income and realized capital gains. The term
"regulated investment company" does not imply the supervision of management or
investment practices or policies by any government agency. Each fund of
Limited-Term Funds, Inc. is treated as a separate tax entity and any capital
gains and losses for each fund are calculated separately.

Distributions paid by the Fund representing net investment income
received by the Fund and short-term capital gains will be taxable to
shareholders as ordinary income and will not qualify for the dividends-received
deduction available to corporations. The tax status of dividends and
distributions paid to shareholders will not be affected by whether they are paid
in cash or in additional shares. The Fund does not expect to realize long-term
capital gains and, therefore, does not contemplate payment of any capital gains
dividends.

In addition to federal tax, shareholders also may be subject to state
and local taxes on distributions from the Fund. Shareholders who are
Pennsylvania residents will not be subject to Pennsylvania county personal
property taxes on their shares. You should consult your tax adviser with respect
to the tax status of distributions from the Fund in your state and locality.

Statements setting forth the full federal income tax status of
distributions made during the year will be mailed annually. In some states,
distributions that came from earnings on U.S. Treasury securities and other
direct U.S.
obligations may be exempt from state income tax.

Under the Taxpayer Relief Act of 1997 (the "1997 Act"), the Fund is
required to track its sales of portfolio securities and to report its capital
gain distributions to you according to the following categories of holding
periods:

"Pre-Act long-term capital gains" or "28 percent rate gain": securities
sold by the Fund before May 7, 1997, that were held for more than 12
months. These gains will be taxable to individual investors at a
maximum rate of 28%.

"Mid-term capital gains" or "28 percent rate gain": securities sold by
the Fund after July 28, 1997 that were held more than one year but not
more than 18 months. These gains will be taxable to individual
investors at a maximum rate of 28%.

"1997 Act long-term capital gains" or "20 percent rate gain":
securities sold by the Fund between May 7, 1997 and July 28, 1997 that
were held for more than 12 months, and securities sold by the Fund
after July 28, 1997 that were held for more than 18 months. These gains
will be taxable to individual investors at a maximum rate of 20% for
investors in the 28% or higher federal income tax brackets, and at a
maximum rate of 10% for investors in the 15% federal income tax
bracket.

"Qualified 5-year gains": For individuals in the 15% bracket, qualified
5-year gains are net gains on securities held for more than 5 years
which are sold after December 31, 2000. For individuals who are subject
to tax at higher rate brackets, qualified 5-year gains are net gains on
securities which are purchased after December 31, 2000 and are held for
more than 5 years.

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<PAGE>

(LTGF/USGMF-SAI/PART B)

Taxpayers subject to tax at a higher rate brackets may also make an
election for shares held on January 1, 2001 to recognize gain on their
shares (any loss is disallowed) in order to qualify such shares as
qualified 5-year property as though purchased after December 31, 2000.
These gains will be taxable to individual investors at a maximum rate
of 18% for investors in the 28% or higher federal income tax brackets,
and at a maximum rate of 8% for investors in the 15% federal income tax
bracket when sold after the 5 year holding period.

-34-

<PAGE>

(LTGF/USGMF-SAI/PART B)

INVESTMENT MANAGEMENT AGREEMENT

The Manager, located at One Commerce Square, Philadelphia, PA 19103,
furnishes investment management services to the Fund, subject to the supervision
and direction of Limited-Term Funds, Inc.'s Board of Directors.

The Manager and its predecessors have been managing the funds in the
Delaware Investments family since 1938. On December 31, 1997, the Manager and
its affiliates within the Delaware Investments family, including Delaware
International Advisers Ltd., were managing in the aggregate more than $40
billion in assets in the various institutional or separately managed
(approximately $24,040,760,000) and investment company (approximately
$16,482,583,000) accounts.

Subject to the supervision and direction of the Board of Directors, the
Manager manages the Fund's portfolio in accordance with the Fund's stated
investment objective and policy and makes and implements all investment
decisions on behalf of the Fund.

The Fund's Investment Management Agreement is dated April 3, 1995 and
was approved by shareholders on March 29, 1995. The Agreement has an initial
term of two years and may be renewed only so long as such renewal and
continuance are specifically approved at least annually by the Board of
Directors or by vote of a majority of the outstanding voting securities of the
Fund, and only if the terms of and the renewal thereof have been approved by the
vote of a majority of the directors of Limited-Term Funds, Inc., who are not
parties thereto or interested persons of any such party, cast in person at a
meeting called for the purpose of voting on such approval. The Agreement is
terminable without penalty on 60 days notice by the directors of Limited-Term
Funds, Inc. or by the Manager. The Agreement will terminate automatically in the
event of its assignment.

The annual compensation paid by the Fund for investment management
services is equal to 1/2 of 1% of the Fund's average daily net assets, less the
Fund's proportionate share of all directors' fees paid to the unaffiliated
directors by the Fund. The Manager pays the salaries of all directors, officers
and employees of Limited-Term Funds, Inc. who are affiliated with the Manager.

On December 31, 1997, the total net assets of the Fund were
$17,246,094. Investment management fees paid by the Fund during the fiscal year
ended December 31, 1995 were $70,149, For the fiscal years ended December 31,
1996 and 1997, investment management fees incurred were $78,833 and $81,779,
respectively, and $1,644 was paid for 1996 and no fees were paid for 1997.

Beginning January 26, 1996, the Manager elected voluntarily to waive
that portion, if any, of the annual management fees payable by the Fund and to
pay the Fund's expenses to the extent necessary to ensure that the Total
Operating Expenses (after voluntary waiver and payments) of the Fund did not
exceed 0.70% (exclusive of taxes, interest, brokerage commissions, extraordinary
expenses and, in the case of Consultant Class Shares, 12b-1 fees) through
February 9, 1998.

Except for those expenses borne by the Manager under the Investment
Management Agreement and the Distributor under the Distribution Agreement, the
Fund is responsible for all of its own expenses. Among others, these include the
investment management fees; shareholder servicing, dividend disbursing and
transfer agent fees and costs; custodian expenses; federal and state securities
registration fees; proxy costs; the costs of preparing prospectuses and reports
sent to shareholders; and the Fund's proportionate share of rent and other
administrative expenses.

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<PAGE>

(LTGF/USGMF-SAI/PART B)

Distribution and Service

The Distributor, Delaware Distributors, L.P. (which formerly conducted
business as Delaware Distributors, Inc.), located at 1818 Market Street,
Philadelphia, PA 19103, serves as the national distributor of Fund shares under
a Distribution Agreement dated April 3, 1995. The Distributor is an affiliate of
the Manager and bears all of the costs of promotion and distribution except for
any payments which may be made under Consultant Class Shares' 12b-1 Plan.
Delaware Distributors, L.P. is an indirect, wholly owned subsidiary of Delaware
Management Holdings, Inc.

The Transfer Agent, Delaware Service Company, Inc., another affiliate
of the Manager located at 1818 Market Street, Philadelphia, PA 19103, serves as
the Fund's shareholder servicing, dividend disbursing and transfer agent
pursuant to a Shareholders Services Agreement dated December 20, 1990. The
Transfer Agent also provides accounting services to the Fund pursuant to the
terms of a separate Fund Accounting Agreement. The Transfer Agent is also an
indirect, wholly owned subsidiary of Delaware Management Holdings, Inc.

The Fund has authorized one or more brokers to accept on its behalf
purchase and redemption orders in addition to the Transfer Agent. Such brokers
are authorized to designate other intermediaries to accept purchase and
redemption orders on the behalf of the Fund. For purposes of pricing, the Fund
will be deemed to have received a purchase or redemption order when an
authorized broker or, if applicable, a broker's authorized designee, accepts the
order. Investors may be charged a fee when effecting transactions through a
broker or agent.

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<PAGE>

(LTGF/USGMF-SAI/PART B)

OFFICERS AND DIRECTORS

The business and affairs of Limited-Term Funds, Inc. are managed under
the direction of its Board of Directors.

Certain officers and directors of Limited-Term Funds, Inc. hold
identical positions in each of the other funds in the Delaware Investments
family. On March 31, 1998, Limited-Term Funds, Inc.'s officers and directors, as
a group, owned less than 1% of the outstanding shares of the Class A Shares and
the Consultant Class Shares of the Fund.

As of March 31, 1998, management believes the following accounts held
5% or more of Class A Shares and Consultant Class Shares of the Fund:

Class Name and Address of Account Share Amount Percentage
- ----- --------------------------- ------------ ----------

<S> <C> <C> <C>
U.S. Government Michael W. Martin and 1,430,839 9.69%
Money Fund Revette D. Martin
A Class 5003 Moss Hollow
Houston, TX 77018

U.S. Government Fahnestock and Company, Inc. CUST 76,157 16.04%
Money Fund Jane C. Hendel R/O
Consultant Class 125 Broad Street
New York, NY 10004

Louis C. Motzer 33,675 7.09%
109 Fairborn Drive
Hamilton, OH 45013

DMTC C/F the 403(B)(7) Plan of 30,545 6.43%
Gary Kronick
2210 Budd Terrace
Schenectady, NY 12309

David R. Johnston and 30,091 6.33%
Mary Ellen Johnston JT WROS
119 Foxcroft Lane
Robesonia, PA 19551
</TABLE>

DMH Corp., Delvoy, Inc., Delaware Management Business Trust, Delaware
Management Company, Delaware Management Company, Inc. (a series of Delaware
Management Business Trust), Delaware Investment Advisers, (a series of Delaware
Management Business Trust), Delaware Distributors, L.P., Delaware Distributors,
Inc., Delaware Service Company, Inc., Delaware Management Trust Company,
Delaware International Holdings Ltd., Founders Holdings, Inc., Delaware
International Advisers Ltd., Delaware Capital Management, Inc. and Delaware
Investment & Retirement Services, Inc. are direct or indirect, wholly owned
subsidiaries of Delaware Management Holdings, Inc. ("DMH"). On April 3, 1995, a
merger between DMH and a wholly owned subsidiary of Lincoln National Corporation
("Lincoln National") was completed. DMH and the Manager are now indirect,

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<PAGE>

(LTGF/USGMF-SAI/PART B)

wholly owned subsidiaries, and subject to the ultimate control, of Lincoln
National. Lincoln National, with headquarters in Fort Wayne, Indiana, is a
diversified organization with operations in many aspects of the financial
services industry, including insurance and investment management.

Certain officers and directors of Limited-Term Funds, Inc. hold identical
positions in each of the other funds in the Delaware Investments family.
Directors and principal officers of Limited-Term Funds, Inc. are noted below
along with their ages and their business experience for the past five years.
Unless otherwise noted, the address of each officer and director is One Commerce
Square, Philadelphia, PA 19103.

-38-

<PAGE>

(LTGF/USGMF-SAI/PART B)

*Wayne A. Stork (60)

Chairman and Director and/or Trustee of Limited-Term Funds, Inc., 33
other investment companies in the Delaware Investments family
and Delaware Capital Management, Inc.

Chairman, President, Chief Executive Officer and Director of DMH Corp.,
Delaware Distributors, Inc. and Founders Holdings, Inc.
Chairman, President, Chief Executive Officer, Chief Investment Officer
and Director/Trustee of Delaware

Management Company, Inc. and Delaware Management Business Trust
Chairman, President, Chief Executive Officer and Chief
Investment Officer of Delaware Management Company (a series
of Delaware Management Business Trust) Chairman, Chief
Executive Officer and Chief Investment Officer of Delaware
Investment Advisers (a series of Delaware Management Business
Trust)
Chairman, Chief Executive Officer and Director of Delaware International
Advisers Ltd., Delaware International Holdings Ltd. and
Delaware Management Holdings, Inc.
President and Chief Executive Officer of Delvoy, Inc.
Chairman of Delaware Distributors, L.P.

Director of Delaware Service Company, Inc. and Delaware Investment &
Retirement Services, Inc.
During the past five years, Mr. Stork has served in various executive
capacities at different times within the Delaware organization.

* Jeffrey J. Nick (45)
President, Chief Executive Officer and Director of Limited-Term Funds,
Inc. and 33 other investment companies in the Delaware
Investments family
President and Director of Delaware Management Holdings, Inc.
President, Chief Executive Officer and Director of Lincoln National
Investment Companies, Inc.
President of Lincoln Funds Corporation
From 1992 to 1996, Mr. Nick was Managing Director of Lincoln National
UK plc and from 1989 to
1992, he was Senior Vice President responsible for corporate
planning and development for

Richard G. Unruh, Jr. (58)
Executive Vice President of Limited-Term Funds, Inc. , 33 other
investment companies in the Delaware Investments family,
Delaware Management Holdings, Inc., Delaware Management Company
(a series of Delaware Management Business Trust) and Delaware
Capital Management, Inc.
President of Delaware Investment Advisers (a series of Delaware
Management Business Trust)
Executive Vice President and Director/Trustee of Delaware Management
Company, Inc. and Delaware Management Business Trust
Director of Delaware International Advisers Ltd.
During the past five years, Mr. Unruh has served in various executive
capacities at different times within the Delaware
organization.

- ----------------------
* Director affiliated with the Trusts investment manager and considered an
"interested person" as defined in the 1940 Act.

-39-

<PAGE>

(LTGF/USGMF-SAI/PART B)

Paul E. Suckow (50)

Executive Vice President/Chief Investment Officer, Fixed Income of
Limited-Term Funds, Inc., 33 other investment companies in the
Delaware Investments family, Delaware Management Company,
Inc., Delaware Management Company (a series of Delaware
Management Business Trust), Delaware Investment Advisers (a
series of Delaware Management Business Trust) and
Delaware Management Holdings, Inc.
Executive Vice President and Director of Founders Holdings, Inc.
Executive Vice President of Delaware Capital Management, Inc. and
Delaware Management Business Trust
Director of Founders CBO Corporation Director of HYPPCO Finance Company
Ltd.
Before returning to Delaware Investments in 1993, Mr. Suckow was
Executive Vice President and Director of Fixed Income for
Oppenheimer Management Corporation, New York, NY from 1985 to
1992. Prior to that, Mr. Suckow was a fixed-income portfolio
manager for Delaware Investments.

David K. Downes (58)

Executive Vice President, Chief Operating Officer, Chief Financial
Officer of Limited-Term Funds, Inc., 33 other investment
companies in the Delaware Investments family, Delaware
Management Holdings, Inc, Founders CBO Corporation, Delaware
Capital Management, Inc., Delaware Management Company (a
series of Delaware Management Business Trust), Delaware
Investment Advisers (a series of Delaware Management Business
Trust) and Delaware
Distributors, L.P.
Executive Vice President, Chief Financial Officer, Chief Administrative
Officer and Trustee of Delaware Management Business Trust
Executive Vice President, Chief Operating Officer, Chief Financial
Officer and Director of Delaware Management Company, Inc.,
DMH Corp., Delaware Distributors, Inc., Founders Holdings,
Inc. and Delvoy, Inc.
President, Chief Executive Officer, Chief Financial Officer and
Director of Delaware Service Company, Inc.
President, Chief Operating Officer, Chief Financial Officer and
Director of Delaware International Holdings Ltd.
Chairman, Chief Executive Officer and Director of Delaware Management
Trust Company and Delaware Investment & Retirement Services,
Inc.
Director of Delaware International Advisers Ltd.
Vice President of Lincoln Funds Corporation
During the past five years, Mr. Downes has served in various
executive capacities at different times within the Delaware
organization.

Walter P. Babich (70)

Director and/or Trustee of Limited-Term Funds, Inc. and 33 other
investment companies in the Delaware Investments family
460 North Gulph Road, King of Prussia, PA 19406
Board Chairman, Citadel Constructors, Inc.
From 1986 to 1988, Mr. Babich was a partner of Irwin & Leighton and
from 1988 to 1991, he was a partner of I&L Investors.

-40-

<PAGE>

(LTGF/USGMF-SAI/PART B)

Anthony D. Knerr (59)
Director and/or Trustee of Limited-Term Funds, Inc. and 33 other
investment companies in the Delaware Investments family
500 Fifth Avenue, New York, NY 10110
Founder and Managing Director, Anthony Knerr & Associates
From 1982 to 1988, Mr. Knerr was Executive Vice President/Finance and
Treasurer of Columbia University, New York. From 1987 to
1989, he was also a lecturer in English at the University. In
addition, Mr. Knerr was Chairman of The Publishing Group,
Inc., New York, from 1988 to 1990. Mr. Knerr founded The
Publishing Group, Inc. in 1988.

Ann R. Leven (57)
Director and/or Trustee of Limited-Term Funds, Inc. and 33 other
investment companies in the Delaware Investments family
785 Park Avenue, New York, NY 10021
Treasurer, National Gallery of Art
From 1984 to 1990, Ms. Leven was Treasurer and Chief Fiscal Officer
of the Smithsonian Institution, Washington, DC, and from 1975
to 1992, she was Adjunct Professor of Columbia Business
School.

W. Thacher Longstreth (77)
Director and/or Trustee of Limited-Term Funds, Inc. and 33 other
investment companies in the Delaware Investments family
City Hall, Philadelphia, PA 19107
Philadelphia City Councilman.

Thomas F. Madison (62)
Director and/or Trustee of Limited-Term Funds, Inc. and 33 other
investment companies in the Delaware Investments family
200 South Fifth Street, Suite 2100, Minneapolis, Minnesota 55402
President and Chief Executive Officer, MLM Partners, Inc.
Mr. Madison has also been Chairman of the Board of Communications
Holdings, Inc. since 1996. From February to September 1994,
Mr. Madison served as Vice Chairman--Office of the CEO of The
Minnesota Mutual Life Insurance Company and from 1988 to 1993,
he was President of U.S. WEST Communications--Markets.

Charles E. Peck (72)
Director and/or Trustee of Limited-Term Funds, Inc. and 33 other
investment companies in the Delaware Investments family
P.O. Box 1102, Columbia, MD 21044
Secretary/Treasurer, Enterprise Homes, Inc.
From 1981 to 1990, Mr. Peck was Chairman and Chief Executive Officer
of The Ryland Group, Inc., Columbia, MD.

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<PAGE>

(LTGF/USGMF-SAI/PART B)

George M. Chamberlain, Jr. (51)
Senior Vice President , Secretary and General Counsel of Limited-Term
Funds,Inc, 33 other investment companies in the Delaware
Investments family, Delaware Distributors, L.P., Delaware
Management Company (a series of Delaware Management Business
Trust), Delaware Investment Advisers (a series of Delaware
Management Business Trust) and Delaware
Management Holdings, Inc.
Senior Vice President, Secretary, General Counsel and Director/Trustee
of DMH Corp., Delaware Management Company, Inc., Delaware
Distributors, Inc., Delaware Service Company, Inc., Founders
Holdings, Inc., Delaware Investment & Retirement Services,
Inc., Delaware Capital Management, Inc., Delvoy, Inc. and
Delaware Management Business Trust
Executive Vice President, Secretary, General Counsel and Director of
Delaware Management Trust Company Senior Vice President and
Director of Delaware International Holdings Ltd. Director of
Delaware International Advisers Ltd. Secretary of Lincoln
Funds Corporation Attorney. During the past five years, Mr.
Chamberlain has served in various executive capacities at
different times within the Delaware organization.

Joseph H. Hastings (48)
Senior Vice President/Corporate Controller of Limited-Term Funds,
Inc., 33 other investment companies in the Delaware
Investments family and Founders Holdings, Inc.
Senior Vice President/Corporate Controller and Treasurer of Delaware
Management Holdings, Inc., DMH Corp., Delaware Management
Company, Inc., Delaware Management Company (a series of
Delaware Management Business Trust), Delaware Distributors,
L.P., Delaware Distributors, Inc., Delaware Service Company,
Inc., Delaware Capital Management, Inc. , Delaware
International Holdings Ltd., Delvoy, Inc. and Delaware
Management Business Trust
Chief Financial Officer/Treasurer of Delaware Investment & Retirement
Services, Inc.
Executive Vice President/Chief Financial Officer/Treasurer of Delaware
Management Trust Company
Senior Vice President/Assistant Treasurer of Founders CBO Corporation
Treasurer of Lincoln Funds Corporation
During the past five years, Mr. Hastings has served in various
executive capacities at different times within the Delaware
organization.

Michael P. Bishof (35)
Senior Vice President/Treasurer of the Trust, 33 other investment
companies in the Delaware Investments family and Founders
Holdings, Inc.
Senior Vice President/Investment Accounting of Delaware Management
Company, Inc., Delaware Management Company (a series of
Delaware Management Business Trust) and Delaware Service
Company, Inc.
Senior Vice President and Treasurer/Manager of Investment Accounting
of Delaware Distributors, L.P. and Delaware Investment
Advisers (a series of Delaware Management Business Trust)
Senior Vice President and Manager of Investment Accounting of
Delaware International Holdings Ltd.
Assistant Treasurer of Founders CBO Corporation
Before joining Delaware Investments in 1995, Mr. Bishof was a Vice
President for Bankers Trust, New York, NY from 1994 to 1995, a
Vice President for CS First Boston Investment Management, New

-42-

<PAGE>

(LTGF/USGMF-SAI/PART B)

York, NY from 1993 to 1994 and an Assistant Vice President for
Equitable Capital Management Corporation, New York, NY from
1987 to 1993.

Gary A. Reed (43)
Vice President/Senior Portfolio Manager of Limited-Term Funds,
Inc., nine other investment companies in the Delaware
Investments family, Delaware Management Company, Inc.,
Delaware Management Company (a series of Delaware Management
Business Trust), Delaware Investment Advisers (a series of
Delaware Management Business Trust) and Delaware Capital
Management, Inc.
During the past five years, Mr. Reed has served in such capacities
within the Delaware organization.

The following is a compensation table listing for each director
entitled to receive compensation, the aggregate compensation received from
Limited-Term Funds, Inc. and the total compensation received from all funds in
the Delaware Investments family for the fiscal year ended December 31, 1997 and
an estimate of annual benefits to be received upon retirement under the Delaware
Investments Retirement Plan for Directors/Trustees as of December 31, 1997. Only
the independent directors of Limited-Term Funds, Inc. receive compensation from
Limited-Term Funds, Inc.

<TABLE>
<CAPTION>
Pension or
Retirement
Benefits Total Compensation
Aggregate Accrued as Estimated from all 34
Compensation Part of Annual Investment
from Limited-Term Benefits Companies in
Limited-Term Funds, Inc. Upon Delaware
Name Funds, Inc. Expenses Retirement* Investments(1)
- ---- ----------- -------- ----------- --------------
<S> <C> <C> <C> <C>
W. Thacher Longstreth $2,095 None $38,500 $59,827
Ann R. Leven $2,278 None $38,500 $65,160
Walter P. Babich $2,243 None $38,500 $64,160
Anthony D. Knerr $2,243 None $38,500 $64,160
Charles E. Peck $2,000 None $38,500 $56,682
Thomas F. Madison(2) $1,317 None $38,500 $43,537

</TABLE>

* Under the terms of the Delaware Investments Retirement Plan for
Directors/Trustees, each disinterested director who, at the time of his or
her retirement from the Board, has attained the age of 70 and served on the
Board for at least five continuous years, is entitled to receive payments
from each fund in the Delaware Investments family for a period equal to the
lesser of the number of years that such person served as a director or the
remainder of such person's life. The amount of such payments will be equal,
on an annual basis, to the amount of the annual retainer that is paid to
directors of each fund at the time of such person's retirement. If an
eligible director retired as of December 31, 1997, he or she would be
entitled to annual payments totaling $38,500, in the aggregate, from all of
the funds in the Delaware Investments family, based on the number of funds in
the Delaware Investments family as of that date.

(1) Each independent director/trustee currently receives a total annual
retainer fee of $38,500 for serving as a director or trustee for all funds
in Delaware Investments, plus $3,145 for each Board Meeting attended. Ann
R. Leven, Walter P. Babich, and Anthony D. Knerr serve on the Trust's audit
committee; Ms. Leven is the chairperson. Members of the audit committee
currently receive

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<PAGE>

(LTGF/USGMF-SAI/PART B)

additional annual compensation of $5,000 from all funds, with the
exception of the chairperson, who receives $6,000.

(2) Thomas F. Madison joined the Board of Trustees on April 30, 1997.

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<PAGE>

(LTGF/USGMF-SAI/PART B)

EXCHANGE PRIVILEGE

The exchange privileges available for shareholders of the Classes and
for shareholders of classes of other funds available from the Delaware
Investments family are set forth in the relevant prospectuses for such classes.
The following supplements that information. The Fund may modify, terminate or
suspend the exchange privilege upon 60 days notice to shareholders.

All exchanges involve a purchase of shares of the fund into which the
exchange is made. As with any purchase, an investor should obtain and carefully
read that fund's prospectus before buying shares in an exchange. The prospectus
contains more complete information about the fund, including charges and
expenses. A shareholder requesting an exchange will be sent a current prospectus
and an authorization form for any of the other mutual funds available from the
Delaware Investments family. Exchange instructions must be signed by the record
owner(s) exactly as the shares are registered.

An exchange constitutes, for tax purposes, the sale of one fund and the
purchase of another. The sale may involve either a capital gain or loss to the
shareholder for federal income tax purposes.

In addition, investment advisers and dealers may make exchanges between
funds available from the Delaware Investments family on behalf of their clients
by telephone or other expedited means. This service may be discontinued or
revised at any time by the Transfer Agent. Such exchange requests may be
rejected if it is determined that a particular request or the total requests at
any time could have an adverse effect on any of the funds. Requests for
expedited exchanges may be submitted with a properly completed exchange
authorization form, as described above.

Telephone Exchange Privilege

Shareholders owning shares for which certificates have not been issued
or their investment dealers of record may exchange shares by telephone for
shares in other mutual funds available from the Delaware Investments family.
This service is automatically provided unless the Fund receives written notice
from the shareholder to the contrary.

Shareholders or their investment dealers of record may contact the
Shareholder Service Center at 800-523-1918 to effect an exchange. The
shareholder's current Fund account number must be identified, as well as the
registration of the account, the share or dollar amount to be exchanged and the
fund into which the exchange is to be made. Requests received on any day after
the time the offering price and net asset value are determined will be processed
the following day. See Offering Price. Any new account established through the
exchange will automatically carry the same registration, shareholder information
and dividend option as the account from which the shares were exchanged. The
exchange requirements of the fund into which the exchange is being made, such as
eligibility and investment minimums, must be met and may entail the payment of a
front-end sales charge which will be deducted from the investment. (See the
prospectus of the fund desired or inquire by calling the Transfer Agent.)
Certain funds are not available for retirement plans.

The telephone exchange privilege is intended as a convenience to
shareholders and is not intended to be a vehicle to speculate on short-term
swings in the securities market through frequent transactions in and out of the
funds available from the Delaware Investments family. Telephone exchanges may be
subject to limitations as to amounts or frequency. The Transfer Agent and the
Fund reserve the right to record exchange instructions received by telephone and
to reject exchange requests at any time in the future.

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As described in the Prospectus, neither the Fund nor the Transfer Agent
is responsible for any shareholder loss incurred in acting upon written or
telephone instructions for redemption or exchange of Fund shares which are
reasonably believed to be genuine.

Right to Refuse Timing Accounts

With regard to accounts that are administered by market timing services
("Timing Firms") to purchase or redeem shares based on changing economic and
market conditions ("Timing Accounts"), the Fund will refuse any new timing
arrangements, as well as any new purchases (as opposed to exchanges) in funds in
the Delaware Investments family from Timing Firms. The Fund reserves the right
to temporarily or permanently terminate the exchange privilege or reject any
specific purchase order for any person whose transactions seem to follow a
timing pattern who: (i) makes an exchange request out of the Fund within two
weeks of an earlier exchange request out of the Fund, or (ii) makes more than
two exchanges out of the Fund per calendar quarter, or (iii) exchanges shares
equal in value to at least $5 million, or more than 1/4 of 1% of the Fund's net
assets. Accounts under common ownership or control, including accounts
administered so as to redeem or purchase shares based upon certain predetermined
market indicators, will be aggregated for purposes of the exchange limits.

Restrictions on Timed Exchanges

Timing Accounts operating under existing timing agreements may only
execute exchanges between the following eight funds in the Delaware Investments
family: (1) Decatur Income Fund, (2) Decatur Total Return Fund, (3) Delaware
Fund, (4) Limited-Term Government Fund, (5) Tax-Free USA Fund, (6) Delaware Cash
Reserve, (7) Delchester Fund and (8) Tax-Free Pennsylvania Fund. No other funds
in the Delaware Investments family are available for timed exchanges. Assets
redeemed or exchanged out of Timing Accounts in funds in the Delaware
Investments family not listed above may not be reinvested back into that Timing
Account. The Fund reserves the right to apply these same restrictions to the
account(s) of any person whose transactions seem to follow a time pattern (as
described above).

The Fund also reserves the right to refuse the purchase side of an
exchange request by any Timing Account, person, or group if, in the Manager's
judgment, the Fund would be unable to invest effectively in accordance with its
investment objectives and policies, or would otherwise potentially be adversely
affected. A shareholder's purchase exchanges may be restricted or refused if the
Fund receives or anticipates simultaneous orders affecting significant portions
of the Fund's assets. In particular, a pattern of exchanges that coincide with a
"market timing" strategy may be disruptive to the Fund and therefore may be
refused.

Except as noted above, only shareholders and their authorized brokers
of record will be permitted to make exchanges or redemptions.

* * *

Following is a summary of the investment objectives of the other funds
in the Delaware Investments family:

Delaware Fund seeks long-term growth by a balance of capital
appreciation, income and preservation of capital. It uses a dividend-oriented
valuation strategy to select securities issued by established companies that are
believed to demonstrate potential for income and capital growth. Devon Fund
seeks current income and capital appreciation by investing primarily in
income-producing common stocks, with a focus on common stocks the Manager
believes have the potential for above average dividend increases over time.

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Trend Fund seeks long-term growth by investing in common stocks issued
by emerging growth companies exhibiting strong capital appreciation potential.

Value Fund seeks capital appreciation by investing primarily in common
stocks whose market values appear low relative to their underlying value or
future potential.

DelCap Fund seeks long-term capital growth by investing in common
stocks and securities convertible into common stocks of companies that have a
demonstrated history of growth and have the potential to support continued
growth.

Decatur Income Fund seeks the highest possible current income by
investing primarily in common stocks that provide the potential for income and
capital appreciation without undue risk to principal. Decatur Total Return Fund
seeks long-term growth by investing primarily in securities that provide the
potential for income and capital appreciation without undue risk to principal.
Blue Chip Fund seeks to achieve long-term capital appreciation. Current income
is a secondary objective. It seeks to achieve these objectives by investing
primarily in equity securities and any securities that are convertible into
equity securities. Social Awareness Fund seeks to achieve long-term capital
appreciation. It seeks to achieve this objective by investing primarily in
equity securities of medium- to large-sized companies expected to grow over time
that meet the Fund's "Social Criteria" strategy.

Delchester Fund seeks as high a current income as possible by investing
principally in high yield, high risk corporate bonds, and also in U.S.
government securities and commercial paper. Strategic Income Fund seeks to
provide investors with high current income and total return by using a
multi-sector investment approach, investing principally in three sectors of the
fixed-income securities markets: high yield, higher risk securities, investment
grade fixed-income securities and foreign government and other foreign
fixed-income securities High-Yield Opportunities Fund seeks to provide investors
with total return and, as a secondary objective, high current income.

U.S. Government Fund seeks high current income by investing primarily
in long-term debt obligations issued or guaranteed by the U.S. government, its
agencies or instrumentalities.

Limited-Term Government Fund seeks high, stable income by investing
primarily in a portfolio of short-and intermediate-term securities issued or
guaranteed by the U.S. government, its agencies or instrumentalities and
instruments secured by such securities.

Delaware Cash Reserve seeks the highest level of income consistent with
the preservation of capital and liquidity through investments in short-term
money market instruments, while maintaining a stable net asset value.

REIT Fund seeks to achieve maximum long-term total return with capital
appreciation as a secondary objective. It seeks to achieve its objectives by
investing in securities of companies primarily engaged in the real estate
industry.

Tax-Free USA Fund seeks high current income exempt from federal income
tax by investing in municipal bonds of geographically-diverse issuers. Tax-Free
Insured Fund invests in these same types of securities but with an emphasis on
municipal bonds protected by insurance guaranteeing principal and interest are
paid when due. Tax-Free USA Intermediate Fund seeks a high level of current
interest income exempt from federal income tax, consistent with the preservation
of capital by investing primarily in municipal bonds.

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Tax-Free Money Fund seeks high current income, exempt from federal
income tax, by investing in short-term municipal obligations, while maintaining
a stable net asset value.

Tax-Free New Jersey Fund seeks a high level of current interest income
exempt from federal income tax and New Jersey state and local taxes, consistent
with preservation of capital. Tax-Free Ohio Fund seeks a high level of current
interest income exempt from federal income tax and Ohio state and local taxes,
consistent with preservation of capital. Tax-Free Pennsylvania Fund seeks a high
level of current interest income exempt from federal income tax and Pennsylvania
state and local taxes, consistent with the preservation of capital.

Income Portfolio seeks a combination of current income and preservation
of capital with capital appreciation by investing in primarily a mix of fixed
income and domestic equity securities, including fixed income and domestic
equity Underlying Funds. Balanced Portfolio seeks capital appreciation with
current income as a secondary objective by investing primarily in domestic
equity and fixed income securities, including domestic equity and fixed income
Underlying Funds. Growth Portfolio seeks long term capital growth by investing
primarily in equity securities, including equity Underlying Funds, and, to a
lesser extent, in fixed income securities, including fixed-income Underlying
Funds.

International Equity Fund seeks to achieve long-term growth without
undue risk to principal by investing primarily in international securities that
provide the potential for capital appreciation and income. Global Bond Fund
seeks to achieve current income consistent with the preservation of principal by
investing primarily in global fixed-income securities that may also provide the
potential for capital appreciation. Global Assets Fund seeks to achieve
long-term total return by investing in global securities which will provide
higher current income than a portfolio comprised exclusively of equity
securities, along with the potential for capital growth. Emerging Markets Fund
seeks long-term capital appreciation by investing primarily in equity securities
of issuers located or operating in emerging countries.

U.S. Growth Fund seeks to maximize capital appreciation by investing in
companies of all sizes which have low dividend yields, strong balance sheets and
high expected earnings growth rates relative to their industry. Overseas Equity
Fund seeks to maximize total return (capital appreciation and income),
principally through investments in an internationally diversified portfolio of
equity securities. New Pacific Fund seeks long-term capital appreciation by
investing primarily in companies which are domiciled in or have their principal
business activities in the Pacific Basin.

Delaware Group Premium Fund, Inc. offers 16 funds available exclusively
as funding vehicles for certain insurance company separate accounts.
Equity/Income Series seeks the highest possible total rate of return by
selecting issues that exhibit the potential for capital appreciation while
providing higher than average dividend income. High Yield Series seeks as high a
current income as possible by investing in rated and unrated corporate bonds,
U.S. government securities and commercial paper. Capital Reserves Series seeks a
high stable level of current income while minimizing fluctuations in principal
by investing in a diversified portfolio of short- and intermediate-term
securities. Money Market Series seeks the highest level of income consistent
with preservation of capital and liquidity through investments in short-term
money market instruments. Growth Series seeks long-term capital appreciation by
investing its assets in a diversified portfolio of securities exhibiting the
potential for significant growth. Multiple Strategy Series seeks a balance of
capital appreciation, income and preservation of capital. It uses a
dividend-oriented valuation strategy to select securities issued by established
companies that are believed to demonstrate potential for income and capital
growth. International Equity Series seeks long-term growth without undue risk to
principal by investing primarily in equity securities of foreign issuers that
provide the

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potential for capital appreciation and income. Value Series seeks capital
appreciation by investing in small- to mid-cap common stocks whose market values
appear low relative to their underlying value or future earnings and growth
potential. Emphasis will also be placed on securities of companies that may be
temporarily out of favor or whose value is not yet recognized by the market.
Emerging Growth Series seeks long-term capital appreciation by investing
primarily in small-cap common stocks and convertible securities of emerging and
other growth-oriented companies. These securities will have been judged to be
responsive to changes in the marketplace and to have fundamental characteristics
to support growth. Income is not an objective. Global Bond Series seeks to
achieve current income consistent with the preservation of principal by
investing primarily in global fixed-income securities that may also provide the
potential for capital appreciation. Strategic Income Series seeks high current
income and total return by using a multi-sector investment approach, investing
primarily in three sectors of the fixed-income securities markets: high-yield,
higher risk securities; investment grade fixed-income securities; and foreign
government and other foreign fixed-income securities. Devon Series seeks current
income and capital appreciation by investing primarily in income-producing
common stocks, with a focus on common stocks that the investment manager
believes have the potential for above-average dividend increases over time.
Emerging Markets Series seeks to achieve long-term capital appreciation by
investing primarily in equity securities of issuers located or operating in
emerging countries. Convertible Securities Series seeks a high level of total
return on its assets through a combination of capital appreciation and current
income by investing primarily in convertible securities. Quantum Series seeks to
achieve long-term capital appreciation by investing primarily in equity
securities of medium to large-sized companies expected to grow over time that
meet the Series' "Social Criteria" strategy. REIT Series seeks to achieve
maximum long-term total return, with capital appreciation as a secondary
objective, by investing in securities of companies primarily engaged in the real
estate industry.

Delaware-Voyageur US Government Securities Fund seeks to provide a high
level of current income consistent with the prudent investment risk by investing
in U.S. Treasury bills, notes, bonds, and other obligations issued or
unconditionally guaranteed by the full faith and credit of the U.S. Treasury,
and repurchase agreements fully secured by such obligations.

Delaware-Voyageur Tax-Free Arizona Insured Fund seeks to provide a high
level of current income exempt from federal income tax and the Arizona personal
income tax, consistent with the preservation of capital. Delaware-Voyageur
Minnesota Insured Fund seeks to provide a high level of current income exempt
from federal income tax and the Minnesota personal income tax, consistent with
the preservation of capital.

Delaware-Voyageur Tax-Free Minnesota Intermediate Fund seeks to provide
a high level of current income exempt from federal income tax and the Minnesota
personal income tax, consistent with preservation of capital. The Fund seeks to
reduce market risk by maintaining an average weighted maturity from five to
ten years.

Delaware-Voyageur Tax-Free California Insured Fund seeks to provide a
high level of current income exempt from federal income tax and the California
personal income tax, consistent with the preservation of capital.
Delaware-Voyageur Tax-Free Florida Insured Fund seeks to provide a high level of
current income exempt from federal income tax, consistent with the preservation
of capital. The Fund will seek to select investments that will enable its shares
to be exempt from the Florida intangible personal property tax.
Delaware-Voyageur Tax-Free Florida Fund seeks to provide a high level of current
income exempt from federal income tax, consistent with the preservation of
capital. The Fund will seek to select investments that will enable its shares to
be exempt from the Florida intangible personal property tax. Delaware-Voyageur
Tax-Free Kansas Fund seeks to provide a high level of current income exempt from
federal income tax, the

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(LTGF/USGMF-SAI/PART B)

Kansas personal income tax and the Kansas Intangible personal property tax,
consistent with the preservation of capital. Delaware-Voyageur Tax-Free Missouri
Insured Fund seeks to provide a high level of current income exempt from federal
income tax and the Missouri personal income tax, consistent with the
preservation of capital. Delaware-Voyageur Tax-Free New Mexico Fund seeks to
provide a high level of current income exempt from federal income tax and the
New Mexico personal income tax, consistent with the preservation of capital.
Delaware-Voyageur Tax-Free Oregon Insured Fund seeks to provide a high level of
current income exempt from federal income tax and the Oregon personal income
tax, consistent with the preservation of capital. Delaware-Voyageur Tax-Free
Utah Fund seeks to provide a high level of current income exempt from federal
income tax, consistent with the preservation of capital. Delaware-Voyageur
Tax-Free Washington Insured Fund seeks to provide a high level of current income
exempt from federal income tax, consistent with the preservation of capital.

Delaware-Voyageur Tax-Free Florida Intermediate Fund seeks to provide a
high level of current income exempt from federal income tax, consistent with the
preservation of capital. The Fund will seek to select investments that will
enable its shares to be exempt from the Florida intangible personal property
tax. The Fund seeks to reduce market risk by maintaining an average weighted
maturity from five to ten years.

Delaware-Voyageur Tax-Free Arizona Fund seeks to provide a high level
of current income exempt from federal income tax and the Arizona personal income
tax, consistent with the preservation of capital. Delaware-Voyageur Tax-Free
California Fund seeks to provide a high level of current income exempt from
federal income tax and the California personal income tax, consistent with the
preservation of capital. Delaware-Voyageur Tax-Free Iowa Fund seeks to provide a
high level of current income exempt from federal income tax and the Iowa
personal income tax, consistent with the preservation of capital.
Delaware-Voyageur Tax-Free Idaho Fund seeks to provide a high level of current
income exempt from federal income tax and the Idaho personal income tax,
consistent with the preservation of capital. Delaware-Voyageur Minnesota High
Yield Municipal Bond Fund seeks to provide a high level of current income exempt
from federal income tax and the Minnesota personal income tax primarily through
investment in medium and lower grade municipal obligations. National High Yield
Municipal Fund seeks to provide a high level of income exempt from federal
income tax, primarily through investment in medium and lower grade municipal
obligations. Delaware-Voyageur Tax-Free New York Fund seeks to provide a high
level of current income exempt from federal income tax and the personal income
tax of the state of New York and the city of New York, consistent with the
preservation of capital. Delaware-Voyageur Tax-Free Wisconsin Fund seeks to
provide a high level of current income exempt from federal income tax and the
Wisconsin personal income tax, consistent with the preservation of capital.

Delaware-Voyageur Tax-Free Colorado Fund seeks to provide a high level
of current income exempt from federal income tax and the Colorado personal
income tax, consistent with the preservation of capital.

Aggressive Growth Fund seeks long-term capital appreciation, which the
Fund attempts to achieve by investing primarily in equity securities believed to
have the potential for high earnings growth. Although the Fund, in seeking its
objective, may receive current income from dividends and interest, income is
only an incidental consideration in the selection of the Fund's investments.
Growth Stock Fund has an objective of long-term capital appreciation. The Fund
seeks to achieve its objective from equity securities diversified among
individual companies and industries. Tax-Efficient Equity Fund seeks to obtain
for taxable investors a high total return on an after-tax basis. The Fund will
attempt to achieve this objective by seeking to provide a high long-term
after-tax total return through managing its portfolio in a manner that will
defer the realization of accrued capital gains and minimize dividend income.

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(LTGF/USGMF-SAI/PART B)

Delaware-Voyageur Tax-Free Minnesota Fund seeks to provide a high level
of current income exempt from federal income tax and the Minnesota personal
income tax, consistent with the preservation of capital. Delaware-Voyageur
Tax-Free North Dakota Fund seeks to provide a high level of current income
exempt from federal income tax and the North Dakota personal income tax,
consistent with the preservation of capital.

For more complete information about any of the funds in the Delaware
Investments family, including charges and expenses, you can obtain a prospectus
from the Distributor. Read it carefully before you invest or forward funds.

Each of the summaries above is qualified in its entirety by the
information contained in each fund's prospectus(es).

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(LTGF/USGMF-SAI/PART B)

GENERAL INFORMATION

The Manager is the investment manager of the Fund. The Manager also
provides investment management services to certain of the other funds available
from the Delaware Investments family. The Manager, through a separate division,
also manages private investment accounts. While investment decisions for the
Fund are made independently from those of the other funds and accounts,
investment decisions for such other funds and accounts may be made at the same
time as investment decisions for the Fund.

The Manager, or its affiliate Delaware International Advisers Ltd.,
also manages the investment options for Delaware Medallion(SM) III Variable
Annuity. Medallion is issued by Allmerica Financial Life Insurance and Annuity
Company (First Allmerica Financial Life Insurance Company in New York and
Hawaii). Delaware Medallion offers 16 different investment series ranging from
domestic equity funds, international equity and bond funds and domestic fixed
income funds. Each investment series available through Medallion utilizes an
investment strategy and discipline the same as or similar to one of the mutual
funds in the Delaware Investments family available outside the annuity. See
Delaware Group Premium Fund, Inc., above.

Access persons and advisory persons of the funds in the Delaware
Investments family, as those terms are defined in SEC Rule 17j-1 under the 1940
Act, who provide services to Delaware Management Company, Delaware International
Advisers Ltd. or their affiliates, are permitted to engage in personal
securities transactions subject to the exceptions set forth in Rule 17j-1 and
the following general restrictions and procedures: (1) certain blackout periods
apply to personal securities transactions of those persons; (2) transactions
must receive advance clearance and must be completed on the same day as the
clearance was received; (3) certain persons are prohibited from investing in
initial public offering of securities and other restrictions apply to
investments in private placements of securities; (4) opening positions may only
be closed-out at a profit after a 60-day holding period has elapsed; and (5) the
Compliance Officer must be informed periodically of all securities transactions
and duplicate copies of brokerage confirmations and account statements must be
supplied to the Compliance Officer.

The Distributor acts as national distributor for the Fund and for the
other mutual funds in the Delaware Investments family. As previously described,
prior to January 3, 1995, DDI served as the national distributor for the Fund.

The Transfer Agent, an affiliate of the Manager, acts as shareholder
servicing, dividend disbursing and transfer agent for the Fund and for the other
mutual funds in the Delaware Investments family. The Transfer Agent is paid a
fee by the Fund for providing these services consisting of an annual per account
charge of $11.00 plus transaction charges for particular services according to a
schedule. Compensation is fixed each year and approved by the Board of
Directors, including a majority of the disinterested directors. The Transfer
Agent also provides accounting services to each Fund. Those services include
performing all functions related to calculating each Fund's net asset value and
providing all financial reporting services, regulatory compliance testing and
the related accounting services. For its services, the Transfer Agent is paid a
fee based on total assets of all funds in the Delaware Investments family for
which it provides such accounting services. Such fee is equal to 0.25%
multiplied by the total amount of assets in the complex for which the Transfer
Agent furnishes accounting services, where such aggregate complex assets are $10
billion or less, and 0.20% of assets if such aggregate complex assets exceed $10
billion. The fees are charged to each fund, including each Fund, on an aggregate
pro-rata basis. The asset-based fee payable to the Transfer Agent is subject to
a minimum fee calculated by determining the total number of investment
portfolios and associated classes.

The Manager and its affiliates own the name "Delaware Group." Under
certain circumstances, including the termination of Limited-Term Funds, Inc.'s
advisory relationship with the Manager or its distribution relationship with

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(LTGF/USGMF-SAI/PART B)

the Distributor, the Manager and its affiliates could cause Limited-Term Funds,
Inc. to delete the words "Delaware Group" from Limited-Term Funds, Inc.'s name.

Bankers Trust Company ("Bankers Trust"), One Bankers Trust Plaza, New
York, NY 10006, is custodian of the Fund's securities and cash. As custodian for
the Fund, Bankers Trust maintains a separate account or accounts for the Fund;
receives, holds and releases portfolio securities on account of the Fund;
receives and disburses money on behalf of the Fund; and collects and receives
income and other payments and distributions on account of the Fund's portfolio
securities.

Capitalization

Limited-Term Funds, Inc. currently offers two series of shares,
Limited-Term Government Fund (formerly known as the Treasury Reserves
Intermediate Series and the Investors Series) and the U.S. Government Money
Series (formerly known as the Cashiers Series). Limited-Term Funds, Inc. has a
total authorized capitalization of three billion shares with a $.001 par value
common stock. The Fund has an authorized capitalization of one billion shares of
common stock with a par value of $.001 per share. Limited-Term Government Fund
has an authorized capitalization of two billion shares of common stock with a
par value of $.001 per share. The directors are authorized to issue different
series and Classes of shares of common stock. At the present time, two series
have been issued. The U.S. Government Money Series offers two Classes of shares
and the Limited-Term Government Fund offers four classes of shares.

The classes offered by the Fund are Class A Shares and Consultant Class
Shares. General expenses of the Fund will be allocated on a pro-rata basis to
the Classes according to asset size, except that any expenses of the Rule 12b-1
Plan of Consultant Class Shares will be allocated solely to that Class. Each
Class of the U.S. Government Money Series represents a proportionate interest in
the assets of that Fund, and each has the same voting and other rights and
preferences as the other Class, except that shares of Class A Shares may not
vote on any matter affecting Consultant Class Shares' Distribution Plan under
Rule 12b-1.

Shares have no preemptive rights, are fully transferable and, when
issued, are fully paid and nonassessable.

Prior to March 1994, Class A Shares were known as the U.S. Government
Money Fund class, and prior to June 1992, the U.S. Government Money Fund class
was known as the original class. Prior to March 1994, U.S. Government Money Fund
Consultant Class Shares were known as the U.S. Government Money Fund Consultant
class, and prior to November 1992, the U.S. Government Money Fund Consultant
class was known as the U.S. Government Money Fund (Institutional) class. The
U.S. Government Money Fund (Institutional) class was known as the consultant
class prior to June 1992.

Noncumulative Voting
Limited-Term Fund, Inc.'s shares have noncumulative voting rights which
means that the holders of more than 50% of the shares of Limited-Term Funds,
Inc. voting for the election of directors can elect all the directors if they
choose to do so, and, in such event, the holders of the remaining shares will
not be able to elect any directors.

This Part B does not include all of the information contained in the
Registration Statement which is on file with the SEC.

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FINANCIAL STATEMENTS

Ernst & Young LLP serves as the independent auditors for Limited-Term
Funds, Inc. and, in its capacity as such, audits the financial statements
contained in the Fund's Annual Report. Delaware Group Limited-Term Government
Funds, Inc.--U.S. Government Money Fund's Statement of Net Assets, Statement of
Assets and Liabilities, Statement of Operations, Statements of Changes in Net
Assets, Financial Highlights and Notes to Financial Statements, as well as the
report of Ernst & Young LLP, independent auditors, for the fiscal year ended
December 31, 1997 are included in the Fund's Annual Report to shareholders. The
financial statements and financial highlights, the notes relating thereto and
the report of Ernst & Young LLP listed above are incorporated by reference from
the Annual Report into this Part B.

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INVESTMENT MANAGER
Delaware Management Company
One Commerce Square
Philadelphia, PA 19103

NATIONAL DISTRIBUTOR
Delaware Distributors, L.P.
1818 Market Street
Philadelphia, PA 19103

SHAREHOLDER SERVICING,
DIVIDEND DISBURSING,
ACCOUNTING SERVICES
AND TRANSFER AGENT
Delaware Service Company, Inc.
1818 Market Street
Philadelphia, PA 19103

LEGAL COUNSEL
Stradley, Ronon, Stevens & Young, LLP
One Commerce Square
Philadelphia, PA 19103

INDEPENDENT AUDITORS
Ernst & Young LLP
Two Commerce Square
Philadelphia, PA 19103

CUSTODIAN
Bankers Trust Company
One Bankers Trust Plaza
New York, NY 10006

- ----------------------------------

U.S. GOVERNMENT MONEY FUND A CLASS
- ----------------------------------

U.S. GOVERNMENT MONEY FUND
CONSULTANT CLASS
- ----------------------------------

CLASSES OF DELAWARE GROUP
LIMITED-TERM GOVERNMENT FUNDS, INC.
- ----------------------------------

PART B
- ----------------------------------

STATEMENT OF ADDITIONAL

INFORMATION

APRIL 29, 1998
--------------

- -----------
DELAWARE
INVESTMENTS
- -----------

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PART C - Other Information
(Continued)

PART C

Other Information

Item 24. Financial Statements and Exhibits
---------------------------------

(a) Financial Statements:

Part A - Financial Highlights

*Part B - Statement of Net Assets
Statement of Operations
Statements of Changes in Net Assets
Financial Highlights
Notes to Financial Statements
Accountant's Report

* The financial statements and Accountant's Report
listed above for Limited-Term Government Fund are
incorporated by reference into Part B from the
Registrant's Annual Report for the fiscal year
ended December 31, 1997.

(b) Exhibits:

(1) Articles of Incorporation.

(a) Articles of Incorporation, as
amended and supplemented through
November 22, 1995 incorporated
into this filing by reference to
Post-Effective Amendment No. 42
filed November 22, 1995.

(b) Executed Articles Supplementary
(November 28, 1995) incorporated
into this filing by reference to
Post-Effective Amendment No. 43
filed February 29, 1996.

(2) By-Laws. By-Laws, as amended through
November 22, 1995, incorporated into this
filing by reference to Post-Effective
Amendment No. 42 filed November 22, 1995.

(3) Voting Trust Agreement. Inapplicable.

(4) Copies of All Instruments Defining the
Rights of Holders.

(a) Articles of Incorporation and
Articles Supplementary. Articles
Fifth and Ninth of the Articles
of Incorporation (September 12,
1990) and Article Second to
Articles Supplementary (June 1,
1992 and April 29, 1994)
incorporated into this filing by
reference to Post-Effective
Amendment No. 42 filed November
22, 1995 and Article Third of
Articles Supplementary (November
28, 1995) incorporated into this
filing by reference to
Post-Effective Amendment No. 43
filed February 29, 1996.

<PAGE>

(b) By-Laws. Article II, Article III,
as amended, and Article XIV
incorporated into this filing by
reference to Post-Effective
Amendment No. 42 filed November
22, 1995.

(5) Investment Management Agreements.
Investment Management Agreement (April 3,
1995) between Delaware Management Company,
Inc. and the Registrant on behalf of each
Series incorporated into this filing by
reference to Post-Effective Amendment No.
42 filed November 22, 1995.

(6) (a) Distribution Agreements.

(i) Form of Distribution Agreement
(April 1995) between Delaware
Distributors, L.P. and the
Registrant on behalf of Limited-
Term Government Fund incorporated
into this filing by reference to
Post-Effective Amendment No. 42
filed November 22, 1995.

(ii) Form of Amendment No. 1 to
Distribution Agreement (November
1995) between Delaware
Distributors, L.P. and the
Registrant on behalf of Limited-
Term Government Fund incorporated
into this filing by reference to
Post-Effective Amendment No. 42
filed November 22, 1995.

(iii) Form of Distribution Agreement
(April 1995) between Delaware
Distributors, L.P. and the
Registrant on behalf of U.S.
Government Money Series
incorporated into this filing by
reference to Post-Effective
Amendment No. 42 filed November
22, 1995.

(b) Administration and Service
Agreement. Form of Administration
and Service Agreement (as amended
November 1995) incorporated into
this filing by reference to
Post-Effective Amendment No. 42
filed November 22, 1995.

(c) Dealer's Agreement. Dealer's
Agreement (as amended November
1995) incorporated into this
filing by reference to Post-
Effective Amendment No. 42 filed
November 22, 1995.

(d) Mutual Fund Agreement for the
Delaware Group of Funds (November
1995) (Module) incorporated into
this filing by reference to
Post-Effective Amendment No.
43 filed February 29, 1996.

(7) Bonus, Profit Sharing, Pension Contracts.

(a) Amended and Restated Profit
Sharing Plan incorporated into
this filing by reference to
Post-Effective Amendment No. 42
filed November 22, 1995.

(b) Amendment to Profit Sharing Plan
(December 21, 1995) (Module)
incorporated into this filing by
reference to Post-Effective
Amendment No. 43 filed February
29, 1996

<PAGE>

(8) Custodian Agreements.

(a) Executed Custodian Agreement
between Bankers Trust Company and
the Registrant incorporated into
this filing by reference to
Post-Effective Amendment No. 45
filed March 2, 1998.

(b) Form of Securities Lending
Agreement between Bankers Trust
Company and the Registrant on
behalf of Limited-Term Government
Fund incorporated into this filing
by reference to Post-Effective
Amendment No. 44 filed February
28, 1997.

(9) Other Material Contracts.

(a) Executed Shareholders Services
Agreement (December 20, 1990)
between Delaware Service Company,
Inc. and the Registrant (formerly
Delaware Group Treasury Reserves,
Inc.) relating to the Investors
Series (now named Limited-Term
Government Fund) incorporated into
this filing by reference to Post-
Effective Amendment No. 44 filed
February 28, 1997.

(b) Executed Shareholders Services
Agreement (December 20, 1990)
between Delaware Service Company,
Inc. and the Registrant (formerly
Delaware Group Treasury Reserves,
Inc.) relating to the Cashiers
Series (now named U.S. Government
Money Series) incorporated into
this filing by reference to Post-
Effective Amendment No. 44 filed
February 28, 1997.

(c) Executed Delaware Group of Funds
Fund Accounting Agreement between
Delaware Service Company, Inc. and
the Registrant (August 19, 1996)
incorporated into this filing by
reference to Post-Effective
Amendment No. 45 filed March 2,
1998.

(i) Executed Amendment No. 8
(December 18, 1997) to
Delaware Group of Funds
Fund Accounting Agreement
incorporated into this
filing by reference
to Post-Effective
Amendment No. 45 filed
March 2, 1998.

(10) Opinion of Counsel. Inapplicable.

(11) Consent of Auditors. Attached as Exhibit.

(12) Inapplicable.

*(13) Investment Letter of Initial Shareholder.
Incorporated into this filing by reference
to Pre-Effective Amendment No. 1 filed
February 20, 1985.

(14) Inapplicable.

<PAGE>

PART C - Other Information
(Continued)

* Relates only to U.S. Government Money Series.

**(15) Plans under Rule 12b-1.

(a) Form of Plan under Rule 12b-1 for
Class A of Limited-Term Government
Fund (November 1995) incorporated
into this filing by reference to
Post-Effective Amendment No. 42
filed November 22, 1995.

(b) Form of Plan under Rule 12b-1 for
Class B of Limited-Term Government
Fund (November 1995) incorporated
into this filing by reference to
Post-Effective Amendment No. 42
filed November 22, 1995.

(c) Form of Plan under Rule 12b-1 for
Class C of Limited-Term Government
Fund (November 1995) incorporated
into this filing by reference to
Post-Effective Amendment No. 42
filed November 22, 1995.

(d) Form of Plan under Rule 12b-1 for
Consultant Class of U.S.
Government Money Series (November
1995) incorporated into this
filing by reference to
Post-Effective Amendment No. 42
filed November 22, 1995.

(16) Schedules of Computation for each
Performance Quotation.

(a) Incorporated into this filing by
reference to Post-Effective
Amendment No. 41 filed February
28, 1995, Post-Effective No. 42
filed November 22, 1995,
Post-Effective Amendment No. 43
filed February 29, 1996,
Post-Effective Amendment No. 44
filed February 28, 1997 and
Post-Effective Amendment No. 45
filed March 2, 1998.

(17) Financial Data Schedules. Attached as
Exhibit.

(18) Inapplicable.

(19) Other: Directors' Power of Attorney.
Incorporated into this filing by reference
to Post- Effective Amendment No. 45 filed
March 2, 1998.

Item 25. Persons Controlled by or under Common Control with Registrant. None.
--------------------------------------------------------------

** Relates only to Class A Shares, Class B Shares and Class C Shares of
Registrant's Limited-Term Government Fund and Consultant Class of
Registrant's U.S. Government Money Series.

<PAGE>

PART C - Other Information
(Continued)

Item 26. Number of Holders of Securities.
-------------------------------
<TABLE>
<CAPTION>
(1) (2)

Number of
Title of Class Record Holders
-------------- --------------
<S> <C>
Delaware Group Limited-Term Government Funds, Inc.'s
Limited-Term Government Fund series:

Limited-Term Government Fund A Class
Common Stock Par Value 17,473 Accounts
$.001 Per Share as of March 31, 1998

Limited-Term Government Fund B Class
Common Stock Par Value 676 Accounts
$.001 Per Share as of March 31, 1998

Limited-Term Government Fund C Class
Common Stock Par Value 129 Accounts
$.001 Per Share as of March 31, 1998

Limited-Term Government Fund Institutional Class
Common Stock Par Value 37 Accounts
$.001 Per Share as of March 31, 1998

Delaware Group Limited-Term Government Funds, Inc.'s
U.S. Government Money Series:

U.S. Government Money Fund A Class
Common Stock Par Value 976 Accounts
$.001 Per Share as of March 31, 1998

U.S. Government Money Fund Consultant Class
Common Stock Par Value 87 Accounts
$.001 Per Share as of March 31, 1998

</TABLE>

Item 27. Indemnification. Incorporated into this filing by reference to
Post-Effective Amendment No. 7 filed September 25, 1985 and
Post-Effective Amendment No. 42 filed November 22, 1995.

<PAGE>

PART C - Other Information
(Continued)

Item 28. Business and Other Connections of Investment Adviser.
----------------------------------------------------

Delaware Management Company, Inc. ("DMC") serves as investment manager
to the Registrant and as investment manager or sub-adviser to certain
of the other funds in the Delaware Investments family (Delaware Group
Equity Funds I, Inc., Delaware Group Equity Funds II, Inc., Delaware
Group Equity Funds III, Inc., Delaware Group Equity Funds IV, Inc.,
Delaware Group Equity Funds V, Inc., Delaware Group Government Fund,
Inc., Delaware Group Income Funds, Inc., Delaware Group Cash Reserve,
Inc., Delaware Group Tax-Free Fund, Inc., Delaware Group State Tax-Free
Income Trust, Delaware Group Tax-Free Money Fund, Inc., Delaware Group
Premium Fund, Inc., Delaware Group Global & International Funds, Inc.,
Delaware Pooled Trust, Inc., Delaware Group Adviser Funds, Inc.,
Delaware Group Dividend and Income Fund, Inc., Delaware Group Global
Dividend and Income Fund, Inc., Delaware Group Foundation Funds,
Voyageur Funds, Inc., Voyageur Tax-Free Funds, Inc., Voyageur
Intermediate Tax-Free Funds, Inc., Voyageur Insured Funds, Inc.,
Voyageur Investment Trust, Voyageur Investment Trust II, Voyageur
Mutual Funds, Inc., Voyageur Mutual Funds II, Inc., Voyageur Mutual
Funds III, Inc., Voyageur Arizona Municipal Income Fund, Inc., Voyageur
Colorado Insured Municipal Income Fund, Inc., Voyageur Florida Insured
Municipal Income Fund, Voyageur Minnesota Municipal Fund, Inc.,
Voyageur Minnesota Municipal Fund II, Inc. and Voyageur Minnesota
Municipal Fund III, Inc.) and provides investment advisory services to
institutional accounts, primarily retirement plans and endowment funds.
In addition, certain directors of the Manager also serve as directors/
trustees of the other funds in the Delaware Investments family, and
certain officers are also officers of these other funds. A company
owned by the Manager's parent company acts as principal underwriter to
the mutual funds in Delaware Investments (see Item 29 below) and
another such company acts as the shareholder services, dividend
disbursing, accounting servicing and transfer agent for all of the
mutual funds in Delaware Investments.

<PAGE>

PART C - Other Information
(Continued)

The following persons serving as officers of the Manager have held the
following positions during the past two years:

<TABLE>
<CAPTION>
Name and Principal Positions and Offices with the Manager and its
Business Address * Affiliates and Other Positions and Offices Held
- ------------------ -----------------------------------------------
<S> <C>
Wayne A. Stork Chairman of the Board, President, Chief Executive Officer, Chief Investment Officer and
Director/Trustee of Delaware Management Company, Inc. and Delaware Management
Business Trust; Chairman of the Board, President, Chief Executive Officer, Chief
Investment Officer of Delaware Management Company (a series of Delaware Management
Business Trust); Chairman of the Board, President, Chief Executive Officer and Director of
DMH Corp., Delaware Distributors, Inc. and Founders Holdings, Inc.; Chairman, Chief
Executive Officer and Chief Investment Officer of Delaware Investment Advisers (a series
of Delaware Management Business Trust); Chairman, Chief Executive Officer and Director
of Delaware International Holdings Ltd. and Delaware International Advisers Ltd.;
Chairman of the Board and Director of the Registrant, each of the other funds in the
Delaware Investments family, Delaware Management Holdings, Inc., and Delaware Capital
Management, Inc.; Chairman of Delaware Distributors, L.P.; President and Chief Executive
Officer of Delvoy, Inc.; and Director and/or Trustee of Delaware Service Company, Inc.
and Delaware Investment & Retirement Services, Inc.

Richard G. Unruh, Jr. President of Delaware Investment Advisers (a series of Delaware Management Business
Trust); Executive Vice President and Director/Trustee of Delaware Management Company,
Inc. and Delaware Management Business Trust; Executive Vice President of the Registrant,
each of the other funds in the Delaware Investments family, Delaware Management
Holdings, Inc., Delaware Capital Management, Inc. and Delaware Management Company (a
series of Delaware Management Business Trust); and Director of Delaware International
Advisers Ltd.

Board of Directors, Chairman of Finance Committee, Keystone Insurance Company since 1989,
2040 Market Street, Philadelphia, PA; Board of Directors, Chairman of Finance Committee,
AAA Mid Atlantic, Inc. since 1989, 2040 Market Street, Philadelphia, PA; Board of Directors,
Metron, Inc. since 1995, 11911 Freedom Drive, Reston, VA

Paul E. Suckow Executive Vice President/Chief Investment Officer, Fixed Income of Delaware
Management Company, Inc., Delaware Management Company (a series of Delaware
Management Business Trust), Delaware Investment Advisers (a series of Delaware
Management Business Trust), the Registrant, each of the other funds in the Delaware
Investments family and Delaware Management Holdings, Inc.; Executive Vice President
and Director of Founders Holdings, Inc.; Executive Vice President of Delaware Capital
Management, Inc. and Delaware Management Business Trust; and Director of Founders
CBO Corporation

Director, HYPPCO Finance Company Ltd.
</TABLE>

* Business address of each is 1818 Market Street, Philadelphia, PA 19103.

<PAGE>

PART C - Other Information
(Continued)
<TABLE>
<CAPTION>
Name and Principal Positions and Offices with the Manager and its
Business Address * Affiliates and Other Positions and Offices Held
- ------------------ -----------------------------------------------
<S> <C>
David K. Downes Executive Vice President, Chief Operating Officer, Chief Financial Officer and Director of
Delaware Management Company, Inc., DMH Corp, Delaware Distributors, Inc., Founders
Holdings, Inc. and Delvoy, Inc.; Executive Vice President, Chief Financial Officer, Chief
Administrative Officer and Trustee of Delaware Management Business Trust; Executive
Vice President, Chief Operating Officer and Chief Financial Officer of the Registrant and
each of the other funds in the Delaware Investments family, Delaware Management
Holdings, Inc., Founders CBO Corporation, Delaware Capital Management, Inc., Delaware
Management Company (a series of Delaware Management Business Trust), Delaware
Investment Advisers (a series of Delaware Management Business Trust) and Delaware
Distributors, L.P.; President, Chief Executive Officer, Chief Financial Officer and Director
of Delaware Service Company, Inc.; President, Chief Operating Officer, Chief Financial
Officer and Director of Delaware International Holdings Ltd.; Chairman, Chief Executive
Officer and Director of Delaware Investment & Retirement Services, Inc.; Chairman and
Director of Delaware Management Trust Company; Director of Delaware International
Advisers Ltd.; and Vice President of Lincoln Funds Corporation

Chief Executive Officer and Director of Forewarn, Inc. since 1993, 8 Clayton Place,
Newtown Square, PA

George M. Senior Vice President, General Counsel, Secretary and Director/Trustee of
Chamberlain, Jr. Delaware Management Company, Inc., DMH Corp., Delaware Distributors, Inc., Delaware
Service Company, Inc., Founders Holdings, Inc., Delaware Capital Management, Inc., Delaware
Investment & Retirement Services, Inc., Delvoy, Inc. and Delaware Management Business Trust;
Senior Vice President, Secretary and General Counsel of the Registrant, each of the other
funds in the Delaware Investments family, Delaware Distributors, L.P., Delaware Management
Company (a series of Delaware Management Business Trust), Delaware Investment Advisers (a
series of Delaware Management Business Trust) and Delaware Management Holdings, Inc.; Senior
Vice President and Director of Delaware International Holdings Ltd.; Executive Vice
President, Secretary, General Counsel and Director of Delaware Management Trust Company;
Director of Delaware International Advisers Ltd.; Secretary of Lincoln Funds Corporation

</TABLE>

* Business address of each is 1818 Market Street, Philadelphia, PA 19103.

<PAGE>

PART C - Other Information
(Continued)
<TABLE>
<CAPTION>
Name and Principal Positions and Offices with the Manager and its
Business Address * Affiliates and Other Positions and Offices Held
- ------------------ -----------------------------------------------
<S> <C>
Richard J. Flannery Senior Vice President/Corporate and International Affairs of the Registrant, each of the
other funds in the Delaware Investments family, Delaware Management Holdings, Inc.,
DMH Corp., Delaware Management Company, Inc., Delaware Distributors, Inc., Delaware
Distributors, L.P., Delaware Management Trust Company, Delaware Capital Management,
Inc., Delaware Service Company, Inc., Delaware Management Company (a series of
Delaware Management Business Trust), Delaware Investment Advisers (a series of
Delaware Management Business Trust) and Delaware Investment & Retirement Services,
Inc.; Executive Vice President/Corporate & International Affairs and Director of Delaware
International Holdings Ltd.; Senior Vice President/ Corporate and International Affairs and
Director of Founders Holdings, Inc. and Delvoy, Inc.; Senior Vice President of Founders
CBO Corporation; and Director of Delaware International Advisers Ltd.

Director, HYPPCO Finance Company Ltd.

Limited Partner of Stonewall Links, L.P. since 1991, Bulltown Rd., Elverton, PA; Director
and Member of Executive Committee of Stonewall Links, Inc. since 1991, Bulltown Rd.,
Elverton, PA

Michael P. Bishof Senior Vice President and Treasurer of the Registrant, each of the other funds in the
Delaware Investments family and Founders Holdings, Inc.; Senior Vice President/Investment
Accounting of Delaware Management Company, Inc., Delaware Management Company (a series of
Delaware Management Business Trust) and Delaware Service Company, Inc.; Senior Vice President
and Treasurer/ Manager, Investment Accounting of Delaware Distributors, L.P. and Delaware
Investment Advisers (a series of Delaware Management Business Trust); Assistant Treasurer of
Founders CBO Corporation; and Senior Vice President and Manager of Investment Accounting of
Delaware International Holdings Ltd.

Joseph H. Hastings Senior Vice President/Corporate Controller and Treasurer of Delaware Management
Holdings, Inc., DMH Corp., Delaware Management Company, Inc., Delaware Distributors,
Inc., Delaware Capital Management, Inc., Delaware Distributors, L.P., Delaware Service
Company, Inc., Delaware International Holdings Ltd., Delaware Management Company (a
series of Delaware Management Business Trust), Delvoy, Inc. and Delaware Management
Business Trust; Senior Vice President/Corporate Controller of the Registrant, each of the
other funds in the Delaware Investments family and Founders Holdings, Inc.; Executive
Vice President, Chief Financial Officer and Treasurer of Delaware Management Trust
Company; Chief Financial Officer and Treasurer of Delaware Investment & Retirement
Services, Inc.; Senior Vice President/Assistant Treasurer of Founders CBO Corporation;
and Treasurer of Lincoln Funds Corporation.

</TABLE>

* Business address of each is 1818 Market Street, Philadelphia, PA 19103.

<PAGE>

Douglas L. Anderson Senior Vice President/Operations of Delaware Management Company, Inc., Delaware
Management Company (a series of Delaware Management Business Trust), Delaware
Investment and Retirement Services, Inc. and Delaware Service Company, Inc.; Senior Vice
President/ Operations and Director of Delaware Management Trust Company

James L. Shields Senior Vice President/Chief Information Officer of Delaware Management Company, Inc.,
Delaware Management Company (a series of Delaware Management Business Trust),
Delaware Service Company, Inc. and Delaware Investment & Retirement Services, Inc.

Eric E. Miller Vice President, Assistant Secretary and Deputy General Counsel of the Registrant and each
of the other funds in the Delaware Investments family, Delaware Management Company,
Inc., Delaware Management Company (a series of Delaware Management Business Trust),
Delaware Investment Advisers (a series of Delaware Management Business Trust),
Delaware Management Holdings, Inc., DMH Corp., Delaware Distributors, L.P., Delaware
Distributors Inc., Delaware Service Company, Inc., Delaware Management Trust Company,
Founders Holdings, Inc., Delaware Capital Management, Inc. and Delaware Investment &
Retirement Services, Inc.; Assistant Secretary of Delaware Management Business Trust;
and Vice President and Assistant Secretary of Delvoy, Inc.

Richelle S. Maestro Vice President and Assistant Secretary of the Registrant, each of the other funds in the
Delaware Investments family, Delaware Management Company, Inc., Delaware
Management Company (a series of Delaware Management Business Trust), Delaware
Investment Advisers (a series of Delaware Management Business Trust), Delaware
Management Holdings, Inc., Delaware Distributors, L.P., Delaware Distributors, Inc.,
Delaware Service Company, Inc., DMH Corp., Delaware Management Trust Company,
Delaware Capital Management, Inc., Delaware Investment & Retirement Services, Inc.,
Founders Holdings, Inc. and Delvoy, Inc.; Vice President and Secretary of Delaware
International Holdings Ltd.; and Secretary of Founders CBO Corporation;

Partner of Tri-R Associates since 1989, 10001 Sandmeyer Lane, Philadelphia, PA

Richard Salus(1) Vice President/Assistant Controller of Delaware Management Company, Inc., Delaware
Management Company (a series of Delaware Management Business Trust) and Delaware
Management Trust Company
</TABLE>

* Business address of each is 1818 Market Street, Philadelphia, PA 19103.

<PAGE>

Joel A. Ettinger(2) Vice President/Director of Taxation of the Registrant, each of the other funds in the
Delaware Investments family, Delaware Management Company, Inc., Delaware Management Company
(a series of Delaware Management Business Trust) and Delaware Management Holdings, Inc.

Christopher Adams Vice President/Strategic Planning of Delaware Management Company, Inc., Delaware
Management Company (a series of Delaware Management Business Trust) and Delaware
Service Company, Inc.

Susan L. Hanson Vice President/Strategic Planning of Delaware Management Company, Inc., Delaware
Management Company (a series of Delaware Management Business Trust) and Delaware
Service Company, Inc.

Dennis J. Mara(3) Vice President/Acquisitions of Delaware Management Company, Inc. and Delaware
Management Company (a series of Delaware Management Business Trust)

Scott Metzger Vice President/Business Development of Delaware Management Company, Inc., Delaware
Management Company (a series of Delaware Management Business Trust) and Delaware
Service Company, Inc.

Lisa O. Brinkley Vice President/Compliance of the Registrant, Delaware Management Company, Inc., each
of the other funds in the Delaware Investments family, Delaware Management Company (a
series of Delaware Management Business Trust), DMH Corp., Delaware Distributors, L.P.,
Delaware Distributors, Inc., Delaware Service Company, Inc., Delaware Management Trust
Company, Delaware Capital Management, Inc. and Delaware Investment & Retirement
Services, Inc.; Vice President/Compliance Officer of Delaware Management Business
Trust; and Vice President of Delvoy, Inc.

Mary Ellen Carrozza Vice President/Client Services of Delaware Management Company, Inc., Delaware
Management Company (a series of Delaware Management Business Trust), Delaware
Investment Advisers (a series of Delaware Management Business Trust) and the Registrant

</TABLE>

* Business address of each is 1818 Market Street, Philadelphia, PA 19103.

<PAGE>

Paul A. Matlack Vice President/Senior Portfolio Manager of Delaware Management Company, Inc.,
Delaware Management Company (a series of Delaware Management Business Trust),
Delaware Investment Advisers (a series of Delaware Management Business Trust) and 21
other investment companies in the Delaware Investments family; Vice President of
Founders Holdings, Inc.; and President and Director of Founders CBO Corporation

Gary A. Reed Vice President/Senior Portfolio Manager of Delaware Management Company, Inc.,
Delaware Management Company (a series of Delaware Management Business Trust),
Delaware Investment Advisers (a series of Delaware Management Business Trust), 19
investment companies in the Delaware Investments family and Delaware Capital
Management, Inc.

Patrick P. Coyne Vice President/Senior Portfolio Manager of Delaware Management Company, Inc.,
Delaware Management Company (a series of Delaware Management Business Trust),
Delaware Investment Advisers (a series of Delaware Management Business Trust), 19 other
investment companies in the Delaware Investments family and Delaware Capital
Management, Inc.

Roger A. Early Vice President/Senior Portfolio Manager of Delaware Management Company,
Inc., Delaware Management Company (a series of Delaware Management Business
Trust), Delaware Investment Advisers (a series of Delaware Management Business
Trust), the Registrant and 19 other investment companies in the Delaware
Investments family

Mitchell L. Conery(4) Vice President/Senior Portfolio Manager of Delaware Management Company, Inc.,
Delaware Management Company (a series of Delaware Management Business Trust),
Delaware Investment Advisers (a series of Delaware Management Business Trust), 19 other
investment companies in the Delaware Investments family and Delaware Capital
Management, Inc.

George H. Burwell Vice President/Senior Portfolio Manager of Delaware Management Company, Inc.,
Delaware Management Company (a series of Delaware Management Business Trust) and
ten investment companies in the Delaware Investments family
</TABLE>

* Business address of each is 1818 Market Street, Philadelphia, PA 19103.

<PAGE>

Gerald S. Frey(5) Vice President/Senior Portfolio Manager of Delaware Management Company, Inc., Delaware
Management Company (a series of Delaware Management Business Trust), Delaware Investment
Advisers (a series of Delaware Management Business Trust) and ten investment companies in
the Delaware Investments family

Christopher Beck(6) Vice President/Senior Portfolio Manager of Delaware Management Company, Inc., Delaware
Management Company (a series of Delaware Management Business Trust), Delaware Investment
Advisers (a series of Delaware Management Business Trust) and ten investment companies in
the Delaware Investments family

Elizabeth H. Howell(7) Vice President/Senior Portfolio Manager of Delaware Management Company, Inc.,
Delaware Management Company (a series of Delaware Management Business Trust), and
seven other investment companies in the Delaware Investments family

Andrew M. McCullagh, Jr.(8) Vice President/Senior Portfolio Manager of Delaware Management Company, Inc.,
Delaware Management Company (a series of Delaware Management Business Trust) and
eight other investment companies in the Delaware Investments family

Babak Zenouzi Vice President/Senior Portfolio Manager of Delaware Management Company, Inc.,
Delaware Management Company (a series of Delaware Management Business Trust) and
13 investment companies in the Delaware Investments family

Paul Grillo Vice President/Portfolio Manager of Delaware Management Company, Inc., Delaware Management
Company (a series of Delaware Management Business Trust), Delaware Investment Advisers (a
series of Delaware Management Business Trust), the Registrant and 21 other investment
companies in the Delaware Investments family

Marshall T. Bassett Vice President/Portfolio Manager of Delaware Management Company, Inc., Delaware Management
Company (a series of Delaware Management Business Trust), Delaware Investment Advisers (a
series of Delaware Management Business Trust), the Registrant and each of the other funds in
the Delaware Investments family

</TABLE>

* Business address of each is 1818 Market Street, Philadelphia, PA 19103.

<PAGE>

* Business address of each is 1818 Market Street, Philadelphia, PA 19103.

1 SENIOR MANAGER, Ernst & Young LLP prior to December 1996.
2 TAX PRINCIPAL, Ernst & Young LLP prior to April 1998.
3 CORPORATE CONTROLLER, IIS prior to July 1997.
4 INVESTMENT OFFICER, Travelers Insurance prior to January 1997.
5 SENIOR DIRECTOR, Morgan Grenfell Capital Management prior to June 1996.
6 SENIOR PORTFOLIO MANAGER, Pitcairn Trust Company prior to May 1997.
7 SENIOR PORTFOLIO MANAGER, Voyageur Fund Managers, Inc. prior to May 1997.
8 SENIOR VICE PRESIDENT, SENIOR PORTFOLIO MANAGER, Voyageur Asset Management
LLC prior to May 1997.

Item 29. Principal Underwriters.
----------------------

(a) Delaware Distributors, L.P. serves as principal underwriter for
all the mutual funds in the Delaware Investments family.

(b) Information with respect to each director, officer or partner of
principal underwriter:

<TABLE>
<CAPTION>
Name and Principal Positions and Offices Positions and Offices
Business Address * with Underwriter with Registrant
- ------------------ --------------------- ---------------------
<S> <C> <C>
Delaware Distributors, Inc. General Partner None

Delaware Investment
Advisers Limited Partner None

Delaware Capital
Management, Inc. Limited Partner None

Wayne A. Stork Chairman Chairman

Bruce D. Barton President and Chief Executive None
Officer

David K. Downes Executive Vice President, Executive Vice President, Chief
Chief Operating Officer Operating Officer and Chief
and Chief Financial Officer Financial Officer
</TABLE>

* Business address of each is 1818 Market Street, Philadelphia, PA 19103.

<PAGE>

PART C - Other Information
(Continued)
<TABLE>
<CAPTION>
Name and Principal Positions and Offices Positions and Offices
Business Address * with Underwriter with Registrant
- ------------------ --------------------- ---------------------
<S> <C> <C>
George M. Chamberlain, Jr. Senior Vice President/Secretary/ Senior Vice President/
General Counsel Secretary/General Counsel

Richard J. Flannery Senior Vice President/Corporate Senior Vice President/
and International Affairs Corporate and International Affairs

Joseph H. Hastings Senior Vice President/Corporate Senior Vice President/
Controller & Treasurer Corporate Controller

Terrence P. Cunningham Senior Vice President/Financial None
Institutions

Thomas E. Sawyer Senior Vice President/ None
National Sales Director

Mac McAuliffe Senior Vice President/Sales None
Manager, Western Division

William F. Hostler Senior Vice President/ None
Marketing Services

J. Chris Meyer Senior Vice President/ None
Director Product Management

William M. Kimbrough Senior Vice President/Wholesaler None

Daniel J. Brooks Senior Vice President/Wholesaler None

Bradley L. Kolstoe Senior Vice President/Western None
Division Sales Manager

Henry W. Orvin Senior Vice President/Eastern None
Division Sales Manager

Michael P. Bishof Senior Vice President and Treasurer/ Senior Vice
Manager, Investment Accounting President/Treasurer

</TABLE>

* Business address of each is 1818 Market Street, Philadelphia, PA 19103.

<PAGE>

PART C - Other Information
(Continued)
<TABLE>
<CAPTION>
Name and Principal Positions and Offices Positions and Offices
Business Address * with Underwriter with Registrant
- ------------------ --------------------- ---------------------
<S> <C> <C>
Eric E. Miller Vice President/Assistant Secretary/ Vice President/Assistant Secretary/
Deputy General Counsel Deputy General Counsel

Richelle S. Maestro Vice President/ Vice President/
Assistant Secretary Assistant Secretary

Lisa O. Brinkley Vice President/Compliance Vice President/Compliance

Daniel H. Carlson Vice President/Strategic Marketing None

Diane M. Anderson Vice President/Plan Record Keeping None
and Administration

Anthony J. Scalia Vice President/Defined Contribution None
Sales, SW Territory

Courtney S. West Vice President/Defined Contribution None
Sales, NE Territory

Denise F. Guerriere Vice President/Client Services None

Gordon E. Searles Vice President/Client Services None

Lori M. Burgess Vice President/Client Services None

Julia R. Vander Els Vice President/Participant Services None

Jerome J. Alrutz Vice President/Retail Sales None

Scott Metzger Vice President/Business Vice President/Business
Development Development

Stephen C. Hall Vice President/Institutional Sales None

Gregory J. McMillan Vice President/ National Accounts None

Holly W. Reimel Vice President/Manager, National None
Accounts

Christopher H. Price Vice President/Manager, None
Insurance
</TABLE>

* Business address of each is 1818 Market Street, Philadelphia, PA 19103.

<PAGE>

PART C - Other Information
(Continued)
<TABLE>
<CAPTION>
Name and Principal Positions and Offices Positions and Offices
Business Address * with Underwriter with Registrant
- ------------------ --------------------- ----------------------
<S> <C> <C>
Stephen J. DeAngelis Vice President/Product None
Development

Andrew W. Whitaker Vice President/Financial Institutions None

Jesse Emery Vice President/Marketing None
Communications

Darryl S. Grayson Vice President, Broker/Dealer None
Internal Sales

Dinah J. Huntoon Vice President/Product None
Manager Equity

Soohee Lee Vice President/Fixed Income None
Product Management

Michael J. Woods Vice President/UIT Product None
Management

Ellen M. Krott Vice President/Marketing None

Dale L. Kurtz Vice President/Marketing Support None

David P. Anderson Vice President/Wholesaler None

Lee D. Beck Vice President/Wholesaler None

Gabriella Bercze Vice President/Wholesaler None

Terrence L. Bussard Vice President/Wholesaler None

William S. Carroll Vice President/Wholesaler None

William L. Castetter Vice President/Wholesaler None

Thomas J. Chadie Vice President/Wholesaler None

Thomas C. Gallagher Vice President/Wholesaler None

</TABLE>

* Business address of each is 1818 Market Street, Philadelphia, PA 19103.

<PAGE>

Ronald A. Haimowitz Vice President/Wholesaler None

Christopher L. Johnston Vice President/Wholesaler None

Michael P. Jordan Vice President/Wholesaler None

Jeffrey A. Keinert Vice President/Wholesaler None

Thomas P. Kennett Vice President/Wholesaler None

Debbie A. Marler Vice President/Wholesaler None

Nathan W. Medin Vice President/Wholesaler None

Roger J. Miller Vice President/Wholesaler None

Patrick L. Murphy Vice President/Wholesaler None

Stephen C. Nell Vice President/Wholesaler None

Julia A. Nye Vice President/Wholesaler None

Joseph T. Owczarek Vice President/Wholesaler None

Mary Ellen Pernice-Fadden Vice President/Wholesaler None

Mark A. Pletts Vice President/Wholesaler None

Philip G. Rickards Vice President/Wholesaler None

Laura E. Roman Vice President/Wholesaler None

Linda Schulz Vice President/Wholesaler None

Edward B. Sheridan Vice President/Wholesaler None

Robert E. Stansbury Vice President/Wholesaler None

Julia A. Stanton Vice President/Wholesaler None

Larry D. Stone Vice President/Wholesaler None
</TABLE>

* Business address of each is 1818 Market Street, Philadelphia, PA 19103.

<PAGE>

Wayne W. Wagner Vice President/Wholesaler None

John A. Wells Vice President/Marketing Technology None

Scott Whitehouse Vice President/Wholesaler None
</TABLE>

* Business address of each is 1818 Market Street, Philadelphia, PA 19103.

Item 30. Location of Accounts and Records.
--------------------------------

All accounts and records are maintained in Philadelphia at
1818 Market Street, Philadelphia, PA 19103 or One Commerce
Square, Philadelphia, PA 19103.

Item 31. Management Services. None.
-------------------

Item 32. Undertakings.
------------

(a) Not Applicable.

(b) Not Applicable.

(c) The Registrant hereby undertakes to furnish each
person to whom a prospectus is delivered with a copy
of the Registrant's latest annual report to
shareholders, upon request and without charge.

(d) The Registrant hereby undertakes to promptly call a
meeting of shareholders for the purpose of voting upon
the question of removal of any director when requested
in writing to do so by the record holders of not less
than 10% of the outstanding shares.

<PAGE>

SIGNATURES
----------

Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, this Registrant certifies that it meets all of the
requirements for effectiveness of this Registration Statement pursuant to Rule
485(b) under the Securities Act of 1933 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in this City of Philadelphia and Commonwealth of Pennsylvania on
this 27th day of April, 1998.

DELAWARE GROUP LIMITED-TERM
GOVERNMENT FUNDS, INC.

By /s/ Wayne A. Stork
------------------
Wayne A. Stork
Chairman

Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed below by the following persons in the capacities and
on the dates indicated:

<TABLE>
<CAPTION>
Signature Title Date
- ------------------------------------- --------------------------------------- ---------------
<S> <C> <C>
/s/ Wayne A. Stork Chairman of the Board and Director April 27, 1998
- -------------------------------------
Wayne A. Stork

Executive Vice President/Chief Operating
/s/ David K. Downes Officer/Chief Financial Officer April 27, 1998
- -------------------------------------- (Principal Financial Officer and Principal
David K. Downes Accounting Officer)

/s/Walter P. Babich * Director April 27, 1998
- --------------------------------------
Walter P. Babich

/s/Anthony D. Knerr * Director April 27, 1998
- --------------------------------------
Anthony D. Knerr

/s/Ann R. Leven * Director April 27, 1998
- --------------------------------------
Ann R. Leven

/s/W. Thacher Longstreth * Director April 27, 1998
- -------------------------------------
W. Thacher Longstreth

/s/Thomas F. Madison * Director April 27, 1998
- -------------------------------------
Thomas F. Madison

/s/Jeffrey J. Nick * Director April 27, 1998
- -------------------------------------
Jeffrey J. Nick

/s/Charles E. Peck * Director April 27, 1998
- -------------------------------------
Charles E. Peck
</TABLE>

*By /s/ Wayne A. Stork
Wayne A. Stork
as Attorney-in-Fact for
each of the persons indicated

<PAGE>

SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

Exhibits

Form N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

<PAGE>
INDEX TO EXHIBITS

Exhibit No. Exhibit
- ---------- -------

EX-99.B11 Consent of Auditors

EX-27 Financial Data Schedules

<PAGE>

EX-99.B11
Exhibit 24 (b)(11)

Consent of Ernst & Young LLP, Independent Auditors

We consent to the references to our firm under the captions "Financial
Highlights" in the Prospectus and "Financial Statements" in the Statement of
Additional Information and to the incorporation by reference in this
Post-Effective Amendment No. 46 to the Registration Statement (Form N-1A) (No.
2-75526) of Delaware Group Limited-Term Government Funds, Inc. - U.S. Government
Money Fund of our report dated February 12, 1998, included in the 1997 Annual
Report to shareholders.

/s/ Ernst & Young LLP
---------------------
Ernst & Young LLP

Philadelphia, Pennsylvania
April 24, 1998

<PAGE>
EX-99.B11
Exhibit 24 (b)(11)

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 and statement of assets
and liabilities of Delaware Group Limited-Term Government Funds, Inc. - U.S.
Government Money Fund as of December 31, 1997, 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 and financial highlights. Our procedures included confirmation of
securities owned as of December 31, 1997, by correspondence with the 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 audit provides 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, 1997, 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.

/s/ Ernst & Young LLP
--------------------------
Ernst & Young LLP

Philadelphia, Pennsylvania
February 12, 1998

<ARTICLE> 6
<CIK> 0000357059
<NAME> DELAWARE GROUP LIMITED-TERM GOVERNMENT FUND, INC.
<SERIES>
<NUMBER> 011
<NAME> U.S. GOVERNMENT MONEY FUND A CLASS

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 16,386,153
<INVESTMENTS-AT-VALUE> 16,386,153
<RECEIVABLES> 122,519
<ASSETS-OTHER> 637
<OTHER-ITEMS-ASSETS> 875,108
<TOTAL-ASSETS> 17,384,417
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 138,323
<TOTAL-LIABILITIES> 138,323
<SENIOR-EQUITY> 17,246
<PAID-IN-CAPITAL-COMMON> 17,228,848
<SHARES-COMMON-STOCK> 16,750,849
<SHARES-COMMON-PRIOR> 15,076,109
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 16,750,849
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 923,953
<OTHER-INCOME> 0
<EXPENSES-NET> 116,832
<NET-INVESTMENT-INCOME> 807,121
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 807,121
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 780,254
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 38,230,061
<NUMBER-OF-SHARES-REDEEMED> 37,280,612
<SHARES-REINVESTED> 719,039
<NET-CHANGE-IN-ASSETS> 1,733,257
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 81,779
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 260,739
<AVERAGE-NET-ASSETS> 16,137,622
<PER-SHARE-NAV-BEGIN> 1.000
<PER-SHARE-NII> 0.048
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0.048
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.000
<EXPENSE-RATIO> 0.70
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<ARTICLE> 6
<CIK> 0000357059
<NAME> DELAWARE GROUP LIMITED-TERM GOVERNMENT FUNDS, INC.
<SERIES>
<NUMBER> 012
<NAME> U.S. GOVERNMENT MONEY FUND CONSULTANT CLASS

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 16,386,153
<INVESTMENTS-AT-VALUE> 16,386,153
<RECEIVABLES> 122,519
<ASSETS-OTHER> 637
<OTHER-ITEMS-ASSETS> 875,108
<TOTAL-ASSETS> 17,384,417
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 138,323
<TOTAL-LIABILITIES> 138,323
<SENIOR-EQUITY> 17,246
<PAID-IN-CAPITAL-COMMON> 17,228,848
<SHARES-COMMON-STOCK> 495,245
<SHARES-COMMON-PRIOR> 430,476
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 495,245
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 923,953
<OTHER-INCOME> 0
<EXPENSES-NET> 116,832
<NET-INVESTMENT-INCOME> 807,121
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 807,121
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 26,867
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 769,674
<NUMBER-OF-SHARES-REDEEMED> 730,126
<SHARES-REINVESTED> 25,221
<NET-CHANGE-IN-ASSETS> 1,733,257
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 81,779
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 260,739
<AVERAGE-NET-ASSETS> 555,133
<PER-SHARE-NAV-BEGIN> 1.000
<PER-SHARE-NII> 0.048
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0.048
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.000
<EXPENSE-RATIO> 0.70
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>