<PAGE>
Money Market Fund
DELAWARE GROUP
U.S. Government
Money Fund
[various photos demonstrating service and guidance,
professional management and goals]
1997
Annual
Report
DELAWARE (sm)
INVESTMENTS
- ----------------------
Philadelphia - London
<PAGE>
January 12, 1997
money market fund 1
Dear Shareholder:
During fiscal 1997, U.S. Government Money Fund achieved its goal of providing
current income and stability of principal. For the 12 months ended December 31,
1997, the Fund provided a total return of +4.94%, with dividends reinvested,
for both A and Consultant Classes.
Money market rates fluctuated moderately during 1997. At year-end,
U.S. Government Money Fund's seven day annualized yield was 4.94% (for both
Classes). The Fund's relatively short weighted average maturity of 43 days
allowed us to avoid the volatility of long-term bonds.
In March 1997, the Federal Reserve Board raised its short-term
interest rate target to 5.5%. This action prevented inflation from
accelerating. Consumer prices rose just 1.7% for the year, the smallest
increase since 1986. Your Fund's returns helped preserve the purchasing power
of your investment dollars.
Some government officials, including Federal Reserve Board members,
have suggested that short-term interest rates may be lowered if financial
problems in Asia slow the U.S. economy more than expected. Still, others
believe the Board may see a need to raise interest rates if problems in Asia do
not lead to an economic slowdown.
Periods of short-term bond market volatility - caused by real or
perceived interest rate changes - can represent overreactions that can
provide opportunities for higher income from money market investments without
undue risk to principal.
We thank you for investing in U.S. Government Money Fund for your
short-term investing needs. We urge you to meet with your financial adviser to
consider an investment plan to meet your long-term goals.
Sincerely,
/s/ Wayne A. Stork
- ---------------------
Wayne A. Stork
Chairman
/s/ Jeffrey J. Nick
- ---------------------
Jeffrey J. Nick
President and Chief Executive Officer
<TABLE>
<CAPTION>
Average Annual Total Return
- --------------------------------------------------------------------------------------------------------------
Through December 31, 1997
Seven-Day Ten Five One Six
Yield Lifetime Years Years Year Months*
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
A Class (Est. 4/20/82) 4.94% +5.91% +4.91% +3.84% +4.94% +2.49%
Consultant Class (Est. 3/29/88) 4.94% +5.90% +4.85% +3.84% +4.94% +2.49%
- --------------------------------------------------------------------------------------------------------------
</TABLE>
*Cumulative return. Past performance does not guarantee future results.
Return and yield fluctuate. All performance reflects reinvestment of
dividends. The Fund is neither insured or guaranteed by the U.S. government
but does strive to maintain a net asset value of $1 per share. However,
there is no guarantee that the Fund will be able to do so.
<PAGE>
money market fund 2
Financial Statements
Delaware Group Limited-Term Government Funds, Inc. -
U.S. Government Money Fund
Statement of Net Assets
December 31, 1997
- -------------------------------------------------------------------------------
Principal
Amount Value
------ -----
Federal Agency Discount Notes - 72.57%
Federal Farm Credit Bank 5.36% 6/16/98 .. $1,000,000 $ 975,284
Federal Home Loan Bank 5.37% 6/19/98 .... 400,000 389,916
Federal Home Loan Bank 5.39% 1/26/98 .... 677,000 674,466
Federal Home Loan Bank 5.39% 3/9/98 ..... 390,000 386,088
Federal Home Loan Bank 5.39% 3/20/98 .... 125,000 123,540
Federal Home Loan Bank 5.39% 4/10/98 .... 165,000 162,554
Federal Home Loan Bank 5.43% 1/15/98 .... 250,000 249,472
Federal Home Loan Bank 5.43% 1/30/98 .... 360,000 358,425
Federal Home Loan Bank 5.43% 2/18/98 .... 665,000 660,185
Federal Home Loan Bank 5.49% 1/9/98 ..... 1,500,000 1,498,170
Federal Home Loan Bank 5.49% 2/4/98 ..... 1,000,000 994,815
Federal Home Loan Bank 5.49% 2/20/98 .... 1,000,000 992,375
Federal Home Loan Bank 5.50% 1/21/98 .... 200,000 199,389
Federal Home Loan Mortgage Corporation
5.41% 1/6/98 .......................... 850,000 849,361
Federal Home Loan Mortgage Corporation
5.70% 1/23/98 ......................... 1,000,000 996,517
Federal Home Loan Mortgage Corporation
5.70% 1/29/98 ......................... 1,000,000 995,567
Federal National Mortgage Association
5.45% 4/27/98 ......................... 630,000 618,937
Federal National Mortgage Association
5.48% 1/21/98 ......................... 1,000,000 996,956
Federal National Mortgage Association
5.48% 4/6/98 .......................... 400,000 394,216
___________
Total Federal Agency Discount Notes 12,516,233
___________
*Floating Rate Notes - 14.50%
Federal Farm Credit Bank 5.55% 2/20/98 .. 1,000,000 999,920
Federal Home Loan Bank 5.90% 10/23/98 ... 500,000 500,000
Student Loan Marketing Association
5.92% 11/12/98 ........................ 1,000,000 1,000,000
__________
Total Floating Rate Notes 2,499,920
_________
<PAGE>
Principal
Amount Value
------ -----
Repurchase Agreements - 7.94%
With Chase Manhattan 6.00% 1/2/98 (dated
12/31/97 collateralized by $428,000
U.S. Treasury Notes 6.625% due
3/31/02, market value $448,603) .......... $440,000 $ 440,000
With J.P. Morgan Securities 6.25% 1/2/98
(dated 12/31/97 collateralized by
$449,000 U.S. Treasury Notes 9.25% due
8/15/98, market value $474,905)........... 465,000 465,000
With PaineWebber 6.375% 1/2/98 (dated
12/31/97 collateralized by $473,000
U.S. Treasury Notes 6.25% due 6/30/98,
market value $475,254) ................... 465,000 465,000
-----------
Total Repurchase Agreements ................ 1,370,000
-----------
TOTAL MARKET VALUE OF SECURITIES OWNED - 95.01%
(WHICH APPROXIMATES COST FOR FINANCIAL
REPORTING AND INCOME TAX PURPOSES) ................... 16,386,153
RECEIVABLES AND OTHER ASSETS NET OF LIABILITIES - 4.99% 859,941
-----------
NET ASSETS APPLICABLE TO 16,750,849 U.S. GOVERNMENT
MONEY FUND A CLASS SHARES AND 495,245 U.S. GOVERNMENT
MONEY FUND CONSULTANT CLASS SHARES ($0.001 PAR VALUE)
OUTSTANDING; 1,000,000,000 SHARES AUTHORIZED
EQUIVALENT TO $1.00 PER SHARE - 100% ................. $17,246,094
===========
- ---------
*Floating Rate Notes - The interest rate shown is the rate as of
December 31, 1997 and the maturity shown is the longer of the next
interest readjustment date or the date the principal amount shown can be
recovered through demand.
See accompanying notes
<PAGE>
3 money market fund
Delaware Group
Limited-Term Government Funds, Inc. -
U.S. Government Money Fund
Statement of Assets and Liabilities
December 31, 1997
- -------------------------------------------------------------------------------
ASSETS:
Investments at market (cost $16,386,153) ............ $16,386,153
Cash ................................................ 871,128
Interest receivable ................................. 20,027
Subscriptions receivable ............................ 2,601
Other assets ........................................ 637
-----------
Total assets ........................................ 17,280,546
-----------
LIABILITIES:
Liquidations payable ................................ 489
Other accounts payable and accrued expenses ......... 33,963
-----------
Total liabilities ................................... 34,452
-----------
Total Net Assets .................................... $17,246,094
===========
See accompanying notes
Delaware Group
Limited-Term Government Funds, Inc. -
U.S. Government Money Fund
Statement of Operations
Year Ended December 31, 1997
INVESTMENT INCOME:
Interest ...................................... $ 923,953
EXPENSES:
Management fees ............................... $ 81,779
Dividend disbursing and transfer agent fees and
expenses ..................................... 86,474
Registration fees ............................. 26,618
Reports and statements to shareholders ........ 24,984
Professional fees ............................. 20,886
Accounting and administration ................. 8,412
Directors' fees ............................... 3,583
Taxes (other than taxes on income) ............ 235
Other ......................................... 7,768 260,739
---------
Expenses absorbed by Delaware Management
Company, Inc. ................................ (143,907)
---------
Total expenses ................................ 116,832
---------
NET INVESTMENT INCOME ......................... $ 807,121
---------
See accompanying notes
<PAGE>
Delaware Group
Limited-Term Government Funds, Inc. -
U.S. Government Money Fund
Statements Of Changes In Net Assets
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<TABLE>
<CAPTION>
Year Ended Year Ended
12/31/97 12/31/96
-------- --------
<S> <C> <C>
INCREASE IN NET ASSETS FROM OPERATIONS:
Net investment income ............................ $ 807,121 $ 745,871
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income:
A Class ......................................... (780,254) (721,027)
Consultant Class ................................ (26,867) (24,844)
------------ ------------
(807,121) (745,871)
------------ ------------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold:
A Class ......................................... 38,230,061 25,564,845
Consultant Class ................................ 769,674 581,297
Net asset value of shares issued upon reinvestment
of dividends from net investment income:
A Class ........................................ 719,039 694,448
Consultant Class ............................... 25,221 17,385
------------ ------------
39,743,995 26,857,975
------------ ------------
Cost of shares repurchased:
A Class ......................................... (37,280,612) (24,963,369)
Consultant Class ................................ (730,126) (497,272)
------------ ------------
(38,010,738) (25,460,641)
------------ ------------
Increase in net assets derived from capital
share transactions .............................. 1,733,257 1,397,334
------------ ------------
NET INCREASE IN NET ASSETS ....................... 1,733,257 1,397,334
------------ ------------
NET ASSETS:
Beginning of year ................................ 15,512,837 14,115,503
------------ ------------
End of year ...................................... $ 17,246,094 $ 15,512,837
============ ============
</TABLE>
See accompanying notes
<PAGE>
4 money market fund
Delaware Group
Limited-Term Government Funds, Inc. -
U.S. Government Money Fund
Financial Highlights
- -------------------------------------------------------------------------------
Selected data for each share of the Fund outstanding throughout the
period was as follows:
<TABLE>
<CAPTION>
U.S. Government Money Fund A Class
-----------------------------------------------------------
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 ..................... $1.000 $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% 4.76% 4.57% 2.93% 2.01%
Ratios and supplemental data:
Net assets, end of period (000 omitted) ............... $16,751 $15,082 $13,787 $17,119 $20,919
Ratio of expenses to average net assets ............ 0.70% 0.74% 1.39% 1.26% 1.04%
Ratio of expenses to average net assets prior
to expense limitation ............................. 1.56% 1.22% 1.39% 1.26% 1.04%
Ratio of net investment income to average net assets 4.84% 4.66% 4.45% 2.91% 2.06%
Ratio of net investment income to average net assets
prior to expense limitation ....................... 3.98% 4.18% 4.45% 2.91% 2.06%
</TABLE>
<TABLE>
<CAPTION>
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 ................... $1.000 $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% 4.76% 4.57% 2.93% 2.01%
Ratios and supplemental data:
Net assets, end of period (000 omitted) ............... $495 $431 $329 $1,077 $555
Ratio of expenses to average net assets ............ 0.70% 0.74% 1.39% 1.26% 1.04%
Ratio of expenses to average net assets prior to
expense limitation ................................ 1.56% 1.22% 1.39% 1.26% 1.04%
Ratio of net investment income to average net assets 4.84% 4.66% 4.45% 2.91% 2.06%
Ratio of net investment income to average net assets
prior to expense limitation ....................... 3.98% 4.18% 4.45% 2.91% 2.06%
</TABLE>
See accompanying notes
<PAGE>
5 money market fund
Delaware Group
Limited-Term Government Funds, Inc. -
U.S. Government Money Fund
Notes To Financial Statements
December 31, 1997
- -------------------------------------------------------------------------------
Delaware Group Limited-Term Government Funds, Inc. - U.S. Government
Money Fund, ("the Fund) is registered as a diversified open-end investment
company under the Investment Company Act of 1940, as amended. The Fund is
organized as a Maryland Corporation and offers two classes of shares - A
Class and Consultant Class. Both classes carry no sales charges.
The investment objective of the U.S. Government Money Fund is to seek
maximum current income while preserving principal and maintaining
liquidity. Though there is no guarantee that this goal will be met, the
Fund strives to maintain a stable net asset value of $1.00.
1. Significant Accounting Policies
The following accounting policies are in accordance with generally
accepted accounting principles and are consistently followed by the Fund:
Security Valuation - Securities are valued at amortized cost which
approximates market value.
Federal Income Taxes - The Fund intends to continue to qualify as a
regulated investment company and make the requisite distributions to
shareholders. Accordingly, no provision for federal income taxes has been
made in the financial statements. Income and capital gain distributions are
determined in accordance with federal income tax regulations which may
differ from generally accepted accounting principles.
Class Accounting - Investment income and common expenses are allocated to
the various classes of the Fund on the basis of daily net assets of each
class. Distribution expenses relating to a specific class are charged
directly to that class.
Repurchase Agreements - The Fund may invest in a pooled cash account
along with other members of the Delaware Group of Funds. The aggregate
daily balance of the pooled cash account is invested in repurchase
agreements secured by obligations of the U.S. government. The respective
collateral is held by the Fund's custodian bank until the maturity of the
respective repurchase agreements. Each repurchase agreement is at least
100% collateralized. However, in the event of default or bankruptcy by the
counterparty to the agreement, realization of the collateral may be subject
to legal proceedings.
Use of Estimates - The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.
Other - Expenses common to all funds within the Delaware Group of Funds
are allocated amongst the funds on the basis of average net assets.
Security transactions are recorded on the date the securities are purchased
or sold (trade date). Premiums and discounts are amortized on a pro-rata
basis and are included in interest income. The Fund declares dividends
daily from net investment income and pays such dividends monthly.
Certain Fund expenses are paid through "soft dollar" arrangements with
brokers. The amount of these expenses is less than 0.01% of the Fund's
average daily net assets.
<PAGE>
2. Investment Management and Other Transactions with Affiliates
In accordance with the terms of the Investment Management Agreement, the
Fund pays Delaware Management Company, Inc. (DMC), the Investment Manager
of the Fund, an annual fee which is calculated daily at the rate of 0.50%
of the net assets of the Fund less the fees paid to the unaffiliated
directors.
DMC has elected to waive that portion, if any, of the management fee and
reimburse the Fund to the extent that annual operating expenses exclusive
of taxes, interest, brokerage commissions and extraordinary expenses,
exceed 0.70% of average daily net assets of the Fund through July 31, 1998.
Total expenses absorbed by DMC for the year ended December 31, 1997 were
$143,907.
The Fund has engaged Delaware Service Company, Inc. (DSC), an affiliate
of DMC, to provide dividend disbursing, transfer agent and accounting
services for the Fund. For the year ended December 31, 1997, the Fund expensed
$86,474 for dividend disbursing and transfer agent services and $5,815 for
accounting services.
Pursuant to the Distribution Agreement, the Fund may pay Delaware
Distributors, L.P. (DDLP), the Distributor and an affiliate of DMC, an
annual 12b-1 fee not to exceed 0.30% of the average daily net assets of the
Consultant Class. Effective June 1, 1990, 12b-1 Plan payments from the
Consultant Class to DDLP were suspended but may be reinstated in the
future.
Certain officers of DMC, DSC and DDLP are officers, directors and/or
employees of the Fund. These officers, directors and employees are paid no
compensation by the Fund.
3. Capital Stock
Transactions in capital stock shares were as follows:
Year Ended Year Ended
12/31/97 12/31/96
Shares sold:
A Class ................................ 38,230,061 25,564,845
Consultant Class ....................... 769,674 581,297
Shares issued upon reinvestment of dividends
from net investment income:
A Class ................................ 719,039 694,448
Consultant Class ....................... 25,221 17,385
----------- -----------
39,743,995 26,857,975
----------- -----------
Shares repurchased:
A Class ................................ (37,280,612) (24,963,369)
Consultant Class ....................... (730,126) (497,272)
----------- -----------
(38,010,738) (25,460,641)
----------- -----------
Net Increase ................................ 1,733,257 1,397,334
=========== ===========
<PAGE>
6 money market fund
Delaware Group
Limited-Term Government Funds, Inc. -
U.S. Government Money Fund
Report of Independent Auditors
- --------------------------------------------------------------------------------
To the Shareholders and Board of Directors
Delaware Group Limited-Term Government Funds, Inc. - U.S. Government
Money Fund
We have audited the accompanying statement of net assets 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 audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the financial
position of Delaware Group Limited-Term Government Funds, Inc. - U.S.
Government Money Fund at December 31, 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.
Ernst & Young LLP
Philadelphia, Pennsylvania
February 12, 1998
<PAGE>
[PHOTO OF GLOBES]
This report must be preceded or accompanied by a current U.S. Government
Money Fund Prospectus and the Delaware Investments Performance Update for the
most recently completed calendar quarter. For a prospectus of any other
mutual fund from Delaware Investments, contact your financial adviser or
Delaware.
For Shareholders
1.800.523.1918
For Securities Dealers
1.800.362.7500
For Financial Institutions
Representatives Only
1.800.659.2265
Money market funds strive to maintain a net asset value of $1 a share.
However, there is no guarantee this goal will be met. Yields fluctuate with
market conditions.
Be sure to consult your financial adviser when making investments. Mutual
funds can be a valuable part of your financial plan; however, shares of the
Fund are not FDIC or NCUSIF insured, are not guaranteed by any bank or any
credit union, and involve investment risk, including the possible loss of the
principal amount invested. Shares of the Fund are not bank or credit union
deposits.
Copy Rights Delaware Distributors, L.P.
DELAWARE (sm)
INVESTMENTS
- ----------------------
Philadelphia - London
Printed in the USA
on recycled paper
(477)
AR-005[12/97]TKO2/98
