AMERICAN CAPITAL RESERVE FUND INC, N14EL24, 1995-05-26

AMERICAN CAPITAL RESERVE FUND INC
N14EL24, 1995-05-26

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<PAGE> 1

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 26, 1995

1933 ACT REGISTRATION NO. 33-
- --------------------------------------------------------------------------------
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------

FORM N-14

REGISTRATION STATEMENT
UNDER THE
SECURITIES ACT OF 1933 /X/
PRE-EFFECTIVE AMENDMENT NO. / /
POST-EFFECTIVE AMENDMENT NO. / /

---------------------
AMERICAN CAPITAL
RESERVE FUND, INC.
(Exact Name of Registrant as Specified in Charter)

2800 POST OAK BOULEVARD, HOUSTON, TEXAS 77056
(Address of Principal Executive Offices)

TELEPHONE NUMBER: (713) 993-0500
---------------------

RONALD A. NYBERG, ESQ. Copy to:
AMERICAN CAPITAL RESERVE FUND, INC. GEORGE M. BARTLETT, ESQ.
ONE PARKVIEW PLAZA O'MELVENY & MYERS
OAKBROOK TERRACE, ILLINOIS 60181 400 SOUTH HOPE STREET
(Name and Address of Agent for Service) LOS ANGELES, CALIFORNIA 90071

---------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.

PURSUANT TO THE PROVISIONS OF RULE 24F-2 OF THE INVESTMENT COMPANY ACT OF
1940, THE REGISTRANT HAS PREVIOUSLY ELECTED TO REGISTER AN INDEFINITE NUMBER OF
SHARES AND WILL FILE A RULE 24F-2 NOTICE WITH THE COMMISSION FOR ITS FISCAL YEAR
ENDING MAY 31, 1995 ON OR BEFORE JULY 28, 1995. THEREFORE, NO FILING FEE IS DUE
AT THIS TIME.
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<PAGE> 2

AMERICAN CAPITAL RESERVE FUND, INC.
Cross-reference sheet pursuant to rule 481(a) of Regulation C
under the Securities Act of 1933

<TABLE>
<CAPTION>
FORM N-14 ITEM NO. PROXY STATEMENT/PROSPECTUS CAPTION*
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<S> <C> <C>
PART A INFORMATION REQUIRED IN THE PROSPECTUS

Item 1. Beginning of Registration
Statement and Outside Front
Cover Page of Prospectus....... Outside front cover page of Proxy
Statement/Prospectus
Item 2. Beginning and Outside Back
Cover Page of Proxy
Statement/Prospectus........... Table of Contents
Item 3. Fee Table, Synopsis Information
and Risk Factors............... Summary; Risk Factors; Fee Comparisons
Item 4. Information about the
Transaction.................... Summary; The Proposed Reorganization
Item 5. Information about the
Registrant..................... Outside front cover page of Proxy
Statement/Prospectus; Summary; The Proposed
Reorganization; Other Information; Prospectus and
Statement of Additional Information of the
American Capital Reserve Fund, Inc. (incorporated
by reference)
Item 6. Information about the Company
Being Acquired................. Prospectus and Statement of Additional Information
of Van Kampen Merritt Money Market Fund
(incorporated by reference)
Item 7. Voting Information............. Voting Information and Requirements
Item 8. Interest of Certain Persons and
Experts........................ Summary; Reasons for the Proposed Reorganization;
Legal Matters
Item 9. Additional Information Required
for Reoffering by Persons
Deemed to be Underwriters...... Not applicable

PART B INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION

Item 10. Cover Page..................... Cover Page
Item 11. Table of Contents.............. Table of Contents
Item 12. Additional Information about
the Registrant................. Incorporation of Documents by Reference
Item 13. Additional Information about
the Company Being Acquired..... Incorporation of Documents by Reference
Item 14. Financial Statements........... Financial Statements

PART C OTHER INFORMATION
</TABLE>

Items 15-17. Information required to be included in Part C is set forth under
the appropriate Item, so numbered, in Part C of this Registration Statement.

* References are to captions within the part of the registration statement to
which the particular item relates except as otherwise indicated.
<PAGE> 3

DEAR VAN KAMPEN AMERICAN CAPITAL MONEY MARKET FUND SHAREHOLDER:

Enclosed is information asking you for your vote on a reorganization (the
"Reorganization") pursuant to an Agreement and Plan of Reorganization (the
"Agreement") for the Van Kampen American Capital Money Market Fund (the "VK
Fund"). The Reorganization calls for VK Fund shareholders to become shareholders
of the Van Kampen American Capital Reserve Fund (the "AC Fund"), a mutual fund
which pursues a substantially similar investment objective.

The enclosed materials include a combined Proxy Statement/Prospectus
containing information you need to make an informed decision. However, we
thought it would also be helpful for you to have, at the start, answers to some
of the important questions you might have about the proposed Reorganization. We
hope you find these explanations useful as you review your materials before
voting. For more detailed information about the Reorganization, please refer to
the combined Proxy Statement/Prospectus.

HOW WILL THE REORGANIZATION AFFECT ME?

Assuming shareholders of the VK Fund approve the Reorganization, the assets
and liabilities of the VK Fund will be combined with those of the AC Fund and
you will become a shareholder of the AC Fund. You will receive shares of the AC
Fund equal in value at the time of issuance to the shares of the VK Fund that
you hold immediately prior to the Reorganization. Class A shareholders of the VK
Fund will receive Class A Shares of the AC Fund and Class B shareholders of the
VK Fund will receive Class B Shares of the AC Fund.

WHY IS THE REORGANIZATION BEING RECOMMENDED?

As we reported to you earlier, the parent company of Van Kampen American
Capital Asset Management, Inc. ("AC Adviser"), the investment adviser to the AC
Fund, was acquired in December 1994 by Van Kampen American Capital, Inc.
("VKAC"), and was subsequently merged into VKAC. VKAC, through its wholly owned
subsidiaries, distributes and manages the Van Kampen American Capital funds. AC
Adviser is an affiliate of Van Kampen American Capital Investment Advisory Corp.
("VK Adviser"), the investment adviser to the VK Fund. The primary purposes of
the proposed Reorganization are to seek to achieve future economies of scale and
eliminate certain costs associated with operating the VK Fund and the AC Fund
separately. The Reorganization will result in combining the assets and
liabilities of the VK Fund with the assets and liabilities of the AC Fund and
consolidating their operations.

The Reorganization is intended to provide various benefits to shareholders
of the VK Fund who become shareholders of the AC Fund (as well as to existing
and future investors in the AC Fund). For example, higher net asset levels would
enable the AC Fund to spread fixed and relatively fixed costs, such as
accounting, legal and printing expenses, over a larger asset base, thereby
reducing per share expense levels. Higher net asset levels also may benefit
portfolio management by permitting larger individual portfolio investments that
may result in reduced transaction costs and/or more favorable pricing and by
providing the opportunity for greater portfolio diversity. These benefits, in
turn, should have a favorable effect on the relative performance of the AC Fund.

The consummation of the Reorganization is subject to the satisfaction of a
number of conditions (including approval by the VK Fund's shareholders), which
are summarized below in "The Proposed Reorganization -- Terms of the Agreement"
section of the accompanying combined Proxy Statement/Prospectus. These
conditions are stated in the Agreement, which is attached as Exhibit A to the
combined Proxy Statement/Prospectus.
<PAGE> 4

WILL I HAVE TO PAY ANY SALES LOAD, COMMISSION OR OTHER TRANSACTIONAL FEE IN
CONNECTION WITH THE REORGANIZATION?

No. The full value of your shares of the VK Fund will be exchanged for
shares of the corresponding class of the AC Fund without any sales load,
commission or other transactional fee being imposed. However, as more fully
discussed in the combined Proxy Statement/Prospectus, the holding period for
shareholders acquiring Class B shares of the AC Fund in the Reorganization
subject to a contingent deferred sales charge will be measured from the time the
holder initially purchased such Class B shares from a Van Kampen American
Capital open-end fund that were subsequently exchanged into Class B shares of
the VK Fund. VKAC Asset Management will bear the costs associated with the
Reorganization, such as printing and mailing costs and other expenses associated
with the Special Meeting.

HOW WILL THE FEES PAID BY THE AC FUND COMPARE TO THOSE PAYABLE BY THE VK FUND?

It is anticipated that, on a per share basis, the total of the various fees
and expenses incurred by the AC Fund will be less, upon completion of the
Reorganization, than the total of such fees and expenses applicable to the VK
Fund. The fees and expenses actually paid to date by the VK Fund have been less
than the total of such fees and expenses applicable to the VK Fund as a result
of voluntary fee waivers and expense reimbursements made by VK Adviser. However,
if the Reorganization is not consummated, VK Adviser does not currently intend
to continue such voluntary fee waivers and expense reimbursements.

WHAT WILL I HAVE TO DO TO OPEN AN ACCOUNT IN THE AC FUND? WHAT HAPPENS TO MY
ACCOUNT IF THE REORGANIZATION IS APPROVED?

If the Reorganization is approved, your interest in Class A or B Shares,
respectively, of the VK Fund will be converted automatically into the same class
of shares of the AC Fund and we will send you written confirmation that this
change has taken place. You will receive the same class of shares of the AC Fund
equal in value to your Class A or B Shares of the VK Fund. No certificates for
AC Fund shares will be issued in connection with the Reorganization, although
such certificates will be available upon request. If you currently hold
certificates representing your shares of the VK Fund, it is not necessary to
surrender such certificates.

WHO WILL ADVISE THE AC FUND AND PROVIDE OTHER SERVICES?

AC Adviser provides advisory services to the AC Fund under an arrangement
that is substantially similar to that currently in effect between the VK Fund
and VK Adviser. The contractual advisory fees payable by the AC Fund are no
higher than the contractual advisory fees applicable to the VK Fund. Van Kampen
American Capital Distributors, Inc. serves as distributor of shares of both the
AC Fund and the VK Fund. In addition, State Street Bank & Trust Company, 225
Franklin Street, P.O. Box 1713, Boston, Massachusetts 02105-1713 is the
custodian of both the AC Fund and the VK Fund. ACCESS Investor Services, Inc.,
P.O. Box 418256, Kansas City, Missouri 64141-9256 serves as the transfer agent
for both the AC Fund and the VK Fund.

WILL I HAVE TO PAY ANY FEDERAL TAXES AS A RESULT OF THE REORGANIZATION?

recognize any gain or loss as a result of the transfer of all of its assets and
liabilities solely in exchange for the shares of the AC Fund or as a result of
its liquidation. The AC Fund expects that it will not recognize any gain or loss
as a result of the Reorganization, that it will take a carryover basis in the
assets acquired from the VK Fund and that its holding period of such assets will
include the period during which the assets were held by the VK Fund. See "The
Proposed Reorganization -- Federal Income Tax Consequences" in the combined
Proxy Statement/Prospectus.

WHAT IF I REDEEM MY VK FUND SHARES BEFORE THE REORGANIZATION TAKES PLACE?

If you choose to redeem your shares of the VK Fund before the
Reorganization takes place, the redemption will be treated as a normal
redemption of shares and will be a taxable transaction, unless your account is
not subject to taxation, such as an individual retirement account or other
tax-qualified retirement plan.

We hope these answers help to clarify the Reorganization proposal for you.
If you still have questions, do not hesitate to call us at 1-800-341-2911.
Please give this matter your prompt attention. We need to receive your proxy
before the shareholder meeting scheduled for September 8, 1995. If shareholders
approve the Reorganization, it is expected to take effect on [ ],
1995.

Thank you for your investment in the Van Kampen American Capital Money
Market Fund.

Very truly yours,

Van Kampen American Capital Money
Market Fund

Dennis J. McDonnell
President and Trustee
<PAGE> 6

VAN KAMPEN AMERICAN CAPITAL MONEY MARKET FUND
ONE PARKVIEW PLAZA
OAKBROOK TERRACE, ILLINOIS 60181
(800) 341-2911

NOTICE OF SPECIAL MEETING
SEPTEMBER 8, 1995

A Special Meeting of Shareholders of the Van Kampen American Capital Money
Market Fund (the "VK Fund"), a series of the Van Kampen American Capital Money
Market Trust, will be held at the [Transco Tower Auditorium, Level 2, 2800 Post
Oak Boulevard, Houston, Texas 77056,] on September 8, 1995 at [ a.m.] (the
"Special Meeting"), for the following purposes:

(1) To approve a plan of reorganization pursuant to which the VK Fund
would transfer all of its assets and liabilities to the Van Kampen American
Capital Reserve Fund (the "AC Fund") in exchange for corresponding Class A
and B Shares of beneficial interest of the AC Fund, the VK Fund would
distribute such Class A and B Shares of the AC Fund to the holders of Class
A and B Shares of the VK Fund, respectively, and the VK Fund would be
dissolved.

(2) To transact such other business as may properly come before the
Special Meeting.

Shareholders of record as of the close of business on [ ], 1995
are entitled to vote at the Special Meeting or any adjournment thereof.

For the Board of Trustees,

Ronald A. Nyberg
Secretary

July , 1995

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

PLEASE VOTE PROMPTLY BY SIGNING AND
RETURNING THE ENCLOSED PROXY.

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<PAGE> 7

VAN KAMPEN AMERICAN CAPITAL MONEY MARKET FUND

PROXY STATEMENT/PROSPECTUS
RELATING TO THE ACQUISITION OF ASSETS AND LIABILITIES OF
VAN KAMPEN AMERICAN CAPITAL MONEY MARKET FUND
BY AND IN EXCHANGE FOR SHARES OF
VAN KAMPEN AMERICAN CAPITAL RESERVE FUND

This Proxy Statement/Prospectus is being furnished to shareholders of the
Van Kampen American Capital Money Market Fund ( the "VK Fund"), a series of the
Van Kampen American Capital Money Market Trust, a Delaware business trust (the
"VKAC Money Market Trust"), and relates to the Special Meeting of Shareholders
of the VK Fund (the "Special Meeting") called for the purpose of approving the
proposed reorganization of the VK Fund (the "Reorganization") which would result
in shareholders of the VK Fund in effect exchanging their VK Fund for shares of
the Van Kampen American Capital Reserve Fund, a Delaware business trust (the "AC
Fund"). The Reorganization would be accomplished as follows: (1) the AC Fund
would acquire all of the then existing assets and liabilities of the VK Fund in
exchange for Class A and B shares of beneficial interest of the AC Fund (the
"Shares"); (2) the VK Fund would distribute the Shares to the VK Fund's
shareholders holding the same respective class of shares; and (3) the VK Fund
would dissolve and all outstanding shares of the VK Fund would be cancelled.

The AC Fund is an open-end, diversified management investment company that
is authorized to issue an unlimited number of shares of beneficial interest, par
value $.01 per share, for each series authorized by its Board of Trustees. The
investment objective of the AC Fund is to seek protection of capital and high
current income through investments in U.S. dollar denominated money market
securities, which is substantially similar to the investment objective of the VK
Fund. (See "Summary -- Comparisons of the VK Fund and the AC Fund -- Investment
Objectives and Policies" below.) There can be no assurance that the AC Fund will
achieve its investment objective. The address and principal executive office of
the VK Fund is One Parkview Plaza, Oakbrook Terrace, Illinois 60181, telephone
no. (708) 684-6000 or (800) 341-2911. The address and principal executive office
of the AC Fund is 2800 Post Oak Boulevard, Houston, Texas 77056, telephone no.
(800) 421-5666. The enclosed proxy and this Proxy Statement/Prospectus are first
being sent to VK Fund shareholders on or about [ ], 1995.
------------------------
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
PROXY STATEMENT/PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
------------------------

This Proxy Statement/Prospectus contains information shareholders of the VK
Fund should know before voting on the Reorganization and constitutes an offering
of Class A and B Shares of the AC Fund only. Please read it carefully and retain
it for future reference. A Statement of Additional Information dated
[ ], 1995, relating to this Proxy Statement/Prospectus (the
"Reorganization SAI") has been filed with the Securities and Exchange Commission
(the "SEC") and is incorporated herein by reference. A Prospectus and Statement
of Additional Information containing additional information about the AC Fund,
each dated [ ], 1995, have been filed with the SEC and are incorporated
herein by reference. A copy of the AC Fund Prospectus accompanies this Proxy
Statement/Prospectus. A Prospectus and Statement of
<PAGE> 8

Additional Information containing additional information about the VK Fund, each
dated [ ], 1995, have been filed with the SEC and are incorporated herein
by reference. Copies of any of the foregoing may be obtained without charge by
calling or writing to the VK Fund at the telephone number or address shown
above. If you wish to request the Reorganization SAI, please ask for the
"Reorganization SAI."

No person has been authorized to give any information or make any
representation not contained in this Proxy Statement/Prospectus and, if so given
or made, such information or representation must not be relied upon as having
been authorized. This Proxy Statement/Prospectus does not constitute an offer to
sell or a solicitation of an offer to buy any securities in any jurisdiction in
which, or to any person to whom, it is unlawful to make such offer or
solicitation.
------------------------

The AC Fund is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended, and the Investment Company Act of 1940, as
amended (the "Act"), and in accordance therewith files reports and other
information with the SEC. Such reports, other information and proxy statements
filed by the AC Fund can be inspected and copied at the public reference
facilities maintained by the SEC at 450 Fifth Street, N.W., Washington, D.C.
20549 and at its Regional Office at 500 West Madison Street, Chicago, Illinois.
Copies of such material can also be obtained from the SEC's Public Reference
Branch, Office of Consumer Affairs and Information Services, Washington, D.C.
20549, at prescribed rates.

The date of this Proxy Statement/Prospectus is [July ], 1995.

2
<PAGE> 9

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
APPROVAL OR DISAPPROVAL OF THE PROPOSED REORGANIZATION.................................. 4
A. SUMMARY........................................................................... 4
The Reorganization................................................................ 4
Comparisons of the AC Fund and the VK Fund........................................ 5
Investment Objectives and Policies............................................... 6
Advisory and Other Fees.......................................................... 7
Distribution, Purchase, Redemption and Exchange of Shares........................ 8
Federal Income Tax Consequences................................................... 11
Reasons for the Proposed Reorganization........................................... 11
B. RISK FACTORS...................................................................... 13
Nature of Investment.............................................................. 13
C. INFORMATION ABOUT THE FUNDS....................................................... 13
D. THE PROPOSED REORGANIZATION....................................................... 14
Terms of the Agreement............................................................ 14
Description of Securities to be Issued............................................ 15
Shares of Beneficial Interest.................................................... 15
Voting Rights of Shareholders.................................................... 15
Continuation of Shareholder Accounts and Plans; Share Certificates................ 16
Federal Income Tax Consequences................................................... 16
Capitalization.................................................................... 18
Comparative Performance Information............................................... 18
Ratification of Investment Objective, Policies and Restrictions
of the AC Fund................................................................... 19
Legal Matters..................................................................... 19
Expenses.......................................................................... 19
F. RECOMMENDATION OF BOARD OF TRUSTEES............................................... 19
OTHER MATTERS THAT MAY COME BEFORE THE MEETING.......................................... 19
OTHER INFORMATION....................................................................... 20
A. SHAREHOLDINGS OF THE VK FUND AND THE AC FUND...................................... 20
B. SHAREHOLDER PROPOSALS............................................................. 20
VOTING INFORMATION AND REQUIREMENTS..................................................... 20
</TABLE>

3
<PAGE> 10

APPROVAL OR DISAPPROVAL OF THE PROPOSED REORGANIZATION

A. SUMMARY

The following is a summary of, and is qualified by reference to, the more
complete information contained in this Proxy Statement/Prospectus, including the
Agreement and Plan of Reorganization by and between the AC Fund and the VKAC
Money Market Trust attached hereto as Exhibit A (the "Agreement"), the
prospectus of the VK Fund dated [ ], 1995 (the "VK Fund Prospectus")
incorporated herein by reference and the prospectus of the AC Fund dated
[ ], 1995 (the "AC Fund Prospectus") incorporated herein by reference
and accompanying this Proxy Statement/Prospectus. This Proxy Statement/
Prospectus constitutes an offering of Class A and B Shares of the AC Fund only.

THE REORGANIZATION

On May 11, 1995, the Board of Trustees of the VKAC Money Market Trust (the
"VK Board") approved the Agreement. The Agreement provides that the VK Fund will
transfer all of its assets and liabilities to the AC Fund in exchange for Class
A and B Shares of the AC Fund. At the Closing (as defined herein), the AC Fund
will issue Shares of the AC Fund to the VK Fund, which AC Fund Shares will have
an aggregate net asset value equal in amount to the value of the VK Fund net
assets as of the Closing (as defined herein). The Agreement provides that the VK
Fund will dissolve following the Closing pursuant to a plan of liquidation and
dissolution adopted by the VK Board and as part of such dissolution, will
distribute to each shareholder of the VK Fund Shares of the respective class of
the AC Fund equal in value to their existing shares in the VK Fund. All members
of the VK Board who were not affiliated with the VK Adviser were elected as
trustees of the AC Fund on July 21, 1995.

The VK Board has unanimously determined that the Reorganization is in the
best interests of the shareholders of each class of shares of the VK Fund and
that such shareholders will not be diluted as a result of the Reorganization.
Similarly, the Board of Trustees of the AC Fund (the "AC Board") has unanimously
determined that the Reorganization is in the AC Fund's best interests and that
the interests of existing shareholders of each class of shares of the AC Fund
will not be diluted as a result of the Reorganization. Management of the
respective funds believes that the proposed Reorganization of the VK Fund into
the AC Fund should allow the AC Fund to achieve future economies of scale and to
eliminate certain costs of operating the VK Fund and the AC Fund separately.

Van Kampen American Capital Asset Management, Inc. (the "AC Adviser") has
agreed to pay all expenses of the Reorganization incurred by the AC Fund and the
VK Fund. Accordingly, the VK Fund and its shareholders will not bear any
expenses of the Reorganization.

The VK Board is asking shareholders of the VK Fund to approve the
Reorganization at the Special Meeting to be held on September 8, 1995. If
shareholders of the VK Fund approve the Reorganization, it is expected that the
Closing will be on [ ], 1995, but it may be at a different time, as
described herein.

THE VK BOARD RECOMMENDS THAT YOU VOTE FOR THE REORGANIZATION. APPROVAL OF
THE REORGANIZATION REQUIRES THE FAVORABLE VOTE OF THE HOLDERS OF A MAJORITY OF
THE OUTSTANDING SHARES ENTITLED TO VOTE. SEE "VOTING INFORMATION AND
REQUIREMENTS."

4
<PAGE> 11

COMPARISONS OF THE AC FUND AND THE VK FUND

The principal changes which would result from the Reorganization are listed
below:

(1) The shareholders of the VK Fund would become shareholders of the AC
Fund. The VK Fund and the AC Fund have substantially similar investment
objectives and follow similar investment strategies.

(2) The AC Fund is managed by AC Adviser, an affiliate of the VK Fund's
adviser, Van Kampen American Capital Investment Advisory Corp. (the "VK
Adviser"). The advisory fee for the AC Fund is a monthly fee computed
on average daily net assets at an annual rate of 0.500% on the first
$150 million of net assets; 0.450% on the next $100 million of net
assets; 0.400% on the next $100 million of net assets; and 0.350% on
net assets over $350 million. The advisory fee for the VK Fund is a
monthly fee computed on average daily net assets at an annual rate of
0.500% on the first $250 million of net assets; 0.475% on the next $250
million of net assets; 0.425% on the next $250 million of net assets
and 0.275% on net assets over $750 million. As of March 31, 1995, the
AC Fund's net assets were approximately $362.0 million. As of March 31,
1995, the VK Fund's net assets were approximately $34.7 million.

(3) The VK Fund offers two classes of shares. The AC Fund offers three
classes of shares. The VK Fund offers Class A shares at the net asset
value per share without a sales charge. In addition, the VK Fund offers
Class B shares which are not subject to a sales charge when purchased,
but which generally are subject to a contingent deferred sales charge
(3.00% if redeemed within the first year after purchase and reduced
thereafter to zero seven years after purchase). Class B shares of the
VK Fund may be acquired only by exchange of Class B shares from other
Van Kampen American Capital open-end funds and are offered for
temporary investment purposes between investments in such other funds.
None of the three classes of AC Fund Shares is subject to a sales
charge when purchased. However, Class B and C Shares generally are
subject to a contingent deferred sales charge (4.00% if redeemed within
the first year after purchase and reduced thereafter to zero six years
after purchase in the case of the Class B Shares and 1.00% if redeemed
within the first year after purchase and reduced to zero thereafter in
the case of the Class C Shares). Class B Shares acquired in the
Reorganization will remain subject to the contingent deferred sales
charge applicable to Class B shares of the VK Fund. Class B shares of
the VK Fund convert automatically to Class A shares of the VK Fund
seven years after purchase. Class B shares of the AC Fund convert to
Class A shares of the AC Fund six years after purchase. Class B Shares
acquired in the Reorganization will remain subject to the conversion
schedule applicable to Class B shares of the VK Fund.

(4) The VK Fund and the AC Fund have adopted plans (each, a "Plan") for
distribution-related expenses pursuant to Rule 12b-1 under the Act and
expenses for providing ongoing shareholder services. The VK Fund Plan
with respect to Class A shares provides that the VK Fund may spend an
aggregate amount up to 0.25% per year of the average daily net assets
attributable to Class A shares in connection with the ongoing provision
of services to holders of such shares by Van Kampen American Capital
Distributors, Inc. ("VKAC Distributors"), the distributor of the VK
Fund shares and by financial intermediaries in connection with the
maintenance of such shareholders' accounts. The VK Fund Plan with
respect to Class B shares provides that VK Fund can charge up to 0.75%
of the average daily net assets attributable to Class B shares for
reimbursement of certain distribution-related expenses and can charge
up to 0.25% of average daily net assets attributable to Class B shares
for the provision of ongoing services to shareholders. The AC Fund Plan
with respect to Class A

5
<PAGE> 12

shares allows for a service fee payment of up to 0.15% per annum of its
average daily net assets attributable to Class A shares to be paid to
VKAC Distributors, the distributor of the AC Fund shares, for
shareholder servicing-related expenses. The AC Fund Plan with respect
to Class B and Class C shares allows for a distribution fee to VKAC
Distributors at an annual rate of up to 0.75% and a service fee at an
annual rate up to 0.15% of the AC Fund's aggregate daily net assets
attributable to the Class B and C Shares to reimburse VKAC Distributors
for service fees paid by it to certain financial institutions (which
may include banks), securities dealers and other industry professionals
and for its distribution costs.

Certain other comparisons between the VK Fund and the AC Fund are discussed
below.

INVESTMENT OBJECTIVES AND POLICIES

The AC Fund and the VK Fund have substantially similar investment
objectives and also share similar investment practices, but there are also
certain differences in their investment policies, practices and restrictions.
The investment objective of the AC Fund is to seek protection of capital and
high current income through investments in U.S. dollar denominated money market
securities. The investment objective of the VK Fund is to provide high current
income consistent with the preservation of capital and liquidity through
investments in a broad range of money market instruments that will mature within
12 months of the date of purchase. Both funds invest principally in a
diversified portfolio of United States agency and government obligations,
commercial paper and repurchase agreements.

As money market funds, both funds are required to comply with the credit
quality, diversification and portfolio security maturity requirements of the Act
applicable to money market funds. Both funds invest in obligations issued or
guaranteed as to principal and interest by the U.S. Government, its agencies and
instrumentalities. The AC Fund invests in bank obligations including
certificates of deposit, time deposits and bankers' acceptances issued by
domestic banks, foreign branches or subsidiaries of domestic banks and domestic
or foreign branches of foreign banks which at the time of investment are rated
in the two highest categories, A-1 or A-2 by Standard & Poor's Corporation
("S&P") or Prime-1 or Prime-2 by Moody's Investors Service, Inc. ("Moody's").
The VK Fund invests in similar types of bank obligations issued by domestic
banks (or a foreign branch thereof) subject to regulation by the U.S. Government
and rated at least A-2 by S&P or Prime-2 by Moody's but may also invest in
unrated securities of comparable quality. Both the VK Fund and the AC Fund may
invest in commercial paper rated at the time of investment at least A-2 by S&P
or Prime-2 by Moody's. Currently, the AC Fund's policy is to limit investments
in commercial paper to obligations rated A-1 or Prime-1, respectively, by S&P or
Moody's.

The VK Fund may not invest in Federal Housing Administration or Veterans'
Administration pooled mortgages, or obligations of the Asian Development Bank,
the Inter-American Development Bank or the International Bank for Reconstruction
and Development (World Bank) or more than 10% of its assets in bank obligations
payable in Euro Dollars. The VK Fund may not invest in bank time deposits
maturing in more than 7 days or invest more than 10% of its assets in bank time
deposits maturing between two business days and 7 calendar days. The AC Fund has
no similar restrictions. For a complete description of the AC Fund's investment
objectives and policies, see the respective sections in the AC Fund's Prospectus
and Statement of Additional Information entitled "Investment Objectives and
Policies". For a complete description of the VK Fund's investment objectives and
policies, see the respective sections in the VK Fund's Prospectus and Statement
of Additional Information entitled "Investment Objective and Policies".

6
<PAGE> 13

The AC Fund is managed by AC Adviser while the VK Fund is managed by VK
Adviser. AC Adviser and VK Adviser are wholly-owned subsidiaries of Van Kampen
American Capital, Inc. ("VKAC") which has been developing investment strategies
and products for individuals, businesses and institutions since 1974. AC Adviser
and VK Adviser are the primary investment advisers to the Van Kampen American
Capital funds. As of March 31, 1995, AC Adviser, VK Adviser and their affiliates
managed or supervised approximately $51.7 billion of assets, including assets of
65 open-end investment companies and 38 closed-end investment companies. The
business address of AC Adviser is 2800 Post Oak Boulevard, Houston, Texas 77056.
AC Adviser and its investment advisory agreement with the AC Fund are more fully
described in the AC Fund Prospectus and Statement of Additional Information.

ADVISORY AND OTHER FEES

The VK Fund pays the VK Adviser a monthly fee based on its average daily
net asset value at the annual rates of 0.500% of the first $250 million; 0.475%
of the next $250 million; 0.425% of the next $250 million and 0.275% over $750
million. However, such fee has historically been reduced as a result of
voluntary fee waivers and expense reimbursements by the VK Adviser. [The
effective rate of advisory fees for the period ended December 31, 1994 was 0.03%
of the average daily net assets of the VK Fund.] In addition, the VK Fund bears
most expenses associated with its operations and the issuance and repurchase or
redemption of its securities, except for the compensation of trustees and
officers affiliated with the VK Adviser, VKAC Distributors or VKAC. Total
operating expenses for the VK Fund for the period ended December 31, 1994 were
1.03% and 1.80% of the average daily net assets attributable to the Class A and
B Shares, respectively, after giving effect to voluntary expense reimbursement
by VK Adviser. Absent such voluntary expense reimbursement, such total operating
expenses for the period ending December 31, 1994 would have been 1.50% and 2.27%
of the average daily net assets attributable to the Class A and B Shares,
respectively. The fees and expenses actually paid to date by the VK Fund have
been less than the total of such fees and expenses applicable to the VK Fund as
a result of voluntary fee waivers and expense reimbursements made by VK Adviser.
However, if the Reorganization is not consummated, VK Adviser does not currently
intend to continue such voluntary fee waivers and expense reimbursements.

The AC Fund pays the AC Adviser a monthly fee based on its average daily
net asset value at the annual rates of 0.50% of the first $150 million; 0.45% on
the next $100 million; 0.40% on the next $100 million and 0.35% on net assets
over $350 million. The effective advisory fee for the fiscal year ended May 31,
1994, was 0.46% of the AC Fund's average daily net asset value. Similar to the
VK Fund, the AC Fund also bears most expenses associated with its operation and
the issuance and repurchase or redemption of its securities, except for the
compensation of trustees and officers affiliated with the AC Adviser and VKAC.
As of May 31, 1994, the AC Fund had only Class A shares. The total operating
expenses of the AC Fund for the fiscal year ended May 31, 1994 were 1.03% of the
average daily net assets attributable to its Class A shares. For a complete
description of the AC Fund's advisory services, see the respective sections in
the AC Fund's Prospectus and Statement of Additional Information entitled "The
Fund and its Management" and "Investment Advisory Agreement." For a complete
description of the VK Fund's advisory services, see the respective sections in
the VK Fund's Prospectus and Statement of Additional Information entitled
"Investment Advisory Services" and "Investment Advisory and Other
Services -- Investment Advisory Agreement."

The AC Fund has adopted Plans for each of the Class A, B and C Shares
hereinafter referred to as the "Class A Plan," "Class B Plan," and the "Class C
Plan." Under the Class A Plan, the AC Fund pays a service fee to VKAC
Distributors, at an annual rate of up to 0.15% of the Fund's aggregate average
daily net assets attributable to the Class A shares. Under the Class B Plan and
Class C Plan, the AC Fund pays a service fee

7
<PAGE> 14

to VKAC Distributors at an annual rate of up to 0.15% and a distribution fee at
an annual rate of up to 0.75% of the Fund's aggregate average daily net assets
attributable to the Class B Shares and Class C Shares, respectively, to
reimburse VKAC Distributors for service fees paid by it to certain financial
institutions (which may include banks), securities dealers and other industry
professionals (collectively, "Service Organizations") and for distribution
costs. VKAC Distributors uses the Class A Plan , Class B Plan and Class C Plan
fees to compensate Service Organizations for personal services and/or
maintenance of shareholder accounts. The expenses of the AC Fund attributable to
such Class A Plan for the fiscal year ended May 31, 1994 were 0.13% of the
average daily net assets attributable to its Class A shares. As of such date,
the AC Fund had only Class A Shares. For a complete description of these
arrangements, see the respective sections in the AC Fund's Prospectus and
Statement of Additional Information entitled "Distribution Plans."

The VK Fund has adopted a Plan with respect to each class of its shares.
The expenses of the VK Fund for the period ended December 31, 1994 were 0.25%
and 1.00% of the VK Fund's average daily net asset value attributable to the
Class A and B shares, respectively. For a complete description of these
arrangements, see the respective sections in the VK Fund's Prospectus and
Statement of Additional Information entitled, "The Distribution and Service
Plans."

DISTRIBUTION, PURCHASE, REDEMPTION AND EXCHANGE OF SHARES

Class A shares of the VK Fund and Class A shares of the AC Fund may be
purchased at net asset value, without the imposition of a sales charge. Class B
shares of the VK Fund may be acquired only by exchange of Class B shares of
other Van Kampen American Capital open-end funds and are subject to a contingent
deferred sales charge (3.00% if redeemed within the first year after purchase
and reduced thereafter to zero seven years after purchase). Class B Shares of
the AC Fund are not subject to a sales charge when purchased, but are subject to
a contingent deferred sales charge (4.00% if redeemed within the first year
after purchase and reduced thereafter to zero six years after purchase). Class B
shares of the VK Fund acquired through use of the exchange privilege are subject
to the contingent deferred sales charge applicable to such shares upon the
investor's initial purchase of Class B shares from the Class B shares of the VK
Fund will convert automatically to Class A shares of the VK Fund seven years
after the end of the month in which the shareholder's initial order to purchase
such Class B shares of one of the Van Kampen American Capital open-end funds was
accepted. Class B Shares of the AC Fund will convert automatically to Class A
Shares six years after the end of the calendar month in which the shareholder's
order to purchase was accepted. Class B Shares of the AC Fund acquired in the
Reorganization will remain subject to the contingent deferred sales charge and
conversion schedule applicable to Class B shares of the VK Fund. Unlike the VK
Fund, the AC Fund offers Class C Shares. Class C Shares may be purchased at net
asset value and are subject to a contingent deferred sales charge of 1.00% on
redemptions made within one year of purchase, which charge is reduced to zero
thereafter. Class C Shares convert automatically to Class A Shares ten years
after the end of the calendar month in which the shareholder's order to purchase
was accepted.

The minimum initial investment in Class A, B and C shares of the AC Fund
and the Class A and B shares of the VK Fund is $500, although shares of the AC
Fund acquired in connection with the Reorganization will not be subject to the
minimum investment limitation. The minimum subsequent investment in Class A, B
and C Shares of the AC Fund and Class A and B shares the VK Fund is $50. For a
complete description of these arrangements with respect to the AC Fund, see the
respective sections in the AC Fund's Prospectus and Statement of Additional
Information entitled "Purchase of Shares" and "Purchase and Redemption of
Shares." For a complete description of these arrangements with respect to the VK
Fund,

8
<PAGE> 15

see the respective sections in the VK Fund's Prospectus and Statement of
Additional Information entitled "Purchasing Shares of the Fund."

Shares of either the VK Fund or the AC Fund may be purchased by check, by
electronic transfer or by bank wire and offer exchange privileges among [almost
all] other Van Kampen American Capital open-end mutual funds distributed by VKAC
Distributors.

Shares of the AC Fund and the VK Fund properly presented for redemption may
be redeemed or exchanged at the next determined net asset value per share
(subject to any applicable deferred sales charge). Shares of either the VK Fund
or the AC Fund may be redeemed or exchanged by mail or by special redemption
privileges (telephone exchange, telephone redemption by check or electronic
transfer). If a shareholder of either fund attempts to redeem shares within 15
days after they have been purchased by check, the respective fund may delay
payment of the redemption proceeds until such fund can verify that payment for
the purchase of the shares has been (or will be) received. No further purchases
of the shares of the VK Fund may be made after the date on which the
shareholders of the VK Fund approve the Reorganization, and the stock transfer
books of the VK Fund will be permanently closed as of the date of Closing. Only
redemption requests and transfer instructions received in proper form by the
close of business on the day prior to the date of Closing will be fulfilled by
the VK Fund. Redemption requests or transfer instructions received by the VK
Fund after that date will be treated by the VK Fund as requests for the
redemption or instructions for transfer of the shares of the AC Fund credited to
the accounts of the shareholders of the VK Fund. Redemption requests or transfer
instructions received by the VK Fund after the close of business on the day
prior to the date of Closing will be forwarded to the AC Fund. For a complete
description of these redemption arrangements with respect to the AC Fund, see
the respective sections in the AC Fund's Prospectus and Statement of Additional
Information entitled "Redemption of Shares" and "Purchase and Redemption of
Shares." For a complete description of these redemption arrangements with
respect to the VK Fund, see the respective sections in the VK Fund's Prospectus
and Statement of Additional Information entitled "Redemption of Shares."

9
<PAGE> 16

The differences in the distribution, purchase and redemption procedures and
fee structure of the shares of the AC Fund and the shares of the VK Fund are
highlighted in the table below.

FEE COMPARISONS

<TABLE>
<CAPTION>
VK AC
CLASS A SHARES FUND* FUND** PRO FORMA
- ----------------------------------------------------------------- ------ ------- ---------
<S> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES FOR CLASS A SHARES
Maximum Sales Load Imposed on Purchase of a Share
(as a percentage of Offering Price)............................ None None None
Maximum Deferred Sales Charge
(as a percentage of the lower of the original purchase price or
redemption proceeds)........................................... None None None
ANNUAL FUND OPERATING EXPENSES FOR CLASS A SHARES
(as a percentage of average net assets)
Management Fees.................................................. 0.50% (1) 0.43% 0.43%
Rule 12b-1 Fees.................................................. 0.25% 0.14% 0.14%
Other Expenses................................................... 0.75% 0.36% 0.36%
Total Fund Operating Expenses (before waivers and
reimbursements)................................................ 1.50% (1) 0.93% 0.93%
Total Fund Operating Expenses (after waivers and
reimbursements)................................................ 1.03% 0.93% 0.93%
</TABLE>

<TABLE>
<CAPTION>
CLASS B SHARES
- -----------------------------------------------------------------
<S> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES FOR CLASS B SHARES
Maximum Sales Load Imposed on Purchase of a Share
(as a percentage of Offering Price)............................ None None None
Maximum Deferred Sales Charge
(as a percentage of the lower of the original purchase price or
redemption proceeds)........................................... 3.00% (3) 4.00%(4) 4.00%
ANNUAL FUND OPERATING EXPENSES FOR CLASS B SHARES
(as a percentage of average net assets)
Management Fees.................................................. 0.50% (1) 0.43% 0.43%
Rule 12b-1 Fees.................................................. 1.00% 0.90% 0.90%
Other Expenses................................................... 0.77% 0.36% 0.36%
Total Fund Operating Expenses (before waivers and
reimbursements)................................................ 2.27% (1) 1.69% 1.69%
Total Fund Operating Expenses (after waivers and
reimbursements)................................................ 1.80% 1.69% 1.69%
</TABLE>

<TABLE>
<CAPTION>
CLASS C SHARES
- -----------------------------------------------------------------
<S> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES FOR CLASS C SHARES
Maximum Sales Load Imposed on Purchase of a Share
(as a percentage of Offering Price)............................ N/A None None
Maximum Deferred Sales Charge
(as a percentage of the lower of the original purchase price or
redemption proceeds)........................................... N/A 1.00%(4) 1.00%
ANNUAL FUND OPERATING EXPENSES FOR CLASS C SHARES
(as a percentage of average net assets)
Management Fees.................................................. N/A 0.43% 0.43%
Rule 12b-1 Fees.................................................. N/A 0.90% 0.90%
Other Expenses................................................... N/A 0.36% 0.36%
Total Fund Operating Expenses (before waivers and
reimbursements)................................................ N/A 1.69% 1.69%
Total Fund Operating Expenses (after waivers and
reimbursements)................................................ N/A 1.69% 1.69%
</TABLE>

- ---------------
(1) Before voluntary expense waiver. After application of the expense waiver,
Management Fees would be 0.03% for each class of shares, and Total Fund
Operating Expenses would be 1.03% and 1.80% for Class A and B shares,
respectively.

10
<PAGE> 17

(2) Class B and C shares of the AC Fund became available for purchase May 1,
1995 and therefore expenses related to these shares have been estimated.
(3) Class B shares of the VK Fund are subject to a contingent deferred sales
charge equal to 3.00% of the lesser of the then current net asset value or
the original purchase price on Class B shares redeemed during the first year
after purchase, which charge is reduced each year thereafter to zero over a
four year period as follows: Year 1 -- 3.00%; Year 2 -- 2.00%; Year 3 --
1.00%; Year 4 -- 0.00%.
(4) Class B shares of the AC Fund are subject to a contingent deferred sales
charge equal to 4.00% of the lesser of the then current net asset value or
the original purchase price on Class B shares redeemed during the first year
after purchase, which charge is reduced each year thereafter to zero over a
six year period as follows: Year 1 -- 4.00%; Year 2 -- 4.00%; Year 3 --
3.00%; Year 4 -- 2.50%; Year 5 -- 1.50%; Year 6 -- 0.00%. Class C shares of
the AC Fund are subject to a contingent deferred sales charge equal to 1.00%
of the lesser of the then current net asset value or the original purchase
price on Class C shares redeemed during the first year after purchase, which
charge is reduced to zero thereafter.
* For the semi-annual period ended December 31, 1994 on an annualized basis.
** For the semi-annual period ended November 30, 1994 on an annualized basis.

FEDERAL INCOME TAX CONSEQUENCES

The Reorganization is intended to qualify as a "reorganization" within the
meaning of Section 368(a)(1)(C) of the Internal Revenue Code of 1986, as amended
(the "Code"). If the Reorganization so qualifies, in general a shareholder of
the VK Fund will recognize no gain or loss upon the receipt solely of the shares
of the AC Fund pursuant to the Reorganization. Additionally, the VK Fund would
not recognize any gain or loss as a result of the exchange of all of its assets
for the shares of the AC Fund or as a result of its liquidation. The AC Fund
expects that it will not recognize any gain or loss as a result of the
Reorganization, that it will take a carryover basis in the assets acquired from
the VK Fund and that its holding period of such assets will include the period
during which the assets were held by the VK Fund. See "The Proposed
Reorganization -- Federal Income Tax Consequences."

The above information is only a summary of more complete information
contained in this Proxy Statement/Prospectus and the related Statement of
Additional Information.

REASONS FOR THE PROPOSED REORGANIZATION

On December 20, 1994, The Van Kampen Merritt Companies, Inc. acquired from
The Travelers Inc. all of the outstanding capital stock of American Capital
Management & Research, Inc., the parent company of the AC Adviser. Immediately
after the acquisition, American Capital Management & Research, Inc. was merged
into The Van Kampen Merritt Companies, Inc. and the combined entity was renamed
Van Kampen American Capital, Inc. ("VKAC"). The VK Adviser and the AC Adviser
currently are each wholly-owned subsidiaries of VKAC.

On February 10, 1995, the VK Board and the AC Board held a joint meeting to
discuss with management ("Management") of the VK Adviser and the AC Adviser the
costs and potential benefits to shareholders of, among other things, (i)
combining certain funds advised by the VK Adviser and the AC Adviser, including
the VK Fund and the AC Fund in order to achieve certain economies of scale and
efficiencies, (ii) permitting exchangeability of shares between funds advised by
the VK Adviser and the AC Adviser, (iii) selecting a common transfer agent to
facilitate exchangeability and enhance shareholder services, and (iv)
consolidating the VK Board and the AC Board into a combined board of trustees
(collectively, the "Consolidation").

11
<PAGE> 18

The VK Board and the AC Board created a joint committee (the "Joint
Committee") to consider the possible costs and benefits to shareholders
associated with the proposed Consolidation, including the combination of the VK
Fund and the AC Fund. The Joint Committee held meetings on February 20, 1995,
March 27, 1995 and April 3, 1995 to consider issues relating to the
Consolidation, review information requested from and provided by Management and
review information requested from and provided by third-party analytical
services.

The VK Board and the AC Board held joint meetings on March 14, 1995 and
April 6-7, 1995 to review the findings and recommendations of the Joint
Committee. The VK Board approved each element of the Consolidation, including
the combination of the VK Fund and the AC Fund on April 7, 1995, subject to
approval of the Consolidation by the AC Board. The AC Board met on May 11, 1995,
and unanimously approved each element of the Consolidation, including the
combination of the VK Fund and the AC Fund. Each of the VK Board and the AC
Board also approved submitting the necessary proposals to the respective
shareholders of the VK Fund and the AC Fund to effect the Consolidation.

At separate shareholder meetings held on July 21, 1995, shareholders of the
VK Fund and the AC Fund approved the reorganization of the VK Fund and the AC
Fund into Delaware business trusts (or series thereof) and the combination of
the VK Board and the AC Board. Shareholders of the VK Fund are now being asked
to approve its combination with the AC Fund in order to (i) eliminate the
duplication of services that currently exists as a result of the separate
operations of the funds, (ii) achieve economies of scale by combining the assets
of the funds and (iii) potentially reduce transaction costs and obtain greater
portfolio diversity.

In connection with approving the combination of the VK Fund with the AC
Fund, the VK Board considered the costs resulting from the separate operations
of the AC Fund and the VK Fund in light of their substantially similar
investment objectives, policies and restrictions. The VK Board also considered
the potential expense savings, economies of scale, reduced per-share expenses
and benefits to the portfolio management process that could result from
combining the assets and operations of the AC Fund and the VK Fund. In this
regard, the VK Board reviewed information provided by the AC Adviser, VK Adviser
and VKAC Distributors relating to the anticipated cost savings to the
shareholders of the AC Fund and the VK Fund as a result of the Reorganization.

In particular, the VK Board considered the probability that the elimination
of duplicative operations and the increase in asset levels of the AC Fund after
the Reorganization would result in the following benefits for investors,
although there can, of course, be no assurances in this regard:

(1) ELIMINATION OF SEPARATE OPERATIONS. Consolidating the VK Fund and
the AC Fund should eliminate the duplication of services that currently
exists as a result of their separate operations. For example, currently the
VK Fund and the AC Fund are managed separately by different affiliated
investment advisers. Consolidating the separate operations of the VK Fund
with those of the AC Fund should promote more efficient operations on a
more cost-effective basis.

(2) ACHIEVEMENT OF REDUCED PER SHARE EXPENSES AND ECONOMIES OF
SCALE. Combining the assets of the VK Fund with the assets of the AC Fund
also should lead to reduced expenses, on a per share basis, by allowing
fixed and relatively fixed costs, such as accounting, legal and printing
expenses, to be spread over a larger asset base. An increase in the net
asset levels of the AC Fund also could result in achieving future economies
of scale, which should also reduce per share expenses. Any significant
reductions in expenses on a per share basis should, in turn, have a
favorable effect on the relative total return of the AC Fund.

12
<PAGE> 19

(3) BENEFITS TO THE PORTFOLIO MANAGEMENT PROCESS. Higher net asset
levels also should enable the AC Fund to purchase larger individual
portfolio investments that may result in reduced transaction costs and/or
other more favorable pricing and provide the opportunity for greater
portfolio diversity.

In determining whether to recommend approval of the Reorganization to
shareholders of the VK Fund, the VK Board considered a number of factors,
including, but not limited to: (1) capabilities and resources of AC Adviser and
other service providers to the AC Fund in the areas of marketing, investment and
shareholder services; (2) expenses and advisory fees applicable to the VK Fund
and the AC Fund and the estimated expense ratios of the AC Fund after the
Reorganization; (3) the comparative investment performance of the VK Fund and
the AC Fund, as well as the performance of the AC Fund compared to its peers;
(4) the terms and conditions of the Agreement and whether the Reorganization
would result in dilution of the VK Fund shareholder interests; (5) the
advantages of eliminating the competition and duplication of effort inherent in
marketing two funds having similar investment objectives, in addition to the
economies of scale realized through the combination of the two funds; (6) the
compatibility of the funds' service features available to shareholders,
including the retention of applicable holding periods and exchange privileges;
(7) the costs estimated to be incurred by the funds as a result of the
Reorganization; and (8) the intended tax consequences of the Reorganization.
Based upon these factors, the VK Board unanimously determined that the
Reorganization is in the best interests of the shareholders of the VK Fund.

B. RISK FACTORS

NATURE OF INVESTMENT

Each of the AC Fund and the VK Fund invest primarily in U.S. dollar
denominated money market securities consisting of obligations of the U.S.
Government and its agencies, bank obligations, commercial paper and repurchase
agreements. Investment in either of the AC Fund or the VK Fund may not be
appropriate for all investors. The investment objectives and policies of the AC
Fund and the VK Fund, and the risks associated with an investment in either
Fund, are substantially similar. For additional information see the respective
sections of the AC Fund's Prospectus and Statement of Additional Information
entitled "Investment Objectives and Policies" and "Investment Practices and
Restrictions" and the respective sections of the VK Fund's Prospectus and
Statement of Additional Information entitled "Investment Objectives and
Policies" and "Investment Practices."

C. INFORMATION ABOUT THE FUNDS

AC Fund. Information about the AC Fund is included in its current
Prospectus dated [ ], 1995, which accompanies this Proxy
Statement/Prospectus. Additional information about the AC Fund is included in
its current Statement of Additional Information dated the same date as the AC
Fund Prospectus. Copies of AC Fund Statement of Additional Information may be
obtained without charge by calling (800) 421-5666. The AC Fund files proxy
material, reports and other information with the SEC. These reports can be
inspected and copied at the Public Reference Facilities maintained by the SEC at
450 Fifth Street, N.W., Washington, D.C. 20549. Copies of such material can also
be obtained from the Public Reference Branch, Office of Consumer Affairs and
Information Services, Securities and Exchange Commission, Washington, D.C. 20549
at prescribed rates.

VK Fund. Information about the VK Fund is included in its current
Prospectus dated [ ], 1995. Additional information about the VK
Fund is included in its Statement of Additional Information dated the same date
as the VK Fund Prospectus. Copies of the VK Fund Statement of Additional
Information may

13
<PAGE> 20

be obtained without charge by calling (800) 225-2222, ext. 6504. The VK Fund
files proxy material, reports and other information with the SEC. These reports
can be inspected and copied at the Public Reference Facilities maintained by the
SEC at 450 Fifth Street, N.W., Washington, D.C. 20549. Copies of such material
can also be obtained from the Public Reference Branch, Office of Consumer
Affairs and Information Services, SEC, Washington, D.C. 20549 at prescribed
rates.

As Delaware business trusts, or series thereof, each of the AC Fund and the
VK Fund are governed by their respective Agreements and Declarations of Trust
(each, a "Declaration"), their respective Bylaws and applicable Delaware law.

D. THE PROPOSED REORGANIZATION

The material features of the Agreement are summarized below. This summary
does not purport to be complete and is subject in all respects to the provisions
of, and is qualified in its entirety by reference to, the Agreement, a copy of
which is attached hereto as Exhibit A. The affirmative vote of a majority of the
outstanding shares entitled to vote is required to approve the Reorganization at
a meeting of shareholders at which a quorum is present.

TERMS OF THE AGREEMENT

Pursuant to the Agreement, the AC Fund will acquire all of the assets and
the liabilities of the VK Fund on the Closing Date in exchange for Class A and B
shares, respectively, of the AC Fund.

Subject to VK Fund shareholder approval of the Reorganization, the closing
(the "Closing") will occur within fifteen (15) business days after the receipt
of all necessary regulatory approvals and the final adjournment of the Special
Meeting or such later date as soon as practicable thereafter as the AC Fund and
the VK Fund may mutually agree.

On the date of Closing, the VK Fund will transfer to the AC Fund all of the
assets and liabilities of the VK Fund. The AC Fund will in turn transfer to the
VK Fund a number of Class A and B Shares, respectively, of the AC Fund equal in
value to the net assets of the VK Fund transferred to the AC Fund as of the date
of Closing as determined in accordance with the valuation method described in
the AC Fund's then current prospectus.

The VK Fund will distribute the Class A and B Shares, respectively, of the
AC Fund to the shareholders of the VK Fund promptly after the Closing and the VK
Fund will then dissolve pursuant to a plan of liquidation and dissolution
adopted by the VK Board.

The VK Fund and the AC Fund have made certain standard representations and
warranties to each other regarding their respective capitalization, status and
conduct of business.

Unless waived in accordance with the Agreement, the obligations of the
parties to the Agreement are conditioned upon, among other things:

1. approval of the Reorganization by the VK Fund's shareholders;

2. the absence of any rule, regulation, order, injunction or
governmental proceeding preventing or seeking to prevent the
consummation of the transactions anticipated by the Agreement;

3. the receipt of all necessary approvals, registrations and
exemptions under federal and state securities laws;

14
<PAGE> 21

4. the truth in all material respects as of the Closing of the
representations and warranties of the parties and performance and
compliance in all material respects with the parties' agreements,
obligations and covenants required by the agreements;

5. the effectiveness under applicable law of the registration
statement of the AC Fund of which this Proxy Statement/Prospectus
forms a part and obtaining of any approvals, registrations or
exemptions under federal and state securities laws; and

6. receipt of opinions of counsel relating to, among other things, the
tax free nature of the Reorganization.

The Agreement may be terminated or amended by the mutual consent of the
parties either before or after approval thereof by the shareholders of the VK
Fund, provided that no such amendment after such approval shall be made if it
would have a material adverse effect on the interests of VK Fund shareholders.
The Agreement may also be terminated by the non-breaching party if there has
been a material misrepresentation, material breach of any representation or
warranty, material breach of contract or failure of any condition to Closing.

The VK Board recommends that you vote to approve the Reorganization, as it
believes the Reorganization is in the best interests of the VK Fund's
shareholders and that the interests of the VK Fund's existing shareholders will
not be diluted as a result of consummation of the proposed Reorganization.

DESCRIPTION OF SECURITIES TO BE ISSUED

SHARES OF BENEFICIAL INTEREST

Beneficial interests in the AC Fund being offered hereby are represented by
transferable Class A and B Shares, par value $.01 per share. The AC Fund's
Declaration permits the trustees, as they deem necessary or desirable, to create
one or more separate investment portfolios and to issue a separate series of
shares for each portfolio and, subject to compliance with the Act, to further
sub-divide the shares of a series into one or more class of shares for such
portfolio.

VOTING RIGHTS OF SHAREHOLDERS

Holders of shares of the AC Fund are entitled to one vote per share on
matters as to which they are entitled to vote. The Declaration of the VKAC Money
Market Trust and the Declaration of the AC Fund are substantially identical,
except that the Declaration of the VKAC Money Market Trust permits the VK Board
or shareholders to remove a trustee with or without cause by the act of
two-thirds of such trustees or shareholders, respectively. The Declaration of
the AC Fund permits (i) the AC Board to remove a trustee with cause by the act
of two-thirds of the trustees and (ii) shareholders holding a majority of the
shares of each series outstanding to remove a trustee with or without cause. The
Declaration of the AC Fund also requires the approval of 80% of the trustees in
office or majority vote of the shares of each series then outstanding to amend
these provisions.

Each of the AC Fund and the VK Fund operate as a diversified, open-end
management investment company registered with the SEC under the Act. Therefore,
in addition to the specific voting rights described above, shareholders of the
AC Fund, as well as shareholders of the VK Fund, are entitled, under current
law, to vote with respect to certain other matters, including changes in
fundamental investment policies and restrictions and the ratification of the
selection of independent auditors. Moreover, under the Act, shareholders owning
not less than 10% of the outstanding shares of the AC Fund or VK Fund may
request that the

15
<PAGE> 22

respective board of trustees call a shareholders' meeting for the purpose of
voting upon the removal of trustee(s).

CONTINUATION OF SHAREHOLDER ACCOUNTS AND PLANS; SHARE CERTIFICATES

If the Reorganization is approved, the AC Fund will establish an account
for each VK Fund shareholder containing the appropriate number of shares of the
AC Fund. The shareholder services and shareholder programs of the VK Fund and
the AC Fund have already been substantially conformed as part of the
Consolidation. Shareholders of the VK Fund who are accumulating VK Fund shares
under the dividend reinvestment plan, or who are receiving payment under the
systematic withdrawal plan with respect to VK Fund shares, will retain the same
rights and privileges after the Reorganization in connection with the AC Fund
Class A and B Shares, respectively, received in the Reorganization through
substantially similar plans maintained by the AC Fund. In the case of shares of
the VK Fund held in IRA accounts, the corresponding shares of the AC Fund will
be credited to a new IRA account maintained in the name of the shareholder by
Van Kampen American Capital Trust Company, an affiliate of VKAC that acts as the
custodian of IRA accounts for VKAC Distributors-sponsored open-end management
mutual funds. Such IRA investors will be sent appropriate documentation to
confirm Van Kampen American Capital Trust Company's custodianship.

It will not be necessary for shareholders of the VK Fund to whom
certificates have been issued to surrender their certificates. Upon liquidation
of the VK Fund, such certificates will become null and void.

FEDERAL INCOME TAX CONSEQUENCES

The following is a general discussion of the material federal income tax
consequences of the Reorganization to shareholders of the VK Fund and
shareholders of the AC Fund. It is based upon the Code, Treasury regulations,
judicial authorities, published positions of the Internal Revenue Service (the
"Service") and other relevant authorities, all as in effect on the date hereof
and all of which are subject to change or different interpretations (possibly on
a retroactive basis). This summary is limited to shareholders who hold their VK
Fund shares as capital assets. No advance rulings have been or will be sought
from the Service regarding any matter discussed in this Proxy
Statement/Prospectus. Accordingly, no assurances can be given that the Service
could not successfully challenge the intended federal income tax treatment
described below. Shareholders should consult their own tax advisors to determine
the specific federal income tax consequences of all transactions relating to the
Reorganization, as well as the effects of state, local and foreign tax laws.

The Reorganization is intended to qualify as a "reorganization" within the
meaning of Section 368(a)(1)(C) of the Code. It is a condition to closing that
the VK Fund receive an opinion from Skadden, Arps, Slate, Meagher & Flom to the
effect that for federal income tax purposes:

1. The acquisition and assumption by the AC Fund of the assets and
liabilities of the VK Fund in exchange solely for Class A or B Shares of the AC
Fund will qualify as a tax-free reorganization within the meaning of Section
368(a)(1)(C) of the Code.

2. No gain or loss will be recognized by the VK Fund or the AC Fund upon
the transfer to, and assumption by, the AC Fund of the assets and liabilities of
the VK Fund in exchange solely for the Class A or B Shares of the AC Fund.

3. The AC Fund's basis in the VK Fund assets received in the Reorganization
will, in each instance, equal the basis of such assets in the hands of the AC
Fund immediately prior to the transfer, and the AC

16
<PAGE> 23

Fund's holding period of such assets will, in each instance, include the period
during which the assets were held by the VK Fund.

4. No gain or loss will be recognized by the shareholders of the VK Fund
upon the exchange of their shares of the VK Fund solely for the Class A or B
Shares, respectively, of the AC Fund.

5. The tax basis of the Class A and B Shares of the AC Fund received by the
shareholders of the VK Fund will be the same as the tax basis of the shares of
the VK Fund surrendered in exchange therefor.

6. The holding period of the Class A and B Shares of the AC Fund received
by the shareholders of the VK Fund will include the holding period of the shares
of the VK Fund surrendered in exchange therefor.

In rendering its opinion, Skadden, Arps, Slate, Meagher & Flom may rely
upon certain representations of the management of the VK Fund and the AC Fund
and it has assumed, for purposes of such opinion, that the Reorganization will
be consummated as described in the Agreement and that redemptions of shares of
the VK Fund occurring prior to the Closing will consist solely of redemptions in
the ordinary course of business.

The AC Fund intends to be taxed under the rules applicable to regulated
investment companies as defined in Section 851 of the Code, which are the same
rules currently applicable to the VK Fund and its shareholders.

17
<PAGE> 24

CAPITALIZATION

The following table sets forth the capitalization of the VK Fund and the AC
Fund as of March 31, 1995 and the pro forma combined capitalization of both as
if the Reorganization had occurred on that date. These numbers may differ at the
time of Closing.

CAPITALIZATION TABLE AS OF MARCH 31, 1995

<TABLE>
<CAPTION>
VK FUND AC FUND PRO FORMA
------------ ---------------- --------------
<S> <C> <C> <C>
NET ASSETS
Class A Shares.............................. $27,638,953 $362,049,597 $ 389,688,550
Class B Shares.............................. 7,100,811 (1) 7,100,811
Class C Shares.............................. N/A (1) (1)
------------ ------------ --------------
Total....................................... $34,739,764 $362,049,597 $ 396,789,361
=========== ============ ==============
NET ASSET VALUE PER SHARE
Class A Shares.............................. $1.00 $1.00 $1.00
Class B Shares.............................. 1.00 (1) 1.00
Class C Shares.............................. N/A (1) (1)
SHARES OUTSTANDING
Class A Shares.............................. 27,711,230 362,049,416 389,760,646
Class B Shares.............................. 7,101,176 (1) 7,101,176
Class C Shares.............................. N/A (1) (1)
------------ ------------ --------------
Total....................................... 34,812,406 362,049,416 396,861,822
=========== ============ ==============
SHARES AUTHORIZED
Class A Shares.............................. Unlimited Unlimited Unlimited
Class B Shares.............................. Unlimited Unlimited Unlimited
Class C Shares.............................. N/A Unlimited Unlimited
</TABLE>

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

(1) Class B and C Shares of the AC Fund became available for purchase May 1,
1995.

COMPARATIVE PERFORMANCE INFORMATION

The average annual total return for the VK Fund for the one-year,
three-year, five-year and ten-year periods ended March 31, 1995 and for the
period beginning April 22, 1983 (the date Class A Shares of the VK Fund were
first offered for sale to the public) through March 31, 1995 in respect to the
Class A Shares were 3.98%, 2.93%, 4.17%, 5.63% and 6.26%, respectively. The
average annual total return for the VK Fund for the period beginning July 11,
1994 (the date Class B Shares of the VK Fund were first offered for sale to the
public) through March 31, 1995 in respect to Class B Shares was 3.38%. The
average annual total return for the AC Fund for the one-year, three-year,
five-year and ten-year periods ended March 31, 1995 and for the period beginning
July 12, 1974 (the date Class A Shares of the AC Fund were first offered for
sale to the public) through March 31, 1995 were 4.08%, 2.94%, 4.11%, 5.71% and
7.64%, respectively for Class A Shares. The AC Fund's annualized current yield
for the seven day period ending March 31, 1995 was 5.10% (its compound effective
yield for the same period was 5.23%).

18
<PAGE> 25

The total return figures above assume reinvestment of all dividends and
distributions. They are not necessarily indicative of future results. The
performance of a fund is a result of conditions in the securities markets,
portfolio management and operating expenses. Although information such as that
shown above is useful in reviewing a fund's performance and in providing some
basis for comparison with other investment alternatives, it should not be used
for comparison with other investments using different reinvestment assumptions
or time periods.

RATIFICATION OF INVESTMENT OBJECTIVE, POLICIES AND RESTRICTIONS OF THE AC FUND

Approval of the Reorganization will constitute the ratification by VK Fund
shareholders of the investment objectives, policies and restrictions of the AC
Fund. For a discussion of the investment objective, policies and restrictions of
the AC Fund, see "Summary -- Comparisons of the AC Fund and the VK Fund" and the
AC Fund Prospectus accompanying this Proxy Statement/Prospectus. Approval of the
Reorganization will constitute approval of amendments to any of the fundamental
investment restrictions of the VK Fund that might otherwise be interpreted as
impeding the Reorganization, but solely for the purpose of and to the extent
necessary for, consummation of the Reorganization.

LEGAL MATTERS

Certain legal matters concerning the issuance of Class A and B Shares of
the AC Fund will be passed on by O'Melveny & Myers, 400 South Hope Street, Los
Angeles, California 90071, counsel to the AC Fund. Lawrence J. Sheehan, a former
partner of, and currently of counsel to, O'Melveny & Myers, is a Trustee of the
AC Fund. On July 21, 1995, Mr. Sheehan was elected as a Trustee of the VK Fund.

Certain legal matters concerning the federal income tax consequences of the
Reorganization will be passed upon by Skadden, Arps, Slate, Meagher & Flom, 333
West Wacker Drive, Chicago, Illinois 60606, counsel to the VKAC Money Market
Trust and the VK Fund. Wayne W. Whalen, a partner of Skadden, Arps, Slate,
Meagher & Flom, is a Trustee of the VKAC Money Market Trust. On July 21, 1995,
Mr. Whalen was elected as a Trustee of the AC Fund.

EXPENSES

The expenses of the Reorganization, including expenses incurred by the VK
Fund will be borne by AC Adviser. Accordingly, the VK Fund and its shareholders
will not bear any expenses of the Reorganization. The VK Board has determined
that the arrangements regarding the payment of expenses and other charges
relating to the Reorganization are fair and equitable.

F. RECOMMENDATION OF BOARD OF TRUSTEES

The VK Board has unanimously approved the Agreement and has determined that
participation in the Reorganization is in the best interests of the shareholders
of the VK Fund. THE VK BOARD RECOMMENDS VOTING FOR APPROVAL OF THE PROPOSED
REORGANIZATION.

OTHER MATTERS THAT MAY COME BEFORE THE MEETING

It is not anticipated that any action will be asked of the shareholders of
the VK Fund other than as indicated above, but if other matters are properly
brought before the Special Meeting, it is intended that the persons named in the
proxy will vote in accordance with their judgment.

19
<PAGE> 26

OTHER INFORMATION

A. SHAREHOLDINGS OF THE VK FUND AND THE AC FUND

At the close of business on [ ], 1995, the record date (the
"Record Date") for the Special Meeting, there were [ ] Class A, [ ] and
Class B Shares, respectively of the VK Fund outstanding and entitled to vote at
the meeting. As of the Record Date, the following persons owned of record or
beneficially [5% or more of the VK Fund's Class A Shares; Novell Incorporated,
Attn: Darcy Mott, Treasurer, 122 East 1700 South, Provo, Utah, 84606-7379, 17%].
To the knowledge of the VK Fund as of the Record Date the following persons
owned of record or beneficially 5% or more of the VK Fund's Class B shares:
[Prudential Securities FBO Joann Dambacher, 5 Long Hill Court, Medford, NJ,
08055-9319, 11%; Prudential Securities FBO Rhonda Jacoby, Trustee, Rhoda Jacoby
Grantor Trust, VA DTD 12/21/88, 452 Copper Beech Circle, Elkins Park, PA 19117,
9%; State Street Bank and Trust Co., IRA R/O Willie Mae H. Dailey, 513 E.
Northern Ave., Crowley, LA 70526-2941, 8%; State Street Bank & Trust Co., IRA
A/C Edward C. Piloske, 6663 Clearbrook Dr., Nashville, TN 37205-3944, 7% and
Lynn T. Farmer, Arlene M. Farmer, JTWROS, 114 Tanya Way, Roseville, CN
95661-5627, 5%.

At the close of business on the Record Date, there were [ ] Class A,
[ ] Class B and [ ] Class C shares of the AC Fund outstanding. As of the
Record Date, no person was known by the AC Fund to own of record or
"beneficially" five percent or more of any class of outstanding shares of the AC
Fund as determined in accordance with Rule 13d-3 under the Securities Exchange
Act of 1934.

The amount of the VK Fund shares owned by the trustees and officers of the
VK Fund as a group as of [ ], 1995 was [ ] Class A and [ ] Class
B shares, respectively, or [ ]% of Class A and [ ]% of Class B of the VK
Fund's outstanding shares. No trustee or officer of the VK Fund owned in excess
of 1% of the VK Fund Shares as of such date. The amount of the AC Fund shares
owned by the trustees and officers of the AC Fund as a group as of
[ ], 1995 was [ ] Class A, [ ] Class B and [ ] Class C shares.
No Trustee or officer of the AC Fund owned in excess of 1% of the AC Fund
Shares.

B. SHAREHOLDER PROPOSALS

As a general matter, the VK Fund does not intend to hold future regular
annual or special meetings of shareholders unless required by the Act. Any
shareholder who wishes to submit proposals for consideration at a meeting of
shareholders of the VK Fund should send such proposal to the VK Fund at One
Parkview Plaza, Oakbrook Terrace, Illinois 60181. To be considered for
presentation at a shareholders' meeting, rules promulgated by the SEC require
that, among other things, a shareholder's proposal must be received at the
offices of the AC Fund a reasonable time before a solicitation is made. Timely
submission of a proposal does not necessarily mean that such proposal will be so
presented.

VOTING INFORMATION AND REQUIREMENTS

Each valid proxy given by a shareholder of the VK Fund will be voted by the
persons named in the proxy in accordance with the designation on such proxy on
the Reorganization proposal and as the persons named in the proxy may determine
on such other business as may come before the Special Meeting on which
shareholders are entitled to vote. If no designation is made, the proxy will be
voted by the persons named in the proxy as recommended by the VK Board "FOR"
approval of the Reorganization.

20
<PAGE> 27

Shareholders who execute proxies may revoke them at any time before they
are voted by filing with the VK Fund a written notice of revocation, by
delivering a duly executed proxy bearing a later date, or by attending the
Special Meeting and voting in person.

The giving of a proxy will not affect your right to vote in person if you
attend the Special Meeting and wish to do so.

The presence in person or by proxy of the holders of a majority of the
outstanding shares entitled to vote is required to constitute a quorum at the
Special Meeting. Approval of the Reorganization will require the favorable vote
of the holders of a majority of the outstanding shares of the VK Fund voted at
the meeting. Shares not voted with respect to a proposal due to an abstention or
broker non-vote will be deemed votes not cast with respect to such proposal, but
such shares will be deemed present for quorum purposes.

In the event that sufficient votes in favor of the Reorganization are not
received by the scheduled time of the Special Meeting, the persons named in the
proxy may propose and vote in favor of one or more adjournments of the Special
Meeting to permit further solicitation of proxies. If sufficient shares were
present to constitute a quorum, but insufficient votes had been cast in favor of
the Reorganization to approve it, proxies would be voted in favor of adjournment
only if the VK Board determined that adjournment and additional solicitation was
reasonable and in the best interest of the shareholders of the VK Fund, taking
into account the nature of the proposal, the percentage of the votes actually
cast, the percentage of negative votes, the nature of any further solicitation
that might be made and the information provided to shareholders about the
reasons for additional solicitation. Any such adjournment will require the
affirmative vote of the holders of a majority of the shares voted at the session
of the Special Meeting to be adjourned.

Proxies of shareholders of the VK Fund are solicited by the VK Board of the
VK Fund. The cost of solicitation will be paid by AC Adviser. Additional
solicitation may be made by mail, personal interview, telephone, facsimile and
telegraph by personnel of the VK Fund or VK Adviser who will not be additionally
compensated therefor.

[ ], 1995

PLEASE SIGN AND RETURN YOUR PROXY PROMPTLY.

21
<PAGE> 28

VAN KAMPEN AMERICAN CAPITAL RESERVE FUND
2800 Post Oak Boulevard
Houston, TX 77056
(800) 421-5666
------------------------

Statement of Additional Information
Dated [ ], 1995
------------------------

This Statement of Additional Information provides information about the Van
Kampen American Capital Reserve Fund (the "AC Fund"), an open-end management
investment company, in addition to information contained in the Proxy
Statement/Prospectus of the AC Fund, dated [ ], 1995, which also
serves as the Proxy Statement of the Van Kampen American Capital Money Market
Fund, a series of the Van Kampen American Capital Money Market Trust (the "VKAC
Trust"), in connection with the issuance of shares of the AC Fund to
shareholders of the VK Fund. This Statement of Additional Information is not a
prospectus. It should be read in conjunction with the Proxy
Statement/Prospectus, into which it has been incorporated by reference and
which may be obtained by contacting the VK Fund located at One Parkview Plaza,
Oakbrook Terrace, Illinois 60181, telephone no. (708) 684-6000 or (800)
341-2911 or the AC Fund located at 2800 Post Oak Boulevard, Houston, Texas
77056 (telephone no. (800) 421-5666).

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Proposed Reorganization of the VK Fund................................................ 2
Additional Information About the AC Fund.............................................. 2
Additional Information About the VK Fund.............................................. 2
Financial Statements.................................................................. 2
Pro Forma Financial Statements........................................................ 2
</TABLE>

The AC Fund will provide, without charge, upon the written or oral request
of any person to whom this Statement of Additional Information is delivered, a
copy of any and all documents that have been incorporated by reference in the
registration statement of which this Statement of Additional Information is a
part.

1
<PAGE> 29

PROPOSED REORGANIZATION OF THE VK FUND

The shareholders of the VK Fund are being asked to approve an acquisition
of all the assets and liabilities of the VK Fund in exchange for shares of the
AC Fund (the "Reorganization").

For detailed information about the Reorganization, shareholders should
refer to the Proxy Statement/ Prospectus.

ADDITIONAL INFORMATION ABOUT THE AC FUND

Incorporated herein by reference to the Statement of Additional Information
of the AC Fund, dated [ ], 1995, attached as Appendix A to this
Statement of Additional Information.

ADDITIONAL INFORMATION ABOUT THE VK FUND

Incorporated herein by reference to the Statement of Additional Information
of the VK Fund, dated [ ], 1995, attached as Appendix B to this
Statement of Additional Information.

FINANCIAL STATEMENTS

Incorporated herein by reference in its entirety is (i) the audited
financial statements of the AC Fund for fiscal year ended May 31, 1994, attached
as Appendix C to this Statement of Additional Information, (ii) the unaudited
semi-annual financial statements of the AC Fund for the six months ended
November 30, 1994, attached as Appendix D to this Statement of Additional
Information, (iii) the audited financial statements of the VK Fund for fiscal
year ended June 30, 1994, attached as Appendix E to this Statement of Additional
Information and (iv) the unaudited semi-annual financial statements of the VK
Fund for the six months ended December 31, 1994, attached as Appendix F to this
Statement of Additional Information.

The unaudited semi-annual financial statements of the AC Fund and the VK
Fund, respectively, reflect all adjustments which are, in the opinion of
management, necessary to a fair statement of the results for the interim periods
presented. All such adjustments are of a normal recurring nature.

PRO FORMA FINANCIAL STATEMENTS

In connection with the Reorganization, the AC Fund will acquire all of the
assets and liabilities of the VK Fund in exchange for a number of shares of the
AC Fund equal to the value of the net assets of the VK Fund being acquired.
Based on the respective net assets of the AC Fund and the VK Fund as of
[ ], 1995, the net asset value of the VK Fund does not exceed ten
(10%) percent of the AC Fund's net assets. Accordingly, pro forma financial
statements are not included herein.

2
<PAGE> 30

APPENDIX A

VAN KAMPEN AMERICAN CAPITAL
RESERVE FUND
STATEMENT OF ADDITIONAL INFORMATION
DATED [ ], 1995

[TO COME]

A-1
<PAGE> 31

APPENDIX B

VAN KAMPEN AMERICAN CAPITAL
MONEY MARKET FUND
STATEMENT OF ADDITIONAL INFORMATION
DATED [ ], 1995

[TO COME]

B-1
<PAGE> 32

APPENDIX C

AMERICAN CAPITAL RESERVE FUND

INVESTMENT PORTFOLIO
May 31, 1994

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

<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
- -----------------------------------------------------------------------------------------------
<S> <C> <C>
COMMERCIAL PAPER 35.4%
$22,000,000 Chevron Oil Finance Co., 4.26%, 6/15/94............................ $ 21,961,042
24,000,000 General Electric Capital Corp., 4.30%, 6/17/94..................... 23,951,493
22,000,000 General Electric Co., 4.25%, 6/20/94............................... 21,948,300
9,387,000 MetLife Funding, Inc., 4.24%, 6/23/94.............................. 9,361,632
21,000,000 Raytheon Co., 4.24%, 6/24/94....................................... 20,940,920
20,000,000 State Bank of New South Wales, 4.27%, 6/27/94...................... 19,936,250
22,000,000 Toronto Dominion Holdings, 4.25%, 6/20/94.......................... 21,948,300
24,000,000 Wal-Mart Stores, Inc., 4.26%, 6/2/94............................... 23,994,333
------------
TOTAL COMMERCIAL PAPER (Cost $164,042,270)......................... 164,042,270
------------
UNITED STATES AGENCY AND GOVERNMENT OBLIGATIONS 25.1%
31,810,000 Federal Home Loan Banks, 4.11% to 4.20%, 6/2/94 to 6/23/94......... 31,741,525
65,000,000 Federal Home Loan Mortgage Corp., 4.21%, 6/27/94................... 64,795,888
10,000,000 Federal National Mortgage Association, 4.20%, 7/1/94............... 9,964,006
10,000,000 United States Treasury Bills, 3.47%, 1/12/95....................... 9,789,380
------------
TOTAL UNITED STATES AGENCY AND GOVERNMENT OBLIGATIONS (Cost
$116,290,799)...................................................... 116,290,799
------------
REPURCHASE AGREEMENTS 42.4%
98,380,000 Kidder, Peabody & Co., Inc., dated 5/31/94, 4.27%, due 6/1/94
(collateralized by U.S. Government obligations in a pooled cash
account) repurchase proceeds $98,391,669........................... 98,380,000
98,382,000 Swiss Bank Corp. Government Securities, Inc., dated 5/31/94, 4.30%,
due 6/1/94 (collateralized by U.S. Government obligations in a
pooled cash account) repurchase proceeds $98,393,751............... 98,382,000
------------
TOTAL REPURCHASE AGREEMENTS (Cost $196,762,000).................... 196,762,000
------------
TOTAL INVESTMENTS (Cost $477,095,069) 102.9%...................... 477,095,069
Other assets and liabilities, net (2.9%).......................... (13,267,756)
------------
NET ASSETS 100%................................................... $463,827,313
============
</TABLE>

See Notes to Financial Statements.

C-1
<PAGE> 33

AMERICAN CAPITAL RESERVE FUND

STATEMENT OF ASSETS AND LIABILITIES
May 31, 1994

<TABLE>
<S> <C>
ASSETS
Investments, at amortized cost................................................. $477,095,069
Cash........................................................................... 130,868
Receivable for Fund shares sold................................................ 480,220
Other assets................................................................... 5,853
------------
477,712,010
------------
LIABILITIES
Payable for Fund shares redeemed............................................... 13,399,235
Accrued expenses............................................................... 215,378
Due to Advisor................................................................. 168,067
Due to Distributor............................................................. 102,017
------------
13,884,697
------------
NET ASSETS, equivalent to $1.00 per share...................................... $463,827,313
===========
NET ASSETS WERE COMPRISED OF:
Shares of capital stock, par value $.01 per share; 1 billion shares authorized;
463,815,535 shares outstanding................................................. $ 4,638,155
Capital surplus................................................................ 459,110,906
Undistributed net investment income............................................ 78,252
------------
NET ASSETS at May 31, 1994..................................................... $463,827,313
===========
</TABLE>

See Notes to Financial Statements.

C-2
<PAGE> 34

AMERICAN CAPITAL RESERVE FUND

STATEMENT OF OPERATIONS
Year Ended May 31, 1994

<TABLE>
<S> <C>
INVESTMENT INCOME
Interest........................................................................ $11,095,566
-----------
EXPENSES
Management fees................................................................. 1,494,701
Shareholder service agent fees and expenses..................................... 1,181,648
Service fees.................................................................... 418,816
Accounting services............................................................. 106,905
Registration and filing fees.................................................... 75,472
Reports to shareholders......................................................... 27,222
Audit fees...................................................................... 20,884
Custodian fees.................................................................. 19,617
Director's fees and expenses.................................................... 15,346
Legal fees...................................................................... 9,218
Miscellaneous................................................................... 3,273
-----------
Total expenses.................................................................. 3,373,102
-----------
Net investment income........................................................... 7,722,464
-----------
Increase in net assets resulting from operations................................ $ 7,722,464
===========
</TABLE>

See Notes to Financial Statements.

C-3
<PAGE> 35

AMERICAN CAPITAL RESERVE FUND

STATEMENT OF CHANGES IN NET ASSETS

<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
YEAR ENDED MAY 31,
-------------------------------
1994 1993
- -----------------------------------------------------------------------------------------------
<S> <C> <C>
NET ASSETS, beginning of year................................. $ 279,344,078 $ 329,174,695
--------------- -------------
OPERATIONS
Net investment income....................................... 7,722,464 7,481,877
--------------- -------------
Increase in net assets resulting from operations............ 7,722,464 7,481,877
--------------- -------------
DIVIDENDS TO SHAREHOLDERS FROM NET INVESTMENT INCOME.......... (7,713,417) (7,491,278)
--------------- -------------
FUND SHARE TRANSACTIONS
Proceeds from shares sold................................... 2,733,962,738 881,962,949
Proceeds from shares issued for dividends reinvested........ 7,713,418 7,491,277
Cost of shares redeemed..................................... (2,557,201,968) (939,275,442)
--------------- -------------
Increase (decrease) in net assets resulting from Fund share
transactions.................................................. 184,474,188 (49,821,216)
--------------- -------------
INCREASE (DECREASE) IN NET ASSETS............................. 184,483,235 (49,830,617)
--------------- -------------
NET ASSETS, end of year....................................... $ 463,827,313 $ 279,344,078
=============== =============
FUND SHARE TRANSACTIONS
Shares sold................................................. 2,733,962,738 881,962,949
Shares issued for dividends reinvested...................... 7,713,418 7,491,277
Shares redeemed............................................. (2,557,202,100) (939,275,439)
--------------- -------------
Increase (decrease) in Fund shares outstanding.............. 184,474,056 (49,821,213)
=============== =============
</TABLE>

See Notes to Financial Statements.

C-4
<PAGE> 36

AMERICAN CAPITAL RESERVE FUND

NOTES TO FINANCIAL STATEMENTS

NOTE 1 -- SIGNIFICANT ACCOUNTING POLICIES

American Capital Reserve Fund, Inc. (the "Fund") is registered under the
Investment Company Act of 1940, as amended, as a diversified open-end management
investment company. The following is a summary of significant accounting
policies consistently followed by the Fund in the preparation of its financial
statements.

A. Investment Valuations

Investments are valued at amortized cost, which approximates market value.
The cost of investments for federal income tax purposes is substantially the
same as for financial reporting purposes.

B. Repurchase Agreements

A repurchase agreement is a short-term investment in which the Fund
acquires ownership of a debt security and the seller agrees to repurchase the
security at a future time and specified price. The Fund may invest independently
in repurchase agreements, or transfer uninvested cash balances into a pooled
cash account along with other investment companies advised or sub-advised by
American Capital Asset Management, Inc. (the "Adviser"), the daily aggregate of
which is invested in repurchase agreements. Repurchase agreements are
collateralized by the underlying debt security. The Fund will make payment for
such securities only upon physical delivery or evidence of book entry transfer
to the account of the custodian bank. The seller is required to maintain the
value of the underlying security at not less than the repurchase proceeds due
the Fund.

C. Federal Income Taxes

No provision for federal income taxes is required because the Fund has
elected to be taxed as a "regulated investment company" under the Internal
Revenue Code and intends to maintain this qualification by annually distributing
all of its taxable net investment income and taxable net realized gains to its
shareholders.

D. Investment Transactions and Related Investment Income

Investment transactions are accounted for on the trade date. Realized gains
and losses on investments are determined on the basis of amortized cost.
Interest income is accrued daily.

E. Dividends

The Fund records daily dividends from net investment income. These
dividends are automatically reinvested in additional shares of the Fund at net
asset value. Shares purchased by daily reinvestments are liquidated at net asset
value on the last business day of the month and the proceeds of such redemptions
paid to the shareholders electing to receive dividends in cash. The Fund
distributes tax basis earnings in accordance with the minimum distribution
requirements of the Internal Revenue Code, which may result in dividends in
excess of financial statement net investment income.

C-5
<PAGE> 37

AMERICAN CAPITAL RESERVE FUND

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

Effective June 1, 1993, the Fund adopted Statement of Position 93-2,
Determination, Disclosure and Financial Statement Presentation of Income,
Capital Gain and Return of Capital Distributions by Investment Companies. As a
result of this statement, the Fund changed the classification of distributions
to shareholders to better disclose the differences between financial statement
amounts and distributions determined in accordance with income tax regulations.
The cumulative effect caused by adopting this statement was to increase
undistributed net investment income and decrease capital surplus by $66,653.
Current year net investment income, net assets and net asset value per share
were not affected by this reclassification.

F. Debt Discount and Premium

For financial and tax reporting purposes, all discounts and premiums are
amortized over the life of the security.

NOTE 2 -- MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES

The Adviser serves as investment manager of the Fund. Management fees are
calculated monthly, based on the average daily net assets of the Fund at an
annual rate of .50% of the first $150 million; .45% of the next $100 million;
.40% of the next $100 million; and .35% of the amount in excess of $350 million.

Accounting services include the salaries and overhead expenses of the
Fund's Treasurer and the personnel operating under his direction. Charges are
allocated among all investment companies advised or sub-advised by the Adviser.
For the year ended May 31, 1994, these charges included $10,454 as the Fund's
share of the employee costs attributable to the Fund's accounting officers. A
portion of the accounting services expense was paid to the Adviser in
reimbursement of personnel, facilities and equipment costs attributable to the
provision of accounting services to the AC Fund. The services provided by the
Adviser are at cost.

American Capital Companies Shareholder Services, Inc., an affiliate of the
Adviser, serves as the Fund's shareholder service agent. These services are
provided at cost plus a profit. For the year ended May 31, 1994, the fees for
these services aggregated $898,801.

Under a Distribution Plan, the Fund pays up to .15% per annum of its
average daily net assets to American Capital Marketing, Inc. (the
"Distributor"), for expenses and service fees incurred.

Legal fees were for services rendered by O'Melveny & Myers, counsel for the
Fund. Lawrence J. Sheehan, of counsel to said firm, is a Director of the Fund.

Certain officers and directors of the Fund are officers and directors of
the Adviser, the Distributor and shareholder service agent.

NOTE 3 -- DIRECTOR COMPENSATION

Fund Directors who are not affiliated with the Adviser are compensated by
the Fund at the annual rate of $1,590 plus a fee of $40 per day for Board and
Committee meetings attended. The Chairman receives additional fees from the Fund
at the annual rate of $590. During the year, such fees aggregated $13,400.

C-6
<PAGE> 38

AMERICAN CAPITAL RESERVE FUND

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

The Fund's Directors may participate in a voluntary Deferred Compensation
Plan (the "Plan"). The Plan is not funded, and obligations under the Plan will
be paid solely out of the Fund's general accounts. The Fund will not reserve or
set aside funds for the payment of its obligations under the Plan by any form of
trust or escrow. At May 31, 1994, the liability for the Plan aggregated $60,398.
Each Director covered by the Plan elects to be credited with an earnings
component on amounts deferred equal to the income earned by the Fund on its
short-term investments or equal to the total return of the Fund.

C-7
<PAGE> 39

AMERICAN CAPITAL RESERVE FUND

FINANCIAL HIGHLIGHTS
Selected data for a share of capital stock outstanding throughout each of the
periods indicated.

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
YEAR ENDED MAY 31,
-----------------------------------------------
1994 1993 1992 1991 1990
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of period............. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------- ------- ------- ------- -------
INCOME FROM OPERATIONS
Investment income................................ .0329 .0353 .052 .0758 .0893
Expenses......................................... (.0100) (.0109) (.0105) (.0094) (.0092)
------- ------- ------- ------- -------
Net investment income............................ .0229 .0244 .0415 .0664 .0801
------- ------- ------- ------- -------
DIVIDENDS FROM NET INVESTMENT INCOME............. (.0229) (.0244) (.0415) (.0664) (.0801)
------- ------- ------- ------- -------
Net asset value, end of period................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======= ======= ======= ======= =======
TOTAL RETURN..................................... 2.32% 2.44% 4.20% 6.80% 8.33%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (millions)............. $ 463.8 $ 279.3 $ 329.2 $ 402.3 $ 426.1
Average net assets (millions).................... $ 326.8 $ 306.7 $ 377.5 $ 482.6 $ 479.4
Ratios to average net assets
Expenses....................................... 1.03% 1.09% 1.05% .94% .91%
Net investment income.......................... 2.36% 2.44% 4.19% 6.68% 7.99%
</TABLE>

See Notes to Financial Statements.

C-8
<PAGE> 40

AMERICAN CAPITAL RESERVE FUND

REPORT OF INDEPENDENT ACCOUNTANTS

To the Shareholders and Board of Directors of
American Capital Reserve Fund, Inc.

In our opinion, the accompanying statement of assets and liabilities,
including the investment portfolio, and the related statements of operations and
of changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of American Capital Reserve Fund, Inc.
at May 31, 1994, 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 selected per share data and ratios for each of the five years in the period
then ended, in conformity with generally accepted accounting principles. These
financial statements and selected per share data and ratios (hereafter referred
to as "financial statements") are the responsibility of the Fund's management;
our responsibility is to express an opinion on these financial statements based
on our audits. We conducted our audits of these financial statements in
accordance with generally accepted auditing standards which require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits, which included confirmation of securities at May 31,
1994 by correspondence with the custodian, provide a reasonable basis for the
opinion expressed above.

PRICE WATERHOUSE LLP

Houston, Texas
July 5, 1994

C-9
<PAGE> 41

APPENDIX D

AMERICAN CAPITAL RESERVE FUND

INVESTMENT PORTFOLIO
November 30, 1994 (Unaudited)

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

<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT PRICE
- -----------------------------------------------------------------------------------------------
<S> <C> <C>
UNITED STATES AGENCY AND GOVERNMENT OBLIGATIONS 46.8%
Federal Home Loan Mortgage Corp.,
$ 25,000,000 5.32%, 1/19/95................................................... $ 24,817,708
1,926,000 5.33%, 1/4/95.................................................... 1,916,113
16,000,000 5.38%, 1/24/95................................................... 15,870,200
62,000,000 5.70%, 2/2/95.................................................... 61,379,449
22,000,000 5.78%, 2/16/95................................................... 21,728,300
Federal National Mortgage Association
5,000,000 4.70%, 12/16/94.................................................. 4,989,733
25,000,000 5.32%, 1/20/95................................................... 24,811,938
53,000,000 5.78%, 2/17/95................................................... 52,337,058
10,000,000 5.79%, 2/22/95................................................... 9,866,767
15,000,000 5.80%, 2/21/95................................................... 14,802,183
10,000,000 5.81%, 1/4/95.................................................... 9,943,806
------------
TOTAL UNITED STATES AGENCY AND GOVERNMENT OBLIGATIONS
($242,463,255)................................................... 242,463,255
------------
COMMERCIAL PAPER 11.5%
26,000,000 General Electric Capital Corp., 5.89%, 2/16/95................... 25,673,267
10,000,000 MetLife Funding, Inc., 5.04%, 12/16/94........................... 9,977,778
24,000,000 Prudential Funding Corp., 5.47%, 1/3/95.......................... 23,877,147
------------
TOTAL COMMERCIAL PAPER (Cost $59,528,192)........................ 59,528,192
------------
REPURCHASE AGREEMENTS 33.4%
113,790,000 Salomon Brothers, Inc., dated 11/30/94, 5.70%, due 12/1/94
(collateralized by U.S. Government obligations in a pooled cash
account) repurchase proceeds $113,808,017........................ 113,790,000
59,740,000 State Street Bank & Trust Co., dated 11/30/94, 5.40%, due 12/1/94
(collateralized by U.S. Government securities in a pooled cash
account) repurchase proceeds $59,748,961......................... 59,740,000
------------
TOTAL REPURCHASE AGREEMENTS (Cost $173,530,000).................. 173,530,000
------------
TOTAL INVESTMENTS (Cost $475,521,447) 91.7%...................... 475,521,447
Other assets and liabilities, net 8.3%........................... 42,776,624
------------
NET ASSETS 100%.................................................. $518,298,071
===========
</TABLE>

See Notes to Financial Statements.

D-1
<PAGE> 42

AMERICAN CAPITAL RESERVE FUND

STATEMENT OF ASSETS AND LIABILITIES
November 30, 1994 (Unaudited)

<TABLE>
<S> <C>
ASSETS
Investments, at amortized cost................................................. $475,521,447
Cash........................................................................... 126,717
Receivable for Fund shares sold................................................ 46,964,935
Other assets................................................................... 5,853
------------
522,618,952
------------
LIABILITIES
Payable for Fund shares redeemed............................................... 3,842,421
Accrued expenses............................................................... 186,223
Due to Advisor................................................................. 181,087
Due to Distributor............................................................. 111,150
------------
4,320,881
------------
NET ASSETS, equivalent to $1.00 per share...................................... $518,298,071
===========
NET ASSETS WERE COMPRISED OF:
Shares of capital stock, par value $.01 per share; 1 billion shares authorized;
518,305,008 shares outstanding............................................... $ 5,183,050
Capital surplus................................................................ 513,055,484
Undistributed net investment income............................................ 59,537
------------
NET ASSETS at November 30, 1994................................................ $518,298,071
===========
</TABLE>

See Notes to Financial Statements.

D-2
<PAGE> 43

AMERICAN CAPITAL RESERVE FUND

STATEMENT OF OPERATIONS
Six Months Ended November 30, 1994 (Unaudited)

<TABLE>
<S> <C>
INVESTMENT INCOME
Interest........................................................................ $11,152,968
-----------
EXPENSES
Management fees................................................................. 1,019,909
Shareholder service agent's fees and expenses................................... 706,799
Service fees.................................................................... 339,159
Accounting services............................................................. 48,218
Registration and filing fees.................................................... 38,250
Reports to shareholders......................................................... 13,580
Directors' fees and expenses.................................................... 10,859
Legal fees...................................................................... 10,349
Audit fees...................................................................... 10,125
Custodian fees.................................................................. 2,069
Miscellaneous................................................................... 11,186
-----------
Total expenses.................................................................. 2,210,503
-----------
Net investment income........................................................... 8,942,465
-----------
Increase in net assets resulting from operations................................ $ 8,942,465
==========
</TABLE>

See Notes to Financial Statements.

D-3
<PAGE> 44

AMERICAN CAPITAL RESERVE FUND

STATEMENT OF CHANGES IN NET ASSETS
(Unaudited)

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
<S> <C> <C>
SIX MONTHS ENDED YEAR ENDED
NOVEMBER 30, 1994 MAY 31, 1994
- --------------------------------------------------------------------------------------------------
NET ASSETS, beginning of period.............................. $ 463,827,313 $ 279,344,078
----------------- ---------------
OPERATIONS
Net investment income...................................... 8,942,465 7,722,464
----------------- ---------------
Increase in net assets resulting from operations........... 8,942,465 7,722,464
----------------- ---------------
DIVIDENDS TO SHAREHOLDERS FROM NET INVESTMENT INCOME......... (8,961,180) (7,713,417)
----------------- ---------------
FUND SHARE TRANSACTIONS
Proceeds from shares sold.................................. 1,651,205,413 2,733,962,738
Proceeds from shares issued for dividends reinvested....... 8,945,975 7,713,418
Cost of shares redeemed.................................... (1,605,661,915) (2,557,201,968)
----------------- ---------------
Increase in net assets resulting from Fund share
transactions............................................ 54,489,473 184,474,188
----------------- ---------------
INCREASE IN NET ASSETS....................................... 54,470,758 184,483,235
----------------- ---------------
NET ASSETS, end of period.................................... $ 518,298,071 $ 463,827,313
============== ==============
FUND SHARE TRANSACTIONS
Shares sold................................................ 1,651,205,413 2,733,962,738
Shares issued for dividends reinvested..................... 8,945,975 7,713,418
Shares redeemed............................................ (1,605,661,915) (2,557,202,100)
----------------- ---------------
Increase in Fund shares outstanding........................ 54,489,473 184,474,056
============== ==============
</TABLE>

See Notes to Financial Statements.

D-4
<PAGE> 45

AMERICAN CAPITAL RESERVE FUND

NOTES TO FINANCIAL STATEMENTS
(Unaudited)

NOTE 1 -- SIGNIFICANT ACCOUNTING POLICIES

A. Investment Valuations

Investments are valued at amortized cost, which approximates market value.
The cost of investments for federal income tax purposes is substantially the
same as for financial reporting purposes.

B. Repurchase Agreements

A repurchase agreement is a short-term investment in which the Fund
acquires ownership of a debt security and the seller agrees to repurchase the
security at a future time and specified price. The Fund may invest independently
in repurchase agreements, or transfer uninvested cash balances into a pooled
cash account along with other investment companies advised or sub-advised by Van
Kampen American Capital Asset Management, Inc. (the "Adviser"), the daily
aggregate of which is invested in repurchase agreements. Repurchase agreements
are collateralized by the underlying debt security. The Fund will make payment
for such securities only upon physical delivery or evidence of book entry
transfer to the account of the custodian bank. The seller is required to
maintain the value of the underlying security at not less than the repurchase
proceeds due the Fund.

C. Federal Income Taxes

D. Investment Transactions and Related Investment Income

Investment transactions are accounted for on the trade date. Realized gains
and losses on investments are determined on the basis of amortized cost.
Interest income is accrued daily.

E. Dividends

The Fund records daily dividends from net investment income. These
dividends are automatically reinvested in additional shares of the Fund at net
asset value. Shares purchased by daily reinvestments are liquidated at net asset
value on the last business day of the month and the proceeds of such redemptions
paid to the shareholders electing to receive dividends in cash. The Fund
distributes tax basis earnings in accordance with the minimum distribution
requirements of the Internal Revenue Code, which may differ from generally
accepted accounting principles. Such distributions may result in dividends in
excess of financial statement net investment income.

D-5
<PAGE> 46

AMERICAN CAPITAL RESERVE FUND

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(Unaudited)

F. Debt Discount and Premium

For financial and tax reporting purposes, all discounts and premiums are
amortized over the life of the security.

NOTE 2 -- MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES

The Adviser serves as investment manager of the Fund. Management fees are
calculated monthly, based on the average daily net assets of the Fund at an
annual rate of .50% of the first $150 million; .45% of the next $100 million;
40% of the next $100 million; and .35% of the amount in excess of $350 million.

Accounting services include the salaries and overhead expenses of the
Fund's Treasurer and the personnel operating under his direction. Charges are
allocated among all investment companies advised or sub-advised by the Adviser.
For the period ended November 30, 1994, these charges included $4,678 as the
Fund's share of the employee costs attributable to the Fund's accounting
officers. A portion of the accounting services expense was paid to the Adviser
in reimbursement of personnel, facilities and equipment costs attributable to
the provision of accounting services to the Fund. The services provided by the
Adviser are at cost.

Van Kampen American Capital Shareholder Services, Inc., an affiliate of the
Adviser, serves as the Fund's shareholder service agent. These services are
provided at cost plus a profit. For the period ended November 30, 1994, fees for
these services aggregated $582,718.

Under a Distribution Plan, the Fund pays up to .15% per annum of its
average daily net assets to Van Kampen American Capital Distributors, Inc. (the
"Distributor"), for expenses and service fees incurred.

Legal fees were for services rendered by O'Melveny & Myers, counsel for the
Fund, Lawrence J. Sheehan, of counsel to said firm, is a Director of the Fund.

Certain officers and directors of the Fund are officers and directors of
the Adviser, Distributor and the shareholder services agent.

NOTE 3 -- DIRECTOR COMPENSATION

Fund Directors who are not affiliated with the Adviser are compensated by
the Fund at the annual rate of $1,450 plus a fee of $35 per day for Board and
Committee meetings attended. The Chairman receives additional fees from the Fund
at the annual rate of $540. During the period, such fees aggregated $9,428.

The Fund's Directors may participate in a voluntary Deferred Compensation
Plan (the "Plan"). The Plan is not funded, and obligations under the Plan will
be paid solely out of the Fund's general accounts. The Fund will not reserve or
set aside funds for the payment of its obligations under the Plan by any form of
trust or escrow. At November 30, 1994, the liability for the Plan aggregated
$62,805. Each Director covered by the Plan elects to be credited with an
earnings component on amounts deferred equal to the income earned by the Fund on
its short-term investments or equal to the total return of the Fund.

D-6
<PAGE> 47

AMERICAN CAPITAL RESERVE FUND

FINANCIAL HIGHLIGHTS
Selected data for a share of capital stock outstanding throughout each of the
periods indicated. (Unaudited)

<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------
YEAR ENDED MAY 31,
-----------------------------------------------
SIX MONTHS 1994 1993 1992 1991 1990
ENDED
NOVEMBER 30,
1994
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of
period............................ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------------ ------- ------- ------- ------- -------
INCOME FROM OPERATIONS
Investment income................... .0234 .0329 .0353 .052 .0758 .0893
Expenses............................ (.0046) (.0100) (.0109) (.0105) (.0094) (.0092)
------------ ------- ------- ------- ------- -------
Net investment income............... .0188 .0229 .0244 .0415 .0664 .0801
------------ ------- ------- ------- ------- -------
DIVIDENDS FROM NET INVESTMENT
INCOME............................ (.0188) (.0229) (.0244) (.0415) (.0664) (.0801)
------------ ------- ------- ------- ------- -------
Net asset value, end of period...... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========== ======= ======= ======= ======= =======
TOTAL RETURN........................ 1.89% 2.32% 2.44% 4.20% 6.80% 8.33%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year
(millions)........................ $ 518.3 $ 463.8 $ 279.3 $ 329.2 $ 402.3 $ 426.1
Average net assets (millions)....... $ 475.7 $ 326.8 $ 306.7 $ 377.5 $ 482.6 $ 479.4
Ratios to average net assets
Expenses.......................... .93%* 1.03% 1.09% 1.05% .94% .91%
Net investment income............. 3.75%* 2.36% 2.44% 4.19% 6.68% 7.99%
</TABLE>

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

* Annualized.

See Notes to Financial Statements.

D-7
<PAGE> 48

APPENDIX E

VAN KAMPEN MERRITT MONEY MARKET FUND

PORTFOLIO OF INVESTMENTS
June 30, 1994
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
DISCOUNT
PAR YIELD ON
AMOUNT MATURITY DATE OF AMORTIZED
(000) DESCRIPTION DATE PURCHASE COST
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
AGENCY 9.7%
$ 877 Small Business Administration........................ 07/01/94 5.250% $ 876,598
800 Student Loan Marketing Association................... 07/06/94 4.325 800,000
1,000 Federal Home Loan Bank............................... 08/22/94 4.270 993,832
-----------
TOTAL AGENCY.............................................................. 2,670,430
-----------
COMMERCIAL PAPER 25.4%
1,000 American General Finance Corp........................ 07/15/94 4.245 1,000,000
1,000 Ford Motor Credit Co................................. 07/15/94 4.245 1,000,000
1,000 John Deere Capital Corp.............................. 07/15/94 4.245 1,000,000
1,000 Associates Corp...................................... 07/20/94 4.290 1,000,000
1,000 State Street Bank & Trust............................ 07/20/94 4.311 1,000,000
1,000 American Express Credit Corp......................... 08/01/94 4.367 1,000,000
1,000 General Electric Capital Corp........................ 08/01/94 4.387 1,000,000
-----------
TOTAL COMMERCIAL PAPER.................................................... 7,000,000
-----------
MEDIUM TERM NOTES 14.8%
500 CIT Group Hldgs Inc.................................. 07/01/94 4.600 500,027
1,000 Purdue University Indiana Rev........................ 07/01/94 4.000 1,000,000
1,000 Kent County, MI Gen Oblig Limited Tax Notes.......... 11/01/94 4.547 1,009,598
750 San Diego, CA Taxable Anticipation Notes............. 12/14/94 4.000 750,493
800 Cuyahoga County, OH Taxable Anticipation Notes....... 12/30/94 4.170 800,845
-----------
TOTAL MEDIUM TERM NOTES................................................... 4,060,963
-----------
VARIABLE RATE DEMAND OBLIGATIONS 15.6%
500 AT & T Capital Corp.................................. 07/01/94 4.750 500,000
700 Catholic Healthcare West (Gtd: Toronto Dominion
Bank)................................................ 07/06/94 4.600 700,000
500 Florida Housing Finance Agency (L.O.C. Credit
Suisse).............................................. 07/06/94 4.460 500,000
700 Health Insurance Plan Greater New York (L.O.C. Morgan
Gty)................................................. 07/06/94 4.500 700,000
500 Illinois Student Assistance Commission (L.O.C.
Sumitomo Bank)....................................... 07/06/94 4.820 500,000
700 Mississippi Business Finance Corp.................... 07/06/94 4.400 700,000
700 Virginia St Housing Development Authority............ 07/06/94 4.500 700,000
-----------
TOTAL VARIABLE RATE DEMAND OBLIGATIONS.................................... 4,300,000
-----------
</TABLE>

E-1
<PAGE> 49

VAN KAMPEN MERRITT MONEY MARKET FUND

PORTFOLIO OF INVESTMENTS -- (CONTINUED)
June 30, 1994
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
DISCOUNT
PAR YIELD ON
AMOUNT MATURITY DATE OF AMORTIZED
(000) DESCRIPTION DATE PURCHASE COST
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
REPURCHASE AGREEMENT 16.1%
4,440 UBS Securities, U.S. T-Note, $4,190,000 par, 9.500%
coupon, due 11/15/95, dated 06/30/94, to be sold on
07/01/94 at $4,440,518............................... 07/01/94 4.200 4,440,000
-----------
TOTAL INVESTMENTS (A) 81.6%............................................... 22,471,393
OTHER ASSETS IN EXCESS OF LIABILITIES 18.4%............................... 5,075,322
-----------
NET ASSETS 100.0%......................................................... $27,546,715
==========
</TABLE>

(a) At June 30, 1994, cost is identical for both book and federal income tax
purposes.

See Notes to Financial Statements

E-2
<PAGE> 50

VAN KAMPEN MERRITT MONEY MARKET FUND

STATEMENT OF ASSETS AND LIABILITIES
June 30, 1994

<TABLE>
<S> <C>
ASSETS:
Investments, at Amortized Cost which Approximates Market (Note 1).............. $22,471,393
Cash........................................................................... 36,251

RECEIVABLES:
Fund Shares Sold............................................................... 5,002,968
Interest....................................................................... 119,753
Other.......................................................................... 5,070
-----------
Total Assets................................................................... 27,635,435
-----------
LIABILITIES:
PAYABLES:
Fund Shares Repurchased........................................................ 33,514
Income Distributions........................................................... 4,018
Investment Advisory Fee (Note 2)............................................... 3,400
Accrued Expenses............................................................... 47,788
-----------
Total Liabilities.............................................................. 88,720
-----------
NET ASSETS..................................................................... $27,546,715
==========
NET ASSETS CONSIST OF:
Paid in Surplus................................................................ $27,601,290
Accumulated Net Realized Loss on Investments................................... (54,575)
-----------
NET ASSETS (equivalent to $1.00 per share on 27,601,290 shares outstanding).... $27,546,715
==========
</TABLE>

See Notes to Financial Statements

E-3
<PAGE> 51

VAN KAMPEN MERRITT MONEY MARKET FUND

STATEMENT OF OPERATIONS
For the Year Ended June 30, 1994

<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest........................................................................ $ 727,456
Amortization of Discount (Premium) -- Net....................................... 3,996
-----------
Total Income.................................................................... 731,452
-----------
EXPENSES:
Investment Advisory Fee (Note 2)................................................ 97,029
Shareholder Services............................................................ 58,932
Distribution (12b-1) and Service Fees (Note 4).................................. 49,893
Printing........................................................................ 31,130
Audit........................................................................... 28,430
Trustees Fees and Expenses (Note 2)............................................. 18,855
Custody......................................................................... 17,760
Legal (Note 2).................................................................. 10,950
Other........................................................................... 3,170
-----------
Total Expenses.................................................................. 316,149
Less Fees Waived................................................................ 83,761
-----------
Net Expenses.................................................................... 232,388
-----------
Net Investment Income........................................................... $ 499,064
==========
REALIZED GAIN/LOSS ON INVESTMENTS:
Proceeds from Sales............................................................. $ 8,035,919
Cost of Securities Sold......................................................... (8,062,346)
-----------
NET REALIZED LOSS ON INVESTMENTS (including $85,500 reimbursement by the Adviser
for realized losses incurred on variable rate instruments).................... $ (26,427)
==========
Net Increase in Net Assets from Operations...................................... $ 472,637
==========
</TABLE>

See Notes to Financial Statements

E-4
<PAGE> 52

VAN KAMPEN MERRITT MONEY MARKET FUND

STATEMENT OF CHANGES IN NET ASSETS
For the Years Ended June 30, 1994 and 1993

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
<S> <C> <C>
YEAR ENDED YEAR ENDED
JUNE 30, 1994 JUNE 30, 1993
- --------------------------------------------------------------------------------------------------
FROM INVESTMENT ACTIVITIES:
OPERATIONS:
Net Investment Income.......................................... $ 499,064 $ 541,128
Net Realized Gain/Loss on Investments.......................... (26,427) 695
------------- -------------
Change in Net Assets from Operations........................... 472,637 541,823
Distributions from Net Investment Income....................... (499,064) (541,128)
------------- -------------
NET CHANGE IN NET ASSETS FROM INVESTMENT ACTIVITIES.............. (26,427) 695
------------- -------------
FROM CAPITAL TRANSACTIONS (NOTE 3):
Proceeds from Shares Sold...................................... 79,908,069 86,871,367
Net Asset Value of Shares Issued Through Dividend
Reinvestment................................................ 445,332 500,012
Cost of Shares Repurchased..................................... (74,519,684) (90,537,141)
------------- -------------
NET CHANGE IN NET ASSETS FROM CAPITAL TRANSACTIONS............... 5,833,717 (3,165,762)
------------- -------------
TOTAL INCREASE/DECREASE IN NET ASSETS............................ 5,807,290 (3,165,067)
NET ASSETS:
Beginning of the Period........................................ 21,739,425 24,904,492
------------- -------------
End of the Period.............................................. $ 27,546,715 $ 21,739,425
=========== ===========
</TABLE>

See Notes to Financial Statements

E-5
<PAGE> 53

VAN KAMPEN MERRITT MONEY MARKET FUND

FINANCIAL HIGHLIGHTS

The following schedule presents selected per share data and related ratios for
one share of the Fund outstanding throughout the periods indicated.
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
YEAR ENDED JUNE 30
--------------------------------------------------------------------------------------
1994 1993 1992 1991 1990 1989 1988 1987 1986 1985
--------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period... $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
----- ----- ----- ----- ----- ----- ----- ----- ----- -----
Net Investment Income.................. .025 .023 .041 .065 .078 .078 .066 .056 .068 .092
Less Distribution from Net Investment
Income............................... .025 .023 .041 .065 .078 .078 .066 .056 .068 .092
----- ----- ----- ----- ----- ----- ----- ----- ----- -----
Net Asset Value, End of Period......... $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
----- ----- ----- ----- ----- ----- ----- ----- ----- -----
Total Return*.......................... 2.50% 2.31% 4.21% 6.72% 8.11% 8.07% 6.60% 5.94% 6.96% 9.60%
Net Assets at End of Period (in
millions)............................ $27.5 $21.7 $24.9 $35.0 $45.0 $44.1 $51.5 $17.1 $ 6.3 $ 1.5
Ratio of Expenses to Average Net
Assets*.............................. 1.13% 1.16% 1.14% .99% .90% .98% .78% .58% .88% 1.01%
Ratio of Net Investment Income to
Average Net Assets*.................. 2.44% 2.31% 4.21% 6.57% 7.81% 7.79% 6.56% 5.65% 6.78% 8.39%
* If certain expenses had not been assumed by the investment adviser, total return would have been lower and the ratios would
have been as follows:

Ratio of Expenses to Average Net
Assets............................... 1.54% 1.31% 1.55% 1.39% 1.31% 1.31% 1.22% 1.48% 1.85% 1.94%
Ratio of Net Investment Income to
Average Net Assets................... 2.03% 2.16% 3.80% 6.17% 7.40% 7.46% 6.13% 4.74% 5.81% 7.46%
</TABLE>

See Notes to Financial Statements

E-6
<PAGE> 54

VAN KAMPEN MERRITT MONEY MARKET FUND

NOTES TO FINANCIAL STATEMENTS
June 30, 1994

1. SIGNIFICANT ACCOUNTING POLICIES

Van Kampen Merritt Money Market Fund (the "Fund") is a separate series of
Van Kampen Merritt Money Market Trust (the "Trust"). The Fund is an open-end
diversified management investment company registered under the Investment
Company Act of 1940, as amended. The distribution of the Fund's second class of
shares, Class B shares, commenced on July 11, 1994.

The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements.

A. Security Valuation

Investments are valued at amortized cost, which approximates market. Under
this valuation method, a portfolio instrument is valued at cost and any discount
or premium is amortized on a straight-line basis to the maturity of the
instrument.

B. Security Transactions

Security transactions are recorded on a trade date basis. Realized gains
and losses are determined on an identified cost basis. Interest income is
recorded on an accrual basis.

C. Federal Income Taxes

It is the Fund's policy to comply with the requirements of the Internal
Revenue Code applicable to regulated investment companies and to distribute
substantially all of its taxable income to its shareholders. Therefore, no
provision for federal income taxes is required. The Fund intends to utilize
provisions of the federal income tax laws which allow it to carry a realized
capital loss forward for eight years following the year of the loss and offset
such losses against any future realized capital gains. At June 30, 1994, the
Fund had an accumulated capital loss carryforward for tax purposes of $39,559.
Of this amount, $26,110, $2,038 and $11,411 will expire on June 30, 1998, 1999
and 2000, respectively. Net realized gains or losses differ for financial
statement and tax reporting purposes primarily because of the deferral of post
October 31 losses which are not recognized for tax purposes until the first day
of the following fiscal year.

D. Distribution of Income and Gains

The Fund declares dividends from net investment income daily and
automatically reinvests such dividends daily. Net realized gains, if any, are
distributed annually. Shareholders can elect to receive the cash equivalent of
their daily dividends at each month end.

E-7
<PAGE> 55

VAN KAMPEN MERRITT MONEY MARKET FUND

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
June 30, 1994

2. INVESTMENT ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES

Under the terms of the Fund's Investment Advisory Agreement, Van Kampen
Merritt Investment Advisory Corp. (the "Adviser") will provide investment advice
and facilities to the Fund for an annual fee payable monthly as follows:

<TABLE>
<CAPTION>
AVERAGE NET ASSETS % PER ANNUM
-------------------------------------------------------- -----------
<S> <C>
First $250 million...................................... .500 of 1%
Next $250 million....................................... .475 of 1%
Next $250 million....................................... .425 of 1%
Over $750 million....................................... .275 of 1%
</TABLE>

Certain legal expenses were paid to Skadden, Arps, Slate, Meagher & Flom,
counsel to the Fund, of which a trustee of the Fund is an affiliated person.

For the year ended June 30, 1994, the Fund recognized expenses of
approximately $20,250 representing Van Kampen Merritt Inc.'s ("Van Kampen
Merritt") or the Adviser's cost of providing accounting, legal and certain
shareholder services to the Fund.

Certain officers and trustees of the Fund are also officers and directors
of the Adviser and Van Kampen Merritt. The Fund does not compensate its officers
or trustees who are officers of the Adviser or Van Kampen Merritt.

At June 30, 1994, Van Kampen Merritt owned 743,833 shares of the Fund.

3. CAPITAL TRANSACTIONS

The Fund is authorized to issue an unlimited number of shares of beneficial
interest without par value. At June 30, 1994, and 1993, paid in surplus
aggregated $27,601,290 and $21,767,573, respectively. Transactions in shares
were as follows:

<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
JUNE 30, 1994 JUNE 30, 1993
------------- -------------
<S> <C> <C>
Beginning Shares.................................................... 21,767,573 24,933,335
------------- -------------
Shares Sold......................................................... 79,908,069 86,871,367
Shares Issued Through Dividend Reinvestment......................... 445,332 500,012
Shares Repurchased.................................................. (74,519,684) (90,537,141)
------------- -------------
Net Change in Shares Outstanding.................................... 5,833,717 (3,165,762)
------------- -------------
Ending Shares....................................................... 27,601,290 21,767,573
========== ==========
</TABLE>

E-8
<PAGE> 56

VAN KAMPEN MERRITT MONEY MARKET FUND

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
June 30, 1994

4. DISTRIBUTION AND SERVICE PLANS

The Fund and its shareholders have adopted a distribution plan (the
"Distribution Plan") pursuant to Rule 12b-1 under the Investment Company Act of
1940 and a Service Plan (the "Service Plan," collectively the "Plans"). The
Plans govern payments for the distribution of the Fund's shares, ongoing
shareholder services and maintenance of shareholder accounts. Annual fees under
the Plans of up to .25% of the Fund's average net assets are accrued daily.

E-9
<PAGE> 57

VAN KAMPEN MERRITT MONEY MARKET FUND

INDEPENDENT AUDITOR'S REPORT

The Board of Trustees and Shareholders of
Van Kampen Merritt Money Market Fund:

We have audited the accompanying statement of assets and liabilities of Van
Kampen Merritt Money Market Fund (the "Fund"), including the portfolio of
investments, as of June 30, 1994, and the related statement of operations for
the year then ended, the statement of changes in net assets for each of the two
years in the period then ended, and the financial highlights for each of the
periods presented. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of June
30, 1994, by correspondence with the custodian. 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 Van
Kampen Merritt Money Market Fund as of June 30, 1994, 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 periods presented, in conformity with generally accepted accounting
principles.

KPMG Peat Marwick LLP

Chicago, Illinois
August 4, 1994

E-10
<PAGE> 58

APPENDIX F

VAN KAMPEN MERRITT MONEY MARKET FUND

PORTFOLIO OF INVESTMENTS
December 31, 1994 (Unaudited)
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
DISCOUNT
PAR YIELD ON
AMOUNT MATURITY DATE OF AMORTIZED
(000) SECURITY DESCRIPTION DATE PURCHASE COST
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
AGENCY 9.1%
$ 869 Small Business Administration........................ 1/03/95 5.750% $ 868,761
1,000 Federal Farm Credit Bank............................. 1/05/95 5.300 999,411
1,000 Federal Home Loan Mortgage Corp.(b).................. 1/05/95 5.900 999,344
1,000 Federal Home Loan Bank............................... 1/10/95 5.780 998,555
-----------
TOTAL AGENCY............................................................... 3,866,071
-----------
BANKERS ACCEPTANCES 13.0%
1,000 Bank of New York..................................... 1/06/95 5.480 999,239
1,000 Nationsbank Corp. ................................... 1/06/95 5.880 999,183
1,000 Sanwa Bank........................................... 1/19/95 5.870 997,065
1,500 National Bank of Detroit............................. 1/23/95 5.870 1,500,000
1,000 Northern Trust Co. .................................. 2/17/95 5.980 992,193
-----------
TOTAL BANKERS ACCEPTANCES.................................................. 5,487,680
-----------
CERTIFICATES OF DEPOSIT 4.7%
1,000 Dresdner Bank........................................ 1/26/95 5.530 999,947
1,000 Societe Generale Bank Yankee......................... 2/03/95 6.150 1,000,000
-----------
TOTAL CERTIFICATES OF DEPOSIT.............................................. 1,999,947
-----------
COMMERCIAL PAPER 52.0%
1,000 AT & T Capital Corp. ................................ 1/03/95 5.850 999,645
1,500 J. P. Morgan & Co. Inc. ............................. 1/03/95 6.000 1,499,500
1,500 Exxon Asset Management............................... 1/04/95 5.600 1,499,300
1,500 Southern California Edison Co. ...................... 1/05/95 5.930 1,499,012
1,000 Credit Suisse First Boston Inc. ..................... 1/09/95 5.030 998,883
1,500 Rabobank USA Financial Corp. ........................ 1/09/95 5.910 1,498,030
1,500 IBM Credit Corp. .................................... 1/10/95 6.000 1,497,750
1,000 State Street Boston Corp. ........................... 1/12/95 5.138 1,000,000
1,500 Ford Motor Credit Co. ............................... 1/17/95 5.950 1,496,033
1,000 Merrill Lynch & Co. Inc. ............................ 1/19/95 5.100 1,000,000
1,000 Commercial Credit Corp. ............................. 1/23/95 5.450 1,000,000
1,000 American General Finance Corp. ...................... 1/25/95 5.750 1,000,000
1,500 Associates Corp. .................................... 1/27/95 6.120 1,493,370
1,000 CIT Group Holdings Inc. ............................. 1/27/95 5.750 1,000,000
1,500 American Express Credit Corp. ....................... 1/30/95 5.850 1,492,931
1,500 Norwest Financial Inc. .............................. 2/07/95 6.050 1,490,673
1,500 John Deere Capital Corp. ............................ 2/09/95 6.000 1,490,250
-----------
TOTAL COMMERCIAL PAPER..................................................... 21,955,377
-----------
</TABLE>

See Notes to Financial Statements.

F-1
<PAGE> 59

VAN KAMPEN MERRITT MONEY MARKET FUND

PORTFOLIO OF INVESTMENTS -- (CONTINUED)
December 31, 1994 (Unaudited)
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
DISCOUNT
PAR YIELD ON
AMOUNT MATURITY DATE OF AMORTIZED
(000) SECURITY DESCRIPTION DATE PURCHASE COST
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
VARIABLE RATE DEMAND OBLIGATIONS 13.0%
$1,500 Virginia St Housing Development Authority............ 1/03/95 6.000% $ 1,500,000
1,400 Catholic Healthcare West (Gtd: Toronto Dominion
Bank)................................................ 1/04/95 7.000 1,400,000
500 Florida Housing Finance Agency (L.O.C. Credit
Suisse).............................................. 1/04/95 6.100 500,000
900 Health Insurance Plan Greater New York (L.O.C. Morgan
Gty)................................................. 1/04/95 6.450 900,000
500 Illinois Student Assistance Commission (L.O.C.
Sumitomo Bank)....................................... 1/04/95 6.170 500,000
700 Mississippi Business Finance Corp. .................. 1/04/95 6.400 700,000
-----------
TOTAL VARIABLE RATE DEMAND OBLIGATIONS..................................... 5,500,000
-----------
REPURCHASE AGREEMENT 7.2%
UBS Securities, U.S. T-Note, $3,165,000 par, 3.875% coupon, due 10/31/95,
dated 12/30/94, to be sold on 01/03/95 at $3,041,942....................... 3,040,000
-----------
TOTAL INVESTMENTS (a) 99.0%................................................ 41,849,075
Other Assets in Excess of Liabilities 1.0%................................. 408,518
-----------
NET ASSETS 100.0%.......................................................... $42,257,593
===========
</TABLE>

(a) At December 31, 1994, cost is identical for both book and federal
income tax purposes.

(b) This is a Mortgage Backed Security (MBS) which is a pass-through
instrument created by pooling mortgages and selling participations in the
principal and interest payments received from borrowers. This security is
guaranteed by Federal Home Loan Mortgage Corporation (FHLMC), a federally
sponsored agency.

See Notes to Financial Statements.

F-2
<PAGE> 60

VAN KAMPEN MERRITT MONEY MARKET FUND

STATEMENT OF ASSETS AND LIABILITIES
December 31, 1994 (Unaudited)

<TABLE>
<S> <C>
ASSETS
Investments, at Amortized Cost which Approximates Market (Note 1).............. $41,849,075
Cash........................................................................... 180,760

RECEIVABLES:
Fund Shares Sold............................................................... 544,455
Interest....................................................................... 116,772
Other.......................................................................... 4,883
-----------
Total Assets................................................................... 42,695,945
-----------
LIABILITIES:
PAYABLES:
Fund Shares Repurchased........................................................ 346,906
Income Distributions........................................................... 24,412
Investment Advisory Fee (Note 2)............................................... 1,791
Accrued Expenses............................................................... 65,243
-----------
Total Liabilities.............................................................. 438,352
-----------
NET ASSETS..................................................................... $42,257,593
===========
NET ASSETS CONSIST OF:
PAID IN SURPLUS:
Class A Shares................................................................. $32,412,705
Class B Shares................................................................. 9,918,443
Accumulated Net Realized Loss on Investments................................... (73,555)
-----------
NET ASSETS..................................................................... $42,257,593
===========
MAXIMUM OFFERING PRICE PER SHARE:
CLASS A SHARES:
Net Asset Value Per Share (Based on Net Assets of $32,339,762 and 32,412,705
Shares of Beneficial Interest Issued and Outstanding)........................ $1.00
=====
CLASS B SHARES:
Net Asset Value Per Share (Based on Net Assets of $9,917,831 and 9,918,443
Shares of Beneficial Interest Issued and Outstanding)........................ $1.00
=====
</TABLE>

See Notes to Financial Statements.

F-3
<PAGE> 61

VAN KAMPEN MERRITT MONEY MARKET FUND

STATEMENT OF OPERATIONS
For the Six Months Ended December 31, 1994 (Unaudited)

<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest........................................................................ $ 842,639
Amortization of Premium......................................................... (10,988)
-----------
Total Income.................................................................... 831,651
-----------
EXPENSES:
Investment Advisory Fee (Note 2)................................................ 83,571
Shareholder Services............................................................ 60,277
Distribution (12b-1) and Service Fees (allocated to Classes A and B of $35,230
and $21,742, respectively) (Note 4)........................................... 56,972
Printing........................................................................ 18,400
Audit........................................................................... 15,088
Custody......................................................................... 14,107
Trustees Fees and Expenses (Note 2)............................................. 11,040
Legal (Note 2).................................................................. 6,440
Other........................................................................... 1,844
-----------
Total Expenses.................................................................. 267,739
Less Fees Deferred.............................................................. 79,108
-----------
Net Expenses.................................................................... 188,631
-----------
Net Investment Income........................................................... $ 643,020
===========
REALIZED GAIN/LOSS ON INVESTMENTS:
Proceeds from Sales............................................................. $ 1,531,038
Cost of Securities Sold......................................................... (1,550,018)
-----------
Net Realized Loss on Investments................................................ $ (18,980)
===========
Net Increase in Net Assets from Operations...................................... $ 624,040
===========
</TABLE>

See Notes to Financial Statements.

F-4
<PAGE> 62

VAN KAMPEN MERRITT MONEY MARKET FUND

STATEMENT OF CHANGES IN NET ASSETS
For the Six Months Ended December 31, 1994 and the Year Ended June 30, 1994
(Unaudited)

<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED
DECEMBER 31, 1994 JUNE 30, 1994
- ----------------------------------------------------------------------------------------------------
<S> <C> <C>
FROM INVESTMENT ACTIVITIES:
OPERATIONS:
Net Investment Income........................................ $ 643,020 $ 499,064
Net Realized Loss on Investments............................. (18,980) (26,427)
------------- -------------
Change in Net Assets from Operations......................... 624,040 472,637
------------- -------------
DISTRIBUTIONS FROM NET INVESTMENT INCOME:
Class A Shares............................................... (568,757) (499,064)
Class B Shares............................................... (74,263) -0-
------------- -------------
Total Distributions....................................... (643,020) (499,064)
------------- -------------
Net Change in Net Assets from Investment Activities.......... (18,980) (26,427)
------------- -------------
FROM CAPITAL TRANSACTIONS (NOTE 3):
PROCEEDS FROM SHARES SOLD:
Class A Shares............................................... 40,881,989 79,908,069
Class B Shares............................................... 15,887,574 -0-
------------- -------------
56,769,563 79,908,069
------------- -------------
NET ASSET VALUE OF SHARES ISSUED THROUGH DIVIDEND REINVESTMENT:
Class A Shares............................................... 479,626 445,332
Class B Shares............................................... 50,549 -0-
------------- -------------
530,175 445,332
------------- -------------
COST OF SHARES REPURCHASED:
Class A Shares............................................... (36,550,200) (74,519,684)
Class B Shares............................................... (6,019,680) -0-
------------- -------------
(42,569,880) (74,519,684)
------------- -------------
Net Change in Net Assets from Capital Transactions............. 14,729,858 5,833,717
------------- -------------
Total Increase in Net Assets.............................. 14,710,878 5,807,290
NET ASSETS:
Beginning of the Period...................................... 27,546,715 21,739,425
------------- -------------
End of the Period............................................ $ 42,257,593 $ 27,546,715
============= =============
</TABLE>

See Notes to Financial Statements.

F-5
<PAGE> 63

VAN KAMPEN MERRITT MONEY MARKET FUND

FINANCIAL HIGHLIGHTS

The following schedule presents financial highlights for one share of the Fund
outstanding throughout the periods indicated. (Unaudited)
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED JUNE 30,
DEC. 31, --------------------------------
CLASS A SHARES 1994 1994 1993 1992 1991
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period.................. $1.00 $1.00 $1.00 $1.00 $1.00
----- ----- ----- ----- -----
Net Investment Income............................... .019 .025 .023 .041 .065
Less Distributions from Net Investment Income....... .019 .025 .023 .041 .065
----- ----- ----- ----- -----
Net Asset Value, End of Period........................ $1.00 $1.00 $1.00 $1.00 $1.00
----- ----- ----- ----- -----
TOTAL RETURN (Non-Annualized)*........................ 1.96% 2.50% 2.31% 4.21% 6.72%
Net Assets at End of Period (In millions)............. $32.3 $27.5 $21.7 24.9 $35.0
Ratio of Expenses to Average Net Assets*.............. 1.03% 1.13% 1.16% 1.14% .99%
Ratio of Net Investment Income to Average Net
Assets*............................................. 3.91% 2.44% 2.31% 4.21% 6.57%
</TABLE>

- -------------------------
* If certain expenses had not been assumed by the Adviser, total return would
have been lower and the ratios would have been as follows:

<TABLE>
<S> <C> <C> <C> <C> <C>
Ratio of Expenses to Average Net Assets............... 1.50% 1.54% 1.31% 1.55% 1.39%
Ratio of Net Investment Income to Average Net
Assets.............................................. 3.44% 2.03% 2.16% 3.80% 6.17%
</TABLE>

See Notes to Financial Statements.

F-6
<PAGE> 64

VAN KAMPEN MERRITT MONEY MARKET FUND

FINANCIAL HIGHLIGHTS -- (CONTINUED)

<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
CLASS A SHARES 1990 1989 1988 1987 1986
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period..................... $1.00 $1.00 $1.00 $1.00 $1.00
----- ----- ----- ----- -----
Net Investment Income.................................. .078 .078 .066 .056 .068
Less Distributions from Net Investment Income.......... .078 .078 .066 .056 .068
----- ----- ----- ----- -----
Net Asset Value, End of Period........................... $1.00 $1.00 $1.00 $1.00 $1.00
----- ----- ----- ----- -----
TOTAL RETURN (Non-Annualized)*........................... 8.11% 8.07% 6.60% 5.94% 6.96%
Net Assets at End of Period (in millions)................ $45.0 $44.1 $51.5 $17.1 $ 6.3
Ratio of Expenses to Average Net Assets*................. .90% .98% .78% .58% .88%
Ratio of Net Investment Income to Average Net Assets*.... 7.81% 7.79% 6.56% 5.65% 6.78%
</TABLE>

- -------------------------
* If certain expenses had not been assumed by the Adviser, total return would
have been lower and the ratios would have been as follows:

<TABLE>
<S> <C> <C> <C> <C> <C>
Ratio of Expenses to Average Net Assets.................. 1.31% 1.31% 1.22% 1.48% 1.85%
Ratio of Net Investment Income to Average Net Assets..... 7.40% 7.46% 6.13% 4.74% 5.81%
</TABLE>

See Notes to Financial Statements.

F-7
<PAGE> 65

VAN KAMPEN MERRITT MONEY MARKET FUND

FINANCIAL HIGHLIGHTS -- (CONTINUED)
The following schedule presents financial highlights for one share of the Fund
outstanding throughout the period indicated. (Unaudited)

<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
JULY 11, 1994
(COMMENCEMENT OF
DISTRIBUTION) TO
DECEMBER 31,
CLASS B SHARES 1994
- -----------------------------------------------------------------------------------------------
<S> <C>
Net Asset Value, Beginning of Period........................................ $1.00
-----
Net Investment Income..................................................... .015
Less Distributions from Net Investment Income............................. .015
-----
Net Asset Value, End of Period.............................................. $1.00
=====
TOTAL RETURN (Non-Annualized)*.............................................. 1.49%

Net Assets at End of Period (in millions)................................... $ 9.9
Ratio of Expenses to Average Net Assets*.................................... 1.80%
Ratio of Net Investment Income to Average Net Assets*....................... 3.41%
</TABLE>

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

* If certain expenses had not been assumed by the Adviser, total return would
have been lower and the ratios would have been as follows:

<TABLE>
<S> <C>
Ratio of expenses to average net assets..................................... 2.28%
Ratio of net investment income to average net assets........................ 2.93%
</TABLE>

See Notes to Financial Statements.

F-8
<PAGE> 66

VAN KAMPEN MERRITT MONEY MARKET FUND

NOTES TO FINANCIAL STATEMENTS
December 31, 1994 (Unaudited)

NOTE 1 -- SIGNIFICANT ACCOUNTING POLICIES

The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements.

A. Security Valuation

B. Security Transactions

Security transactions are recorded on a trade date basis. Realized gains
and losses are determined on an identified cost basis. Interest income is
recorded on an accrual basis.

C. Federal Income Taxes

D. Distribution of Income and Gains

F-9
<PAGE> 67

VAN KAMPEN MERRITT MONEY MARKET FUND

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
December 31, 1994 (Unaudited)

NOTE 2 -- INVESTMENT ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES

Under the terms of the Fund's Investment Advisory Agreement, Van Kampen
American Capital Investment Advisory Corp. (the "Adviser") will provide
investment advice and facilities to the Fund for an annual fee payable monthly
as follows:

<TABLE>
<CAPTION>
AVERAGE NET ASSETS % PER ANNUM
-------------------------------------------------------- ------------
<S> <C>
First $250 million...................................... .500 of 1%
Next $250 million....................................... .475 of 1%
Next $250 million....................................... .425 of 1%
Over $750 million....................................... .275 of 1%
</TABLE>

Certain legal expenses were paid to Skadden, Arps, Slate, Meagher & Flom,
counsel to the Fund, of which a trustee of the Fund is an affiliated person.

For the six months ended December 31, 1994, the Fund recognized expenses of
approximately $9,700 representing Van Kampen American Capital Distributors,
Inc.'s or its affiliates' ("VKAC") cost of providing accounting, legal and
certain shareholder services to the Fund.

Certain officers and trustees of the Fund are also officers and directors
of VKAC. The Fund does not compensate its officers or trustees who are officers
of VKAC.

The Fund has implemented deferred compensation and retirement plans for its
Trustees. Under the deferred compensation plan, Trustees may elect to defer all
or a portion of their compensation to a later date. The retirement plan covers
those Trustees who are not officers of VKAC.

At December 31, 1994, VKAC owned 611,383 and 100 shares of Classes A and B,
respectively.

F-10
<PAGE> 68

VAN KAMPEN MERRITT MONEY MARKET FUND

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
December 31, 1994 (Unaudited)

NOTE 3 -- CAPITAL TRANSACTIONS

The Fund has outstanding two classes of common shares, Classes A and B.
There are an unlimited number of shares of each class without par value
authorized.

At June 30, 1994, paid in surplus for Class A shares aggregated
$27,601,290. Transactions in shares were as follows:

<TABLE>
<CAPTION>
YEAR ENDED
SIX MONTHS ENDED JUNE 30,
DECEMBER 31, 1994 1994
----------------- -----------
<S> <C> <C>
SALES:
Class A......................................................... 40,881,989 79,908,069
Class B......................................................... 15,887,574 -0-
----------- -----------
Total Sales..................................................... 56,769,563 79,908,069
=========== ===========
DIVIDEND REINVESTMENT:
Class A......................................................... 479,626 445,332
Class B......................................................... 50,549 -0-
----------- -----------
Total Dividend Reinvestment..................................... 530,175 445,332
=========== ===========
REPURCHASES:
Class A......................................................... (36,550,200) (74,519,684)
Class B......................................................... (6,019,680) -0-
----------- -----------
Total Repurchases............................................... (42,569,880) (74,519,684)
=========== ===========
</TABLE>

NOTE 4 -- DISTRIBUTION AND SERVICE PLANS

F-11
<PAGE> 69

PART C: OTHER INFORMATION

ITEM 15. INDEMNIFICATION

The AC Fund's trustees and officers are covered by an Errors and Omissions
Policy. Section 2 of the current and proposed investment advisory agreement
between the AC Fund and AC Adviser provides that, in the absence of willful
misfeasance, bad faith, gross negligence or reckless disregard of the
obligations or duties under the investment advisory agreement on the part of AC
Adviser. AC Adviser shall not be liable to the AC Fund or to any shareholder for
any act or omission in the course of or connected in any way with rendering
services or for any losses that may be sustained in the purchase, holding or
sale of any security. The distribution agreement provides that the AC Fund shall
indemnify VKAC Distributors and related thereto for any loss or liability
arising from any alleged misstatement of a material fact (or alleged omission to
state a material fact) contained in, among other things, registration statements
or prospectuses except to the extent the misstated fact or omission was made in
reliance upon information provided by or on behalf of VKAC Distributors.

Insofar as indemnification for liabilities arising under the Securities Act
of 1933, as amended (the "Securities Act"), may be permitted to directors,
officers and controlling persons of the AC Fund and AC Adviser and VKAC
Distributors pursuant to the foregoing provisions or otherwise, the AC Fund has
been advised that in the opinion of the SEC such indemnification is against
public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the AC Fund of expenses incurred or paid
by a director, officer, or controlling person of the AC Fund and the principal
underwriter in connection with the successful defense of any action, suit or
proceeding) is asserted against the AC Fund by such director, officer or
controlling person or VKAC Distributors in connection with the shares being
registered, the AC Fund will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.

ITEM 16. EXHIBITS

(1) Agreement and Declaration of Trust -- AC Fund+

(2) Bylaws -- AC Fund+

(4) Form of Agreement and Plan of Reorganization*

(5) Specimen Share Certificate for Class A, B and C Shares of the AC
Fund+

(6) Form of Investment Advisory Agreement, as amended -- AC Fund+

(7) (a) Form of Underwriting Agreement+

(b) Form of Selling Agreement+

(9) (a) Form of Custodian Agreement -- AC Fund+

(b) Form of Transfer Agency Agreement -- AC Fund+

(10) (a) Form of Distribution Plan Pursuant to Rule 12b-1+
(i) Class A Plan of Distribution+
(ii) Class B Plan of Distribution+
(iii) Class C Plan of Distribution+

(b) Form of Servicing Agreement with Brokers+

(11) Form of Opinion of O'Melveny & Myers+

(12) Form of Opinion of Skadden, Arps, Slate, Meagher & Flom+

C-1
<PAGE> 70

(13) (a) Form of Support Service Agreement+

(b) Fund Pricing Agreement+

(14) (a) Consent of Price Waterhouse LLP*

(b) Consent of KPMG Peat Marwick LLP*

(16) Powers of Attorney*

(17) (a) Copy of 24f-2 Election of AC Fund+

(b) Form of proxy card*

(27) (a) Financial Data Schedule for AC Fund*

(b) Financial Data Schedule for VK Fund*
- ------------------------

* Filed herewith.

+ To be filed by pre-effective amendment.

C-2
<PAGE> 71

ITEM 17. UNDERTAKINGS

(1) The undersigned registrant agrees that prior to any public re-offering
of the securities registered through the use of a prospectus which is a part of
this registration statement by any person or party who is deemed to be an
underwriter within the meaning of Rule 145(c) of the Securities Act, the
re-offering prospectus will contain the information called for by the applicable
registration form for re-offerings by persons who may be deemed underwriters, in
addition to the information called for by the other items of the applicable
form.

(2) The undersigned registrant agrees that every prospectus that is filed
under paragraph (1) above will be filed as a part of an amendment to the
registration statement and will not be used until the amendment is effective,
and that, in determining any liability under the 1933 Act, each post-effective
amendment shall be deemed to be a new registration statement for the securities
offered therein, and the offering of the securities at that time shall be deemed
to be the initial bona fide offering of them.

C-3
<PAGE> 72

SIGNATURES

AS REQUIRED BY THE SECURITIES ACT OF 1933, THIS REGISTRATION STATEMENT HAS
BEEN SIGNED ON BEHALF OF THE REGISTRANT IN THE CITY OF HOUSTON AND STATE OF
TEXAS, ON THE 23RD DAY OF MAY, 1995.

VAN KAMPEN AMERICAN CAPITAL
RESERVE FUND

By: /s/ NORI L. GABERT

------------------------------------
Nori L. Gabert
Vice President and Secretary

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 DATE INDICATED.

<TABLE>
<CAPTION>
SIGNATURE TITLE
- --------------------------------------------- ----------------------------

<S> <C>
/s/ FERNANDO SISTO* Chairman of the Board
- ---------------------------------------------
Fernando Sisto

/s/ J. MILES BRANAGAN* Director
- ---------------------------------------------
J. Miles Branagan

/s/ RICHARD E. CARUSO* Director
- ---------------------------------------------
Richard E. Caruso

/s/ ROGER HILSMAN* Director
- ---------------------------------------------
Roger Hilsman

/s/ DON G. POWELL* President and Director
- ---------------------------------------------
Don G. Powell

/s/ DAVID REES* Director
- ---------------------------------------------
David Rees

/s/ LAWRENCE J. SHEEHAN* Director
- ---------------------------------------------
Lawrence J. Sheehan

/s/ WILLIAM S. WOODSIDE* Director
- ---------------------------------------------
William S. Woodside

/s/ CURTIS W. MORELL* Vice President and Treasurer
- ---------------------------------------------
Curtis W. Morell

* Signed by Ronald A. Nyberg pursuant to a power of attorney filed herewith.

/s/ RONALD A. NYBERG
- ---------------------------------------------
Ronald A. Nyberg
Attorney-in-fact
</TABLE>
<PAGE> 73

AMERICAN CAPITAL RESERVE FUND, INC.
FORM N-14

EXHIBIT INDEX

<TABLE>
<CAPTION>
PAGE
DESCRIPTION NUMBER
----------------------------------------------------------------------------- ------
<S> <C> <C>
(1) Agreement and Declaration of Trust -- AC Fund+
(2) Bylaws -- AC Fund+
(4) Form of Agreement and Plan of Reorganization*
(5) Specimen Share Certificate for Class A, B and C Shares of the AC Fund+
(6) Form of Investment Advisory Agreement -- AC Fund+
(7) (a) Form of Underwriting Agreement+
(b) Form of Selling Agreement+
(c) Form of Selling Group Agreement+
(9) (a) Form of Custodian Agreement -- AC Fund+
(b) Form of Transfer Agency Agreement -- AC Fund+
(10) (a) Form of Distribution Plan Pursuant to Rule 12b-1
(i) Class A Plan of Distribution+
(ii) Class B Plan of Distribution+
(iii) Class C Plan of Distribution+
(b) Form of Servicing Agreement with Brokers+
(c) Form of Servicing Agreement with Financial Institutions+
(11) Form of Opinion of O'Melveny & Myers+
(12) Form of Opinion of Skadden, Arps, Slate, Meagher & Flom+
(13) (a) Form of Support Service Agreement+
(b) Form of Fund Pricing Agreement+
(c) Form of Accounting Service Agreement+
(14) (a) Consent of Price Waterhouse LLP*
(b) Consent of KPMG Peat Marwick LLP*
(16) Powers of Attorney*
(17) (a) Copy of 24f-2 Election of Registrant+
(b) Form of proxy card*
(27) (a) Financial Data Schedule for AC Fund*
(b) Financial Data Schedule for VK Fund*
</TABLE>

- ---------------
+ To be filed by amendment.
* Filed herewith.

<PAGE> 1
EXHIBIT 4

AGREEMENT AND PLAN OF REORGANIZATION

This Agreement and Plan of Reorganization (the "Agreement") is made as of
July ____, 1995, by and between the American Capital Reserve Fund, a Delaware
business trust formed under the laws of the State of Delaware (the "AC Fund")
and the Van Kampen Merritt Money Market Trust, a Delaware business trust
created under the laws of the State of Delaware (the "VKM Trust") on behalf of
its series, the Van Kampen Merritt Money Market Fund (the "VKM Fund").

W I T N E S S E T H:

WHEREAS, on December 20, 1994, (the "AC Acquisition Date") The Van Kampen
Merritt Companies, Inc. ("TVKMC") acquired all of the issued and outstanding
shares of American Capital Management & Research, Inc. ("American Capital") and
subsequently changed its name to Van Kampen American Capital, Inc.;

WHEREAS, American Capital and TVKMC, through their affiliated companies,
sponsor and manage a number of registered investment companies; and

WHEREAS, Van Kampen American Capital Distributors, Inc., successor by merger
between Van Kampen Merritt Inc. and American Capital Marketing, Inc., acts as
the sponsor and principal underwriter for both the AC Fund and the VKM Fund;

WHEREAS, the VKM Trust was organized as a Massachusetts business trust, and
subsequently reorganized as a Delaware business trust, pursuant to an Agreement
and Declaration of Trust (the "Declaration of Trust") dated [July ___, 1995],
pursuant to which it is authorized to issue an unlimited number of shares of
beneficial interest with par value of $0.01 per share, which at present have
been divided into different series, each series constituting a separate and
distinct series of the VKM Trust, including the VKM Fund;

WHEREAS, Van Kampen American Capital Investment Advisory Corp. (formerly, Van
Kampen Merritt Investment Advisory Corp.) ("Advisory Corp.") provides
investment advisory and administrative services to the VKM Fund;

WHEREAS, the AC Fund was organized as a Maryland corporation on March 28,
1974, and subsequently reorganized as a Delaware business trust, pursuant to an
Agreement and Declaration of Trust dated [July ____, 1995] and is authorized to
issue an unlimited number of shares of beneficial interest with par value of
$0.01 per share;

WHEREAS, Van Kampen American Capital Asset Management, Inc. (formerly,
American Capital Asset Management, Inc.) ("VKAC Asset Management") provides
investment advisory and administrative services to the AC Fund;

WHEREAS, the Board of Trustees of the VKM Trust and the AC Fund have
determined that entering into this Agreement for the AC Fund to acquire the
assets and liabilities of the VKM Fund is in the best interests of the
shareholders of each respective fund; and

1
<PAGE> 2

WHEREAS, the parties intend that this transaction qualify as a reorganization
within the meaning as described in Section 368(a) of the Internal Revenue Code
of 1986, as amended, (the "Code");

NOW, THEREFORE, in consideration of the mutual promises contained herein, and
intending to be legally bound hereby, the parties hereto agree as follows:

1. PLAN OF TRANSACTION.

A. TRANSFER OF ASSETS. Upon satisfaction of the conditions precedent set
forth in Sections 7 and 8 hereof, the VKM Trust will convey, transfer and
deliver to the AC Fund at the closing, provided for in Section 2 hereof, all of
the existing assets of the VKM Fund (including accrued interest to the Closing
Date) consisting of nondefaulted, liquid, U.S. dollar denominated money market
securities, due bills, cash and other marketable securities acceptable to the
AC Fund as more fully set forth on Schedule 1 hereto, and as amended from time
to time prior to the Closing Date (as defined below), free and clear of all
liens, encumbrances and claims whatsoever (the assets so transferred
collectively being referred to as the "Assets").

B. CONSIDERATION. In consideration thereof, the AC Fund agrees that on the
Closing Date the AC Fund will (i) deliver to the VKM Trust full and fractional
shares of the AC Fund having a net asset value per share calculated as provided
in Section 3A hereof, in an amount equal to the aggregate dollar value of the
Assets net of the liabilities determined pursuant to Section 3A of this
Agreement net of the Liabilities (collectively, the "AC Fund Shares") and (ii)
assume all of the VKM Fund's liabilities described in Section 3E hereof (the
"Liabilities"). All AC Fund Shares delivered to the VKM Trust in exchange for
such Assets shall be delivered at net asset value without sales load,
commission or other transactional fee being imposed.

2. CLOSING OF THE TRANSACTION.

CLOSING DATE. The closing shall occur within fifteen (15) business days
after the later of receipt of all necessary regulatory approvals and the final
adjournment of the meeting of shareholders of the VKM Fund at which this
Agreement will be considered and approved or such later date as soon as
practicable thereafter, as the parties may mutually agree (the "Closing Date").
On the Closing Date, the AC Fund shall deliver to the VKM Trust the AC Fund
Shares and the VKM Trust thereafter shall, in order to effect the distribution
of such shares to the VKM Fund stockholders, instruct the AC Fund to register
the pro rata interest in the AC Fund Shares (in full and fractional shares) of
each of the holders of record of shares of the VKM Fund and shall provide as
part of such instruction a complete and updated list of such holders (including
addresses and taxpayer identification numbers), and the AC Fund agrees promptly
to comply with said instruction. The AC Fund shall have no obligation to
inquire as to the validity, propriety or correctness of such instruction, but
shall assume that such instruction is valid, proper and correct.

3. PROCEDURE FOR REORGANIZATION.

A. VALUATION. The value of the Assets and Liabilities of the VKM Fund to be
transferred and assumed, respectively, by the AC Fund shall be computed as of
the Closing Date, in the manner set forth in the most recent Prospectus and
Statement of Additional Information of the AC Fund (collectively, the "AC Fund
Prospectus"), copies of which have been delivered to the VKM Trust.

B. DELIVERY OF FUND ASSETS. The Assets shall be delivered to State Street
Bank and Trust Company, 225 Franklin Street, Post Office Box 1713, Boston,
Massachusetts 02105-1713, as custodian for the AC Fund (the "Custodian") for
the benefit of the AC Fund, duly endorsed in proper form for transfer in such
condition as to constitute a good delivery thereof, free and clear of all
liens, encumbrances and claims whatsoever, in accordance with the custom of
brokers, and shall be accompanied by all necessary state stock transfer stamps,
the cost of which shall be borne by the VKM Fund.

2
<PAGE> 3

C. FAILURE TO DELIVER SECURITIES. If the VKM Trust is unable to make
delivery pursuant to Section 3B hereof to the Custodian of any of the VKM
Fund's securities for the reason that any of such securities purchased by the
AC Fund have not yet been delivered to it by the VKM Fund's broker or brokers,
then, in lieu of such delivery, the VKM Trust shall deliver to the Custodian,
with respect to said securities, executed copies of an agreement of assignment
and due bills executed on behalf of said broker or brokers, together with such
other documents as may be required by the AC Fund or Custodian, including
brokers' confirmation slips.

D. SHAREHOLDER ACCOUNTS. The AC Fund, in order to assist the VKM Trust in
the distribution of the AC Fund Shares to the VKM Fund shareholders after
delivery of the AC Fund Shares to the VKM Trust, will establish pursuant to the
request of the VKM Trust an open account with the AC Fund for each shareholder
of the VKM Fund and, upon request by the VKM Trust, shall transfer to such
account the exact number of full and fractional shares of the AC Fund then held
by the VKM Trust specified in the instruction provided pursuant to Section 2
hereof. The AC Fund is not required to issue certificates representing AC Fund
Shares unless requested to do so by a shareholder. Upon liquidation or
dissolution of the VKM Fund, certificates representing shares of stock of the
VKM Fund shall become null and void.

E. LIABILITIES. The Liabilities shall include all of VKM Fund's
liabilities, debts, obligations, and duties of whatever kind or nature, whether
absolute, accrued, contingent, or otherwise, whether or not arising in the
ordinary course of business, whether or not determinable at the Closing Date,
and whether or not specifically referred to in this Agreement.

F. EXPENSES. Whether or not the transactions contemplated herein are
consummated VKAC Asset Management agrees to pay (i) for the reasonable outside
expenses for the transactions contemplated herein; including, but not by way of
limitation, the preparation of the AC Fund's Registration Statement on Form
N-14 (the "Registration Statement") and the solicitation of VKM Fund
shareholder proxies; (ii) VKM Trust's counsel's reasonable attorney's fees,
which fees shall be payable pursuant to receipt of an itemized statement, and
(iii) the cost of rendering the tax opinion, more fully referenced in Section
7F below.

G. DISSOLUTION. As soon as practicable after the Closing Date but in no
event later than one year after the Closing Date, the VKM Trust shall
voluntarily dissolve and completely liquidate the VKM Fund, by taking, in
accordance with the Delaware Business Trust Law and Federal securities laws,
all steps as shall be necessary and proper to effect a complete liquidation and
dissolution of the VKM Fund. Immediately after the Closing Date, the stock
transfer books relating to the VKM Fund shall be closed and no transfer of
shares shall thereafter be made on such books.

4. VKM TRUST'S REPRESENTATIONS AND WARRANTIES.

VKM Trust, on behalf of the VKM Fund, hereby represents and warrants to the
AC Fund and agrees with the AC Fund, which representations and warranties are
true and correct on the date hereof that:

A. ORGANIZATION. The VKM Trust, a Delaware Business Trust duly formed and
in good standing under the laws of the State of Delaware and is duly authorized
to transact business in the State of Delaware. The VKM Fund is a separate
series of the VKM Trust duly designated in accordance with the applicable
provisions of the Declaration of Trust. The VKM Trust and the VKM Fund are
qualified to do business in all jurisdictions in which they are required to be
so qualified, except jurisdictions in which the failure to so qualify would not
have a material adverse effect on either the VKM Trust or VKM Fund. The VKM
Trust has all material federal, state and local authorization necessary to own
on behalf of the VKM Fund all of the properties and assets allocated to the VKM
Fund and to carry on its business and the business of the VKM Fund as now being
conducted, except authorizations which the failure to so obtain would not have
a material adverse effect on the VKM Trust or the VKM Fund.

3
<PAGE> 4

B. REGISTRATION. VKM Trust is registered under the Investment Company Act
of 1940 (the "1940 Act") as an open-end, diversified management company and
such registration has not been revoked or rescinded. VKM Trust is in
compliance in all material respects with the 1940 Act and the rules and
regulations thereunder with respect to its activities and those undertaken on
behalf of the VKM Fund. All of the outstanding shares of beneficial interest
of the VKM Fund (subject to the matters set forth in the Opinion of Counsel
dated [ ], from Skadden, Arps, Slate, Meagher & Flom, to the VKM
Trust, a copy of which is contained in the VKM Trust's registration statement
on form N1-A, a copy of which opinion letter has been tendered to the AC Fund)
have been duly authorized and are validly issued, fully paid and non-assessable
and not subject to pre-emptive or dissenters' rights.

C. AUDITED FINANCIAL STATEMENTS. The statement of assets and liabilities
and the portfolio of investments and the related statements of operations and
changes in net assets of the VKM Fund audited as of and for the year ended June
30, 1994, and as soon as reasonably available, same for the year ended June 30,
1995, true and complete copies of which have been heretofore furnished to the
AC Fund, fairly represent the financial condition and the results of operations
of the VKM Fund as of and for their respective dates and periods in conformity
with generally accepted accounting principles applied on a consistent basis
during the periods involved.

D. FINANCIAL STATEMENTS. The VKM Trust shall furnish to the AC Fund (i) an
unaudited statement of assets and liabilities and the portfolio of investments
and the related statements of operations and changes in net assets of the VKM
Fund for the period ended June 30, 1995; and (ii) within five (5) business days
after the Closing Date an unaudited statement of assets and liabilities and the
portfolio of investments and the related statements of operations and changes
in net assets as of and for the interim period ending on the Closing Date; such
financial statements will represent fairly the financial position and portfolio
of investments and the results of the VKM Fund's operations as of, and for the
period ending on, the dates of such statements in conformity with generally
accepted accounting principles applied on a consistent basis during the periods
involved and the results of its operations and changes in financial position
for the periods then ended; and such financial statements shall be certified by
the Treasurer of the VKM Trust as complying with the requirements hereof.

E. LIABILITIES. There are, and as of the Closing Date will be, no
contingent liabilities of the VKM Fund not disclosed in the financial
statements delivered pursuant to Sections 4C and 4D which would materially
affect the VKM Fund's financial condition, and there are no legal,
administrative, or other proceedings pending or, to its knowledge, threatened
against the VKM Trust or the VKM Fund which would, if adversely determined,
materially affect the VKM Fund's financial condition. All Liabilities were
incurred by the VKM Fund in the ordinary course of its business.

F. MATERIAL AGREEMENTS. The VKM Trust is in compliance as to the VKM Fund
with all material agreements, rules, laws, statutes, regulations and
administrative orders affecting its operations or its assets; and except as
referred to in the VKM Fund's Prospectus and Statement of Additional
Information, there are no material agreements outstanding relating to the VKM
Fund to which the VKM Trust is a party.

G. STATEMENT OF EARNINGS. As promptly as practicable, but in any case no
later than 30 calendar days after the Closing Date, KPMG Peat Marwick L.L.P.,
auditors for the VKM Trust, shall furnish the AC Fund with a statement of the
earnings and profits of the VKM Fund within the meaning of the Code as of the
Closing Date.

H. RESTRICTED SECURITIES. None of the securities comprising the assets of
the VKM Fund at the date hereof are, or on the Closing Date or any subsequent
delivery date will be, "restricted securities" under the Securities Act of
1933, (the "Securities Act") or the rules and regulations of the Securities and
Exchange Commission (the "SEC") thereunder, or will be securities for which
market quotations are not readily available for purposes of Section 2(a)(41)
under the 1940 Act.

4
<PAGE> 5

I. TAX RETURNS. At the date hereof and on the Closing Date, all Federal
and other tax returns and reports of the VKM Fund required by law to have been
filed by such dates shall have been filed, and all Federal and other taxes
shown thereon shall have been paid so far as due, or provision shall have been
made for the payment thereof, and to the best of VKM Trust's knowledge no such
return is currently under audit and no assessment has been asserted with
respect to any such return.

J. CORPORATE AUTHORITY. The VKM Trust has the necessary power under its
Declaration of Trust to enter into this Agreement and to consummate the
transactions contemplated herein. The execution, delivery and performance of
this Agreement and the consummation of the transactions contemplated herein
have been duly authorized by the VKM Trust's Board of Trustees, and except for
obtaining approval of the holders of the shares of beneficial interest of the
VKM Fund, no other corporate acts or proceedings by the VKM Trust or the VKM
Fund are necessary to authorize this Agreement and the transactions
contemplated herein. This Agreement has been duly executed and delivered by
VKM Trust and constitutes a legal, valid and binding obligation of VKM Trust
enforceable in accordance with its terms.

K. NO VIOLATION; CONSENTS AND APPROVALS. The execution, delivery and
performance of this Agreement by the VKM Trust does not and will not (i)
result in a material violation of any provision of the Declaration of Trust of
the VKM Trust, as amended, or the Designation of Series, as amended, of the VKM
Fund, (ii) result in a material violation of any statute, law, judgment, writ,
decree, order, regulation or rule of any court or governmental authority
applicable to VKM Trust, (iii) result in a material violation or breach of, or
constitute a default under any material contract, indenture, mortgage, loan
agreement, note, lease or other instrument or obligation to which the VKM Trust
is subject, or (iv) result in the creation or imposition or any lien, charge or
encumbrance upon any property or assets of the VKM Trust. Except as set forth
in Schedule 2 to this Agreement, (i) no consent, approval, authorization, order
or filing with or notice to any court or governmental authority or agency is
required for the consummation by the VKM Trust of the transactions contemplated
by this Agreement and (ii) no consent of or notice to any third party or entity
is required for the consummation by the VKM Trust of the transactions
contemplated by this Agreement.

L. ABSENCE OF CHANGES. From the date of this Agreement through the Closing
Date, there shall not have been:

(1) any change in the business, results of operations, assets, or financial
condition or the manner of conducting the business of the VKM Fund, other than
changes in the ordinary course of its business, or any pending or threatened
litigation, which has had or may have an adverse material effect on such
business, results of operations, assets or financial condition;

(2) issued any option to purchase or other right to acquire shares of the
VKM Fund granted by the VKM Trust to any person other than subscriptions to
purchase shares at net asset value in accordance with terms in the prospectus
for the VKM Fund;

(3) any entering into, amendment or termination of any contract or
agreement by the VKM Trust, except as otherwise contemplated by this Agreement;

(4) any indebtedness incurred, other than in the ordinary course of
business, by the VKM Fund for borrowed money or any commitment to borrow money
entered into by the VKM Fund or the VKM Trust on behalf of the VKM Fund;

(5) any amendment of the Declaration of Trust of the VKM Trust; or

(6) any grant or imposition of any lien, claim, charge or encumbrance
(other than encumbrances arising in the ordinary course of business with
respect to covered options) upon any asset of the VKM Fund other than a lien
for taxes not yet due and payable.

5
<PAGE> 6

M. TITLE. On the Closing Date, the VKM Fund will have good and marketable
title to the Assets, free and clear of all liens, mortgages, pledges,
encumbrances, charges, claims and equities whatsoever, other than a lien for
taxes not yet due and payable and full right, power and authority to sell,
assign, transfer and delivery such Assets; upon delivery of such Assets, the AC
Fund will receive good and marketable title to such Assets, free and clear of
all liens, mortgages, pledges, encumbrances, charges, claims and equities other
than a lien for taxes not yet due and payable.

N. PROXY STATEMENT. The VKM Trust's Proxy Statement, at the time of delivery
by the VKM Trust to its shareholders in connection with a special meeting of
shareholders to approve this transaction, and the VKM Trust's Prospectus and
Statement of Additional Information with respect to the VKM Fund on the forms
incorporated by reference into such Proxy Statement and as of their respective
dates (collectively, the "VKM Trust's Proxy Statement/Prospectus"), and at the
time the Registration Statement becomes effective, the Registration Statement
insofar as it relates to the VKM Trust and the VKM Fund and each of them at all
times subsequent thereto and including the Closing Date, as amended or as
supplemented if it shall have been amended or supplemented, conform and will
conform, in all material respects, to the applicable requirements of the
applicable Federal and state securities laws and the rules and regulations of
the SEC thereunder, and do not and will not include any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading, except that no representations or
warranties in this Section 4N apply to statements or omissions made in reliance
upon and in conformity with written information concerning the AC Fund or their
affiliates furnished to VKM Trust by the AC Fund.

O. BROKERS. There are no brokers or finders fees payable by VKM Trust or
VKM Fund in connection with the transactions provided for herein.

P. TAX QUALIFICATION. The VKM Fund has qualified as a regulated investment
company within the meaning of Section 851 of the Code for each of its taxable
years; and has satisfied the distribution requirements imposed by Section 852
of the Code for each of its taxable years.

Q. FAIR MARKET VALUE The fair market value on a going concern basis of the
Assets will equal or exceed the Liabilities to be assumed by the AC Fund and
those to which the Assets are subject.

5. THE AC FUND'S REPRESENTATIONS AND WARRANTIES.

The AC Fund, hereby represents and warrants to the VKM Trust and agrees with
the VKM Trust, which representations and warranties are true and correct on the
date hereof that:

A. ORGANIZATION. The AC Fund is a Delaware Business Trust duly formed and
in good standing under the laws of the State of Delaware and is duly authorized
to transact business in the State of Delaware. The AC Fund is qualified to do
business in all jurisdictions in which it is required to be so qualified,
except jurisdictions in which the failure to so qualify would not have a
material adverse effect on the AC Fund. The AC Fund has all material federal,
state and local authorization necessary to own all of its properties and assets
and to carry on its business and the business thereof as now being conducted,
except authorizations which the failure to so obtain would not have a material
adverse effect on the AC Fund.

B. REGISTRATION. The AC Fund is registered under the 1940 Act as an
open-end, non-diversified management company and; such registration has not
been revoked or rescinded. The AC Fund is in compliance in all material
respects with the 1940 Act and the rules and regulations thereunder. All of
the outstanding shares of the AC Fund have been duly authorized and are validly
issued, fully paid and non-assessable and not subject to pre-emptive dissenters
rights.

C. AUDITED FINANCIAL STATEMENTS. The statement of assets and liabilities
and the portfolio of investments and the related statements of operations and
changes in net assets of the AC Fund audited

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<PAGE> 7

as of and for the year ended May 31, 1994, true and complete copies of which
have been heretofore furnished to the VKM Trust fairly represent the financial
condition and the results of operations of the AC Fund as of and for their
respective dates and periods in conformity with generally accepted accounting
principles applied on a consistent basis during the periods involved.

D. FINANCIAL STATEMENTS. The AC Fund shall furnish to the VKM Trust (i) an
unaudited statement of assets and liabilities and the portfolio of investments
and the related statements of operations and changes in net assets of the AC
Fund for the period ended March 31, 1995, and (ii) within five (5) business
days after the Closing Date, an unaudited statement of assets and liabilities
and the portfolio of investments and the related statements of operations and
changes in net assets as of and for the interim period ending on the Closing
Date; such financial statements will represent fairly the financial position
and portfolio of investments of the AC Fund and the results of its operations
as of, and for the period ending on, the dates of such statements in conformity
with generally accepted accounting principles applied on a consistent basis
during the period involved and fairly present the financial position of the AC
Fund as at the dates thereof and the results of its operations and changes in
financial position for the periods then ended; and such financial statements
shall be certified by the Treasurer of the AC Fund as complying with the
requirements hereof.

E. CONTINGENT LIABILITIES. There are no contingent liabilities of the AC
Fund not disclosed in the financial statements delivered pursuant to Sections
5C and 5D and there are no legal, administrative, or other proceedings pending
or, to its knowledge, threatened against the AC Fund which would, if adversely
determined, materially affect the AC Fund's financial condition.

F. MATERIAL AGREEMENTS. The AC Fund is in compliance with all material
agreements, rules, laws, statutes, regulations and administrative orders
affecting its operations or its assets; and except as referred to in the AC
Fund's Prospectus and Statement of Additional Information, there are no
material agreements outstanding to which the AC Fund is a party.

G. TAX RETURNS. At the date hereof and on the Closing Date, all Federal and
other tax returns and reports of the AC Fund required by laws to have been
filed by such dates shall have been filed, and all Federal and other taxes
shall have been paid so far as due, or provision shall have been made for the
payment thereof, and to the best of the AC Fund's knowledge no such return is
currently under audit and no assessment has been asserted with respect to any
such return.

H. CORPORATE AUTHORITY. The AC Fund has the necessary power to enter into
this Agreement and to consummate the transactions contemplated herein. The
execution, delivery and performance of this Agreement and the consummation of
the transactions contemplated herein have been duly authorized by the AC Fund's
Board of Trustees, no other corporate acts or proceedings by the AC Fund are
necessary to authorize this Agreement and the transactions contemplated herein.
This Agreement has been duly executed and delivered by the AC Fund and
constitutes a valid and binding obligation of the AC Fund enforceable in
accordance with its terms.

I. NO VIOLATION; CONSENTS AND APPROVALS. The execution, delivery and
performance of this Agreement by the AC Fund does not and will not (i) violate
any provision of the Declaration of Trust of the AC Fund, or any amendment
thereto, (ii) violate any statute, law, judgment, writ, decree, order,
regulation or rule of any court or governmental authority applicable to the AC
Fund or (iii) result in a violation or breach of, or constitute a default
under, or result in the creation or imposition or any lien, charge or
encumbrance upon any property or assets of the AC Fund pursuant to any material
contract, indenture, mortgage, loan agreement, note, lease or other instrument
or obligation to which the AC Fund is subject. Except as set forth in Schedule
6 to this Agreement, (i) no consent, approval, authorization, order of filing
with notice to any court or governmental authority or agency is required for
the consummation by the AC Fund of the transactions contemplated by this
Agreement and (ii) no consent of or notice to any third party or entity is
required for the consummation by the AC Fund of the transactions contemplated
by this Agreement.

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<PAGE> 8

J. ABSENCE OF PROCEEDINGS. There are no legal, administrative or other
proceedings pending or, to its knowledge, threatened against the AC Fund which
would materially affect its financial condition.

K. SHARES OF THE AC FUND: REGISTRATION. The AC Fund Shares to be issued
pursuant to Section 1 hereof will be duly registered under the Securities Act
and all applicable state securities laws.

L. SHARES OF THE AC FUND: AUTHORIZATION. The shares of the AC Fund to be
issued pursuant to Section 1 hereof have been duly authorized and, when issued
in accordance with this Agreement, will be validly issued and fully paid and
non-assessable by the AC Fund and conform in all material respects to the
description thereof contained in the AC Fund's Prospectus furnished to the VKM
Trust.

M. ABSENCE OF CHANGES. From the date hereof through the Closing Date, there
shall not have been any change in the business, results of operations, assets
or financial condition or the manner of conducting the business of the AC Fund,
other than changes in the ordinary course of its business, which has had an
adverse material effect on such business, results of operations, assets or
financial condition.

N. REGISTRATION STATEMENT. The Registration Statement and the Prospectus
contained therein filed on Form N-14, the ("Registration Statement"), as of the
effective date of the Registration Statement, and at all times subsequent
thereto and including the Closing Date, as amended or as supplemented if they
shall have been amended or supplemented, will conform, in all material
respects, to the applicable requirements of the applicable Federal securities
laws and the rules and regulations of the SEC thereunder, and will not include
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading, except
that no representations or warranties in this Section apply to statements or
omissions made in reliance upon and in conformity with written information
concerning the VKM Trust or the VKM Fund furnished to the AC Fund by the VKM
Trust.

O. TAX QUALIFICATION. The AC Fund has qualified as a regulated investment
company within the meaning of Section 851 of the Code for each of its taxable
years; and has satisfied the distribution requirements imposed by Section 852
of the Code for each of its taxable years. For purposes of this Section, any
reference to the VKM Fund shall include its predecessors, a series of a
Massachusetts business trust organized and designated on [September 14, 1984]
and subsequently reorganized by merger with and into the Fund.

6. COVENANTS.

During the period from the date of this Agreement and continuing until the
Closing Date the VKM Trust and AC Fund each agrees that (except as expressly
contemplated or permitted by this Agreement):

A. OTHER ACTIONS. The VKM Fund shall operate only in the ordinary course of
business consistent with prior practice. No party shall take any action that
would, or reasonably would be expected to, result in any of its representations
and warranties set forth in this Agreement being or becoming untrue in any
material respect.

B. GOVERNMENT FILINGS; CONSENTS. The VKM Trust and the AC Fund shall file
all reports required to be filed by the VKM Trust and the AC Fund with the SEC
between the date of this Agreement the Closing Date and shall deliver to the
other party copies of all such reports promptly after the same are filed.
Except where prohibited by applicable statutes and regulations, each party
shall promptly provide the other (or its counsel) with copies of all other
filings made by such party with any state, local or federal government agency
or entity in connection with this Agreement or the transactions contemplated
hereby. Each of the VKM Trust and the AC Fund shall use all reasonable
efforts to obtain all consents, approvals, and authorizations required in
connection with the consummation of the transactions contemplated by this
Agreement and to make all necessary filings with the Secretary of State of the
State of Delaware.

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<PAGE> 9

C. PREPARATION OF THE REGISTRATION STATEMENT AND THE PROXY
STATEMENT/PROSPECTUS. In connection with the Registration Statement and the
VKM Fund's Proxy Statement/Prospectus, each party hereto will cooperate with
the other and furnish to the other the information relating to the VKM Trust,
VKM Fund or the AC Fund, as the case may be, required by the Securities Act or
the Exchange Act and the rules and regulations thereunder, as the case may be,
to be set forth in the Registration Statement or the Proxy
Statement/Prospectus, as the case may be. The VKM Trust shall promptly prepare
and file with the SEC the Proxy Statement/Prospectus and the AC Fund shall
promptly prepare and file with the SEC the Registration Statement, in which the
Proxy Statement/Prospectus will be included as a prospectus. In connection
with the Registration Statement, insofar as it relates to the VKM Trust and its
affiliated persons, the AC Fund shall only include such information as is
approved by the VKM Trust for use in the Registration Statement. The AC Fund
shall not amend or supplement any such information regarding the VKM Trust and
such affiliates without the prior written consent of the VKM Trust which
consent shall not be unreasonably withheld. The AC Fund shall promptly notify
and provide the VKM Trust with copies of all amendments or supplements filed
with respect to the Registration Statement. The AC Fund shall use all
reasonable efforts to have the Registration Statement declared effective under
the Securities Act as promptly as practicable after such filing. The AC Fund
shall also take any action (other than qualifying to do business in any
jurisdiction in which it is now not so qualified) required to be taken under
any applicable state securities laws in connection with the issuance of the AC
Fund's shares in the transactions contemplated by this Agreement, and the AC
Fund shall furnish all information concerning the VKM Fund and the holders of
the AC Fund's shares as may be reasonably requested in connection with any such
action.

D. ACCESS TO INFORMATION. During the period prior to the Closing Date, the
VKM Trust shall make available to the AC Fund a copy of each report, schedule,
registration statement and other document (the "Documents") filed or received
by it during such period pursuant to the requirements of Federal or state
securities laws or Federal or state banking laws (other than Documents which
such party is not permitted to disclose under applicable law or which are not
relevant to the VKM Fund). During the period prior to the Closing Date, the AC
Fund shall make available to the VKM Fund each Document pertaining to the
transactions contemplated hereby filed or received by it during such period
pursuant to Federal or state securities laws or Federal or state banking laws
(other than Documents which such party is not permitted to disclose under
applicable law).

E. SHAREHOLDERS MEETING. The VKM Trust shall call a meeting of the VKM Fund
shareholders to be held as promptly as practicable for the purpose of voting
upon the approval of this Agreement and the transactions contemplated herein,
and shall furnish a copy of the Proxy Statement/Prospectus and form of proxy to
each shareholder of the VKM Fund as of the record date for such meeting of
shareholders. The VKM Trust's Board of Trustees shall recommend to the VKM Fund
shareholders approval of this Agreement and the transactions contemplated
herein, subject to fiduciary obligations under applicable law.

F. COORDINATION OF PORTFOLIOS. The VKM Trust and AC Fund, covenant and
agree to coordinate the respective portfolios of the VKM Fund and AC Fund from
the date of the Agreement up to and including the Closing Date in order that at
Closing, when the Assets are added to the AC Fund's portfolio, the resulting
portfolio will meet the AC Fund's investment objective, policies and
restrictions, as set forth in the AC Fund's prospectus and Statement of
Additional Information, copies of which have been delivered to VKM Trust.

G. DISTRIBUTION OF THE SHARES. At Closing the VKM Trust covenants that it
shall cause to be distributed the AC Fund Shares in the proper pro rata amount
for the benefit of the VKM Fund's shareholders and such that neither the VKM
Trust nor the VKM Fund shall continue to hold amounts of said shares so as to
cause a violation of Section 12(d)(1) of the Investment Company Act. VKM Trust
covenants further that, pursuant to Section 3G, it shall liquidate and dissolve
the VKM Fund as promptly as practicable after the Closing Date. The VKM Trust
covenants to use all reasonable efforts to cooperate with the AC Fund and the
AC Fund's transfer agent in the distribution of said shares.

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<PAGE> 10

H. BROKERS OR FINDERS. Except as disclosed in writing to the other party
prior to the date hereof, each of the VKM Trust and the AC Fund represents that
no agent, broker, investment banker, financial advisor or other firm or person
is or will be entitled to any broker's or finder's fee or any other commission
or similar fee in connection with any of the transactions contemplated by this
Agreement, and each party shall hold the other harmless from and against any
all claims, liabilities or obligations with respect to any such fees,
commissions or expenses asserted by any person to be due or payable in
connection with any of the transactions contemplated by this Agreement on the
basis of any act or statement alleged to have been made by such first party or
its affiliate.

I. ADDITIONAL AGREEMENTS. In case at any time after the Closing Date any
further action is necessary or desirable in order to carry out the purposes of
this Agreement (including, without limitation, the execution of any documents,
agreements or certificates or any other additional actions reasonably requested
with respect to the non-assumption of the liabilities and obligations of the
VKM Fund by the AC Fund), the proper officers and trustees of each party to
this Agreement shall take all such necessary action.

J. PUBLIC ANNOUNCEMENTS. For a period of time from the date of this
Agreement to the Closing Date, the VKM Trust and the AC Fund will consult with
each other before issuing any press releases or otherwise making any public
statements with respect to this Agreement or the transactions contemplated
herein and shall not issue any press release or make any public statement prior
to such consultation, except as may be required by law or the rules of any
national securities exchange on which such party's securities are traded.

K. TAX STATUS OF REORGANIZATION. The intention of the parties is that the
transaction will qualify as a reorganization within the meaning of Section
368(a) of the Code. Neither the VKM Trust, the VKM Fund nor the AC Fund shall
take any action, or cause any action to be taken (including, without
limitation, the filing of any tax return) that is inconsistent with such
treatment or results in the failure of the transaction to qualify as a
reorganization within meaning of Section 368(a) of the Code. At or prior to
the Closing Date, the VKM Trust, the VKM Fund and the AC Fund will take such
action, or cause such action to be taken, as is reasonably necessary to enable
Skadden, Arps, Slate, Meagher & Flom, counsel to the AC Fund, to render the tax
opinion required herein.

L. DECLARATION OF DIVIDEND. At or immediately prior to the Closing Date, the
VKM Fund shall declare and pay to its stockholders a dividend or other
distribution in an amount large enough so that it will have distributed in an
amount large enough so that it will have distributed substantially all (and in
any event not less than 98%) of its investment company taxable income (computed
without regard to any deduction for dividends paid) and realized net capital
gain, if any, for the current taxable year through the Closing Date.

7. CONDITIONS TO OBLIGATIONS OF THE VKM TRUST

The obligations of the VKM Trust hereunder with respect to the consummation
of the Reorganization are subject to the satisfaction, or written waiver by the
VKM Trust, of the following conditions:

A. SHAREHOLDER APPROVAL. This Agreement and the transactions contemplated
herein shall have been approved by the affirmative vote of the holders of a
majority of the shares of beneficial interest of the VKM Fund present in person
or by proxy at a meeting of said shareholders in which a quorum is constituted.

B. REPRESENTATIONS, WARRANTIES AND AGREEMENTS. Each of the representations
and warranties of the AC Fund contained herein shall be true in all material
respects as of the Closing Date, and as of the Closing Date there shall have
been no material adverse change in the financial condition, results of
operations, business properties or assets of the AC Fund, and the VKM Trust
shall have received a certificate of the President or Vice President of the AC
Fund satisfactory in form and

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<PAGE> 11

substance to the VKM Trust so stating. The AC Fund shall have performed and
complied in all material respects with all agreements, obligations and
covenants required by this Agreement to be so performed or complied with by it
on or prior to the Closing Date.

C. REGISTRATION STATEMENT EFFECTIVE. The Registration Statement shall have
become effective and no stop orders under the Securities Act pertaining thereto
shall have been issued.

D. REGULATORY APPROVAL. All necessary approvals, registrations, and
exemptions under federal and state securities laws shall have been obtained.

E. NO INJUNCTIONS OR RESTRAINTS; ILLEGALITY. No temporary restraining
order, preliminary or permanent injunction or other order issued by any court
of competent jurisdiction or other legal restraint or prohibition (an
"Injunction") preventing the consummation of the transactions contemplated by
this Agreement shall be in effect, nor shall any proceeding by any state, local
or federal government agency or entity asking any of the foregoing be pending.
There shall not have been any action taken, or any statute, rule, regulation or
order enacted, entered, enforced or deemed applicable to the transactions
contemplated by this Agreement, which makes the consummation of the
transactions contemplated by this Agreement illegal or which has a material
adverse affect on the business operations of the AC Fund.

F. TAX OPINION. The VKM Trust shall have obtained an opinion from Skadden,
Arps, Slate, Meagher & Flom, counsel for the VKM Trust, dated as of the Closing
Date, addressed to the VKM Trust, that the consummation of the transactions set
forth in this Agreement comply with the requirements of a reorganization as
described in Section 368(a) of the Internal Revenue Code of 1986, as amended,
substantially in the form attached as Annex A.

G. OPINION OF COUNSEL. The VKM Trust shall have received the opinion of
O'Melveny & Myers, counsel for AC Fund, dated as of the Closing Date, addressed
to the VKM Trust and VKM Fund, substantially in the form attached as Annex B to
the effect that: (i) the AC Fund is duly formed and in good standing as a
trust under the laws of the State of Delaware; (ii) the AC Fund is registered
as an open-end, diversified management company under the Securities Act of 1933
and the 1940 Act; (iii) this Agreement and the reorganization provided for
herein and the execution of this Agreement have been duly authorized and
approved by all requisite action of the AC Fund and this Agreement has been
duly executed and delivered by the AC Fund and (assuming the Agreement is a
valid and binding obligation of the other parties thereto) is a valid and
binding obligation of the AC Fund; (iv) neither the execution or delivery by
the AC Fund of this Agreement nor the consummation by the AC Fund of the
transactions contemplated thereby contravene the AC Fund's Declaration of Trust
or, to the best of their knowledge, violate any provision of any statute, or
any published regulation or any judgment or order disclosed to us by the AC
Fund as being applicable to the AC Fund; (v) to the best of their knowledge
based solely on the certificate of an appropriate officer of the AC Fund
attached hereto, there is no pending, or threatened litigation which would have
the effect of prohibiting any material business practice or the acquisition of
any material property or the conduct of any material business of the AC Fund or
might have a material adverse effect on the value of any assets of the AC Fund;
(vi) the AC Fund's Shares have been duly authorized and upon issuance thereof
in accordance with this Agreement will be validly issued, fully paid and
non-assessable; (vii) except as to financial statements and schedules and other
financial and statistical data included or incorporated by reference therein
and subject to usual and customary qualifications with respect to Rule 10b-5
type opinions as of the effective date of the Registration Statement filed
pursuant to the Agreement, the portions thereof pertaining to the AC Fund
comply as to form in all material respects with their requirements of the
Securities Act, the Securities Exchange Act and the 1940 Act and the rules and
regulations of the Commission thereunder and no facts have come to counsel's
attention which cause them to believe that as of the effectiveness of the
portions of the Registration Statement applicable to the AC Fund, the
Registration Statement contained any untrue statement of a material fact or
omitted to state any material fact required to be stated therein or necessary
to make the statements therein not misleading; and (viii) to the best of their
knowledge and information and subject to the qualifications set forth below,
the execution and delivery by the AC Fund of the Agreement and the consummation
of the transactions therein contemplated do not require, under

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<PAGE> 12

the laws of the States of Texas or Delaware, or the federal laws of the United
States, the consent, approval, authorization, registration, qualification or
order of, or filing with, any court or governmental agency or body (except such
as have been obtained under the Securities Act, the 1940 Act or the rules and
regulations thereunder.) Counsel need express no opinion, however, as to any
such consent, approval, authorization, registration, qualification, order or
filing (a) which may be required as a result of the involvement of other
parties to the Agreement in the transactions contemplated by the Agreement
because of their legal or regulatory status or because of any other facts
specifically pertaining to them; (b) the absence of which does not deprive the
VKM Trust or VKM Fund of any material benefit under such agreements; of (c)
which can be readily obtained without significant delay or expense to the VKM
Trust or VKM Fund, without loss to the VKM Trust or VKM Fund of any material
benefit under the Agreement and without any material adverse effect on them
during the period such consent, approval authorization, registration,
qualification or order was obtained. The foregoing opinion relates only to
consents, approvals, authorizations, registrations, qualifications, orders or
fillings under (a) laws which are specifically referred to in this opinion, (b)
laws of the States of Texas and Delaware and the United States of America
which, in our experience, are normally applicable to transactions of the type
provided for in the Agreement and (c) court orders and judgments disclosed to
us by the AC Fund in connection with the opinion. In addition, although
counsel need not specifically considered the possible applicability to the AC
Fund of any other laws, orders or judgments, nothing has come to their
attention in connection with our representations of the AC Fund in this
transaction that has caused them to conclude that any other consent, approval,
authorization, registration, qualification, order or filing is required.

H. OFFICER CERTIFICATES. The VKM Trust shall have received a certificate of
an authorized officer of the AC Fund, dated as of the Closing Date, certifying
that the representations and warranties set forth in Section 5 are true and
correct on the Closing Date, together with certified copies of the resolutions
adopted by the Board of Directors shall be furnished to the VKM Trust.

8. CONDITIONS TO OBLIGATIONS OF THE AC FUND

The obligations of the AC Fund hereunder with respect to the consummation of
the Reorganization are subject to the satisfaction, or written waiver by the AC
Fund of the following conditions:

B. REPRESENTATIONS, WARRANTIES AND AGREEMENTS. Each of the representations
and warranties of the VKM Trust contained herein shall be true in all material
respects of the Closing Date, and as of the Closing Date there shall have been
no material adverse change in the financial condition, results of operations,
business, properties or assets of the VKM Fund since June 30, 1994 and the AC
Fund shall have received a certificate of the Chairman or President of VKM
Trust satisfactory in form and substance to the AC Fund so stating. The VKM
Trust and the VKM Fund shall have performed and complied in all material
respects with all agreements, obligations and covenants required by this
Agreement to be so performed or complied with by them on or prior to the
Closing Date.

C. REGISTRATION STATEMENT EFFECTIVE. The Registration Statement shall have
become effective and no stop orders under the Securities Act pertaining thereto
shall have been issued.

D. REGULATORY APPROVAL. All necessary approvals, registrations, and
exemptions under federal and state securities laws shall have been obtained.

E. NO INJUNCTIONS OR RESTRAINTS: ILLEGALITY. No injunction preventing the
consummation of the transactions contemplated by this Agreement shall be in
effect, nor shall any proceeding by any state, local or federal government
agency or entity seeking any of the foregoing be pending. There shall not be

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<PAGE> 13

any action taken, or any statute, rule, regulation or order enacted, entered,
enforced or deemed applicable to the transactions contemplated by this
Agreement, which makes the consummation of the transactions contemplated by
this Agreement illegal.

F. TAX OPINION. The AC Fund shall have obtained an opinion from Skadden,
Arps, Slate, Meagher & Flom, counsel for the VKM Trust, dated as of the Closing
Date, addressed to the AC Fund, that the consummation of the transactions set
forth in this Agreement comply with the requirements of a reorganization as
described in Section 368(a) of the Internal Revenue Code of 1986 substantially
in the form attached as Annex A.

G. OPINION OF COUNSEL. The AC Fund shall have received the opinion of
Skadden, Arps, Slate, Meagher & Flom, counsel for the VKM Trust, dated as of
the Closing Date, addressed to the AC Fund substantially in the form attached
hereto as Annex C to the effect that: (i) the VKM Trust is duly formed and in
good standing as a business trust under the laws of the State of Delaware; (ii)
the Board of Trustees of the VKM Trust has duly designated the VKM Fund as a
series of the VKM Trust pursuant to the terms of the Declaration of Trust of
the VKM Trust; (iii) the VKM Fund is registered as an open-end, diversified
management company under the Securities Act of 1933 and the 1940 Act; (iv) this
Agreement and the reorganization provided for herein and the execution of this
Agreement have been duly authorized and approved by all requisite action of VKM
Trust and this Agreement has been duly executed and delivered by the VKM Trust
and (assuming the Agreement is a valid and binding obligation of the other
parties thereto) is a valid and binding obligation of the VKM Trust; (v)
neither the execution or delivery by the VKM Trust of this Agreement nor the
consummation by the VKM Trust or VKM Fund of the transactions contemplated
thereby contravene the VKM Trust's Declaration of Trust, or, to the best of
their knowledge, violate any provision of any statute or any published
regulation or any judgment or order disclosed to us by the VKM Trust as being
applicable to the VKM Trust or the VKM Fund; (vi) to the best of their
knowledge based solely on the certificate of an appropriate officer of the VKM
Trust attached hereto, there is no pending or threatened litigation which would
have the effect of prohibiting any material business practice or the
acquisition of any material property or the conduct of any material business of
the VKM Fund or might have a material adverse effect on the value of any assets
of the VKM Fund; (vii) except as to financial statements and schedules and
other financial and statistical data included or incorporated by reference
therein and subject to usual and customary qualifications with respect to Rule
10b-5 type opinions, as of the effective date of the Registration Statement
filed pursuant to the Agreement, the portions thereof pertaining to VKM Trust
and the VKM Fund comply as to form in all material respects with the
requirements of the Securities Act, the Securities Exchange Act and the 1940
Act and the rules and regulations of the Commission thereunder and no facts
have come to counsel's attention which would cause them to believe that as of
the effectiveness of the portions of the Registration Statement applicable to
VKM Trust and VKM Fund, the Registration Statement contained any untrue
statement of a material fact or omitted to state any material fact required to
be stated therein or necessary to make the statements therein not misleading;
and (viii) to the best of their knowledge and information and subject to the
qualifications set forth below, the execution and delivery by the VKM Trust of
the Agreement and the consummation of the transactions therein contemplated do
not require, under the laws of the States of Delaware or Illinois or the
federal laws of the United States, the consent, approval, authorization,
registration, qualification or order of, or filing with, any court or
governmental agency or body (except such as have been obtained under the
Securities Act, the 1940 Act or the rules and regulations thereunder.) Counsel
need express no opinion, however, as to any such consent, approval,
authorization, registration, qualification, order or filing (a) which may be
required as a result of the involvement of other parties to the Agreement in
the transactions contemplated by the Agreement because of their legal or
regulatory status or because of any other facts specifically pertaining to
them; (b) the absence of which does not deprive the AC Fund of any material
benefit under the Agreement; or (c) which can be readily obtained without
significant delay or expense to the AC Fund, without loss to the AC Fund of any
material benefit under the Agreement and without any material adverse effect on
you during the period such consent, approval, authorization, registration,
qualification or order was obtained. The foregoing opinion relates only to
consents, approvals, authorizations, registrations, qualifications, orders or
filings under (a) laws which are specifically referred to in this opinion, (b)
laws of the States of Delaware and Illinois and the United States of America
which, in our experience, are normally applicable to transactions of the type
provided for in the Agreement and (c) court orders and judgments disclosed to

13
<PAGE> 14

us by the VKM Trust in connection with this opinion. In addition, although
counsel need not specifically considered the possible applicability to the VKM
Trust of any other laws, orders or judgments, nothing has come to their
attention in connection with our representation of the VKM Trust in this
transaction that has caused them to conclude that any other consent, approval,
authorization, registration, qualification, order or filing is required.

H. VKM TRUST'S LIABILITIES. Except as otherwise provided for herein, the
VKM Trust shall use reasonable efforts, consistent with its ordinary operating
procedures, to have repaid in full any indebtedness for borrowed money for the
account of the VKM Fund and have discharged or reserved for all of the VKM
Fund's known debts, liabilities and obligations including expenses, costs and
charges whether absolute or contingent, accrued or unaccrued.

I. THE ASSETS. The Assets, as set forth in Schedule 1, as amended, shall
consist solely of nondefaulted, liquid U.S. dollar denominated money market
securities, cash and other marketable securities which are in conformity with
the AC Fund's investment objective, policy and restrictions as set forth in the
AC Fund's prospectus and statement of additional information, copies of which
have been delivered to the VKM Trust.

J. SHAREHOLDER LIST. The VKM Trust shall have delivered to the AC Fund an
updated list of all shareholders of the VKM Fund, as reported by VKM Trust's
transfer agent, as of one (1) business day prior to the Closing Date with each
shareholder's respective holdings in the VKM Fund, taxpayer identification
numbers, Form W-9 and last known address.

K. OFFICER CERTIFICATES. The AC Fund shall have received a certificate of
an authorized officer of VKM Trust, dated as of the Closing Date, certifying
that the representations and warranties set forth in Section 4 are true and
correct on the Closing Date, together with certified copies of the resolutions
adopted by the Board of Trustees and shareholders shall be furnished to the VKM
Trust.

9. AMENDMENT, WAIVER AND TERMINATION.

(A) The parties hereto may, by agreement in writing authorized by their
respective Boards of Trustees or Directors, as the case may be, amend this
Agreement at any time before or after approval thereof by the shareholders of
the VKM Fund; provided, however, that (i) after such VKM Fund shareholder
approval, no amendment shall be made by the parties hereto which substantially
changes the terms of Sections 1, 2 and 3 hereof without obtaining VKM Fund's
shareholder approval thereof.

(B) At any time prior to the Closing Date, either of the parties may by
written instrument signed by it (i) waive any inaccuracies in the
representations and warranties made to it contained herein and (ii) waive
compliance with any of the covenants or conditions made for its benefit
contained herein. No delay on the part of either party in exercising any
right, power or privilege hereunder shall operate as a waiver thereof, nor
shall any waiver on the part of any party of any such right, power or
privilege, or any single or partial exercise of any such right, power or
privilege, preclude any further exercise thereof or the exercise of any other
such right, power or privilege.

(C) This Agreement may be terminated, and the transactions contemplated
herein may be abandoned at any time prior to the Closing Date:

(i) by the mutual consents of the Board of Trustees of the VKM Trust and
the AC Fund;

(ii) by the VKM Trust, if the AC Fund breaches in any material respect
any of its representations, warranties, covenants or agreements contained in
this Agreement; or

(iii) by the AC Fund, if the VKM Trust breaches in any material respect
any of its representations, warranties, covenants or agreements contained in
this Agreement; or

14
<PAGE> 15

(iv) by either the VKM Trust or the AC Fund, if the Closing has not
occurred on or prior to September 30, 1995 (provided that the rights to
terminate this Agreement pursuant to this subsection (C) (iv) shall not be
available to any party whose failure to fulfill any of its obligations under
this Agreement has been the cause of or resulted in the failure of the Closing
to occur on or before such date); or

(v) by the AC Fund in the event that: (a) all the conditions
precedent to the VKM Trust's obligation to close, as set forth in Section 7 of
this Agreement, have been fully satisfied (or can be fully satisfied at the
Closing); (b) the AC Fund gives the VKM Trust written assurance of its intent
to close irrespective of the satisfaction or non-satisfaction of all conditions
precedent to the AC Fund's obligation to close, as set forth in Section 8 of
this Agreement; and (c) the VKM Trust then fails or refuses to close within the
earlier of five (5) business days or September 30, 1995; or

(vi) by the VKM Trust in the event that: (a) all the conditions precedent
to the AC Fund's obligation to close, as set forth in Section 8 of this
Agreement, have been fully satisfied (or can be fully satisfied at the
Closing); (b) the VKM Trust gives the AC Fund written assurance of its intent
to close irrespective of the satisfaction or non-satisfaction of all the
conditions precedent to the VKM Trust's obligation to close, as set forth in
Section 7 of this Agreement; and (c) the AC Fund then fails or refuses to close
within the earlier of five (5) business days or September 30, 1995.

10. REMEDIES

In the event of termination of this Agreement by either or both of the VKM
Trust and AC Fund pursuant to Section 9(C), written notice thereof shall
forthwith be given by the terminating party to the other party hereto, and this
Agreement shall therefore terminate and become void and have no effect, and the
transactions contemplated herein and thereby shall be abandoned, without
further action by the parties hereto.

11. SURVIVAL OF WARRANTIES AND INDEMNIFICATION.

(A) SURVIVAL. The representations and warranties included or provided for
herein, or in the Schedules or other instruments delivered or to be delivered
pursuant hereto, shall survive the Closing Date for a three year period except
that any representation or warranty with respect to taxes shall survive for the
expiration of the statutory period of limitations for assessments of tax
deficiencies as the same may be extended from time to time by the taxpayer.
The covenants and agreements included or provided for herein shall survive and
be continuing obligations in accordance with their terms. The period for which
a representation, warranty, covenant or agreement survives shall be referred to
hereinafter as the "Survival Period." Notwithstanding anything set forth in
the immediately preceding sentence, the VKM Trust's and the AC Fund's right to
seek indemnity pursuant to this Agreement shall survive for a period of ninety
(90) days beyond the expiration of the Survival Period of the representation,
warranty, covenant or agreement upon which indemnity is sought. In no event
shall the VKM Trust or the AC Fund be obligated to indemnify the other if
indemnity is not sought within ninety (90) days of the expiration of the
applicable Survival Period.

(B) INDEMNIFICATION. The VKM Trust shall indemnity and defend the AC Fund,
their officers, trustees, agents and persons controlled by or controlling any
of them and hold them harmless, from and against any and all losses, damages,
liabilities, claims, demands, judgments, settlements, deficiencies, taxes,
assessments, charges, costs and expenses of any nature whatsoever (including
reasonable attorneys' fees) including amounts paid in satisfaction of
judgments, in compromise or as fines and penalties, and counsel fees reasonably
incurred by such indemnitee in connection with the defense or disposition of
any claim, action, suit or other proceeding, whether civil or criminal, before
any court or administrative or investigative body in which such indemnitee may
be or may have been involved as a party or otherwise or with which such
indemnitee may be or may have been threatened, (collectively, the "Losses")
resulting from or arising out of any of the following:

15
<PAGE> 16

(i) all debts, liabilities and obligations of the VKM Trust of any nature,
whether accrued, absolute, contingent or otherwise, including liabilities or
obligations relating to the Assets (whether or not disclosed to the AC Fund and
whether or not known by the VKM Trust); and
(ii) taxes of any kind in respect of the VKM Fund whether imposed on the VKM
Fund or on any shareholder of the VKM Fund.

(C) REPRESENTATIONS AND WARRANTIES. In addition to the indemnities provided
in Section 11(B) above, each party (an "Indemnitor") shall indemnify and hold
the other and its officers, directors, agents and persons controlled by or
controlling any of them (each an "Indemnified Party") harmless from and against
any Losses arising out of or related to any claim of a breach of any
representation, warranty or covenant made herein by the Indemnitor; provided,
however, that no Indemnified Party shall be indemnified hereunder against any
Losses arising directly from such Indemnified Party's (i) willful misfeasance,
(ii) bad faith, (iii) gross negligence or (iv) reckless disregard of the duties
involved in the conduct of such Indemnified Party's position.

(D) INDEMNIFICATION PROCEDURE. The Indemnified Party shall use its best
efforts to minimize any liabilities, damages, deficiencies, claims, judgments,
assessments, costs and expenses in respect of which indemnity may be sought
hereunder. The Indemnified Party shall given written notice to Indemnitor
within the earlier of ten (10) days of receipt of written notice to Indemnitor
or thirty (30) days from discovery by Indemnified Party of any matters which
may give rise to a claim for indemnification or reimbursement under this
Agreement. The failure to give such notice shall not affect the right of
Indemnified Party to indemnity hereunder unless such failure has materially and
adversely affected the rights of the Indemnitor; provided that in any event
such notice shall have been given prior to the expiration of the Survival
Period. At any time after ten (10) days from the giving of such notice,
Indemnified Party may, at its option, resist, settle or otherwise compromise,
or pay such claim unless it shall have received notice from Indemnitor that
Indemnitor intends, at Indemnitor's sole cost and expense, to assume the
defense of any such matter, in which case Indemnified Party shall have the
right, at no cost or expense to Indemnitor, to participate in such defense. If
Indemnitor does not assume the defense of such matter, and in any event until
Indemnitor states in writing that it will assume the defense, Indemnitor shall
pay all costs of Indemnified Party arising out of the defense until the defense
is assumed; provided, however, that Indemnified Party shall consult with
Indemnitor and obtain Indemnitor's consent to any payment or settlement of any
such claim. Indemnitor shall keep Indemnified Party fully apprised at all
times as to the status of the defense. If Indemnitor does not assume the
defense, Indemnified Party shall keep Indemnitor apprised at all times as to
the status of the defense. Following indemnification as provided for
hereunder, Indemnitor shall be subrogated to all rights of Indemnified Party
with respect to all third parties, firms or corporations relating to the matter
for which indemnification has been made.

12. SURVIVAL

The provisions set forth in Sections 10, 11 and 16 hereof shall survive the
termination of this Agreement for any cause whatsoever.

13. NOTICES.

All notices hereunder shall be sufficiently given for all purposes hereunder
if in writing and delivered personally or sent by registered mail or certified
mail, postage prepaid. Notice to the VKM Trust shall be addressed to the VKM
Trust c/o Van Kampen American Capital Investment Advisory Corp., One Parkview
Plaza, Oakbrook Terrace, Illinois 60181, Attention: General Counsel or at such
other address and to the attention of such other person as the VKM Trust may
designate by written notice to the AC Fund. Notice to AC Fund shall be
addressed to the AC Fund c/o Van Kampen American Capital Asset Management,
Inc., 2800 Post Oak Boulevard, Houston, Texas 77056, Attention: General
Counsel, with a copy to George M. Bartlett, O'Melveny & Myers, 400 South Hope
Street, Los Angeles,

16
<PAGE> 17

California 900710-2899, or at such other address as AC Fund may designate by
written notice to the VKM Trust. Any notice shall be deemed to have been
served or given as of the date such notice is delivered personally or mailed.

14. SUCCESSORS AND ASSIGNS.

This Agreement shall be binding upon and inure to the benefit of the parties
hereto and their successors and assigns. This Agreement shall not be assigned
by any party without the prior written consent of the other parties.

15. BOOKS AND RECORDS.

The VKM Trust and the AC Fund agree that copies of the books and records of
the VKM Fund relating to the Assets including, but not limited to all files,
records, written materials; e.g., closing transcripts, surveillance files and
credit reports shall be delivered by the VKM Trust to the AC Fund at the
Closing Date. In addition to, and without limiting the foregoing, the VKM Trust
and the AC Fund agree to take such action as my be necessary in order that the
AC Fund shall have reasonable access to such other books and records as may be
reasonably requested, all for three years after the Closing Date for the three
tax years ending December 31, 1992, December 31, 1993 and December 31, 1994
namely, general ledger, journal entries, voucher registers; distribution
journal; payroll register; monthly balance owing report; income tax returns;
tax depreciation schedules; and investment tax credit basis schedules.

16. GENERAL.

This Agreement supersedes all prior agreements between the parties (written
or oral), is intended as a complete and exclusive statement of the terms of the
Agreement between the parties and may not be amended, modified or changed or
terminated orally. This Agreement may be executed in one or more counterparts,
all of which shall be considered one and the same agreement, and shall become
effective when one or more counterparts have been executed by the VKM Trust and
the AC Fund and delivered to each of the parties hereto. The headings contained
in this Agreement are for reference purposes only and shall not affect in any
way the meaning or interpretation of this Agreement. This Agreement is for the
sole benefit of the parties thereto, and nothing in this Agreement, expressed
or implied, is intended to confer upon any other person any rights or remedies
under or by reason of this Agreement. This Agreement shall be governed by and
construed in accordance with the laws of the State of Illinois without regard
to principles of conflicts or choice of law.

17
<PAGE> 18
17. LIMITATION OF LIABILITY.

Copies of the Declarations of Trust of the VKM Trust and AC Fund are on file
with the Secretary of State of the State of Delaware, and notice, is hereby
given and the parties hereto acknowledge and agree that this instrument is
executed on behalf of the Trustees of the VKM Trust and AC Fund, respectively,
as Trustees and not individually and that the obligations of this instrument
are not binding upon any of the Trustees or shareholders of the VKM Trust or
the AC Fund individually but binding only upon the assets and property of this
VKM Trust or AC Fund, as the case may be.

IN WITNESS WHEREOF, the parties have hereunto caused this Agreement to be
executed and delivered by their duly authorized officers as of the day and year
first written above.

AMERICAN CAPITAL RESERVE FUND, a Delaware
business trust

By:_____________________________________

Title:__________________________________

Attest: _________________________

Title: _________________________

VAN KAMPEN MERRITT MONEY MARKET TRUST, a
Delaware business trust

By:_____________________________________

Title:__________________________________

Attest: _________________________

Title: _________________________

18
<PAGE> 19

SCHEDULE 1 [LIST OF MARKETABLE SECURITIES] [AS AMENDED AT CLOSING]

<PAGE> 20

SCHEDULE 2 [VKM TRUST CONSENTS]

<PAGE> 21

ANNEX A [TAX FREE OPINION: SKADDEN, ARPS, SLATE, MEAGHER & FLOM]

<PAGE> 22

ANNEX B [OPINION OF COUNSEL - O'MELVENY & MYERS FOR THE AC FUND]

<PAGE> 23

ANNEX C [OPINION OF COUNSEL - SKADDEN, ARPS, SLATE, MEAGHER & FLOM FOR THE VKM
TRUST]

<PAGE> 1
EXHIBIT 14(a)

CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the use in the Statement of Additional Information
constituting part of the registration statement on Form N-14 (the "Registration
Statement") of our report dated July 5, 1994, relating to the financial
statements and financial highlights of the American Capital Reserve Fund, which
appears in such Statement of Additional Information.

Price Waterhouse LLP

PRICE WATERHOUSE LLP

Houston, Texas
May 25, 1995

<PAGE> 1
EXHIBIT 14(b)

CONSENT OF INDEPENDENT AUDITORS

The Board of Trustees and Shareholders
Van Kampen Merritt Money Market Fund:

We consent to the use of our report included herein.

KPMG Peat Marwick LLP

Chicago, Illinois
May 23, 1995

<PAGE> 1

EXHIBIT 16

POWER OF ATTORNEY

The undersigned, being officers and directors of American Capital Reserve
Fund, Inc., a Maryland corporation (the "Fund"), do hereby, in the capacities
shown below, individually appoint Ronald A. Nyberg of Oakbrook Terrace,
Illinois, as the agent and attorney-in-fact with full power of substitution and
resubstitution, for each of the undersigned, to execute and deliver, for and on
behalf of the undersigned, the Registration Statement on Form N-14
("Registration Statement") to be filed with the Securities and Exchange
Commission on or about May 24, 1995, pursuant to the provisions of the
Securities Act of 1993, and any and all amendments to the Registration Statement
which may be filed by the Fund with the Securities and Exchange Commission.

This Power of Attorney may be executed in multiple counterparts, each of
which shall be deemed an original, but which taken together shall constitute one
instrument.

Dated: May 19, 1995

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----

<S> <C> <C>
/s/ FERNANDO SISTO Director 5/22/95
- ---------------------------------------------
Fernando Sisto

/s/ DON G. POWELL President (Chief Executive 5/22/95
- --------------------------------------------- Officer) and Director
Don G. Powell

/s/ J. MILES BRANAGAN Director 5/22/95
- ---------------------------------------------
J. Miles Branagan

/s/ RICHARD E. CARUSO Director 5/22/95
- ---------------------------------------------
Richard E. Caruso

/s/ ROGER HILSMAN Director 5/22/95
- ---------------------------------------------
Roger Hilsman

/s/ DAVID REES Director 5/22/95
- ---------------------------------------------
David Rees

/s/ LAWRENCE J. SHEEHAN Director 5/22/95
- ---------------------------------------------
Lawrence J. Sheehan

/s/ WILLIAM S. WOODSIDE Director 5/22/95
- ---------------------------------------------
William S. Woodside

/s/ CURTIS W. MORELL Vice President and Treasurer 5/22/95
- --------------------------------------------- (Chief Financial and Accounting
Curtis W. Morell Officer)
</TABLE>

<PAGE> 1

EXHIBIT 17(B)

PROXY

VAN KAMPEN AMERICAN CAPITAL MONEY MARKET FUND

SPECIAL MEETING OF SHAREHOLDERS

[ ], 1995

THIS PROXY IS BEING SOLICITED ON BEHALF OF THE VAN KAMPEN AMERICAN CAPITAL MONEY
MARKET FUND.

The undersigned holder of shares of beneficial interest of the Van Kampen
American Capital Money Market Fund ("VK Fund"), a series of Van Kampen American
Capital Money Market Trust, a Delaware business trust, hereby appoint [Dennis J.
McDonnell] and [Ronald A. Nyberg], and each of them, with full power of
substitution and revocation, as proxies to represent the undersigned at the
Special Meeting of Shareholders to be held at the [Transco Tower Auditorium,
Level 2, 2800 Post Oak Boulevard, Houston, Texas 77056 on [day], [DATE], 1995 at
[TIME]], and any and all adjournments thereof (the "Special Meeting"), and
thereat to vote all shares of beneficial interest which the undersigned would be
entitled to vote, with all powers the undersigned would possess if personally
present, in accordance with the following instructions:

<TABLE>
<S> <C> <C> <C> <C>
1. FOR AGAINST ABSTAIN
------ ------ ------ The proposal to approve the Reorganization pursuant to
which the VK Fund would transfer substantially all of its
------ ------ ------ assets and liabilities to the Van Kampen American Capital
Reserve Fund in exchange for shares of the Van Kampen
American Capital Reserve Fund which shares would be
distributed to each shareholder of the VK Fund and the VK
Fund would be dissolved, as more fully described in the
Proxy Statement/Prospectus.
2. FOR AGAINST ABSTAIN
------ ------ ------ To act upon any and all other business which may come
before the Special Meeting or any adjournment thereof.
------ ------ ------
</TABLE>

If more than one of the proxies, or their substitutes, are present at the
Special Meeting or any adjournment thereof, they jointly (or, if only one
is present and voting then that one) shall have authority and may exercise
all powers granted hereby. This Proxy, when properly executed, will be
voted in accordance with the instructions marked hereon by the undersigned.
IF NO SPECIFICATION IS MADE, THIS PROXY WILL BE VOTED FOR EACH OF THE
PROPOSALS DESCRIBED ABOVE AND IN THE DISCRETION OF THE PROXIES UPON SUCH
OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING.

Account No. No. of Shares Class of Shares Proxy No.

The undersigned hereby acknowledges receipt of the accompanying Notice of
Special Meeting and Proxy Statement for the Special Meeting to be held on
[ ], 1995.

Dated
------------------------ , 1995

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

- ------------------------------------------------------------------------
Signature(s)

Please sign exactly as your name or names appear on this Proxy. When signing as
attorney, trustee, executor, administrator, custodian, guardian or corporate
officer, please give full title. If shares are held jointly, each holder should
sign.

<ARTICLE> 6
<CIK> 0000005114
<NAME> RESERVE FUND

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAY-31-1994
<PERIOD-START> JUN-01-1993
<PERIOD-END> MAY-31-1994
<INVESTMENTS-AT-COST> 477,095,069
<INVESTMENTS-AT-VALUE> 477,095,069
<RECEIVABLES> 480,220
<ASSETS-OTHER> 5,853
<OTHER-ITEMS-ASSETS> 130,868
<TOTAL-ASSETS> 477,712,010
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 13,884,679
<TOTAL-LIABILITIES> 13,884,697
<SENIOR-EQUITY> 4,638,155
<PAID-IN-CAPITAL-COMMON> 459,110,906
<SHARES-COMMON-STOCK> 463,815,535
<SHARES-COMMON-PRIOR> 279,341,479
<ACCUMULATED-NII-CURRENT> 78,252
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 463,827,313
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 11,095,566
<OTHER-INCOME> 0
<EXPENSES-NET> 3,373,102
<NET-INVESTMENT-INCOME> 7,722,464
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 7,722,464
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 7,713,417
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2,733,962,738
<NUMBER-OF-SHARES-REDEEMED> 2,557,202,100
<SHARES-REINVESTED> 7,713,418
<NET-CHANGE-IN-ASSETS> 184,483,235
<ACCUMULATED-NII-PRIOR> 2,552
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,494,701
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 3,373,102
<AVERAGE-NET-ASSETS> 326,775,699
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> .023
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> .023
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> 1.03
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<ARTICLE> 6
<CIK> 0000005114
<NAME> AC RESERVE FUND

<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAY-31-1995
<PERIOD-START> JUN-01-1994
<PERIOD-END> NOV-30-1994
<INVESTMENTS-AT-COST> 475,521,447
<INVESTMENTS-AT-VALUE> 475,521,447
<RECEIVABLES> 46,964,935
<ASSETS-OTHER> 5,853
<OTHER-ITEMS-ASSETS> 126,717
<TOTAL-ASSETS> 522,618,952
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 4,320,881
<TOTAL-LIABILITIES> 4,320,881
<SENIOR-EQUITY> 5,183,050
<PAID-IN-CAPITAL-COMMON> 513,055,484
<SHARES-COMMON-STOCK> 518,305,008
<SHARES-COMMON-PRIOR> 463,815,535
<ACCUMULATED-NII-CURRENT> 59,537
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 518,298,071
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 11,152,968
<OTHER-INCOME> 0
<EXPENSES-NET> 2,210,503
<NET-INVESTMENT-INCOME> 8,942,465
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 8,942,465
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 8,961,180
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,651,205,413
<NUMBER-OF-SHARES-REDEEMED> 1,605,661,915
<SHARES-REINVESTED> 8,945,975
<NET-CHANGE-IN-ASSETS> 54,470,758
<ACCUMULATED-NII-PRIOR> 78,252
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,019,909
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2,210,503
<AVERAGE-NET-ASSETS> 475,662,557
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> .019
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> .019
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> .93
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<ARTICLE> 6

<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-1995
<PERIOD-START> JUL-01-1994
<PERIOD-END> DEC-31-1994
<INVESTMENTS-AT-COST> 41849075<F1>
<INVESTMENTS-AT-VALUE> 41849075<F1>
<RECEIVABLES> 661227<F1>
<ASSETS-OTHER> 4883<F1>
<OTHER-ITEMS-ASSETS> 180760<F1>
<TOTAL-ASSETS> 42695945<F1>
<PAYABLE-FOR-SECURITIES> 0<F1>
<SENIOR-LONG-TERM-DEBT> 0<F1>
<OTHER-ITEMS-LIABILITIES> 438352<F1>
<TOTAL-LIABILITIES> 438352<F1>
<SENIOR-EQUITY> 0<F1>
<PAID-IN-CAPITAL-COMMON> 32412705
<SHARES-COMMON-STOCK> 32412705
<SHARES-COMMON-PRIOR> 27601290
<ACCUMULATED-NII-CURRENT> 0<F1>
<OVERDISTRIBUTION-NII> 0<F1>
<ACCUMULATED-NET-GAINS> (73555)<F1>
<OVERDISTRIBUTION-GAINS> 0<F1>
<ACCUM-APPREC-OR-DEPREC> 0<F1>
<NET-ASSETS> 32339762
<DIVIDEND-INCOME> 0<F1>
<INTEREST-INCOME> 842639<F1>
<OTHER-INCOME> (10988)<F1>
<EXPENSES-NET> 188631<F1>
<NET-INVESTMENT-INCOME> 643020<F1>
<REALIZED-GAINS-CURRENT> (18980)<F1>
<APPREC-INCREASE-CURRENT> 0<F1>
<NET-CHANGE-FROM-OPS> 624040<F1>
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (568757)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 40881989
<NUMBER-OF-SHARES-REDEEMED> (36550200)
<SHARES-REINVESTED> 479626
<NET-CHANGE-IN-ASSETS> 4793047
<ACCUMULATED-NII-PRIOR> 0<F1>
<ACCUMULATED-GAINS-PRIOR> 0<F1>
<OVERDISTRIB-NII-PRIOR> 0<F1>
<OVERDIST-NET-GAINS-PRIOR> 0<F1>
<GROSS-ADVISORY-FEES> 83571<F1>
<INTEREST-EXPENSE> 0<F1>
<GROSS-EXPENSE> 267739<F1>
<AVERAGE-NET-ASSETS> 29102469
<PER-SHARE-NAV-BEGIN> 1.000
<PER-SHARE-NII> .019
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> (.019)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.000
<EXPENSE-RATIO> 1
<AVG-DEBT-OUTSTANDING> 0<F1>
<AVG-DEBT-PER-SHARE> 0<F1>
<FN>
<F1>This Item relates to the Fund on a composite basis and not on a class basis.
</FN>

</TABLE>

<ARTICLE> 6
<SERIES>
<NUMBER> 1
<NAME> MONEY MARKET

<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-1995
<PERIOD-START> JUL-11-1994
<PERIOD-END> DEC-31-1994
<INVESTMENTS-AT-COST> 41849075<F1>
<INVESTMENTS-AT-VALUE> 41849075<F1>
<RECEIVABLES> 661227<F1>
<ASSETS-OTHER> 4883<F1>
<OTHER-ITEMS-ASSETS> 180760<F1>
<TOTAL-ASSETS> 42695945<F1>
<PAYABLE-FOR-SECURITIES> 0<F1>
<SENIOR-LONG-TERM-DEBT> 0<F1>
<OTHER-ITEMS-LIABILITIES> 438352<F1>
<TOTAL-LIABILITIES> 438352<F1>
<SENIOR-EQUITY> 0<F1>
<PAID-IN-CAPITAL-COMMON> 9918443
<SHARES-COMMON-STOCK> 9918443
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0<F1>
<OVERDISTRIBUTION-NII> 0<F1>
<ACCUMULATED-NET-GAINS> (73555)<F1>
<OVERDISTRIBUTION-GAINS> 0<F1>
<ACCUM-APPREC-OR-DEPREC> 0<F1>
<NET-ASSETS> 9917831
<DIVIDEND-INCOME> 0<F1>
<INTEREST-INCOME> 842639<F1>
<OTHER-INCOME> (10988)<F1>
<EXPENSES-NET> 188631<F1>
<NET-INVESTMENT-INCOME> 643020<F1>
<REALIZED-GAINS-CURRENT> (18980)<F1>
<APPREC-INCREASE-CURRENT> 0<F1>
<NET-CHANGE-FROM-OPS> 624040<F1>
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (74263)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 15887574
<NUMBER-OF-SHARES-REDEEMED> (6019680)
<SHARES-REINVESTED> 50549
<NET-CHANGE-IN-ASSETS> 9917831
<ACCUMULATED-NII-PRIOR> 0<F1>
<ACCUMULATED-GAINS-PRIOR> 0<F1>
<OVERDISTRIB-NII-PRIOR> 0<F1>
<OVERDIST-NET-GAINS-PRIOR> 0<F1>
<GROSS-ADVISORY-FEES> 83571<F1>
<INTEREST-EXPENSE> 0<F1>
<GROSS-EXPENSE> 267739<F1>
<AVERAGE-NET-ASSETS> 4563746
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> .015
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> (.015)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> 2
<AVG-DEBT-OUTSTANDING> 0<F1>
<AVG-DEBT-PER-SHARE> 0<F1>
<FN>
<F1>This Item relates to the Fund on a composite basis and not on a class basis.
</FN>

</TABLE>