<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 29, 1995
REGISTRATION NO.'S 33-6745
811-4718
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM N-1A
<TABLE>
<S> <C>
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933 /X/
Post-Effective Amendment No. 13 /X/
and
REGISTRATION STATEMENT UNDER
THE INVESTMENT COMPANY ACT OF 1940 /X/
Amendment No. 14 /X/
</TABLE>
VAN KAMPEN AMERICAN CAPITAL
TAX FREE MONEY FUND
(Exact Name of Registrant as Specified in Declaration of Trust)
One Parkview Plaza, Oakbrook Terrace, Illinois 60181
(Address of Principal Executive Offices)
(708) 684-6000
(Registrant's Telephone Number)
Ronald A. Nyberg, Esq.
Executive Vice President, General Counsel and Secretary
Van Kampen American Capital, Inc.
One Parkview Plaza, Oakbrook Terrace, Illinois 60181
(Name and Address of Agent for Service)
Copies to:
Wayne W. Whalen, Esq.
Thomas A. Hale, Esq.
Skadden, Arps, Slate, Meagher & Flom
333 W. Wacker Drive
Chicago, IL 60606
(312) 407-0700
Approximate Date of Proposed Public Offering: As soon as practicable
following effectiveness of this Registration Statement.
------------------------
IT IS PROPOSED THAT THIS FILING WILL BECOME EFFECTIVE: (CHECK APPROPRIATE
BOX)
/ / IMMEDIATELY UPON FILING PURSUANT TO PARAGRAPH (B)
/X/ ON SEPTEMBER 1, 1995 PURSUANT TO PARAGRAPH (B)
/ / 60 DAYS AFTER FILING PURSUANT TO PARAGRAPH (A)(1)
/ / ON (DATE) PURSUANT TO PARAGRAPH (A)(1)
/ / 75 DAYS AFTER FILING PURSUANT TO PARAGRAPH (A)(2)
/ / ON (DATE) PURSUANT TO PARAGRAPH (A)(2) OF RULE 485
IF APPROPRIATE CHECK THE FOLLOWING:
/ / THIS POST-EFFECTIVE AMENDMENT DESIGNATES A NEW EFFECTIVE DATE FOR
A PREVIOUSLY FILED POST-EFFECTIVE AMENDMENT.
DECLARATION PURSUANT TO RULE 24F-2
REGISTRANT HAS REGISTERED AN INDEFINITE NUMBER OF SHARES AND WILL FILE WITH
THE SECURITIES AND EXCHANGE COMMISSION A RULE 24F-2 NOTICE FOR ITS FISCAL YEAR
ENDING JUNE 30, 1995 ON OR ABOUT AUGUST 31, 1995.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
VAN KAMPEN AMERICAN CAPITAL TAX FREE MONEY FUND
CROSS REFERENCE SHEET
(AS REQUIRED BY ITEM 501(B) OF REGULATION S-K)
<TABLE>
<CAPTION>
ITEM NUMBER OF
FORM N-1A LOCATION OR CAPTION
----------- --------------------
<S> <C> <C>
PART A
Item 1. Cover Page............ Cover Page
Item 2. Synopsis.............. SHAREHOLDER TRANSACTION EXPENSES; ANNUAL FUND OPERATING
EXPENSES AND EXAMPLE
Item 3. Condensed Financial
Information......... FINANCIAL HIGHLIGHTS
Item 4. General Description of
Registrant.......... THE FUND; INVESTMENT OBJECTIVE AND POLICIES; INVESTMENT
PRACTICES; DESCRIPTION OF SHARES OF THE FUND
Item 5. Management of the
Fund................ ANNUAL FUND OPERATING EXPENSES AND EXAMPLE; INVESTMENT
PRACTICES; INVESTMENT ADVISORY SERVICES; SHAREHOLDER
SERVICES
Item 6. Capital Stock and
Other Securities..... PURCHASE OF SHARES; DISTRIBUTIONS FROM THE FUND;
REDEMPTION OF SHARES; THE DISTRIBUTION AND SERVICE PLANS;
TAX STATUS; SHAREHOLDER SERVICES; DESCRIPTION OF SHARES OF
THE FUND; ADDITIONAL INFORMATION
Item 7. Purchase of Securities
Being Offered....... SHAREHOLDER TRANSACTION EXPENSES; PURCHASE OF SHARES;
REDEMPTION OF SHARES; THE DISTRIBUTION AND SERVICE PLANS;
NET ASSET VALUE
Item 8. Redemption or
Repurchase.......... PURCHASE OF SHARES; REDEMPTION OF SHARES; NET ASSET VALUE
Item 9. Pending Legal
Proceedings......... Not Applicable
PART B
Item 10. Cover Page............ Cover Page
Item 11. Table of Contents..... Table of Contents
Item 12. General Information
and History......... The Fund and the Trust
Item 13. Investment Objectives
and Policies........ Investment Policies and Restrictions; Appendix
</TABLE>
(i.)
<PAGE> 3
<TABLE>
<CAPTION>
ITEM NUMBER OF
FORM N-1A LOCATION OR CAPTION
---------- -------------------
<S> <C> <C>
Item 14. Management of the
Fund................ Officers and Trustees
Item 15. Control Persons and
Principal Holders of
Securities.......... Officers and Trustees
Item 16. Investment Advisory
and Other
Services.............. Contained in Prospectus under captions: PURCHASE OF
SHARES; INVESTMENT ADVISORY SERVICES; THE
DISTRIBUTION AND SERVICE PLANS; Officers and
Trustees; Legal Counsel; Investment Advisory and
Other Services; Custodian and Independent Auditors;
The Distributor
Item 17. Brokerage
Allocation............ Portfolio Transactions
Item 18. Capital Stock and
Other Securities.... Contained in the Prospectus under captions: THE FUND;
DESCRIPTION OF SHARES OF THE FUND; The Fund and the
Trust
Item 19. Purchase, Redemption
and Pricing of
Securities Being
Offered............. Contained in the Prospectus under captions: PURCHASE
OF SHARES; THE DISTRIBUTION AND SERVICE PLANS;
REDEMPTION OF SHARES; NET ASSET VALUE
Item 20. Tax Status............ Contained in Prospectus under caption: TAX STATUS
Item 21. Underwriters.......... The Distributor
Item 22. Calculations of Yield
Quotations of Money
Market Funds........ Yield Information; Dividends
Item 23. Financial
Statements............ Contained in the Prospectus under caption: FINANCIAL
HIGHLIGHTS; Independent Auditors' Report; Financial
Statements; Notes to Financial Statements; Officers
and Trustees
PART C
</TABLE>
Information required to be included in Part C is set forth under the
appropriate Item, so numbered, in Part C of this Registration Statement.
(ii.)
<PAGE> 4
- ------------------------------------------------------------------------------
VAN KAMPEN AMERICAN CAPITAL
TAX FREE MONEY FUND
- ------------------------------------------------------------------------------
Van Kampen American Capital Tax Free Money Fund, formerly known as Van
Kampen Merritt Tax Free Money Fund (the "Fund"), is a money market mutual fund
whose investment objective is to provide a high level of current income exempt
from federal income taxes consistent with the preservation of capital and
liquidity through investments in a broad range of municipal securities that will
mature within 12 months of the date of purchase.
The Fund is organized as a Delaware business trust. The portfolio of the
Fund is managed by Van Kampen American Capital Investment Advisory Corp. (the
"Adviser").
An investment in the Fund is neither insured nor guaranteed by the U.S.
government. There can be no assurance that the Fund will be able to maintain a
stable net asset value of $1.00 per share.
This Prospectus concisely sets forth the information about the Fund that a
prospective investor should know before investing in the Fund. Please read and
retain this Prospectus for future reference. The address of the Fund is One
Parkview Plaza, Oakbrook Terrace, Illinois 60181, and its telephone number is
(800) 421-5666.
------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
------------------
SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, GUARANTEED OR
ENDORSED BY, ANY BANK OR DEPOSITORY INSTITUTION; FURTHER, SUCH SHARES ARE NOT
FEDERALLY INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD, OR ANY OTHER GOVERNMENT AGENCY. SHARES OF THE FUND INVOLVE
INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
A Statement of Additional Information dated September 1, 1995 containing
additional information about the Fund has been filed with the Securities and
Exchange Commission and is hereby incorporated by reference in its entirety into
this Prospectus. A copy of the Statement of Additional Information may be
obtained without charge by calling (800) 421-5666 (or (800) 722-8889 for the
hearing impaired).
------------------
VAN KAMPEN AMERICAN CAPITAL SM
------------------
THIS PROSPECTUS IS DATED SEPTEMBER 1, 1995.
<PAGE> 5
- ------------------------------------------------------------------------------
TABLE OF CONTENTS
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Shareholder Transaction Expenses............................... 3
Annual Fund Operating Expenses and Example..................... 3
Financial Highlights........................................... 5
The Fund....................................................... 6
Investment Objective and Policies.............................. 6
Investment Practices........................................... 8
Investment Advisory Services................................... 9
Purchase of Shares............................................. 11
Shareholder Services........................................... 13
Redemption of Shares........................................... 16
The Distribution and Service Plans............................. 19
Distributions from the Fund.................................... 19
Net Asset Value................................................ 20
Tax Status..................................................... 20
Description of Shares of the Fund.............................. 22
Additional Information......................................... 23
</TABLE>
NO DEALER, SALESMAN OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS, OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS, IN CONNECTION WITH THE OFFER CONTAINED IN THIS PROSPECTUS AND, IF
GIVEN OR MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON
AS HAVING BEEN AUTHORIZED BY THE FUND, THE ADVISER, OR THE DISTRIBUTOR. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER BY THE FUND OR BY THE DISTRIBUTOR TO
SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY
IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL FOR THE FUND TO MAKE
SUCH AN OFFER IN SUCH JURISDICTION.
2
<PAGE> 6
- ------------------------------------------------------------------------------
SHAREHOLDER TRANSACTION EXPENSES
- ------------------------------------------------------------------------------
<TABLE>
<S> <C>
Maximum sales charge imposed on purchases
(as a percentage of the offering price)...................... None
Maximum sales charge imposed on reinvested dividends
(as a percentage of the offering price)...................... None
Deferred sales charge (as a percentage of original purchase
price on redemption proceeds)................................ None
Redemption fees (as a percentage of amount redeemed)........... None
Exchange fees.................................................. None
</TABLE>
- ------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES AND EXAMPLE
- ------------------------------------------------------------------------------
<TABLE>
<S> <C>
Management fees(1) (as a percentage of average daily net
assets net of waiver)....................................... 0.01%
12b-1 fees(2) (as a percentage of average daily net assets)... 0.25%
Other expenses (as a percentage of average daily net assets
net of expense reimbursement)............................... 0.63%
Total expenses(1) (as a percentage of average daily net assets
net of waiver and expense reimbursement).................... 0.89%
</TABLE>
- ----------------
(1) The expenses indicated above are based on the Fund's fiscal year ended June
30, 1995. "Management fees" and "Total expenses" indicated above reflect a
waiver of fees by the Adviser. Without such waiver, "Management fees" and
"Total expenses" were 0.50% and 1.38%, respectively.
(2) Such fees include a service fee of up to 0.25% paid by the Fund to
investors' broker-dealers as compensation for ongoing services rendered to
investors.
3
<PAGE> 7
EXAMPLE:
<TABLE>
<CAPTION>
ONE THREE FIVE TEN
YEAR YEARS YEARS YEARS
---- ----- ----- -----
<S> <C> <C> <C> <C>
You would pay the following expenses on a
$1,000 investment, assuming a 5% annual
return. The Fund does not charge a fee
for redemptions............................. $9 $28 $49 $ 110
</TABLE>
The purpose of the foregoing tables is to assist an investor in understanding
the various costs and expenses that an investor in the Fund will bear directly
or indirectly. The "Example" reflects expenses based on the "Annual Fund
Operating Expenses" table as shown above carried out to future years. It is
expected that as Fund assets increase, the fees waived or expenses reimbursed by
the Adviser will decrease. Accordingly, it is unlikely that future expenses as
projected will remain consistent with those determined based on the table of the
"Annual Fund Operating Expenses." THE INFORMATION CONTAINED IN THE ABOVE TABLE
SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES AND ACTUAL
EXPENSES MAY BE GREATER OR LESSER THAN THOSE SHOWN. For more complete
description of such costs and expenses, see "Investment Advisory Services" and
"The Distribution and Service Plans."
4
<PAGE> 8
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (for one share outstanding throughout the period)
- --------------------------------------------------------------------------------
The following schedule presents financial highlights for one share of the Fund
outstanding throughout the periods indicated. The financial highlights have been
audited by KPMG Peat Marwick LLP, independent certified public accountants,
whose report thereon appears in the Statement of Additional Information. This
information should be read in conjunction with the financial statements and
related notes thereto included in the Statement of Additional Information.
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
----------------------------------------
1995 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............................................................ .027 .017 .019 .035 .052
Less Distributions from Net Investment Income.................................... (.027) (.017) (.019) (.035) (.052)
----- ----- ----- ----- -----
Net Asset Value, End of Period.................................................... $1.00 $1.00 $1.00 $1.00 $1.00
====== ====== ====== ====== ======
Total Return* (non-annualized).................................................... 2.73% 1.70% 1.93% 3.56% 5.29%
Net Assets at End of Period (in millions)......................................... $33.2 $37.4 $43.1 $70.8 $81.5
Ratio of Expenses to Average Net Assets* (annualized)............................. .89% .81% .72% .57% .56%
Ratio of Net Investment Income to Average Net Assets* (annualized)................ 2.68% 1.69% 1.92% 3.56% 5.01%
- ----------------
* 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 (annualized)............................. 1.38% 1.29% .97% 1.18% 1.20%
Ratio of Net Investment Income to Average Net Assets (annualized)................ 2.20% 1.20% 1.67% 2.96% 4.37%
<CAPTION>
NOVEMBER 5, 1986
(COMMENCEMENT OF
YEAR ENDED JUNE 30, INVESTMENT
------------------ OPERATIONS)
1990 1989 1988 TO JUNE 30, 1987
----- ----- ----- ----------------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period.............................................. $1.00 $1.00 $1.00 $ 1.00
----- ----- ----- -----
Net Investment Income............................................................ .057 0.53 .046 .026
Less Distributions from Net Investment Income.................................... (.057) (.053) (.046) (.026)
----- ----- ----- -----
Net Asset Value, End of Period.................................................... $1.00 $1.00 $1.00 $ 1.00
===== ===== ===== ======
Total Return* (non-annualized).................................................... 5.93% 5.50% 4.65% 4.35%
Net Assets at End of Period (in millions)......................................... $59.8 $43.6 $58.3 $ 30.0
Ratio of Expenses to Average Net Assets* (annualized)............................. .55% .78% .51% .11%
Ratio of Net Investment Income to Average Net Assets* (annualized)................ 5.69% 5.34% 4.63% 4.10%
- ----------------
* If certain expenses had not been assumed by the investment adviser, total return
would have been as follows:
Ratio of Expenses to Average Net Assets (annualized)............................. 1.25% 1.17% 1.08% 1.17%
Ratio of Net Investment Income to Average Net Assets (annualized)................ 4.98% 4.96% 4.06% 3.03%
</TABLE>
See Financial Statements and Notes Thereto.
-------------------------------
The "current yield" of the Fund for the seven days ended June 30, 1995, was
3.22% and its "compounded effective yield" for that period was 3.27%. The
method of calculating these yields is described in the Statement of Additional
Information.
5
<PAGE> 9
- ------------------------------------------------------------------------------
THE FUND
- ------------------------------------------------------------------------------
Van Kampen American Capital Tax Free Money Fund (the "Fund") is a diversified,
open-end management investment company, commonly known as a "mutual fund." The
Fund is organized as a Delaware business trust. Mutual funds sell their shares
to investors and invest the proceeds in a portfolio of securities. A mutual fund
allows investors to pool their money with that of other investors in order to
obtain professional investment management. Mutual funds generally make it
possible for investors to obtain greater diversification of their investments
and to simplify their recordkeeping.
Van Kampen American Capital Investment Advisory Corp. (the "Adviser") provides
investment advisory and administrative services to the Fund. See "Investment
Advisory Services." The Adviser and its affiliates also manage other mutual
funds distributed by Van Kampen American Capital Distributors, Inc. (the
"Distributor"). To obtain prospectuses and other information on any of these
other funds, please call the telephone number on the cover page of this
Prospectus.
- ------------------------------------------------------------------------------
INVESTMENT OBJECTIVE AND POLICIES
- ------------------------------------------------------------------------------
The Fund's investment objective is to provide a high level of current income
exempt from federal income taxes consistent with the preservation of capital and
liquidity through investments in a diversified portfolio of municipal securities
that will mature within 12 months of the date of purchase. These securities may
not earn as high a level of current income as securities with longer maturities
or lower quality, which may also have less liquidity and greater price
fluctuation. There can be no assurance that the Fund will attain its investment
objective.
The Fund will generally invest its assets in municipal securities, which are
obligations issued by or on behalf of States, territories and possessions of the
United States and the District of Columbia and their political subdivisions,
agencies and instrumentalities, the interest on which, in the opinion of bond
counsel or other counsel to the issuer or the Fund is exempt from federal income
tax at the time of issuance. In normal circumstances, up to 100%, but not less
than 80%, of the Fund's net assets will be invested in such securities. All of
the Fund's investments are subject, however, to the limitation that they mature
within one year of the date of their purchase or are subject to repurchase
agreements maturing within one year. The Fund's investment objective and the
foregoing policies are fundamental and cannot be changed without shareholder
approval. If the tax-exempt status of the municipal securities in which the Fund
may invest changes at some future date, the Trustees of the Fund would consider
what changes if any should be made in the Fund and might recommend to the
shareholders changes in the Fund's fundamental objectives.
6
<PAGE> 10
The Fund will invest in municipal securities which at the time of purchase:
(a) are rated at least AA by Standard & Poor's Ratings Group ("Standard &
Poor's") or Aa by Moody's Investors Service, Inc. ("Moody's"); (b) have a
Moody's short-term municipal securities rating of at least MIG-2 or VMIG-2, or a
municipal commercial paper rating of at least P-2 by Moody's or A-2 or SP-2 by
Standard & Poor's; (c) are guaranteed or insured by the U.S. government, its
agencies or instrumentalities as to the payment of principal and interest; (d)
are fully collateralized by an escrow of U.S. government securities or other
securities acceptable to the Adviser; or (e) which are unrated but considered by
the Adviser to be of comparable quality to securities having one of the above
ratings. Although the Fund may invest in U.S. government securities or
securities collateralized by an escrow of such securities, an investment in the
Fund is neither insured nor guaranteed by the U.S. government.
Municipal Securities. The Fund may invest in municipal securities which are
scheduled to mature in one year or less. This category includes, but is not
limited to, short-term tax anticipation notes, bond anticipation notes, revenue
anticipation notes, grant anticipation notes, construction loan notes,
tax-exempt commercial paper, and variable rate demand obligations.
Tax anticipation notes are typically sold to finance working capital needs of
municipalities in anticipation of receiving taxes on a future date. Bond
anticipation notes are sold on an interim basis in anticipation of a
municipality issuing a longer term bond in the future. Revenue anticipation
notes are issued in expectation of receipt of other types of revenue such as
those available under state aid programs. Grant anticipation notes are issued in
anticipation of receipt of an intergovernmental grant in the future.
Construction loan notes are issued to provide short-term construction financing
for multi-family housing projects. Frequently construction loan notes are
insured by the Federal Housing Administration with permanent financing by the
Government National Mortgage Association at the end of the project construction
period. Tax exempt commercial paper is an unsecured promissory obligation issued
or guaranteed by a municipal issuer. The Fund may purchase other municipal
securities which have a remaining life of one year or less.
The Fund may invest in certain municipal securities which have rates of
interest that are adjusted periodically according to formulae intended to
minimize fluctuations in values of the instruments. These securities are
commonly known as variable rate demand notes. These variable rate demand
obligations are long-term securities which allow the purchaser, at its
discretion, to redeem the securities before their final maturity at par upon
notice (typically 7 to 30 days). Variable rate instruments with a demand feature
enable the Fund to purchase instruments with a stated maturity in excess of one
year. The Fund determines the maturity of variable rate instruments in
accordance with rules of the Securities and Exchange Commission (the "SEC")
which allow the Fund to consider certain of such instruments as having
maturities that are less than the maturity date on the face of the instrument.
7
<PAGE> 11
Yields on municipal securities are dependent on a variety of factors,
including the general conditions of the money market and of the municipal bond
and municipal note markets, income tax rates, and the size, maturity and rating
of the particular offering. The ratings of Moody's and Standard & Poor's
represent their opinions as to the quality of the municipal securities which
they undertake to rate. It should be emphasized, however, that ratings are
general and are not absolute standards of quality. Consequently, municipal
securities with the same maturity, coupon and rating may have different yields.
- ------------------------------------------------------------------------------
INVESTMENT PRACTICES
- ------------------------------------------------------------------------------
The Fund may purchase and sell portfolio securities on a "when issued" and
"delayed delivery" basis, although no more than 25% of the Fund's assets will be
invested in such manner. No income accrues to the Fund on securities in
connection with such transactions prior to the date the Fund actually takes
delivery of such securities. These transactions are subject to market
fluctuation, the value of the securities at delivery may be more or less than
their purchase price, and yields generally available on comparable securities
when delivery occurs may be higher than yields on the securities obtained
pursuant to such transactions. Because the Fund relies on the buyer or seller,
as the case may be, to consummate the transaction, failure by the other party to
complete the transaction may result in the Fund missing the opportunity of
obtaining a price or yield considered to be advantageous. When the Fund is the
buyer in such a transaction, however, it will maintain, in a segregated account
with its custodian, cash or portfolio securities having an aggregate value equal
to the amount of such purchase commitments until payment is made. The Fund will
make commitments to purchase securities on such basis only with the intention of
actually acquiring these securities, but the Fund may sell such securities prior
to the settlement date if such sale is considered to be advisable. No specific
limitation exists as to the percentage of the Fund's assets which may be used to
acquire securities on a "when issued" or "delayed delivery" basis. To the extent
the Fund engages in "when issued" and "delayed delivery" transactions, it will
do so for the purpose of acquiring securities for the Fund's portfolio
consistent with the Fund's investment objective and policies and not for the
purpose of investment leverage.
The Fund may also purchase municipal securities which provide for the right to
resell them back to the issuer, a bank, or a broker dealer at an agreed upon
price or yield within a specified period of time prior to the maturity date of
these securities. These securities are known as "put" securities or securities
with stand-by commitments. The Fund may pay a higher price for such securities
than would otherwise be paid for the same security without a put. The primary
purpose of purchasing these securities is to permit the Fund to be as fully
invested as practicable in municipal securities while at the same time providing
the Fund with greater liquidity. It will be the Fund's policy to enter into
these transactions only with issuers, banks, or broker-dealers that are
determined by the Adviser to present
8
<PAGE> 12
minimal credit risks. If an issuer, bank, or broker-dealer should default on its
obligation to repurchase, the Fund might be unable to recover all or a portion
of any loss sustained from having to sell the security elsewhere.
Although it is the Fund's intention to provide current income exempt from
federal income taxes, there may be circumstances when the Fund will invest
temporarily in taxable investments, such as repurchase agreements. The Fund may
enter into such agreements with banks and broker-dealers, under which the Fund
purchases securities and agrees to resell the securities at an agreed upon time
and at an agreed upon price. Under the Investment Company Act of 1940, as
amended (the "1940 Act"), repurchase agreements may be considered collateralized
loans by the Fund, and the difference between the amount the Fund pays for the
securities and the amount it receives upon resale is accrued as interest and
reflected in the Fund's net income. When the Fund enters into repurchase
agreements, it relies on the seller to repurchase the securities. Failure to do
so may result in a loss for the Fund if the market value of the securities is
less than the repurchase price. At the time the Fund enters into a repurchase
agreement, the value of the underlying security including accrued interest will
be equal to or exceed the value of the repurchase agreement and, for repurchase
agreements that mature in more than one day, the seller will agree that the
value of the underlying security including accrued interest will continue to be
at least equal to the value of the repurchase agreement. In determining whether
to enter into a repurchase agreement with a bank or broker-dealer, the Fund will
take into account the creditworthiness of such party. In the event of default by
such party, the Fund may not have a right to the underlying security and there
may be possible delays and expenses in liquidating the security purchased,
resulting in a decline in its value and loss of interest. The Fund will use
repurchase agreements as a means of making short-term investments, and may
invest in repurchase agreements of duration of seven days or less without
limitation. The Fund's ability to invest in repurchase agreements that mature in
more than seven days is subject to an investment restriction that limits the
Fund's investment in "illiquid" securities, including such repurchase
agreements, to 10% of the Fund's net assets. The Fund's ability to invest in
taxable temporary investments is limited to 20% of the Fund's net assets.
The Fund is subject to certain investment restrictions which constitute
fundamental policies. Fundamental policies cannot be changed without the
approval of the holders of a majority of the Fund's outstanding voting
securities, as defined in the 1940 Act. See "Investment Policies and
Restrictions" in the Statement of Additional Information.
- ------------------------------------------------------------------------------
INVESTMENT ADVISORY SERVICES
- ------------------------------------------------------------------------------
THE ADVISER. Van Kampen American Capital Investment Advisory Corp. (the
"Adviser") is the investment adviser for the Fund. The Adviser is a wholly-owned
subsidiary of Van Kampen American Capital, Inc. ("Van Kampen American
9
<PAGE> 13
Capital"). Van Kampen American Capital is a diversified asset management
company with more than two million retail investor accounts, extensive
capabilities for managing institutional portfolios, and over $50 billion under
management or supervision. Van Kampen American Capital's more than 40 open-end
and 38 closed-end funds and more than 2,700 unit investment trusts are
professionally distributed by leading financial advisers nationwide. The
Adviser's principal office is located at One Parkview Plaza, Oakbrook Terrace,
Illinois 60181.
Van Kampen American Capital is a wholly-owned subsidiary of VK/AC Holding,
Inc. VK/AC Holding, Inc. is controlled, through the ownership of a substantial
majority of its common stock by The Clayton & Dubilier Private Equity Fund IV
Limited Partnership ("C&D L.P."), a Connecticut limited partnership. C&D L.P. is
managed by Clayton, Dubilier & Rice, Inc. a New York based private investment
firm. The General Partner of C&D L.P. is Clayton & Dubilier Associates IV
Limited Partnership ("C&D Associates L.P."). The general partners of C&D
Associates L.P. are Joseph L. Rice, III, B. Charles Ames, William A. Barbe,
Alberto Cribiore, Donald J. Gogel, Leon J. Hendrix, Jr., Hubbard C. Howe, and
Andrall E. Pearson, each of whom is a principal of Clayton, Dubilier & Rice,
Inc. In addition, certain officers, directors and employees of Van Kampen
American Capital own in the aggregate, not more than 7% of the common stock of
VK/AC Holding, Inc. and have the right to acquire, upon the exercise of options,
approximately an additional 11% of the common stock of VK/AC Holding, Inc.
Presently, and after giving effect to the exercise of such options, no officer
or trustee of the Fund owns or would own 5% or more of the common stock of VK/AC
Holding, Inc.
ADVISORY AGREEMENT. The business and affairs of the Fund will be managed under
the direction of the Trustees of the Fund. Subject to the Trustees' authority,
the Adviser and the Fund's officers will supervise and implement the Fund's
investment activities and will be responsible for overall management of the
Fund's business affairs. The Fund will pay the Adviser a fee (accrued daily and
paid monthly) equal to a percentage of the average daily net assets of the Fund
as follows:
<TABLE>
<CAPTION>
AVERAGE DAILY NET ASSETS % PER ANNUM
- ------------------------------------------------------ ---------------
<S> <C>
First $500 million.................................... 0.500 of 1.00%
Next $500 million..................................... 0.475 of 1.00%
Next $500 million..................................... 0.425 of 1.00%
Over $1.5 billion..................................... 0.375 of 1.00%
</TABLE>
The Adviser may from time to time, in its sole discretion, waive a portion of
its fees or assume a portion of the Fund's expenses, and the Adviser in its sole
discretion may discontinue any such waiver of fees or assumption of expenses at
any time.
Under its investment advisory agreement with the Adviser, the Fund has agreed
to assume and pay the charges and expenses of the Fund's operation, including
the
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<PAGE> 14
compensation of the Trustees of the Fund (other than those who are affiliated
persons, as defined in the 1940 Act, of the Adviser, the Distributor or Van
Kampen American Capital), the charges and expenses of independent accountants,
legal counsel, any transfer or dividend disbursing agent and the custodian
(including fees for safekeeping of securities), costs of calculating net asset
value, costs of acquiring and disposing of portfolio securities, interest (if
any) on obligations incurred by the Fund, costs of share certificates,
membership dues in the Investment Company Institute or any similar organization,
reports and notices to shareholders, costs of registering shares of the Fund
under the federal securities laws, miscellaneous expenses and all taxes and fees
to federal, state or other governmental agencies, excluding state securities
registration expenses.
The Fund and the Adviser have adopted Codes of Ethics designed to recognize
the fiduciary relationship between the Fund and the Adviser and its employees.
The Codes permit trustees/directors, officers and employees to buy and sell
securities for their personal accounts subject to procedures designed to prevent
conflicts of interest including, in some instances, preclearance of trades.
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PURCHASE OF SHARES
- ------------------------------------------------------------------------------
Shares of the Fund are continuously offered through Van Kampen American
Capital Distributors, Inc. (the "Distributor"), as principal underwriter, which
is located at One Parkview Plaza, Oakbrook Terrace, Illinois 60181. Shares are
also offered through members of the National Association of Securities Dealers,
Inc. ("NASD") acting as securities dealers ("dealers") and through NASD members
acting as brokers for investors ("brokers") or eligible non-NASD members acting
as agents for investors ("financial intermediaries"). The Fund reserves the
right to suspend or terminate the continuous offering at any time and without
prior notice.
Shares of the Fund are available without a sales charge at the net asset value
per share, which will remain fixed at $1.00 per share except in extraordinary
circumstances. Share certificates will not be issued. The Fund has adopted a
distribution plan pursuant to Rule 12b-1 under the 1940 Act and a service plan
which permit the Fund through the Distributor to compensate brokers, dealers and
financial intermediaries out of the assets of the Fund for their sales of the
shares of the Fund and for shareholder services, respectively.
The minimum initial investment to open an account is $500, and the minimum
subsequent investment is $25, except as discussed under "Unit Trust Reinvestment
Programs" hereunder.
Investments may be made as follows:
1. By Mail. For initial investments send a check payable to "Van Kampen
American Capital Tax Free Money Fund" along with a completed account application
to the transfer agent of the Fund: ACCESS Investor Services, Inc., P.O. Box
418256, Kansas City, MO 64141-9256 ("ACCESS"). Subsequent
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<PAGE> 15
investments by mail may be made directly to the Fund accompanied by either the
detachable form which is part of the Fund's account statement or by a letter
indicating the dollar amount of the investment, the account number, and
registration. Investments made by check will begin receiving dividends on the
next business day after the Fund receives good funds. For checks drawn on
foreign banks, monies must be collected before shares will be purchased.
2. By Wire. The Fund will also accept investments by wire. An investor must
first telephone the Fund at (800) 421-5666 and provide the account registration,
address, tax identification number, and the amount being wired. Investors will
then be assigned an account number and should instruct their bank or broker to
wire federal funds to the custodian of the Fund: State Street Bank and Trust
Company, Custody, ABA-011000028, Re: Van Kampen American Capital Tax Free Money
Fund for further credit to Account Name , Account Number .
Investors will be responsible for the charges, if any, that the bank, broker,
dealer or financial intermediary may make to handle the wire transfer. A
completed account application must then be forwarded to the Fund. Subsequent
investments by wire may be made by instructing a bank or broker to wire the
specified amount in accordance with the above instructions. Please call to
advise the Fund before wiring monies.
Investments made by federal funds wire (up to $1 million, without approval by
the Fund) received prior to 12:00 p.m. Eastern time will be invested at the next
determined net asset value and begin receiving dividends on that day.
Investments made by federal funds wire received after 12:00 p.m. Eastern time
will be invested at the next determined net asset value and begin receiving
dividends on the next business day.
3. Through Financial Services Representatives. Brokers, dealers or financial
intermediaries may purchase, on behalf of investors, shares of the Fund using
either the By Mail or By Wire procedures outlined above. The Fund does not
charge for this transaction.
4. Unit Trust Reinvestment Programs. The Fund will permit unitholders of unit
investment trusts to reinvest distributions from such trusts in shares of the
Fund and other mutual funds distributed by the Distributor with no minimum or
subsequent investment requirement. In order to qualify for this privilege, the
administrator of an investor's unit investment trust must have an agreement with
the Distributor pursuant to which the administrator will (1) submit a single
bulk order and make payment with a single remittance for all investments in the
Fund during each distribution period by all investors who choose to invest in
the Fund through the program and (2) provide ACCESS with appropriate backup data
for each participating investor in a computerized format fully compatible with
ACCESS' processing system. In addition, the Fund also requires that all
dividends and other distributions by the Fund be reinvested in additional shares
without any systematic withdrawal program. There will be no minimum for
reinvestments from unit investment trusts. The Fund will send account activity
statements to investors on a
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<PAGE> 16
quarterly basis only, even if an investor's investment period is more frequent.
Persons desiring more information with respect to this program, including the
applicable terms and conditions thereof, should contact their securities broker,
dealer, financial intermediary or the Distributor. The Fund reserves the right
to modify or terminate this program at any time.
The Fund and the Distributor reserve the right to reject any order for the
purchase of shares. In addition, the offering of shares may be suspended and
resumed at any time thereafter. Shares will not be offered in certificate form.
Account statements are prepared and mailed to you monthly, quarterly in the
case of a participant in a "Unit Trust Reinvestment Program." Account statements
are not mailed to shareholders as a result of individual redemptions by check.
- ------------------------------------------------------------------------------
SHAREHOLDER SERVICES
- ------------------------------------------------------------------------------
The Fund offers a number of shareholder services designed to facilitate
investment in its shares at little or no extra cost to the investor. Below is a
description of such services. Unless otherwise described below, each of these
services may be modified or terminated by the Fund at any time.
As used herein, the term "Participating Funds" refers to all open-end
investment companies distributed by the Distributor other than the Fund, Van
Kampen American Capital Money Market Fund ("Money Market Fund"), Van Kampen
American Capital Reserve Fund ("Reserve Fund") and the Govett Funds, Inc.
INVESTMENT ACCOUNT. ACCESS Investor Services, Inc. ("ACCESS"), transfer agent
for the Fund and a wholly-owned subsidiary of Van Kampen American Capital,
performs bookkeeping, data processing and administration services related to the
maintenance of shareholder accounts. Each shareholder has an investment account
under which shares are held by ACCESS. Except as described herein, after each
share transaction in an account, the shareholder receives a statement showing
the activity in the account. Each shareholder will receive statements at least
quarterly from ACCESS showing any reinvestments of dividends and capital gains
distributions and any other activity in the account since the preceding
statement. Such shareholders also will receive separate confirmations for each
purchase or sale transaction other than reinvestment of dividends and capital
gains distributions and systematic purchases or redemptions. Additions to an
investment account may be made at any time by purchasing shares through
authorized brokers, dealers or financial intermediaries or by mailing a check
directly to ACCESS.
AUTOMATIC INVESTMENT PLAN. An automatic investment plan is available under
which a shareholder can authorize ACCESS to charge a bank account on a regular
basis to invest pre-determined amounts in the Fund. Additional information is
available from the Distributor or authorized brokers, dealers or financial
intermediaries.
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<PAGE> 17
DIVIDEND DIVERSIFICATION. A shareholder may, upon written request or by
completing the appropriate section of the application form accompanied by this
Prospectus or by calling (800) 421-5666 (or (800) 772-8889 for the hearing
impaired), elect to have all dividends and other distributions paid on shares of
the Fund invested into shares sold subject to an initial sales charge of any
other Participating Fund or into shares without a sales charge of the Money
Market Fund or Reserve Fund so long as a pre-existing account for such class of
shares exists for such shareholder.
If the qualified pre-existing account does not exist, the shareholder must
establish a new account subject to minimum investment and other requirements of
the fund into which distributions would be invested. Distributions are invested
into the selected fund at its net asset value as of the payable date of the
distribution only if shares of such selected fund have been registered for sale
in the investor's state.
EXCHANGE PRIVILEGE. Shares of the Fund may be exchanged into shares sold
subject to an initial sales charge of any other Participating Fund or into
shares without a sales charge of the Money Market Fund or Reserve Fund subject
to certain limitations herein or in such other fund's prospectus. Before
effecting an exchange, shareholders in the Fund should obtain and read a current
prospectus of the fund into which the exchange is to be made. SHAREHOLDERS MAY
ONLY EXCHANGE INTO SUCH OTHER FUNDS AS ARE LEGALLY AVAILABLE FOR SALE IN THEIR
STATE.
In general, shares of the Fund must have been registered in the shareholder's
name for at least 15 days prior to an exchange. Shares of the Fund registered in
a shareholder's name for less than 15 days may only be exchanged upon receipt of
prior approval of the Adviser; however, under normal circumstances, it is the
policy of the Adviser not to approve such requests. Upon 60 days after the date
of this prospectus, the Fund will increase the number of days shares must be
registered in a shareholder's name prior to an exchange to 30 days.
Shares of the Fund which have not previously been charged a sales charge
(except for shares purchased via the reinvestment option) will have any
applicable sales charge differential imposed upon exchange into such fund.
Exchanges of shares of the Fund that previously have been charged a sales charge
lower than the sales charge applicable to the other fund will also have the
sales charge differential imposed upon the exchange into such fund.
Exchanges of shares are sales and may result in a gain or loss for federal
income tax purposes. If the shares exchanged have been held for less than 91
days, the sales charge paid on such shares is not included in the tax basis of
the exchanged shares, but is carried over and included in the tax basis of the
shares acquired.
A shareholder wishing to make an exchange may do so by sending a written
request to ACCESS or by contacting the telephone transaction line at (800)
421-5684 (or (800) 772-8889 for the hearing impaired). A shareholder
automatically has telephone exchange privileges unless otherwise designated in
the application form accompanied by this Prospectus. The exchange will take
place at
14
<PAGE> 18
the relative net asset values of the shares next determined after receipt of
such request with adjustment for any additional sales charge. Any shares
exchanged begin earning dividends on the next business day after the exchange is
affected. Van Kampen American Capital and its subsidiaries, including ACCESS
(collectively, "VKAC"), and the Fund employ procedures considered by them to be
reasonable to confirm that instructions communicated by telephone are genuine.
Such procedures include requiring certain personal identification information
prior to acting upon telephone instructions, tape recording telephone
communications, and providing written confirmation of instructions communicated
by telephone. If reasonable procedures are employed, a shareholder agrees that
neither VKAC nor the Fund will be liable for following telephone instructions
which it reasonably believes to be genuine. VKAC and the Fund may be liable for
any losses due to unauthorized or fraudulent instructions if reasonable
procedures are not followed. If the exchanging shareholder does not have an
account in the fund whose shares are being acquired, a new account will be
established with the same registration, dividend and capital gains options
(except dividend diversification options) and broker, dealer or financial
intermediary of record as the account from which shares are exchanged, unless
otherwise specified by the shareholder. In order to establish a systematic
withdrawal plan for the new account or dividend diversification options for the
new account, an exchanging shareholder must file a specific written request. The
Fund reserves the right to reject any order to acquire its shares through
exchange. In addition, the Fund may restrict or terminate the exchange privilege
at any time on 60 days' notice to its shareholders of any termination or
material amendment.
SYSTEMATIC WITHDRAWAL PLAN. Any investor whose shares in a single account
total $10,000 or more at the offering price next computed after receipt of
instructions may establish a monthly, quarterly, semi-annual or annual
withdrawal plan. This plan provides for the orderly use of the entire account,
not only the income but also the capital, if necessary. Each withdrawal
constitutes a redemption of shares on which taxable gain or loss will be
recognized. The plan holder may arrange for monthly, quarterly, semi-annual, or
annual checks in any amount not less than $25.
Under the plan, sufficient shares of the Fund are redeemed to provide the
amount of the periodic withdrawal payment. Dividends and capital gains
distributions on shares held under the plan are reinvested in additional shares
at the next determined net asset value. If periodic withdrawals continuously
exceed reinvested dividends and capital gains distributions, the shareholder's
original investment will be correspondingly reduced and ultimately exhausted.
The Fund reserves the right to amend or terminate the systematic withdrawal
program on thirty days' notice to its shareholders.
CHECK WRITING PRIVILEGE. Holders of shares of the Fund may appoint ACCESS as
agent by completing the Authorization for Redemption by Check Form and the
appropriate section of the account application and returning the form and the
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<PAGE> 19
application to ACCESS. Once the form is properly completed, signed and returned
to the agent, a supply of checks drawn on State Street Bank and Trust Company
("State Street Bank") will be sent to such shareholder. These checks may be made
payable by the holder of shares to the order of any person in any amount of $100
or more.
When a check is presented to State Street Bank for payment, full and
fractional shares required to cover the amount of the check are redeemed from
the shareholder's account by ACCESS at the next determined net asset value.
Check writing redemptions represent the sale of shares. Any gain or loss
realized on the sale of shares is a taxable event. See "Redemption of Shares."
Checks will not be honored for redemption of shares held less than 15 calendar
days, unless such shares have been paid for by bank wire. If the amount of the
check is greater than the proceeds of all shares held in the shareholder's share
account, the check will be returned and the shareholder may be subject to
additional charges. Holders of shares may not liquidate the entire account by
means of a check. The check writing privilege may be terminated or suspended at
any time by the Fund or State Street Bank. Retirement plans and accounts that
are subject to backup withholding are not eligible for the privilege. A "stop
payment" system is not available on these checks.
AUTOMATED CLEARING HOUSE ("ACH") DEPOSITS. Holders of shares can use ACH to
have redemption proceeds deposited electronically into their bank accounts.
Redemptions transferred to a bank account via the ACH plan are available to be
credited to the account on the second business day following normal payment. In
order to utilize this option, the shareholder's bank must be a member of
Automated Clearing House. In addition, the shareholder must fill out the
appropriate section of the account application. The shareholder must also
include a voided check or deposit slip from the bank account into which
redemptions are to be deposited together with the completed application. Once
ACCESS has received the application and the voided check or deposit slip, such
shareholder's designated bank account, following any redemption, will be
credited with the proceeds of such redemption. Once enrolled in the ACH plan, a
shareholder may terminate participation at any time by writing ACCESS.
- ------------------------------------------------------------------------------
REDEMPTION OF SHARES
- ------------------------------------------------------------------------------
Shareholders may redeem for cash some or all of their shares without charge by
the Fund at any time by sending a written request in proper form directly to
ACCESS, P. O. Box 418256, Kansas City, Missouri 64141-9256, by placing the
redemption request through an authorized dealer or by calling the Fund.
WRITTEN REDEMPTION REQUESTS. In the case of redemption requests sent directly
to ACCESS, the redemption request should indicate the number of shares to be
redeemed, the account number and be signed exactly as the shares are registered.
16
<PAGE> 20
Signatures must conform exactly to the account registration. If the proceeds of
the redemption would exceed $50,000, or if the proceeds are not to be paid to
the record owner at the record address, or if the record address has changed
within the previous 30 days, signature(s) must be guaranteed by one of the
following: a bank or trust company; a broker-dealer; a credit union; a national
securities exchange, registered securities association or clearing agency; a
savings and loan association; or a federal savings bank. In the event the
redemption is requested by a corporation, partnership, trust, fiduciary,
executor or administrator, and the name and title of the individual(s)
authorizing such redemption is not shown in the account registration, a copy of
the corporate resolution or other legal documentation appointing the authorized
signer and certified within the prior 60 days must accompany the redemption
request. The redemption price is the net asset value per share next determined
after the request is received by ACCESS in proper form. Payment for shares
redeemed will ordinarily be made by check mailed within three business days
after acceptance by ACCESS of the request and any other necessary documents in
proper order. Such payments may be postponed or the right of redemption
suspended as provided by the rules of the SEC. If the shares to be redeemed have
been recently purchased by check, ACCESS may delay mailing a redemption check
until it confirms that the purchase check has cleared, usually a period of up to
15 days.
DEALER REDEMPTION REQUESTS. Shareholders may sell shares through their
securities dealer, who will telephone the request to the Distributor. Orders
received from dealers must be at least $500 unless transmitted via the FUNDSERV
network. The redemption price for such shares is the net asset value next
calculated after an order is received by a dealer provided such order is
transmitted to the Distributor prior to the Distributor's close of business on
such day. It is the responsibility of dealers to transmit redemption requests
received by them to the Distributor so they will be received prior to such time.
Any change in the redemption price due to failure of the Distributor to receive
a sell order prior to such time must be settled between the shareholder and
dealer. Shareholders must submit a written redemption request in proper form (as
described above under "Written Redemption Requests") to the dealer within three
business days after calling the dealer with the sell order. Payment for shares
redeemed will ordinarily be made by check mailed within three business days to
the dealer.
TELEPHONE REDEMPTION REQUESTS. The Fund permits redemption of shares by
telephone and for redemption proceeds to be sent to the address of record for
the account or to the bank account of record as described below. To establish
such privilege, a shareholder must complete the appropriate section of the
application form accompanying this Prospectus or call the Fund at (800) 421-5666
(or (800) 772-8889 for the hearing impaired) to request that a copy of the
Telephone Redemption Authorization form be sent to them for completion. To
redeem shares, contact the telephone transaction line at (800) 421-5684. VKAC
and the Fund employ procedures considered by them to be reasonable to confirm
that instructions communicated by telephone are genuine. Such procedures include
requiring certain
17
<PAGE> 21
personal identification information prior to acting upon telephone instructions,
tape recording telephone communications, and providing written confirmation of
instructions communicated by telephone. If reasonable procedures are employed, a
shareholder agrees that neither VKAC nor the Fund will be liable for following
instructions which it reasonably believes to be genuine. VKAC and the Fund may
be liable for any losses due to unauthorized or fraudulent instructions if
reasonable procedures are not followed. Telephone redemptions may not be
available if the shareholder cannot reach ACCESS by telephone, whether because
all telephone lines are busy or for any other reason; in such case, a
shareholder would have to use the Fund's other redemption procedures previously
described. Requests received by ACCESS prior to 12:00 p.m. Eastern time on a
regular business day will be processed that day and dividends for that day will
not be earned. Requests received by ACCESS after 12:00 p.m. Eastern time on a
regular business day will be treated as requests to redeem as of 4:00 p.m.
Eastern time so that the investor will receive that day's dividend. These
privileges are available for all accounts other than retirement accounts. If the
shares to be redeemed have been recently purchased by check, ACCESS may delay
mailing a redemption check or wiring redemption proceeds until it confirms that
the purchase check has cleared, usually a period of up to 15 days. If an account
has multiple owners, ACCESS may rely on the instructions of any one owner.
For redemptions authorized by telephone, amounts of $50,000 or less may be
redeemed daily if the proceeds are to be paid by check sent to the shareholders'
address of record and amounts of at least $1,000 and up to $1 million may be
redeemed daily if the proceeds are to be paid by wire sent to the shareholder's
bank account of record. The proceeds must be payable to the shareholder(s) of
record. Proceeds from redemptions to be paid by check will ordinarily be mailed
within three business days to the shareholder's address of record. Proceeds from
redemptions to be paid by wire will ordinarily be wired to the shareholder's
bank account of record on the same day for requests received prior to 12:00 p.m.
Eastern time or on the next business day for requests received after 12:00 p.m.
Eastern time. This privilege is not available if the address of record has been
changed within 30 days prior to a telephone redemption request. The Fund
reserves the right at any time to terminate, limit or otherwise modify this
telephone redemption privilege.
REDEMPTION BY CHECK. Shareholders may effect redemptions by writing checks
drawn on their share account with the Fund. For more information, see
"Shareholder Services -- Check Writing Privilege."
GENERAL REDEMPTION INFORMATION. The Fund may redeem any shareholder account
with a net asset value on the date of the notice of redemption less than the
minimum investment as specified by the Trustees. At least 60 days advance
written notice of any such involuntary redemption is required and the
shareholder is given an opportunity to purchase the required value of additional
shares at the next determined net asset value without sales charge. Any
involuntary redemption may
18
<PAGE> 22
only occur if the shareholder account is less than the minimum investment due to
shareholder redemptions.
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THE DISTRIBUTION AND SERVICE PLANS
- ------------------------------------------------------------------------------
The Fund has adopted a distribution plan (the "Distribution Plan") pursuant to
Rule 12b-1 under the 1940 Act. The Fund has also adopted a service plan (the
"Service Plan"). The Distribution Plan and the Service Plan provide that the
Fund may spend a portion of the Fund's average daily net assets in connection
with the distribution of shares and in connection with the provision of ongoing
services to shareholders. The Distribution Plan and the Service Plan are being
implemented through an agreement with the Distributor and sub-agreements between
the Distributor and brokers, dealers or financial intermediaries (collectively,
"Selling Agreements") that may provide for their customers or clients certain
services or assistance.
The Fund may spend an aggregate amount of up to 0.25% per year of its average
daily net assets pursuant to the Distribution Plan and the Service Plan. From
such amount, the Fund may spend up to the full 0.25% per year of its average
daily net assets pursuant to the Service Plan in connection with the ongoing
provision of services to holders of the Fund's shares by the Distributor and by
brokers, dealers or financial intermediaries and in connection with the
maintenance of Shareholder accounts. The Fund pays the Distributor the lesser of
the balance, if any, of the 0.25% not paid to such brokers, dealers or financial
intermediaries or the amount of the Distributor's actual distribution related
expense.
Accounts payable to the Distributor under the Distribution Plan in a given
year may not fully reimburse the Distributor for its actual distribution-related
expenses during such year. In such event, there is no carryover of such
reimbursement obligations to succeeding years.
Various federal and state laws prohibit national banks and some
state-chartered commercial banks from underwriting or dealing in the Fund's
shares. In addition, state securities laws on this issue may differ from the
interpretations of federal law, and banks and financial institutions may be
required to register as dealers pursuant to state law. In the unlikely event
that a court were to find that these laws prevent such banks from providing such
services described above, the Fund would seek alternative providers and expects
that shareholders would not experience any disadvantage.
- ------------------------------------------------------------------------------
DISTRIBUTIONS FROM THE FUND
- ------------------------------------------------------------------------------
The Fund's present policy, which may be changed at any time by the Board of
Trustees, is to declare and pay dividends from net investment income on a daily
basis. Investments will begin earning dividends on the day federal funds are
received by the Fund prior to 12:00 p.m. Eastern time. Any investments for which
19
<PAGE> 23
federal funds are received after 12:00 p.m. Eastern time will begin receiving
dividends on the next business day. Dividends are automatically reinvested in
additional shares of the Fund and credited to the investors' accounts daily.
If investors request, they may redeem dividends paid on their shares on a
monthly basis. Investors may make such a request by checking the appropriate box
on the account application.
- ------------------------------------------------------------------------------
NET ASSET VALUE
- ------------------------------------------------------------------------------
The net asset value per share for the Fund is determined by calculating the
total value of the Fund's assets, deducting its total liabilities, and dividing
the result by the number of its shares outstanding. The net asset value per
share will normally remain fixed at $1.00 per share except in extraordinary
circumstances. The net asset value of the Fund is computed twice daily as of
12:00 p.m. and 4:00 p.m. Eastern time, Monday through Friday, except on
customary business holidays, or except on any day on which no purchase or
redemption orders are received, or there is not a sufficient degree of trading
in the Fund's portfolio securities such that the Fund's net asset value per
share might be materially affected. The Fund reserves the right to calculate the
net asset value more or less frequently than daily if deemed desirable.
The Fund values its portfolio on the basis of amortized cost, which means that
securities are valued at their acquisition cost to reflect a constant
amortization rate to maturity of any premium or discount, rather than at current
market value. Calculations are made to compare the amortized cost valuation of
the portfolio with current market values. Money market valuations are obtained
by using market quotations provided by market makers, estimates of market
values, or values obtained from published yield data of money market
instruments. If a deviation of 1/2 of 1% or more were to occur between the net
asset value calculated by reference to market values and the Fund's $1.00 per
share net asset value, or if there were any other deviation which the Trustees
believe would result in a material dilution to investors or purchasers, the
Trustees would promptly consider what action, if any, should be initiated. Other
assets are valued at fair value as determined in good faith by the Trustees of
the Fund. The method of calculating yield is described in the Statement of
Additional Information. There can be no assurance that the Fund will be able to
maintain a net asset value of $1.00 per share.
- ------------------------------------------------------------------------------
TAX STATUS
- ------------------------------------------------------------------------------
The Fund has qualified and intends to continue to qualify as a regulated
investment company under Subchapter M of the Internal Revenue Code of 1986, as
amended (the "Code"). To qualify as a regulated investment company, the Fund
must comply with certain requirements of the Code relating to, among other
things, the sources of its income and the diversification of its assets. If the
Fund so qualifies
20
<PAGE> 24
and distributes at least 90% of its net investment income (including tax-exempt
interest and net short-term capital gain, but not net capital gain, which is the
excess of net long-term capital gain over net short-term capital loss) in each
year, it will not be required to pay federal income taxes on any income
distributed to shareholders. The Fund intends to distribute at least the minimum
amount of net investment income to satisfy the 90% distribution requirement. The
Fund will not be subject to federal income tax on any net capital gains
distributed to its shareholders.
In order to avoid a 4% excise tax the Fund will be required to distribute by
December 31 of each year, at least 98% of its ordinary income (not including
tax-exempt income) for such year and at least 98% of its capital gain net income
(the latter of which generally is computed on the basis of the one-year period
ending on October 31 of such year), plus any amounts that were not distributed
in previous taxable years. For purposes of the excise tax, any ordinary income
or capital gain net income retained by, and subject to federal income tax in the
hands of, the Fund will be treated as having been distributed.
If the Fund qualifies as a regulated investment company and satisfies the 90%
distribution requirement, and if, at the close of each quarter of the Fund's
taxable year, at least 50% of the total value of the Fund's total assets
consists of obligations the interest on which is exempt from federal income tax
("tax-exempt obligations"), the Fund will be qualified to pay exempt-interest
dividends to its shareholders to the extent of its tax-exempt interest income
(less expenses properly applicable thereto). Exempt-interest dividends are
excludable from a shareholder's income for federal income tax purposes, but may
be taxable distributions for state, local and other tax purposes.
Exempt-interest dividends are included, however, in determining what portion, if
any, of a person's social security and railroad retirement benefits will be
includable in gross income subject to federal income tax. Interest expense with
respect to indebtedness incurred or continued by a shareholder to purchase or
carry shares of the Fund is not deductible to the extent that such interest
relates to exempt-interest dividends received from the Fund.
Distributions of the Fund's investment company taxable income (which does not
include tax-exempt interest income) are taxable to shareholders as ordinary
income, whether received in shares or in cash. Shareholders who receive
distributions in the form of additional shares will have a basis for federal
income tax purposes in each such share equal to the value thereof on the
reinvestment date. Distributions in excess of the Fund's earnings and profits
will first reduce the adjusted tax basis of holder's shares and, after such
adjusted tax basis is reduced to zero, will constitute capital gains to such
holder (assuming such shares are held as a capital asset). The Fund will inform
shareholders of the source and tax status of such distributions promptly after
the close of each taxable year. Distributions from the Fund will not be eligible
for the dividends received deduction for corporations.
Exempt-interest dividends allocable to interest received by the Fund on
certain "private activity" obligations issued after August 7, 1986 will be
treated as interest on such obligations and thus will give rise to an item of
tax preference that will
21
<PAGE> 25
increase a shareholder's alternative minimum taxable income. In addition, for
corporations, alternative minimum taxable income will be increased by a
percentage of the amount by which a measure of income that includes interest on
tax-exempt obligations exceeds the amount otherwise determined to be the
alternative minimum taxable income. Accordingly, investment in the Fund may
cause shareholders to be subject to (or result in an increased liability under)
the alternative minimum tax.
Exempt-interest dividends will not be tax-exempt to the extent made to any
shareholder who is a "substantial user" of the facilities financed by tax-exempt
obligations held by the Fund or "related persons" of such substantial users.
Redemption or resale of shares of the Fund will be a taxable transaction for
federal income tax purposes. Redeeming shareholders will recognize gain or loss
in an amount equal to the difference between their basis in such redeemed shares
of the Fund and the amount received. Assuming that such shares are held as
capital assets, the gain or loss will be a capital gain or loss and will
generally be long-term if such shareholders have held their shares for more than
one year. Any loss realized on a taxable disposition of shares held for six
months or less will be disallowed to the extent of any exempt-interest dividends
received with respect to such shares.
Although dividends generally will be treated as distributed when paid,
dividends declared in October, November or December, payable to shareholders of
record on a specified date in such a month and paid in January of the following
year, will be treated as having been distributed by the Fund (and received by
the shareholders) on the December 31 of the year in which the dividend was
declared. In addition, certain other distributions made after the close of a
taxable year of the Fund may be "spilled back" and treated as paid by the Fund
during such taxable year. In such case, shareholders will be treated as having
received such dividends in the taxable year in which the distribution is
actually made.
The Fund is required, in certain circumstances, to withhold 31% of dividends
and certain other payments, including redemptions, paid to shareholders who do
not furnish to the Fund their correct taxpayer identification number (in the
case of individuals, their social security number) or who are otherwise subject
to backup withholding.
The federal income tax discussion set forth above is for general information
only. Prospective shareholders should consult their tax advisors regarding the
specific federal income tax consequences of holding and disposing of shares, as
well as the effects of state, local and foreign tax laws and any proposed tax
law changes.
- ------------------------------------------------------------------------------
DESCRIPTION OF SHARES OF THE FUND
- ------------------------------------------------------------------------------
The Fund was originally organized as a Massachusetts business trust on June
16, 1986 and was reorganized as a Delaware business trust as of July 31, 1995.
The Fund is registered under the 1940 Act as an open-end, diversified management
22
<PAGE> 26
investment company. The Fund's Declaration of Trust permits the Trustees to
issue an unlimited number of full and fractional shares in an unlimited number
of classes or series. The authorized capitalization of the Fund consists of an
unlimited number of shares of beneficial interest, $0.01 par value. Each share
represents an equal proportionate interest in the assets of the Fund. The
Declaration of Trust provides that shareholders are not liable for any
liabilities of the Fund or any of its series, requires inclusion of a clause to
that effect in every agreement entered into by the Fund or any of its series and
indemnifies shareholders against any such liability.
Shares of the Fund entitle their holders to one vote per share. The Fund does
not contemplate holding regular meetings of shareholders to elect Trustees or
otherwise. However, the holders of 10% or more of the outstanding shares may by
written request require a meeting to consider the removal of Trustees by a vote
of two-thirds of the shares then outstanding cast in person or by proxy at such
meeting. The Fund will assist such holders in communicating with other
shareholders of the Fund to the extent required by the 1940 Act. More detailed
information concerning the Fund is set forth in the Statement of Additional
Information.
- ------------------------------------------------------------------------------
ADDITIONAL INFORMATION
- ------------------------------------------------------------------------------
This prospectus and the Statement of Additional Information do not contain all
the information set forth in the Registration Statement filed by the Fund with
the SEC under the Securities Act of 1933. Copies of the Registration Statement
may be obtained at a reasonable charge from the SEC or may be examined, without
charge, at the office of the SEC in Washington, D.C.
The Fund's fiscal year ends on June 30. The Fund sends to its shareholders at
least semi-annually reports showing the Fund's portfolio and other information.
An annual report, containing financial statements audited by the Fund's
independent auditors, is sent to shareholders each year. After the end of each
year, shareholders will receive federal income tax information regarding
dividends and capital gains distributions.
Shareholder inquiries should be directed to Van Kampen American Capital Tax
Free Money Fund, One Parkview Plaza, Oakbrook Terrace, Illinois 60181, Attn:
Correspondence.
For Automated Telephone Service which provides 24-hour direct dial access to
Fund facts and Shareholder account information, dial (800) 421-5666. For
inquiries through Telecommunications Device for the Deaf (TDD), dial (800)
772-8889.
23
<PAGE> 27
EXISTING SHAREHOLDERS--
FOR INFORMATION ON YOUR
EXISTING ACCOUNT PLEASE CALL
THE FUND'S TOLL-FREE
NUMBER--(800) 421-5666.
PROSPECTIVE INVESTORS--CALL
YOUR BROKER OR (800) 421-5666.
DEALERS--FOR DEALER
INFORMATION, SELLING
AGREEMENTS, WIRE ORDERS,
OR REDEMPTIONS CALL THE
DISTRIBUTOR'S TOLL-FREE
NUMBER--(800) 421-5666.
FOR SHAREHOLDER AND
DEALER INQUIRIES THROUGH
TELECOMMUNICATIONS
DEVICE FOR THE DEAF (TDD)
DIAL 1-800-772-8889.
FOR AUTOMATED TELEPHONE
SERVICES DIAL (800) 421-5666.
VAN KAMPEN AMERICAN CAPITAL
TAX FREE MONEY FUND
One Parkview Plaza
Oakbrook Terrace, IL 60181
- ------------------
Investment Adviser
VAN KAMPEN AMERICAN CAPITAL
INVESTMENT ADVISORY CORP.
One Parkview Plaza
Oakbrook Terrace, IL 60181
Distributor
VAN KAMPEN AMERICAN CAPITAL DISTRIBUTORS, INC.
One Parkview Plaza
Oakbrook Terrace, IL 60181
Transfer Agent
ACCESS INVESTOR SERVICES, INC.
P.O. Box 418256
Kansas City, MO 64141-9256
Attn: Van Kampen American Capital Funds
Custodian
STATE STREET BANK AND
TRUST COMPANY
225 Franklin Street, P.O. Box 1912
Boston, MA 02105
Attn: Van Kampen American Capital Funds
Legal Counsel
SKADDEN, ARPS, SLATE,
MEAGHER & FLOM
333 West Wacker Drive
Chicago, IL 60606
Independent Auditors
KPMG PEAT MARWICK LLP
Peat Marwick Plaza
303 East Wacker Drive
Chicago, IL 60601
<PAGE> 28
TAX FREE
MONEY FUND
------------------------------------------------------------------------------
P R O S P E C T U S
SEPTEMBER 1, 1995
------ A WEALTH OF KNOWLEDGE - A KNOWLEDGE OF WEALTH ------
VAN KAMPEN AMERICAN CAPITAL
------------------------------------------------------------------------
<PAGE> 29
STATEMENT OF ADDITIONAL INFORMATION
VAN KAMPEN AMERICAN CAPITAL TAX FREE MONEY FUND
Van Kampen American Capital Tax Free Money Fund, formerly known as Van Kampen
Merritt Tax Free Money Fund (the "Fund"), is a money market mutual fund whose
investment objective is to provide a high level of current income exempt from
federal income taxes consistent with the preservation of capital and liquidity
through investment in a diversified portfolio of municipal securities that will
mature within 12 months of the date of purchase. There can be no assurance that
the Fund will achieve its objective. The Fund is a Delaware business trust and
is classified as a diversified open-end management company. The Fund is a mutual
fund whose portfolio is advised by Van Kampen American Capital Investment
Advisory Corp. (the "Adviser").
This Statement of Additional Information is not a prospectus but should be
read in conjunction with the Prospectus for the Fund dated September 1, 1995
(the "Prospectus"). This Statement of Additional Information does not include
all information that a prospective investor should consider before purchasing
shares of the Fund, and investors should obtain and read the Prospectus prior to
purchasing shares. A copy of the Prospectus may be obtained without charge by
calling the Fund at (800) 421-5666. This Statement of Additional Information
incorporates by reference the entire Prospectus.
The Prospectus and this Statement of Additional Information omit certain
information contained in the registration statement filed with the Securities
and Exchange Commission ("SEC"), Washington, D.C. This omitted information may
be obtained from the SEC upon payment of the fee prescribed or inspected at the
SEC's office at no charge.
TABLE OF CONTENTS
<TABLE>
<S> <C>
The Fund and the Trust.......................................................... B-2
Investment Policies and Restrictions............................................ B-2
Officers and Trustees........................................................... B-3
Legal Counsel................................................................... B-8
Investment Advisory and Other Services.......................................... B-9
Custodian and Independent Auditors.............................................. B-10
Portfolio Transactions.......................................................... B-10
The Distributor................................................................. B-11
Yield Information............................................................... B-12
Dividends....................................................................... B-13
Appendix........................................................................ B-14
Independent Auditors' Report.................................................... B-16
Financial Statements............................................................ B-17
Notes to Financial Statements................................................... B-22
</TABLE>
THIS STATEMENT OF ADDITIONAL INFORMATION IS DATED SEPTEMBER 1, 1995.
B-1
<PAGE> 30
THE FUND AND THE TRUST
The Fund is an open-end diversified management investment company organized as
an unincorporated business trust established under the laws of the State of
Delaware by an Agreement and Declaration of Trust ("Declaration of Trust") dated
as of May 10, 1995. The Fund was originally organized in 1986 as a Massachusetts
business trust under the name Van Kampen Merritt Tax Free Income Fund. The Fund
was reorganized as a Delaware business trust as of July 31, 1995. The Fund can
issue an unlimited number of shares at $0.01 par value (prior to July 31, 1995,
the shares had no par value).
The Fund's Declaration of Trust provides that shareholders are not liable for
any liabilities of the Fund and requires inclusion of a clause to that effect in
every agreement entered into by the Fund and indemnifies shareholders against
any such liability. Shares of the Fund entitle their holders to one vote per
share. Shares do not have cumulative voting rights, preemptive rights or any
conversion or exchange rights. The Fund does not contemplate holding regular
meetings of shareholders to elect Trustees or otherwise. However, the holders of
10% or more of the outstanding shares may by written request require a meeting
to consider the removal of Trustees by a vote of two-thirds of the shares then
outstanding cast in person or by proxy at such meeting.
The Trustees may amend the Declaration of Trust in any manner without
shareholder approval, except that the Trustees may not adopt any amendment
adversely affecting the rights of shareholders without approval by a majority of
the shares present at a meeting of shareholders (or such higher vote as may be
required by the Investment Company Act of 1940 (the "1940 Act") or other
applicable law) and except that the Trustees cannot amend the Declaration of
Trust to impose any liability on shareholders, make any assessment on shares or
impose liabilities on the Trustees without approval from each affected
shareholder or Trustee, as the case may be.
Statements contained in this Statement of Additional Information as to the
contents of any contract or other document referred to are not necessarily
complete, and, in each instance, reference is made to the copy of such contract
or other document filed as an exhibit to the Registration Statement of which
this Statement of Additional Information forms as part, each such statement
being qualified in all respects by such reference.
INVESTMENT POLICIES AND RESTRICTIONS
The investment objective of the Fund is to provide a high level of current
income exempt from federal income taxes, consistent with the preservation of
capital and liquidity through investment in a diversified portfolio of municipal
securities. The Fund will invest only in the municipal securities denominated in
U.S. dollars and must either (i) mature or have been called for redemption
within one year of the date purchased or (ii) be subject to repurchase
agreements maturing within one year. There can be no assurance that the Fund
will achieve its objective. The foregoing is a fundamental policy and cannot be
changed without approval of the shareholders of the Fund.
Fundamental investment restrictions limiting the investments of the Fund
provide that the Fund may not:
1. Purchase any securities (other than obligations issued or guaranteed by
the United States Government or by its agencies or instrumentalities) if,
as a result, more than 5% of the Fund's total assets (taken at current
value) would then be invested in securities of a single issuer or if, as a
result, the Fund would hold more than 10% of the outstanding voting
securities of an issuer except, that up to 25% of the Fund's total assets
may be invested without regard to such limitations.
2. Borrow money, except from banks for temporary or emergency purposes or in
reverse repurchase transactions as described in the Prospectus and then
not in amounts in excess of 10% of its net assets at the time of
borrowing. It can mortgage or pledge its assets only in connection with
such borrowing and in amounts not in excess of 20% of the value of its net
assets at the time of such borrowing. The Fund will not purchase any
securities while it has any outstanding borrowings.
3. Buy any securities "on margin" or sell any securities "short."
4. Make investments for the purpose of exercising control or management.
B-2
<PAGE> 31
5. Purchase any security which is restricted as to disposition under federal
securities laws or by contract or which are not readily marketable, or
enter into a repurchase agreement maturing in more than seven days with
respect to any security if, as a result, more than 10% of the Fund's total
assets would be invested in such securities.
6. Invest in securities of other investment companies, except as part of a
merger, consolidation or other acquisition.
7. Invest in interests in oil, gas or other mineral exploration or
development programs.
8. Make loans, except that the Fund can purchase and hold those publicly
distributed debt securities which it is permitted to buy, and enter into
repurchase agreements.
9. Act as an underwriter of securities, except to the extent the Fund may be
deemed to be an underwriter in connection with the sale of securities held
in its portfolio.
10. Purchase or sell real estate, commodities or commodity contracts.
The Fund may not change any of these investment restrictions without the
approval of the lesser of (i) more than 50% of the Fund's outstanding shares or
(ii) 67% of the Fund's shares present at a meeting at which the holders of more
than 50% of such outstanding shares are present in person or by proxy. As long
as the percentage restrictions described above are satisfied at the time of the
investment or borrowing, the Fund will be considered to have abided by those
restrictions even if, at a later time, a change in values or net assets causes
an increase or decrease in percentage.
From time to time, the Fund may adopt more stringent investment restrictions
in order to satisfy rules and regulations promulgated by the SEC or to be able
to offer its shares to residents in particular states. The Fund may amend or
revoke such investment restrictions if the SEC amends or revokes such rules and
regulations. In addition, in order to offer its shares to residents in
particular states, the Fund has committed that it will not purchase or sell
options and that it will not invest in warrants. The Fund may revoke any such
commitments at any time so long as it thereafter ceases to offer its shares in
the state or states involved or such commitment is no longer required by such
state or states.
OFFICERS AND TRUSTEES
The tables below list the trustees and officers of the Fund and their
principal occupations for the last five years and their affiliations, if any,
with Van Kampen American Capital Investment Advisory Corp. (the "VK Adviser" or
"Adviser"), Van Kampen American Capital Asset Management, Inc. (the "AC
Adviser"), Van Kampen American Capital Management, Inc., McCarthy, Crisanti &
Maffei, Inc., MCM Asia Pacific Company, Limited, Van Kampen American Capital
Distributors, Inc. (the "Distributor"), Van Kampen American Capital, Inc. ("Van
Kampen American Capital") or VK/AC Holding, Inc. For purposes hereof, the term
"Van Kampen American Capital Funds" includes each of the open-end investment
companies advised by the VK Adviser (excluding the Van Kampen Merritt Series
Trust) and each of the open-end investment companies advised by the AC Adviser.
TRUSTEES
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATIONS OR
NAME, ADDRESS AND AGE EMPLOYMENT IN PAST 5 YEARS
- ----------------------------------- ---------------------------------------------------------
<S> <C>
J. Miles Branagan.................. Co-founder, Chairman, Chief Executive Officer and
2300 205th Street President of MDT Corporation, a company which develops
Torrance, CA 90501 manufactures, markets and services medical and scientific
Age: 63 equipment. Trustee of each of the Van Kampen American
Capital Funds.
</TABLE>
B-3
<PAGE> 32
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATIONS OR
NAME, ADDRESS AND AGE EMPLOYMENT IN PAST 5 YEARS
- ----------------------------------- ---------------------------------------------------------
<S> <C>
Richard E. Caruso.................. Founder, Chairman and Chief Executive Officer, Integra
Two Randor Station, Suite 314 Life Sciences Corporation, a firm specializing in life
King of Prussia Road sciences. Trustee of Susquehanna University and First
Radnor, PA 19087 Vice President, The Baum School of Art; Founder and
Age: 52 Director of Uncommon Individual Foundation, a youth
development foundation. Director of International Board
of Business Performance Group, London School of
Economics. Formerly, Director of First Sterling Bank, and
Executive Vice President and a Director of LFC Financial
Corporation, a provider of lease and project financing.
Trustee of each of the Van Kampen American Capital Funds.
Philip P. Gaughan.................. Prior to February, 1989, Managing Director and Manager of
9615 Torresdale Avenue Municipal Bond Department, W. H. Newbold's Sons & Co.
Philadelphia, PA 19114 Trustee of each of the Van Kampen American Capital Funds.
Age: 66
Roger Hilsman...................... Professor of Government and International Affairs
251-1 Hamburg Cove Emeritus, Columbia University. Trustee of each of the Van
Lyme, CT 06371 Kampen American Capital Funds.
Age: 75
R. Craig Kennedy................... President and Director, German Marshall Fund of the
1341 E. 50th Street United States. Formerly, advisor to the Dennis Trading
Chicago, IL 60615 Group Inc. Prior to 1992, President and Chief Executive
Age: 43 Officer, Director and member of the Investment Committee
of the Joyce Foundation, a private foundation. Trustee of
each of the Van Kampen American Capital Funds.
Dennis J. McDonnell*............... President, Chief Operating Officer and a Director of the
One Parkview Plaza VK Adviser, the AC Adviser and Van Kampen American
Oakbrook Terrace, IL 60181 Capital Management, Inc. Director of VK/AC Holding, Inc,
Age: 53 Van Kampen American Capital, and McCarthy, Crisanti &
Maffei, Inc. Chairman and a Director of MCM Asia Pacific
Company, Ltd. President, Chief Executive Officer and
Trustee of each of the funds advised by the VK Adviser.
Prior to December, 1991, Senior Vice President of Van
Kampen Merritt Inc.
Donald C. Miller................... Prior to 1992, Director of Royal Group, Inc., a company
415 North Adams in insurance related businesses. Formerly Vice Chairman
Hinsdale, IL 60521 and Director of Continental Illinois National Bank and
Age: 75 Trust Company of Chicago and Continental Illinois
Corporation. Trustee of each of the Van Kampen American
Capital Funds and Chairman of the Board of each of the
open-end funds (except the Van Kampen Merritt Series
Trust) advised by the VK Adviser.
Jack E. Nelson..................... President of Nelson Investment Planning Services, Inc., a
423 Country Club Drive financial planning company and registered investment
Winter Park, FL 32789 adviser. President of Nelson Investment Brokerage
Age: 59 Services Inc., a member of the National Association of
Securities Dealers, Inc. (NASD) and Securities Investors
Protection Corp. (SIPC). Trustee of each of the Van
Kampen American Capital Funds.
</TABLE>
B-4
<PAGE> 33
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATIONS OR
NAME, ADDRESS AND AGE EMPLOYMENT IN PAST 5 YEARS
- ----------------------------------- ---------------------------------------------------------
<S> <C>
Don G. Powell*..................... President, Chief Executive Officer and a Director of
2800 Post Oak Blvd. VK/AC Holding, Inc. and Van Kampen American Capital.
Houston, TX 77056 Chairman, Chief Executive Officer and a Director of the
Age: 55 Distributor, the VK Adviser, the AC Adviser and Van
Kampen American Capital Management, Inc. Director,
President and Chief Executive Officer of Van Kampen
American Capital Advisers, Inc. and Van Kampen American
Capital Exchange Corp. Director and Executive Vice
President of Advantage Capital Corporation, ACCESS
Investor Services, Inc., Van Kampen American Capital
Services, Inc. and Van Kampen American Capital Trust
Company. Director of McCarthy, Crisanti & Maffei, Inc.
President and Director, Trustee or Managing General
Partner of each of the funds advised by the AC Adviser
and Trustee of each of the funds advised by the VK
Adviser. He is also Chairman of the Board of the Van
Kampen Merritt Series Trust and closed-end investment
companies advised by the VK Adviser.
David Rees......................... Contributing Columnist and, prior to 1995, Senior Editor
1601 Country Club Drive of Los Angeles Business Journal. A director of Source
Glendale, CA 91208 Capital, Inc., a closed-end investment company
Age: 71 unaffiliated with Van Kampen American Capital, a director
and the second vice president of International Institute
of Los Angeles. Trustee of each of the Van Kampen
American Capital Funds.
Jerome L. Robinson*................ President of Robinson Technical Products Corporation, a
115 River Road manufacturer and processor of welding alloys, supplies
Edgewater, NJ 07020 and equipment. Director of Pacesetter Software, a
Age: 72 software programming company specializing in white collar
productivity. Director of Panasia Bank. Trustee of each
of the Van Kampen American Capital Funds.
Lawrence J. Sheehan*............... Of Counsel to and formerly Partner (from 1969 to 1994) of
1999 Avenue of the Stars the law firm of O'Melveny & Myers, legal counsel to the
Suite 700 funds advised by the AC Adviser. Director, FPA Capital
Los Angeles, CA 90067 Fund, Inc.; FPA New Income Fund, Inc.; FPA Perennial
Age: 63 Fund, Inc.; Source Capital, Inc.; and TCW Convertible
Security Fund, Inc. Trustee of each of the Van Kampen
American Capital Funds.
Fernando Sisto..................... George M. Bond Chaired Professor and, prior to 1995, Dean
Stevens Institute of Graduate School and Chairman, Department of Mechanical
of Technology Engineering, Stevens Institute of Technology. Director of
Castle Point Station Dynalysis of Princeton, a firm engaged in engineering
Hoboken, NJ 07030 research. Trustee of each of the Van Kampen American
Age: 70 Capital Funds and Chairman of the Board of each of the
open-end funds advised by the AC Adviser.
Wayne W. Whalen*................... Partner in the law firm of Skadden, Arps, Slate, Meagher
333 West Wacker Drive & Flom, legal counsel to funds advised by the VK Adviser.
Chicago, IL 60606 Trustee of each of the Van Kampen American Capital Funds.
Age: 55 He also is a Trustee of the Van Kampen Merritt Series
Trust and closed-end investment companies advised by the
VK Adviser.
</TABLE>
B-5
<PAGE> 34
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATIONS OR
NAME, ADDRESS AND AGE EMPLOYMENT IN PAST 5 YEARS
- ----------------------------------- ---------------------------------------------------------
<S> <C>
William S. Woodside................ Vice Chairman of the Board of LSG Sky Chefs, Inc., a
712 Fifth Avenue caterer of airline food. Formerly, Director of Primerica
40th Floor Corporation (currently known as The Traveler's Inc.).
New York, NY 10019 Formerly, Director of James River Corporation, a producer
Age: 73 of paper products. Trustee, and former President of
Whitney Museum of American Art. Formerly, Chairman of
Institute for Educational Leadership, Inc., Board of
Visitors, Graduate School of The City University of New
York, Academy of Political Science. Trustee of Committee
for Economic Development. Director of Public Education
Fund Network, Fund for New York City Public Education.
Trustee of Barnard College. Member of Dean's Council,
Harvard School of Public Health. Member of Mental Health
Task Force, Carter Center. Trustee of each of the Van
Kampen American Capital Funds.
</TABLE>
OFFICERS
<TABLE>
<CAPTION>
POSITIONS AND OTHER PRINCIPAL OCCUPATIONS
NAME AND AGE OFFICES WITH FUND IN PAST 5 YEARS
- --------------------- -------------------------- ---------------------------------------------
<S> <C> <C>
Peter W. Hegel....... Vice President Executive Vice President and Portfolio
Age: 39 Manager of the Adviser. Executive Vice
President of the AC Adviser. Vice President
of each of the Van Kampen American Capital
Funds and closed-end funds advised by the VK
Adviser.
Ronald A. Nyberg..... Vice President and Executive Vice President, General Counsel and
Age: 41 Secretary Secretary of Van Kampen American Capital.
Executive Vice President and a Director of
the VK Adviser and the Distributor. Executive
Vice President of the AC Adviser. Vice
President and Secretary of each of the Van
Kampen American Capital Funds and closed-end
funds advised by the VK Adviser. Director of
ICI Mutual Insurance Co., a provider of
insurance to members of the Investment
Company Institute. Prior to March 1990,
Secretary of Van Kampen Merritt Inc., the VK
Adviser and McCarthy, Crisanti & Maffei, Inc.
Edward C. Wood III... Vice President, Treasurer Senior Vice President of the VK Adviser. Vice
Age: 39 and Chief Financial President, Treasurer and Chief Financial
Officer Officer of each of the Van Kampen American
Capital Funds and closed-end funds advised by
the VK Adviser.
Nicholas Dalmaso..... Assistant Secretary Assistant Vice President and Attorney of Van
Age: 30 Kampen American Capital. Assistant Secretary
of each of the Van Kampen American Capital
Funds and closed-end funds advised by the VK
Adviser. Prior to May 1992, attorney for
Cantwell & Cantwell, a Chicago law firm.
</TABLE>
B-6
<PAGE> 35
<TABLE>
<CAPTION>
POSITIONS AND OTHER PRINCIPAL OCCUPATIONS
NAME AND AGE OFFICES WITH FUND IN PAST 5 YEARS
- --------------------- -------------------------- ---------------------------------------------
<S> <C> <C>
Scott E. Martin...... Assistant Secretary Senior Vice President, Deputy General Counsel
Age: 38 and Assistant Secretary of Van Kampen
American Capital. Senior Vice President,
Deputy General Counsel and Secretary of the
VK Adviser and the Distributor. Assistant
Secretary of each of the Van Kampen American
Capital Funds and closed-end funds advised by
the VK Adviser.
Weston B.
Wetherell.......... Assistant Secretary Vice President, Associate General Counsel and
Age: 39 Assistant Secretary of Van Kampen American
Capital, the VK Adviser and the Distributor.
Assistant Secretary of McCarthy, Crisanti &
Maffei, Inc. Assistant Secretary of each of
the Van Kampen American Capital Funds and
closed-end funds advised by the VK Adviser.
John L. Sullivan..... Controller First Vice President of the VK Adviser.
Age: 39 Controller of each of the Van Kampen American
Capital Funds and closed-end funds advised by
the VK Adviser.
Steven M. Hill....... Assistant Treasurer Assistant Vice President of the VK Adviser.
Age: 30 Assistant Treasurer of each of the Van Kampen
American Capital Funds and closed-end funds
advised by the VK Adviser.
</TABLE>
- ---------------
* Such Trustees are "interested persons" (within the meaning of Section 2(a)(19)
of the 1940 Act). Messrs. Powell and McDonnell are interested persons of the
VK Adviser and the Fund by reason of their positions with the VK Adviser. Mr.
Robinson is an interested person of the Fund by reason of his ownership of
over 5% of the outstanding shares of the Fund. Mr. Sheehan is an interested
person of the VK Adviser and the Fund by reason of his firm having acted as
legal counsel to the VK Adviser. Mr. Whalen is an interested person of the
Fund by reason of his firm acting as legal counsel for the Fund.
Messrs. Powell and McDonnell own, or have the opportunity to purchase, an
equity interest in VK/AC Holding, Inc., the parent company of Van Kampen
American Capital, and have entered into employment contracts (for a term of five
years) with Van Kampen American Capital.
The Fund will pay trustees who are not affiliated persons of the VK Adviser,
the Distributor or Van Kampen American Capital an annual retainer of $2,500 per
year and $125 per regular quarterly meeting of the Fund, plus expenses. No
additional fees are proposed at the present time to be paid for special
meetings, committee meetings or to the chairman of the board. The trustees have
approved an aggregate annual compensation cap from the combined fund complex of
$84,000 per trustee (excluding any retirement benefits) until December 31, 1996,
based upon the current net assets and the current number of Van Kampen American
Capital funds (except that Mr. Whalen, who is also a trustee of the closed-end
funds advised by the VK Adviser would receive additional compensation for
serving as a trustee of such funds). In addition, the VK Adviser has agreed to
reimburse the Fund through December 31, 1996, for any increase in the aggregate
trustees' compensation over the aggregate compensation paid by the Fund in its
1994 fiscal year.
B-7
<PAGE> 36
COMPENSATION TABLE(1)
<TABLE>
<CAPTION>
TOTAL
PENSION OR COMPENSATION
RETIREMENT FROM THE FUND
AGGREGATE BENEFITS ACCRUED ESTIMATED ANNUAL AND FUND
COMPENSATION AS PART OF BENEFITS UPON COMPLEX PAID TO
NAME FROM THE FUND(2) FUND EXPENSES(3) RETIREMENT(4) TRUSTEE(5)
- ------------------------------- -------------------- ------------------ ---------------- ---------------
<S> <C> <C> <C> <C>
R. Craig Kennedy............... $3,999 $ 102 $2,500 $62,362
Philip G. Gaughan.............. 5,464 2,224 2,500 63,250
Donald C. Miller............... 3,854 3,606 2,500 62,178
Jack A. Nelson................. 3,999 1,125 2,500 62,362
Jerome L. Robinson............. 1,945 2,847 2,500 58,475
Wayne W. Whalen................ 5,359 719 2,500 49,875
</TABLE>
- ---------------
(1) Messrs. McDonnell and Powell, trustees of the Fund, are affiliated persons
of the VK Adviser and are not eligible for compensation or retirement
benefits from the Fund. Messrs. Branagan, Caruso, Hilsman, Rees, Sheehan,
Sisto and Woodside were elected as trustees of the Fund at a shareholders
meeting held July 21, 1995 and thus received no compensation or retirement
benefits from the Fund during its 1995 fiscal year ended June 30, 1995.
(2) The amounts shown in this column are from the Fund's fiscal year ended June
30, 1995. Beginning in October 1994 each Trustee, except Messrs. Gaughan and
Whalen, began deferring his entire aggregate compensation. The total
combined amount of deferred compensation (including interest) accrued with
respect to each trustee from the Fund Complex (as defined herein) as of
December 31, 1994 is as follows: Mr. Kennedy $14,737; Mr. Miller $14,553;
Mr. Nelson $14,737 and Mr. Robinson $13,725.
(3) The Retirement Plan commenced as of August 1, 1994 for the Fund. The amounts
in this column are the retirement benefits accrued during the Fund's fiscal
year ended June 30, 1995.
(4) This is the estimated annual benefits payable per year for the 10-year
period commencing in the year of such Trustee's retirement by a Fund
assuming: the Trustee has 10 or more years of service on the Board of the
Fund and retires at or after attaining the age of 60. Trustees retiring
prior to the age of 60 or with fewer than 10 years of service for the Fund
may receive reduced retirement benefits from such Fund.
(5) As of December 31, 1994, the Fund Complex consisted of 20 mutual funds
advised by the VK Adviser which had the same members on each funds' Board of
Trustees as of December 31, 1994. The amounts shown in this column are
accumulated from the Aggregate Compensation of each of these 20 mutual funds
in the Fund Complex during the calendar year ended December 31, 1994. The VK
Adviser also serves as investment adviser for other investment companies;
however, with the exception of Messrs. Powell, McDonnell and Whalen, such
investment companies do not have the same trustees as the Fund Complex.
Combining the Fund Complex with other investment companies advised by the VK
Adviser, Mr. Whalen received Total Compensation of $161,850.
As of August 18, 1995, the Trustees and officers as a group own 19% of the
Fund's shares.
To the knowledge of the Fund, as of August 18, 1995, no person owned of record
or beneficially 5% or more of the Fund's shares, except that Jerome L. Robinson,
c/o Van Kampen American Capital, Inc., One Parkview Plaza, Oakbrook Terrace,
Illinois 60181 was the beneficial holder of 19% of the Fund's shares.
LEGAL COUNSEL
Counsel to the Fund is Skadden, Arps, Slate, Meagher & Flom, Chicago,
Illinois.
B-8
<PAGE> 37
INVESTMENT ADVISORY AND OTHER SERVICES
Van Kampen American Capital Investment Advisory Corp. (the "Adviser") is the
Fund's investment adviser. The Adviser was incorporated as a Delaware
corporation in 1982 (and through December 31, 1987 transacted business under the
name of American Portfolio Advisory Service Inc.). The Adviser's principal
office is located at One Parkview Plaza, Oakbrook Terrace, Illinois 60181.
The Adviser is a wholly-owned subsidiary of Van Kampen American Capital, which
in turn is a wholly-owned subsidiary of VK/AC Holding, Inc. VK/AC Holding, Inc.
is controlled, through the ownership of a substantial majority of its common
stock, by The Clayton & Dubilier Private Equity Fund IV Limited Partnership
("C&D L.P."), a Connecticut limited partnership, C&D L.P. is managed by Clayton,
Dubilier & Rice, Inc., a New York based private investment firm. The General
Partner of C&D L.P. is Clayton & Dubilier Associates IV Limited Partnership
("C&D Associates L.P."). The general partners of C&D Associates L.P. are Joseph
L. Rice, III, B. Charles Ames, William A. Barbe, Alberto Cribiore, Donald J.
Gogel, Leon J. Hendrix, Jr., Hubbard C. Howe and Andrall E. Pearson each of whom
is a principal of Clayton, Dubilier & Rice, Inc. In addition, certain officers,
directors and employees of Van Kampen American Capital own, in the aggregate,
not more than 7% of the common stock of VK/AC Holding, Inc. and have the right
to acquire, upon the exercise of options, approximately an additional 11% of the
common stock of VK/AC Holding, Inc. Presently, and after giving effect to the
exercise of such options, no officer or trustee of the Fund owns or would own 5%
or more of the common stock of VK/AC Holding, Inc.
The investment advisory agreement provides that the Adviser will supply
investment research and portfolio management, including the selection of
securities for the Fund to purchase, hold or sell and the selection of brokers
through whom the Fund's portfolio transactions are executed. The Adviser also
administers the business affairs of the Fund, furnishes offices, necessary
facilities and equipment, provides administrative services, and permits its
officers and employees to serve without compensation as trustees and officers of
the Fund if duly elected to such positions.
The Adviser's activities are subject to the review and supervision of the
Trustees, to whom the Adviser renders periodic reports of the Fund's investment
activities.
The investment advisory agreement with the Fund was approved by the
shareholders of the Fund at a shareholders meeting held on January 14, 1993. The
agreement will remain in effect from year to year if specifically approved by
the Trustees or the Fund shareholders, as the case may be, and by the
disinterested Trustees in compliance with the requirements of the 1940 Act. The
agreement may be terminated without penalty upon 60 days written notice by
either party and will automatically terminate in the event of assignment.
The Adviser has undertaken to reimburse the Fund for annual expenses which
exceed the most stringent limit prescribed by any State in which the Fund's
shares are offered for sale. Currently, the most stringent limit in any State
would require such reimbursement to the extent that aggregate operating expenses
of the Fund (excluding interest, taxes and other expenses which may be
excludable under applicable state law) exceed in any fiscal year 2 1/2% of the
average annual net assets of the Fund up to $30 million. 2% of the average
annual net assets of the Fund of the next $70 million, and 1 1/2% of the
remaining average annual net assets of the Fund. In addition to making any
required reimbursements, the Adviser may in its discretion, but is not obligated
to, waive all or any portion of its fee or assume all or any portion of the
expenses of the Fund.
For the years ended June 30, 1995, 1994 and 1993, the Fund recognized advisory
expenses of $6,443, $4,391 and $136,166, respectively.
OTHER AGREEMENTS
SUPPORT SERVICES AGREEMENT. Under a support services agreement with the
Distributor which terminated as of July 10, 1995 concurrent with the Fund's
change in transfer agent, the Fund received support services for shareholders,
including the handling of all written and telephonic communications, except
initial order entry and other distribution related communications. Payment by
the Fund for such services was made on cost basis for the employment of the
personnel and the equipment necessary to render the support services. At such
B-9
<PAGE> 38
time, the Fund, and the other Van Kampen American Capital mutual funds
distributed by the Distributor, shared such costs proportionately among
themselves based upon their respective net asset values.
For the years ended June 30, 1995, 1994 and 1993, the Fund recognized expenses
of approximately $16,300, $16,800 and $18,900, respectively, representing the
Distributor's cost of providing certain support services.
ACCOUNTING SERVICES AGREEMENT. The Fund has entered into an accounting
services agreement pursuant to which the Adviser provides accounting services
supplementary to those provided by the Custodian. Such services are expected to
enable the Fund to more closely monitor and maintain its accounts and records.
The Fund shares together with the other Van Kampen American Capital mutual funds
advised by the Adviser and distributed by the Distributor in the cost of
providing such services, with 25% of such costs shared proportionately based on
the number of outstanding classes of securities per fund and with the remaining
75% of such cost being paid by the Fund and such other Van Kampen American
Capital funds based proportionally on their respective net assets.
For the years ended June 30, 1995, 1994 and 1993, the Fund recognized expenses
of approximately $1,800, $2,000 and $2,700, respectively, representing the
Adviser's cost of providing accounting services.
LEGAL SERVICES AGREEMENT. The Fund and each of the other Van Kampen American
Capital funds advised by the Adviser and distributed by the Distributor have
entered into Legal Services Agreements pursuant to which Van Kampen American
Capital provides legal services, including without limitation: accurate
maintenance of the funds' minute books and records, preparation and oversight of
the funds' regulatory reports, and other information provided to shareholders,
as well as responding to day-to-day legal issues on behalf of the funds. Payment
by the Fund for such services is made on a cost basis for the salary and salary
related benefits, including but not limited to bonuses, group insurances and
other regular wages for the employment of personnel, as well as overhead and the
expenses related to the office space and the equipment necessary to render the
legal services. Other funds distributed by the Distributor also receive legal
services from Van Kampen American Capital. Of the total costs for legal services
provided to funds distributed by the Distributor, one half of such costs are
allocated equally to each fund and the remaining one half of such costs are
allocated to specific funds based on monthly time records.
For the years ended June 30, 1995, 1994 and 1993, the Fund recognized expenses
of approximately $9,000, $8,200 and $7,300, respectively, representing Van
Kampen American Capital's cost of providing legal services.
CUSTODIAN AND INDEPENDENT AUDITORS
State Street Bank and Trust Company, 225 Franklin Street, P.O. Box 1713,
Boston, MA 02105-1713, is the custodian of the Fund and has custody of all
securities and cash of the Fund. The custodian, among other things, attends to
the collection of principal and income, and payment for and collection of
proceeds of securities bought and sold by the Fund.
The independent auditors for the Fund are KPMG Peat Marwick LLP, Chicago,
Illinois. The selection of independent auditors will be subject to ratification
by the shareholders of the Fund at any annual meeting of shareholders.
PORTFOLIO TRANSACTIONS
The Adviser is responsible for decisions to buy and sell securities for the
Fund and broker-dealer selection. The primary consideration in effecting a
securities transaction will be execution at the most favorable securities price.
A substantial majority of the Fund's portfolio transactions may be transacted
with primary market makers acting as principal on a net basis, with no brokerage
commissions being paid by the Fund. Such principal transactions may, however,
result in a profit to the market makers. In certain instances the Adviser may
make purchases of underwritten issues at prices which include underwriting fees.
In selecting a broker-dealer to execute each particular transaction, the Adviser
will take the following into consideration: the best securities price available;
the reliability, integrity and financial condition of the broker-dealer; the
size of and difficulty in executing the order; and the value of the expected
contribution of the broker-dealer to the investment performance of the Fund on a
continuing basis. Accordingly, the price to the Fund in any
B-10
<PAGE> 39
transaction may be less favorable than that available from another broker-dealer
if the difference is reasonably justified by other aspects of the portfolio
execution services offered. Subject to such policies as the Trustees of the Fund
may determine, the Adviser may cause the Fund to pay a broker-dealer that
provides brokerage and research services an amount of commission for effecting a
portfolio investment transaction in excess of the amount of commission another
broker-dealer would have charged for effecting that transaction, if the Adviser
determines in good faith that such amount of commission was reasonable in
relation to the value of the brokerage and research services provided by such
broker-dealer, viewed in terms of either that particular transaction or the
Adviser's overall responsibilities with respect to the Fund. The Adviser may
also allocate the orders placed by it on behalf of the Fund to such
broker-dealers who provide research or statistical material, or other services
to the Fund or the Adviser. Such allocation shall be in such amounts and
proportions as the Adviser shall determine, and the Adviser will report on said
allocations regularly to the Trustees, indicating the brokers to whom such
allocations have been made and the basis therefor.
While the Adviser will be primarily responsible for the placement of the
Fund's business, the policies and practices in this regard must be consistent
with the foregoing and will at all times be subject to review by the Trustees of
the Fund.
THE DISTRIBUTOR
The Distributor offers one of the industry's broadest lines of investments --
encompassing mutual funds, closed-end funds and unit investment trusts -- and is
currently the nation's 5th largest broker-sold mutual fund group according to
Strategic Insight. Van Kampen American Capital's roots in money management
extend back to 1926. Today, Van Kampen American Capital manages or supervises
more than $50 billion in mutual funds, closed-end funds and unit investment
trusts -- assets which have been entrusted to Van Kampen American Capital in
more than 2 million investor accounts. Van Kampen American Capital has one of
the largest research teams (outside of the rating agencies) in the country, with
86 analysts devoted to various specializations.
Shares of the Fund are offered on a continuous basis through the Distributor,
One Parkview Plaza, Oakbrook Terrace, IL 60181. The Distributor is a wholly
owned subsidiary of Van Kampen American Capital, which is a subsidiary of VK/AC
Holding, Inc., a Delaware corporation that is controlled through an ownership of
a substantial majority of its common stock, by The Clayton & Dubilier Private
Equity Fund IV Limited Partnership ("C & D L.P."), a Connecticut limited
partnership. In addition, certain officers, directors and employees of Van
Kampen American Capital, and its subsidiaries own, in the aggregate not more
than 7% of the common stock of VK/AC Holding, Inc. and have the right to
acquire, upon the exercise of options, approximately an additional 11% of the
common stock of VK/AC Holding, Inc. C & D L.P. is managed by Clayton, Dubilier &
Rice, Inc. Clayton & Dubilier Associates IV Limited Partnership ("C & D
Associates L.P.") is the general partner of C & D L.P. Pursuant to a
distribution agreement, the Distributor will purchase shares of the Fund for
resale to the public, either directly or through securities dealers, and is
obligated to purchase only those shares for which it has received purchase
orders. A discussion of how to purchase and redeem the Fund's shares and how the
Fund's shares are priced is contained in the Prospectus.
The Fund has adopted a distribution plan (the "Distribution Plan") pursuant to
Rule 12b-1 under the 1940 Act. The Fund also has adopted a service plan (the
"Service Plan"). The Distribution Plan and the Service Plan sometimes are
referred to herein as the "Plans." The Plans provide that the Fund may spend a
portion of the Fund's average daily net assets in connection with the
distribution of shares and in connection with the provision of ongoing services
to shareholders. The Plans are being implemented through an agreement (the
"Distribution and Service Agreement") with the Distributor and sub-agreements
between the Distributor and members of the NASD who are acting as securities
dealers and NASD members or eligible non-members who are acting as brokers or
agents for investors (collectively, "Selling Agreements") that may provide for
their customers or clients certain services or assistance, which may include,
but not be limited to, processing purchase and redemption transactions,
establishing and maintaining shareholder accounts regarding the Fund, and such
other services as may be agreed to from time to time and as may be permitted by
applicable statute, rule or regulation. Brokers, dealers and financial
intermediaries that have entered into
B-11
<PAGE> 40
sub-agreements with the Distributor and sell shares of the Fund are referred to
herein as "financial intermediaries."
Under the Distribution and Service Agreement and the Selling Agreements,
financial intermediaries that sold shares prior to July 1, 1987, or prior to the
beginning of the calendar quarter in which the Selling Agreement between the
Fund and such financial intermediary was approved by the Fund's Board of
Trustees (an "Implementation Date") are not eligible to receive compensation
pursuant to such Distribution and Service Agreement and/or Selling Agreement. To
the extent that there remain outstanding shares of the Fund that were purchased
prior to all Implementation Dates, the percentage of the total average daily net
asset value of a class of shares that may be utilized pursuant to the
Distribution and Service Agreement will be less than the maximum percentage
amount permissible with respect to such class of shares under the Distribution
and Service Agreement.
The Distributor must submit quarterly reports to the Board of Trustees of the
Fund setting forth all amounts paid under the Distribution Plan and the purposes
for which such expenditures were made, together with such other information as
from time to time is reasonably requested by the Trustees. The Plans provide
that they will continue in full force and effect from year to year so long as
such continuance is specifically approved by a vote of the Trustees, and also by
a vote of the disinterested Trustees, cast in person at a meeting called for the
purpose of voting on the Plans. Each of the Plans may not be amended to increase
materially the amount to be spent for the services described therein without
approval by a vote of a majority of the outstanding voting shares and all
material amendments to either of the Plans must be approved by the Trustees and
also by the disinterested Trustees. Each of the Plans may be terminated at any
time by a vote of a majority of the disinterested Trustees or by a vote of a
majority of the outstanding voting shares.
For the years ended June 30, 1995, 1994 and 1993, the Fund has recognized
expenses under the Plans of $81,152, $96,015 and ($14,289), respectively, of
which $86,763, $93,964 and $97,394, respectively, representing payments to
Financial intermediaries under the Selling Agreements. For the years ended June
30, 1995, 1994 and 1993, the Fund has reimbursed the Distributor for $0, $1,055
and $3,636, respectively, for advertising expenses, and $0, $839 and $3,000,
respectively, for compensation of the Distributor's sales personnel.
YIELD INFORMATION
There are two methods by which the Fund's yield for a specified period of time
is calculated. Normally a seven day period will be used in determining yields in
published or mailed advertisements.
The first method, which results in an amount referred to as the "current
yield," assumes an account containing exactly one share at the beginning of the
period. (The net asset value of this share will be $1.00 except under
extraordinary circumstances.) The net change in the value of the account during
the period is then determined by subtracting this beginning value from the value
of the account at the end of the period; however, capital changes and unrealized
appreciation or depreciation of the Fund's portfolio are excluded from this
calculation. This net change in the account value is then divided by the value
of the account at the beginning of the period (i.e., normally $1.00 as discussed
above) and the resulting figure (referred to as the "base period return") is
then annualized by multiplying it by 365 and dividing by the seven days of the
period; the result is the "current yield," usually expressed to the nearest
one-hundredth of one percent.
The second method results in an amount referred to as the "compounded
effective yield." This represents an annualization of the current yield with
dividends reinvested daily. This compounded effective yield, calculated again
for a seven day period, would be computed by compounding the unannualized base
period return by adding one to the base period return, raising the sum to a
power equal to 365 divided by seven and subtracting one from the result.
In addition to using the yields in advertisements or information furnished to
present or prospective stockholders, the Fund also may quote rankings, yields or
returns as published by recognized statistical services or publishers, such as
Lipper Analytical Services, Inc. Weisenberger Investment Companies, Donoghues
Money Fund Report, or others.
B-12
<PAGE> 41
Yield information may be useful to investors in reviewing the performance of
the Fund. However, a number of factors should be taken into account before using
yield information as a basis for comparison with alternative investments. An
investment in the Fund is not insured and its yields are not guaranteed. They
normally will fluctuate on a daily basis. Accordingly they cannot be compared to
yields on those savings accounts or other investment alternatives which provide
a guaranteed fixed yield for a stated period of time and which may be insured by
a government agency. The yields for any given past period are not an indication
or representation by the Fund of future yields or rates of return on a Fund's
shares. Previously, the Adviser has waived a portion of its management fee and
the Adviser may in its discretion elect to discontinue waiving all or any
portion of its fee and assuming all or any portion of the expenses of the Fund.
In the event that the Adviser elects to discontinue waiving its fee and assuming
the expenses of the Fund, the Fund's yield will be less than it otherwise would
have been. In comparing the yields of one money market fund to another,
consideration should be given to each fund's investment policy, portfolio
quality, portfolio maturity, type of instruments held and operating expenses.
DIVIDENDS
On each day, including a Saturday, Sunday or other holiday, a dividend of all
of the Fund's net income since the last declaration is declared. The Fund's net
income for dividend purposes consists of all interest income accrued on the
Fund's portfolio, less the Fund's expenses.
Under the procedures which the Fund's Board of Trustees have adopted relating
to amortized cost valuation, the calculation of the Fund's daily dividends will
change from that indicated above in certain circumstances. If on any date the
deviation between net asset value determined on an amortized cost basis and that
determined using market quotations is 0.5% or more, the amount of such deviation
will be added to or subtracted from the daily dividend to the extent necessary
to reduce such deviation to within 0.5%.
B-13
<PAGE> 42
APPENDIX
STANDARD & POOR'S RATINGS
TAX-EXEMPT NOTES
A Standard & Poor's note rating reflects the liquidity concerns and market
access risks unique to notes. Notes maturing beyond 3 years will most likely
receive a long-term debt rating. Notes maturing in 3 years or less will likely
receive a note rating. The following criteria will be used in making that
assessment:
-- Amortization schedule (the larger the final maturity relative to other
maturities, the more likely it is to be treated as a note).
-- Source of payment (the more the issue depends on the market for its
refinancing, the more likely it will be treated as a note).
Note rating symbols are as follows:
SP-1. Strong capacity to pay principal and interest. Issues determined to
possess very strong safety characteristics are given a plus (+) designation.
SP-2. Satisfactory capacity to pay principal and interest, with some
vulnerability to adverse financial and economic changes over the term of the
notes.
TAX-EXEMPT COMMERCIAL PAPER
A Standard & Poor's commercial paper rating is a current assessment of the
likelihood of timely payment of debt considered short-term in the relevant
market. Ratings are graded into several categories, ranging from 'A-1' for the
highest quality obligations to 'D' for the lowest. These categories are as
follows:
A-1. This highest category indicates that the degree of safety regarding
timely payment is strong. Those issues determined to possess extremely strong
safety characteristics are denoted with a plus sign (+) designation.
A-2. Capacity for timely payment on issues with this designation is
satisfactory. However, the relative degree of safety is not as high as for
issues designated 'A-1'.
TAX-EXEMPT VARIABLE RATE DEMAND OBLIGATIONS
Standard & Poor's assigns "dual" ratings to all debt issues that have a put
option or demand feature as part of their structure.
The first rating addresses the likelihood of repayment of principal and
interest as due, and the second rating addresses only the demand feature. The
long-term debt rating symbols are used for bonds to denote the long-term
maturity and the commercial paper rating symbols for the put option (for
example, 'AAA/A-1+'). With short-term demand debt, Standard & Poor's note rating
symbols are used with the commercial paper rating symbols (for example,
'SP-1+/A-1+').
B-14
<PAGE> 43
MOODY'S RATINGS
TAX-EXEMPT SHORT TERM LOAN RATINGS
Moody's ratings for state and municipal short-term obligations will be
designated Moody's Investment Grade or (MIG). Such ratings recognize the
differences between short-term credit risk and long-term risk. Factors affecting
the liquidity of the borrower and short-term cyclical elements are critical in
short-term ratings, while other factors of major importance in bond risk,
long-term secular trends for example, may be less important over the short run.
A short-term rating may also be assigned on an issue having a demand
feature--variable rate demand obligation (VRDO). Such ratings will be designated
as VMIG or, if the demand feature is not rated, as NR.
Moody's short-term ratings are designated Moody's Investment Grade as MIG 1 or
VMIG 1 through MIG 4 or VMIG 4. As the name implies, when Moody's assigns a MIG
or VMIG rating, all categories define an investment grade situation.
The purpose of the MIG or VMIG ratings is to provide investors with a simple
system by which the relative investment qualities of short-term obligations may
be evaluated.
Gradations of investment quality are indicated by rating symbols, with each
symbol representing a group in which the quality characteristics are broadly the
same.
MIG 1/VMIG 1
This designation denotes best quality. There is present strong protection by
established cash flows, superior liquidity support or demonstrated broad based
access to the market for refinancing.
MIG 2/VMIG 2
This designation denotes high quality. Margins of protection are ample
although not so large as in the preceding group.
Issues or the features associated with MIG or VMIG ratings are identified by
date of issue, date of maturity or maturities or rating expiration date and
description to distinguish each rating from other ratings. Each rating
designation is unique with no implication as to any other similar issue of the
same obligor. MIG ratings terminate at the retirement of the obligation while
VMIG rating expiration will be a function of each issue's specific structural or
credit features.
TAX-EXEMPT COMMERCIAL PAPER
Moody's Commercial Paper ratings are opinions of the ability of issuers to
repay punctually promissory obligations not having an original maturity in
excess of nine months. Moody's employs the following designations, all judged to
be investment grade, to indicate the relative repayment capacity of rated
issuers:
Issuers rated Prime-1 (or supporting institutions) have a superior
ability for repayment of senior short-term debt obligations. Prime-1
repayment ability will often be evidenced by many of the following
characteristics:
- Leading market positions in well-established industries.
- High rates of return on funds employed.
- Conservative capitalization structure with moderate reliance on debt
and ample asset protection.
- Broad margins in earnings coverage of fixed financial charges and high
internal cash generation.
- Well-established access to a range of financial markets and assured
sources of alternate liquidity.
Issuers rated Prime-2 (or supporting institutions) have a strong
ability for repayment of senior short-term debt obligations. This will
normally be evidenced by many of the characteristics cited above but to a
lesser degree. Earnings trends and coverage ratios, while sound, may be
more subject to variation. Capitalization characteristics, while still
appropriate, may be more affected by external conditions. Ample alternate
liquidity is maintained.
B-15
<PAGE> 44
Independent Auditors' Report
The Board of Trustees and Shareholders of
Van Kampen Merritt Tax Free Money Fund:
We have audited the accompanying statement of assets and liabilities of Van
Kampen Merritt Tax Free Money Fund (the "Fund"), including the portfolio of
investments, as of June 30, 1995, 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, 1995, by correspondence with the custodian and brokers. An audit also
includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of Van
Kampen Merritt Tax Free Money Fund as of June 30, 1995, 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 3, 1995
B-16
<PAGE> 45
Portfolio of Investments
June 30, 1995
<TABLE>
<CAPTION>
Discount
Par Yield on
Amount Maturity Date of Amortized
(000) Security Description Date Purchase Cost
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Municipal Bonds
Dates 13.6%
$ 200 Chicago, IL O'Hare Intl Arpt Special Fac Rev
Ser 1983 C (LOC: Sanwa Bank) .............................. 07/03/95 4.600% $ 200,000
500 Chicago, IL O'Hare Intl Arpt Special Fac Rev
Ser 1983 D (LOC: Sanwa Bank) .............................. 07/03/95 4.600 500,000
400 Louisiana St Recovery Dist Sales Tax Rev
Ser 1988 (FGIC Insured) ................................... 07/03/95 4.350 400,000
300 New York City Ser B (FGIC Insured) ................................ 07/03/95 4.500 300,000
200 North AL Environmental Impt Auth Pollutn Ctl Rev
(LOC: Bank of Nova Scotia) ................................. 07/03/95 4.350 200,000
900 Peninsula Ports Auth VA Port Fac Rev Ser 1987 Rfdg
(Gtd: Shell Oil Company) .................................. 07/03/95 4.150 900,000
500 Pinal Cnty, AZ Indl Dev Auth Pollutn Ctl Rev
Ser 1984 (LOC: Nat'l Westminster Bank) .................... 07/03/95 4.200 500,000
1,500 Sullivan Cnty, TN Indl Dev Pollutn Ctl Rev
Ser 1986 (LOC: Union Bank of Switzerland) .................. 07/03/95 4.350 1,500,000
---------
Total Dates ............................................................................ 4,500,000
---------
7 Day Floaters 41.7%
1,200 Washington St Hsg Fin Comm Multi-Family Mtg Rev
Rfdg (LOC: Harris Trust & Savings Bank) ...................... 07/04/95 3.800 1,200,000
1,400 City of Chillicothe, IA Pollutn Ctl Rev Ser 1993 A
Rfdg (Gtd: Midwest Power Systems Inc.) ...................... 07/05/95 4.000 1,400,000
1,500 City of Salix, IA Pollutn Ctl Rev Ser 1993 Rfdg
(Gtd: Midwest Power Systems Inc.) .......................... 07/05/95 4.000 1,500,000
1,110 Fort Bend, TX Indl Dev Rev Rfdg
(Gtd: W.W. Grainger, Inc.) ................................. 07/05/95 4.150 1,110,000
1,000 Illinois Dev Fin Auth Rev Roosevelt Univ Ser 1995
(LOC: American Nat'l Bank & Trust of Chicago) ............... 07/05/95 4.250 1,000,000
1,100 Illinois Dev Fin Auth Rev Ser 1994 Lake Forest
Academy (LOC: The Northern Trust Company) ................... 07/05/95 4.150 1,100,000
1,500 Iowa Hsg Fin Auth Small Bus Ln Proj Ser 85-A
(LOC: Federal Home Loan Bank of Des Moines) ................. 07/05/95 4.150 1,500,000
1,200 St Paul, MN Hsg & Redev Auth Rev Ser 1985 A
(LOC: Federal Home Loan Bank of Des Moines) ................. 07/05/95 4.150 1,200,000
1,150 Calhoun Cnty, MI Econ Dev Corp Rev
(LOC: Comerica Bank) ...................................... 07/06/95 4.100 1,150,000
970 City of Sterling Heights, MI Econ Dev Corp Rev
Rfdg (LOC: NBD Bank N.A.) .................................. 07/06/95 4.300 970,000
708 Georgia Muni Assoc Pool Certificates of Part
Ser 1990 (MBIA Insured) .................................... 07/06/95 4.000 707,919
1,000 Minnesota St Higher Ed Ser 1995 A Rfdg (Gtd:
Minnesota Higher Education Coordinating Board) ............. 07/06/95 4.050 1,000,000
---------
Total 7 Day Floaters ................................................................ 13,837,919
---------
</TABLE>
B-17 See Notes to Financial Statements
<PAGE> 46
Portfolio of Investments (Continued)
June 30, 1995
<TABLE>
<CAPTION>
Discount
Par Yield on
Amount Maturity Date of Amortized
(000) Security Description Date Purchase Cost
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Updates (Commercial Paper) 19.6%
$ 1,000 West Orange Mem Hosp Tax Dist Rev
Subser 1991 A-2 (LOC: Societe Generale) ......... 07/03/95 3.400% $ 1,000,000
500 West Orange Mem Hosp Tax Dist Rev
Subser 1991 A-1 (LOC: Societe Generale) ......... 07/05/95 3.400 500,000
1,000 Sweetwater Cnty, WY Customized Purchase
Pollutn Ctl Rev Ser 1988 A Rfdg
(LOC: Union Bank of Switzerland) ............... 07/14/95 4.100 1,000,000
1,500 York Cnty, SC Pollutn Ctl Rev Ser 1990
(Gtd: Duke Power Co.) .......................... 09/08/95 4.150 1,500,000
1,500 Texas A & M Univ Sys Rev Ser B
(Gtd: Texas A & M University System) ............ 09/12/95 4.200 1,500,000
1,000 Wayne Cnty, MI Downriver Sewage Disp Sys
(LOC: Comerica Bank) ........................... 09/25/95 4.300 999,882
---------
Total Updates (Commercial Paper) ............................................. 6,499,882
---------
Bonds/Notes 27.8%
1,000 State of Utah GO Bldg & Hwy Bds Ser 92 .................. 07/01/95 4.500 1,000,000
1,500 Maricopa Cnty, AZ Washington Elementary Sch
District No 6 Ser 1994 B Tax Anticipation Nts ... 07/28/95 5.000 1,500,814
790 City of Ashdown, AR Indl Dev Rev Ser 1981
(Gtd: Allied Signal Corp.) ...................... 11/01/95 4.300 790,000
910 Philadelphia, PA Indl Dev Pollutn Ctl Rev
Ser 1981 (Gtd: Allied Signal Corp.) .............. 11/01/95 4.300 910,000
1,000 Du Page Cnty, IL Motor Fuel Tax Rev Ser 95
(FSA Insured) ................................... 01/01/96 4.400 1,000,000
1,020 Elkhart, IN Cmnty Sch GO Ser 1995 Rfdg
(FGIC Insured) .................................. 01/15/96 4.400 1,020,000
985 Middleton-Cross Plains Area Sch Dist
(FGIC Insured) .................................. 04/01/96 4.850 989,634
1,000 Idaho St Tax Anticipation Nts ............................ 06/27/96 4.500 1,006,580
1,000 City of Chicago GO Tender Notes Ser 1995 A
(LOC: Morgan Guaranty & Trust Co.) ............... 10/31/96 4.600 1,000,000
---------
Total Bonds/Notes .......................................................... 9,217,028
---------
Total Investments 102.7% <F1> ..................................................................... 34,054,829
Liabilities in Excess of Other Assets (2.7%) ...................................................... (879,789)
----------
Net Assets 100.0% ................................................................................$ 33,175,040
==========
<FN>
<F1> At June 30, 1995, cost is identical for both book and federal income tax purposes.
</TABLE>
B-18 See Notes to Financial Statements
<PAGE> 47
Statement of Assets and Liabilities
June 30, 1995
<TABLE>
<S> <C>
Assets:
Investments, at Amortized Cost which Approximates Market (Note 1) ........................ $ 34,054,829
Cash .................................................................................... 87,339
Receivables:
Interest ............................................................................... 223,359
Fund Shares Sold ....................................................................... 11,924
Other ................................................................................... 5,064
----------
Total Assets ........................................................................... 34,382,515
----------
Liabilities:
Payables:
Investments Purchased .................................................................. 1,006,580
Fund Shares Repurchased ............................................................... 29,428
Income Distributions .................................................................. 21,758
Investment Advisory Fee (Note 2) ...................................................... 6,443
Accrued Expenses ......................................................................... 143,266
----------
Total Liabilities ...................................................................... 1,207,475
----------
Net Assets ............................................................................... $ 33,175,040
----------
Net Assets Consist of:
Paid in Surplus (Note 3) ............................................................... $ 33,199,618
Accumulated Net Realized Loss on Investments ............................................. (24,578)
----------
Net Assets (Equivalent to $1.00 per share for 33,199,618 shares outstanding) (Note 3) ... $ 33,175,040
----------
</TABLE>
B-19 See Notes to Financial Statements
<PAGE> 48
Statement of Operations
For the Year Ended June 30, 1995
<TABLE>
<S> <C>
Investment Income:
Interest .......................................... $ 1,252,454
---------------
Expenses:
Investment Advisory Fee (Note 2) ................. 175,190
Shareholder Services ............................. 83,036
Distribution (12b-1) and Service Fees (Note 4) ... 81,152
Printing ......................................... 44,931
Audit ............................................ 31,025
Custody .......................................... 18,600
Trustees Fees and Expenses (Note 2) ............... 18,243
Legal (Note 2) ................................... 15,710
Other ............................................ 14,343
---------------
Total Expenses .................................. 482,230
Less Fees Waived ............................... 168,747
---------------
Net Expenses ...................................... 313,483
---------------
Net Investment Income ............................. $ 938,971
---------------
Realized Gain/Loss on Investments:
Proceeds from Sales ............................... $ 123,123,329
---------------
Cost of Securities Sold ........................... (123,123,329)
---------------
Net Realized Gain on Investments ................. $ -0-
---------------
Net Increase in Net Assets from Operations ....... $ 938,971
---------------
</TABLE>
B-20 See Notes to Financial Statements
<PAGE> 49
Statement of Changes in Net Assets
For the Years Ended June 30, 1995 and 1994
<TABLE>
<CAPTION>
Year Ended Year Ended
June 30, 1995 June 30, 1994
<S> <C> <C>
From Investment Activities:
Operations:
Net Investment Income ............................................ $ 938,971 $ 678,256
Net Realized Gain on Investments ................................. -0- 1,863
-------------- ---------------
Change in Net Assets from Operations ............................ 938,971 680,119
Distributions from Net Investment Income ....................... (938,971) (678,256)
-------------- ---------------
Net Change in Net Assets from Investment Activities ............. -0- 1,863
-------------- ---------------
From Capital Transactions (Note 3): Proceeds from Shares
Sold ....................................... 23,885,907 33,501,857
Net Asset Value of Shares Issued Through Dividend Reinvestment ... 685,467 484,657
Cost of Shares Repurchased ....................................... (28,779,907) (39,734,622)
-------------- ---------------
Net Change in Net Assets from Capital Transactions .............. (4,208,533) (5,748,108)
-------------- ---------------
Total Decrease in Net Assets ..................................... (4,208,533) (5,746,245)
-------------- ---------------
Net Assets:
Beginning of the Period ......................................... 37,383,573 43,129,818
-------------- ---------------
End of the Period ............................................... $ 33,175,040 $ 37,383,573
-------------- ---------------
</TABLE>
B-21 See Notes to Financial Statements
<PAGE> 50
Notes to Financial Statements
June 30, 1995
1. Significant Accounting Policies
Van Kampen Merritt Tax Free Money Fund (the "Fund") was organized as an
unincorporated Massachusetts business trust on June 16, 1986. The Fund is an
open-end diversified management investment company registered under the
Investment Company Act of 1940, as amended. The Fund commenced investment
operations on November 5, 1986.
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, if any, 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, 1995, the Fund had an accumulated capital loss carryforward
of $24,578. Of this amount, $6,277, $4,541 and $13,760 will expire on June 30,
1998, 1999 and 2001, respectively. Net realized gains or losses may differ for
financial and tax reporting purposes primarily as a result 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.
B-22
<PAGE> 51
Notes to Financial Statements (Continued)
June 30, 1995
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 $500 million ... .500 of 1%
Next $500 million .... .475 of 1%
Next $500 million .... .425 of 1%
Over $1.5 billion ... .375 of 1%
</TABLE>
Certain legal expenses are 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, 1995, the Fund recognized expenses of
approximately $27,100 representing Van Kampen American Capital Distributors,
Inc's. or its affiliates' (collectively "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. The Fund's liability under the
deferred compensation and retirement plans at June 30, 1995, was approximately
$22,100.
B-23
<PAGE> 52
Notes to Financial Statements (Continued)
June 30, 1995
3. Capital Transactions
The Fund is authorized to issue an unlimited number of shares of beneficial
interest without par value. At June 30, 1995 and 1994, paid in surplus
aggregated $33,199,618 and $37,408,151, respectively. Transactions in shares
were as follows:
<TABLE>
<CAPTION>
Year Ended Year Ended
June 30, 1995 June 30, 1994
<S> <C> <C>
Beginning Shares ........ 37,408,151 43,156,259
----------- -----------
Shares Sold ............ 23,885,907 33,501,857
Shares Issued Through
Dividend Reinvestment ... 685,467 484,657
Shares Repurchased ...... (28,779,907) (39,734,622)
----------- -----------
Net Change in Shares
Outstanding ............. (4,208,533) (5,748,108)
----------- -----------
Ending Shares .......... 33,199,618 37,408,151
----------- -----------
</TABLE>
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.
B-24
<PAGE> 53
PART C: OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS.
List all financial statements and exhibits as part of the Registration
Statement.
(A) FINANCIAL STATEMENTS:
Included in Part A of the Registration Statement:
Financial Highlights
Included in Part B of the Registration Statement:
Independent Auditors' Report
Financial Statements
Notes to Financial Statements
(B) EXHIBITS:
(1) Form of Declaration of Trust(12)
(2) Form of By-Laws(12)
(5) Form of Investment Advisory Agreement(12)
(6)(a) Form of Distribution and Service Agreement(12)
(b) Form of Dealer Agreement(12)
(c) Form of Broker Agreement(12)
(d) Form of Bank Agreement(12)
(8)(a) Form of Custodian Agreement**
(b) Form of Transfer Agency Agreement(12)
(c) Material Contracts*
(9)(a) Form of Fund Accounting Agreement(12)
(b) Form of Legal Services Agreement(12)
(10) Opinion and Consent of Skadden, Arps, Slate Meagher & Flom(12)
(11) Opinion and Consent of KPMG Peat Marwick LLP+
(13) Letter of Understanding relating to initial capital**
(15)(a) Form of Distribution Plan Pursuant to Rule 12b-1(12)
(b) Form of Shareholder Assistance Agreement(12)
(c) Form of Administrative Services Agreement(12)
(d) Form of Service Plan(12)
(16) Computation of Performance Quotations+
(17)(a) List of certain investment companies in response to Item
29(a)+
(b) List of officers and directors of Van Kampen American Capital
Distributors, Inc. in response to Item 29(b)+
(24) Power of attorney+
(27) Financial Data Schedule+
- ---------------
* Incorporated herein by reference to Exhibits 4(a) and (b) to Registrant's
Registration Statement on Form N-14, file number 33-6745, filed February
25, 1987.
** Incorporated herein by reference to Pre-Effective Amendment No. 1 to
Registrant's Registration Statement on Form N-1A, file number 33-6745,
filed September 6, 1986.
(12) Incorporated herein by reference to Post-Effective Amendment No. 12 to
Registrant's Registration Statement on Form N-1A, file number 33-6745,
filed August 3, 1995.
+ Filed herewith.
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT.
To the best knowledge of Registrant, no person is controlled by or under
common control with the Registrant.
ITEM 26. NUMBER OF HOLDERS OF SECURITIES.
As of August 18, 1995:
<TABLE>
<CAPTION>
(1) (2)
NUMBER
OF
RECORD
TITLE OF CLASS HOLDERS
-------
<S> <C>
Shares of Beneficial Interest................. 2,007
-----
</TABLE>
C-1
<PAGE> 54
ITEM 27. INDEMNIFICATION.
Reference is made to Article 8, Section 8.4 of the Registrant's Agreement
and Declaration of Trust.
Article 8, Section 8.4 of the Agreement and Declaration of Trust provides
that each officer and trustee of the Registrant shall be indemnified by the
Registrant against all liabilities incurred in connection with the defense or
disposition of any action, suit or other proceeding, whether civil or criminal,
in which the officer or trustee may be or may have been involved by reason of
being or having been an officer or trustee, except that such indemnity shall not
protect any such person against a liability to the Registrant or any shareholder
thereof to which such person would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of his or her office. Absent a court determination that
an officer or trustee seeking indemnification was not liable on the merits or
guilty of willful misfeasance, bad faith, gross negligence or reckless disregard
of the duties involved in the conduct of his or her office, the decision by the
Registrant to indemnify such person must be based upon the reasonable
determination of independent counsel or non-party independent trustees, after
review of the facts, that such officer or trustee is not guilty of willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of his or her office.
The Registrant has purchased insurance on behalf of its officers and
trustees protecting such persons from liability arising from their activities as
officers or trustees of the Registrant. The insurance does not protect or
purport to protect such persons from liability to the Registrant or to its
shareholders to which such officers or trustee would otherwise be subject by
reason of willful misfeasance, bad faith, gross negligence or reckless disregard
of the duties involved in the conduct of their office.
Conditional advancing of indemnification monies may be made if the trustee
or officer undertakes to repay the advance unless it is ultimately determined
that he or she is entitled to the indemnification and only if the following
conditions are met: (1) the trustee or officer provides security for the
undertaking; (2) the Registrant is insured against losses arising from lawful
advances; or (3) a majority of a quorum of the Registrant's disinterested,
non-party trustees, or an independent legal counsel in a written opinion, shall
determine, based upon a review of readily available facts, that a recipient of
the advance ultimately will be found entitled to indemnification.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 (the "Act") may be permitted to trustees, officers and controlling
persons of the Registrant pursuant to the foregoing provisions or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by the trustee, officer, or controlling person of the
Registrant in the successful defense of any action, suit or proceeding) is
asserted by such trustee, officer or controlling person in connection with the
shares being registered, the Registrant 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 Act and will be governed by the final
adjudication of such issue.
ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER.
See "Investment Advisory Services" in the Prospectus and "Officers and
Trustees" in the Statement of Additional Information for information regarding
the business of the Adviser. For information as to the business, profession,
vocation or employment of a substantial nature of each of the officers and
Directors of Van Kampen American Capital Investment Advisory Corp., reference is
made to the Adviser's current Form ADV filed under the Investment Advisers Act
of 1940, incorporated herein by reference.
ITEM 29. PRINCIPAL UNDERWRITERS.
(a) The sole principal underwriter is Van Kampen American Capital
Distributors, Inc., which acts as principal underwriter for certain investment
companies and unit investment trusts set forth in Exhibit 17(a) incorporated by
reference herein.
C-2
<PAGE> 55
(b) Van Kampen American Capital Distributors, Inc., which is an affiliated
person of an affiliated person of Registrant, is the sole principal underwriter
for Registrant. The name, principal business address and positions and offices
with Van Kampen American Capital Distributors, Inc. of each of the directors and
officers thereof are set forth in Exhibit 17(b). Except as disclosed under the
heading "Officers and Trustees" in Part B of this Registration Statement, none
of such persons has any position or office with Registrant.
(c) Not applicable.
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS.
All accounts, books and other documents required by Section 31(a) of the
Investment Company Act of 1940 and the Rules thereunder to be maintained (i) by
Registrant will be maintained at its offices located at One Parkview Plaza,
Oakbrook Terrace, Illinois 60181, ACCESS Investor Services, Inc., 7501 Tiffany
Springs Parkway, Kansas City, Missouri 64153, or at the State Street Bank and
Trust Company, 1776 Heritage Drive, North Quincy, Massachusetts; (ii) by the
Adviser, will be maintained at its offices, located at One Parkview Plaza,
Oakbrook Terrace, Illinois 60181; and (iii) by Van Kampen American Capital
Distributors, Inc., the principal underwriter, will be maintained at its offices
located at One Parkview Plaza, Oakbrook Terrace, Illinois 60181.
ITEM 31. MANAGEMENT SERVICES.
Not applicable.
ITEM 32. UNDERTAKINGS.
(a) Not applicable.
(b) Not applicable.
(c) Not applicable.
C-3
<PAGE> 56
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933 AND THE
INVESTMENT COMPANY ACT OF 1940, THE REGISTRANT, VAN KAMPEN AMERICAN CAPITAL TAX
FREE MONEY FUND, CERTIFIES THAT IT MEETS ALL OF THE REQUIREMENTS FOR
EFFECTIVENESS OF THIS REGISTRATION STATEMENT PURSUANT TO RULE 485(B) UNDER THE
SECURITIES ACT OF 1933 AND HAS DULY CAUSED THIS AMENDMENT TO THIS REGISTRATION
STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THERETO DULY
AUTHORIZED, IN THE CITY OF OAKBROOK TERRACE, AND THE STATE OF ILLINOIS ON THE
16TH DAY OF AUGUST, 1995.
VAN KAMPEN AMERICAN CAPITAL
TAX FREE MONEY FUND
By: /s/ RONALD A. NYBERG
-----------------------------------
Ronald A. Nyberg, Vice President
and Secretary
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS AMENDMENT
TO THE REGISTRATION STATEMENT HAS BEEN SIGNED ON AUGUST 16, 1995 BY THE
FOLLOWING PERSONS IN THE CAPACITIES INDICATED:
<TABLE>
<CAPTION>
SIGNATURES TITLE
---------- ------
<S> <C>
/s/ DONALD MILLER* Chairman of the Board and Trustee
- ---------------------------------------------
Donald Miller
Chief Executive Officer:
/s/ DENNIS J. McDONNELL* President and Trustee
- ---------------------------------------------
Dennis J. McDonnell
Chief Financial and Accounting Officer:
/s/ EDWARD C. WOOD, III* Vice President and Treasurer
- ---------------------------------------------
Edward C. Wood, III
Trustees:
/s/ J. MILES BRANAGAN* Trustee
- ---------------------------------------------
J. Miles Branagan
/s/ RICHARD E. CARUSO* Trustee
- ---------------------------------------------
Richard E. Caruso
/s/ ROGER HILSMAN* Trustee
- ---------------------------------------------
Roger Hilsman
/s/ R. CRAIG KENNEDY* Trustee
- ---------------------------------------------
R. Craig Kennedy
/s/ PHILIP P. GAUGHAN* Trustee
- ---------------------------------------------
Philip P. Gaughan
/s/ JACK E. NELSON* Trustee
- ---------------------------------------------
Jack E. Nelson
/s/ DON G. POWELL* Trustee
- ---------------------------------------------
Don G. Powell
</TABLE>
C-4
<PAGE> 57
<TABLE>
<CAPTION>
SIGNATURES TITLE
---------- ------
<C> <S>
/s/ DAVID REES* Trustee
- ---------------------------------------------
David Rees
/s/ JEROME L. ROBINSON* Trustee
- ---------------------------------------------
Jerome L. Robinson
/s/ LAWRENCE J. SHEEHAN* Trustee
- ---------------------------------------------
Lawrence J. Sheehan
/s/ FERNANDO SISTO* Trustee
- ---------------------------------------------
Fernando Sisto
/s/ WAYNE W. WHALEN* Trustee
- ---------------------------------------------
Wayne W. Whalen
/s/ WILLIAM S. WOODSIDE* Trustee
- ---------------------------------------------
William S. Woodside
</TABLE>
- ---------------
* Signed pursuant to a power of attorney.
<TABLE>
<S> <C>
/s/ RONALD A. NYBERG August 16, 1994
- ---------------------------------------------
Ronald A. Nyberg
Attorney-in-Fact
</TABLE>
C-5
<PAGE> 58
SCHEDULE OF EXHIBITS TO
FORM N-1A
POST-EFFECTIVE AMENDMENT NUMBER 13 TO BE
SUBMITTED TO THE SECURITIES AND EXCHANGE
COMMISSION ON AUGUST 29, 1994
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT PAGE NUMBER
------- ------- -----------
<S> <C> <C>
(1) Form of Declaration of Trust(12)
(2) Form of By-Laws(12)
(5) Form of Investment Advisory Agreement(12)
(6) (a) Form of Distribution and Service Agreement(12)
(b) Form of Dealer Agreement(12)
(c) Form of Broker Agreement(12)
(d) Form of Bank Agreement(12)
(8) (a) Form of Custodian Agreement**
(b) Form of Transfer Agency Agreement(12)
(c) Material Contracts*
(9) (a) Form of Fund Accounting Agreement(12)
(b) Form of Legal Services Agreement(12)
(10) Opinion and Consent of Skadden, Arps, Slate Meagher & Flom(12)
(11) Opinion and Consent of KPMG Peat Marwick LLP+
(13) Letter of Understanding relating to initial capital**
(15) (a) Form of Distribution Plan Pursuant to Rule 12b-1(12)
(b) Form of Shareholder Assistance Agreement(12)
(c) Form of Administrative Services Agreement(12)
(d) Form of Service Plan(12)
(16) Computation of Performance Quotations+
(17) (a) List of certain investment companies in response to Item 29(a)+
(b) List of officers and directors of Van Kampen American Capital Distributors,
Inc. in response to Item 29(b)+
(24) Power of attorney+
(27) Financial Data Schedule+
</TABLE>
- ---------------
* Incorporated herein by reference to Exhibits 4(a) and (b) to Registrant's
Registration Statement on Form N-14, file number 33-6745, filed February
25, 1987.
** Incorporated herein by reference to Pre-Effective Amendment No. 1 to
Registrant's Registration Statement on Form N-1A, file number 33-6745,
filed September 6, 1986.
(12) Incorporated herein by reference to Post-Effective Amendment No. 12 to
Registrant's Registration Statement on Form N-1A, file number 33-6745,
filed August 3, 1995.
+ Filed herewith.
C-6
<PAGE> 1
EXHIBIT 11
CONSENT OF INDEPENDENT AUDITORS
The Board of Trustees and Shareholders
Van Kampen American Capital Tax Free Money Fund:
We consent to the use of our report included in the Statement of Additional
Information which is incorporated by reference into the Prospectus and to the
reference to our Firm under the headings "Financial Highlights" in the
Prospectus and "Custodian and Independent Auditors" in the Statement of
Additional Information.
KPMG Peat Marwick LLP
Chicago, Illinois
August 23, 1995
<PAGE> 1
EXHIBIT 16
TAX FREE MONEY FUND
COMPUTATION OF PERFORMANCE QUOTATIONS
PERIOD ENDED JUNE 30, 1995
(a) Calculation of Current Yield:
Formula (EV-BV) + BV * 365 / 7 = CY
Ending Value 1.000617228 = EV
Beginning Value 1 = BV
Current Yield 3.22% = CY
(b) Calculation of Compound Effective Yield: 365/7
Formula (UBR + 1) - 1 = CEY
Unannualized Base Return .000617228 = UBR
Compound Effective Yield 3.27% = CEY
<PAGE> 1
EXHIBIT 17 (a)
INVESTMENT COMPANIES FOR WHICH
VAN KAMPEN/AMERICAN CAPITAL DISTRIBUTORS INC.
ACTS AS PRINCIPAL UNDERWRITER OR DEPOSITOR
AUGUST 17, 1995
Van Kampen Merritt U.S. Government Trust
Van Kampen Merritt Tax Free Fund
Van Kampen Merritt Insured Tax Free Income Fund
Van Kampen Merritt Tax Free High Income Fund
Van Kampen Merritt California Insured Tax Free Fund
Van Kampen Merritt Municipal Income Fund
Van Kampen Merritt Limited Term Municipal Income Fund
Van Kampen Merritt Florida Insured Tax Free Income Fund
Van Kampen Merritt New Jersey Tax Free Income Fund
Van Kampen Merritt New York Tax Free Income Fund
Van Kampen Merritt Trust
Van Kampen Merritt High Yield Fund
Van Kampen Merritt Short-Term Global Income Fund
Van Kampen Merritt Adjustable Rate U.S. Government Fund
Van Kampen Merritt Strategic Income Fund
Van Kampen Merritt Emerging Markets Income Fund
Van Kampen Merritt Growth Fund
Van Kampen Merritt Equity Trust
Van Kampen Merritt Growth and Income Fund
Van Kampen Merritt Utility Fund
Van Kampen Merritt Balanced Fund
Van Kampen Merritt Total Return Fund
Van Kampen Merritt Pennsylvania Tax Free Income Fund
Van Kampen Merritt Money Market Trust
Van Kampen Merritt Money Market Fund
Van Kampen Merritt Tax Free Money Fund
Van Kampen Merritt Prime Rate Income Trust
Van Kampen Merritt Series Trust
American Capital Comstock Fund, Inc.
American Capital Corporate Bond Fund, Inc.
American Capital Emerging Growth Fund, Inc.
American Capital Enterprise Fund, Inc.
American Capital Equity Income Fund, Inc.
American Capital Federal Mortgage Trust
American Capital Global Managed Assets Fund, Inc.
American Capital Government Securities, Inc.
American Capital Government Target Series
American Capital Growth and Income Fund, Inc.
American Capital Harbor Fund, Inc.
American Capital High Yield Investments, Inc.
American Capital Life Investment Trust
American Capital Municipal Bond Fund, Inc.
American Capital Pace Fund, Inc.
American Capital Real Estate Securities Fund, Inc.
American Capital Reserve Fund, Inc.
American Capital Tax-Exempt Trust
American Capital Texas Municipal Securities, Inc.
American Capital U.S. Government Trust for Income
American Capital Utilities Income Fund, Inc.
American Capital World Portfolio Series, Inc.
<PAGE> 2
<TABLE>
<S> <C>
Emerging Markets Municipal Income Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . Series 1
Insured Municipals Income Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Series 1 through 353
Insured Municipals Income Trust (Discount) . . . . . . . . . . . . . . . . . . . . . . . . . Series 5 through 13
Insured Municipals Income Trust (Short Intermediate Term) . . . . . . . . . . . . . . . . . . Series 1 through 1009
Insured Municipals Income Trust (Intermediate Term) . . . . . . . . . . . . . . . . . . . . . Series 5 through 84
Insured Municipals Income Trust (Limited Term) . . . . . . . . . . . . . . . . . . . . . . . Series 9 through 80
Insured Municipals Income Trust (Premium Bond Series) . . . . . . . . . . . . . . . . . . . . Series 1 through 3
Insured Municipals Income Trust (Intermediate Laddered Maturity) . . . . . . . . . . . . . . Series 1 and 2
Insured Tax Free Bond Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Series 1 through 6
Insured Tax Free Bond Trust (Limited Term) . . . . . . . . . . . . . . . . . . . . . . . . . Series 1
Investors' Quality Tax-Exempt Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Series 1 through
Investors' Quality Tax-Exempt Trust-Intermediate . . . . . . . . . . . . . . . . . . . . . . Series 1
Investors' Corporate Income Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Series 1 through 12
Investors' Governmental Securities Income Trust . . . . . . . . . . . . . . . . . . . . . . . Series 1 through 7
Van Kampen Merritt International Bond Income Trust . . . . . . . . . . . . . . . . . . . . . Series 1 through 21
Alabama Investors' Quality Tax-Exempt Trust . . . . . . . . . . . . . . . . . . . . . . . . . Series 1
Alabama Insured Municipals Income Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . Series 1 through 9
Arizona Investors' Quality Tax-Exempt Trust . . . . . . . . . . . . . . . . . . . . . . . . . Series 1 through 16
Arizona Insured Municipals Income Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . Series 1 through 12
Arkansas Insured Municipals Income Trust . . . . . . . . . . . . . . . . . . . . . . . . . . Series 1 through 2
Arkansas Investors' Quality Tax-Exempt Trust . . . . . . . . . . . . . . . . . . . . . . . . Series 1
California Insured Municipals Income Trust . . . . . . . . . . . . . . . . . . . . . . . . . Series 1 through 144
California Insured Municipals Income Trust (Premium Bond Series) . . . . . . . . . . . . . . Series 1
California Insured Municipals Income Trust (1st Intermediate Series) . . . . . . . . . . . . Series 1 through 3
California Investors' Quality Tax-Exempt Trust . . . . . . . . . . . . . . . . . . . . . . . Series 1 through 21
California Insured Municipals Income Trust (Intermediate Laddered) . . . . . . . . . . . . . Series 1 through 20
Colorado Insured Municipals Income Trust . . . . . . . . . . . . . . . . . . . . . . . . . . Series 1 through 75
Colorado Investors' Quality Tax-Exempt Trust . . . . . . . . . . . . . . . . . . . . . . . . Series 1 through 18
Connecticut Insured Municipals Income Trust . . . . . . . . . . . . . . . . . . . . . . . . Series 1 through 27
Connecticut Investors' Quality Tax-Exempt Trust . . . . . . . . . . . . . . . . . . . . . . . Series 1
Delaware Investor's Quality Tax-Exempt Trust . . . . . . . . . . . . . . . . . . . . . . . . Series 1 and 2
Florida Insured Municipal Income Trust - Intermediate . . . . . . . . . . . . . . . . . . . . Series 1 and 2
Florida Insured Municipals Income Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . Series 1 through 95
Florida Investors' Quality Tax-Exempt Trust . . . . . . . . . . . . . . . . . . . . . . . . . Series 1 and 2
Florida Insured Municipals Income Trust (Intermediate Laddered) . . . . . . . . . . . . . . . Series 1 through 13
Georgia Insured Municipals Income Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . Series 1 through 76
Georgia Investors' Quality Tax-Exempt Trust . . . . . . . . . . . . . . . . . . . . . . . . . Series 1 through 16
Hawaii Investors' Quality Tax-Exempt Trust . . . . . . . . . . . . . . . . . . . . . . . . . Series 1
Investors' Quality Municipals Trust (AMT) . . . . . . . . . . . . . . . . . . . . . . . . . . Series 1 through 9
Kansas Investors' Quality Tax-Exempt Trust . . . . . . . . . . . . . . . . . . . . . . . . . Series 1 through 11
Kentucky Investors' Quality Tax-Exempt Trust . . . . . . . . . . . . . . . . . . . . . . . . Series 1 through 55
Louisiana Insured Municipals Income Trust . . . . . . . . . . . . . . . . . . . . . . . . . . Series 1 through 13
Maine Investor's Quality Tax-Exempt Trust . . . . . . . . . . . . . . . . . . . . . . . . . . Series 1
Maryland Investors' Quality Tax-Exempt Trust . . . . . . . . . . . . . . . . . . . . . . . . Series 1 through 73
Massachusetts Insured Municipals Income Trust . . . . . . . . . . . . . . . . . . . . . . . . Series 1 through 31
Massachusetts Insured Municipals Income Trust (Premium Bond Series) . . . . . . . . . . . . . Series 1
Michigan Financial Institutions Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . Series 1
Michigan Insured Municipals Income Trust . . . . . . . . . . . . . . . . . . . . . . . . . . Series 1 through 130
Michigan Insured Municipals Income Trust (Premium Bond Series) . . . . . . . . . . . . . . . Series 1
Michigan Insured Municipals Income Trust (1st Intermediate Series) . . . . . . . . . . . . . Series 1 through 3
Michigan Investors' Quality Tax-Exempt Trust . . . . . . . . . . . . . . . . . . . . . . . . Series 1 through 30
Minnesota Insured Municipals Income Trust . . . . . . . . . . . . . . . . . . . . . . . . . . Series 1 through 55
Minnesota Investors' Quality Tax-Exempt Trust . . . . . . . . . . . . . . . . . . . . . . . . Series 1 through 21
Missouri Insured Municipals Income Trust . . . . . . . . . . . . . . . . . . . . . . . . . . Series 1 through 92
Missouri Insured Municipals Income Trust (Premium Bond Series) . . . . . . . . . . . . . . . Series 1
Missouri Investors' Quality Tax-Exempt Trust . . . . . . . . . . . . . . . . . . . . . . . . Series 1 through 15
Missouri Insured Municipals Income Trust
(Intermediate Laddered Maturity) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Series 1
Nebraska Investors' Quality Tax-Exempt Trust . . . . . . . . . . . . . . . . . . . . . . . . Series 1 through 9
</TABLE>
<PAGE> 3
<TABLE>
<S> <C>
New Mexico Insured Municipals Income Trust . . . . . . . . . . . . . . . . . . . . . . . . . Series 1 through 18
New Jersey Insured Municipals Income Trust . . . . . . . . . . . . . . . . . . . . . . . . . Series 1 through 105
New Jersey Investors' Quality Tax-Exempt Trust . . . . . . . . . . . . . . . . . . . . . . . Series 1 through 22
New Jersey Insured Municipals Income Trust
(Intermediate Laddered Maturity) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Series 1 and 4
New York Insured Municipals Income Trust-Intermediate . . . . . . . . . . . . . . . . . . . . Series 1 through 6
New York Insured Municipals Income Trust (Limited Term) . . . . . . . . . . . . . . . . . . . Series 1
New York Insured Municipals Income Trust . . . . . . . . . . . . . . . . . . . . . . . . . . Series 1 through 127
New York Insured Tax-Free Bond Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . Series 1
New York Insured Municipals Income Trust
(Intermediate Laddered Maturity) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Series 1 through 15
New York Investors' Quality Tax-Exempt Trust . . . . . . . . . . . . . . . . . . . . . . . . Series 1
North Carolina Investors' Quality Tax-Exempt Trust . . . . . . . . . . . . . . . . . . . . . Series 1 through 83
Ohio Insured Municipals Income Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . Series 1 through 98
Ohio Insured Municipals Income Trust (Premium Bond Series) . . . . . . . . . . . . . . . . . Series 1 and 2
Ohio Insured Municipals Income Trust (Intermediate Term) . . . . . . . . . . . . . . . . . . Series 1
Ohio Insured Municipals Income Trust
(Intermediate Laddered Maturity) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Series 3 through 6
Ohio Investors' Quality Tax-Exempt Trust . . . . . . . . . . . . . . . . . . . . . . . . . . Series 1 through 16
Oklahoma Insured Municipal Income Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . Series 1 through 17
Oregon Investors' Quality Tax-Exempt Trust . . . . . . . . . . . . . . . . . . . . . . . . . Series 1 through 53
Pennsylvania Insured Municipals Income Trust - Intermediate . . . . . . . . . . . . . . . . . Series 1 through 6
Pennsylvania Insured Municipals Income Trust . . . . . . . . . . . . . . . . . . . . . . . . Series 1 through 204
Pennsylvania Insured Municipals Income Trust (Premium Bond Series) . . . . . . . . . . . . . Series 1
Pennsylvania Investors' Quality Tax-Exempt Trust . . . . . . . . . . . . . . . . . . . . . . Series 1 through 14
South Carolina Investors' Quality Tax-Exempt Trust . . . . . . . . . . . . . . . . . . . . . Series 1 through 79
Tennessee Insured Municipals Income Trust . . . . . . . . . . . . . . . . . . . . . . . . . . Series 1-3 and 5-32
Texas Insured Municipals Income Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . Series 1 through 40
Texas Insured Municipal Income Trust (Intermediate Ladder) . . . . . . . . . . . . . . . . . Series 1
Virginia Investors' Quality Tax-Exempt Trust . . . . . . . . . . . . . . . . . . . . . . . . Series 1 through 67
Van Kampen Merritt Utility Income Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . Series 1 through 6
Van Kampen Merritt Insured Income Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . Series 1 through 45
Van Kampen Merritt Insured Income Trust (Intermediate Term) . . . . . . . . . . . . . . . . . Series 1 through 44
Van Kampen Merritt Select Equity Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . Series 1
Van Kampen Merritt Select Equity and Treasury Trust . . . . . . . . . . . . . . . . . . . . . Series 1
Washington Insured Municipals Income Trust . . . . . . . . . . . . . . . . . . . . . . . . . Series 1
West Virginia Insured Municipals Income Trust . . . . . . . . . . . . . . . . . . . . . . . . Series 1 through 5
</TABLE>
<PAGE> 1
EXHIBIT 17(b)
OFFICERS
VAN KAMPEN AMERICAN CAPITAL DISTRIBUTORS, INC.
<TABLE>
<CAPTION>
NAME OFFICE LOCATION
- ---- ------ --------
<S> <C> <C>
Don G. Powell Chairman & Chief Executive Officer Houston, TX
William R. Molinari President & Chief Operating Oakbrook Terrace, IL
Officer
Ronald A. Nyberg Executive Vice President & General Oakbrook Terrace, IL
Counsel
William R. Rybak Executive Vice President & Chief Oakbrook Terrace, IL
Financial Officer
Paul R. Wolkenberg Executive Vice President Houston, TX
Robert A. Broman Sr. Vice President Oakbrook Terrace, IL
Gary R. DeMoss Sr. Vice President Oakbrook Terrace, IL
Keith K. Furlong Sr. Vice President Oakbrook Terrace, IL
Douglas B. Gehrman Sr. Vice President Houston, TX
Richard D. Humphrey Sr. Vice President Houston, TX
Scott E. Martin Sr. Vice President, Deputy General Oakbrook Terrace, IL
Counsel & Secretary
Debra A. Nichols Sr. Vice President Houston, TX
Charles G. Millington Sr. Vice President & Treasurer Oakbrook Terrace, IL
Frederick Shepherd Sr. Vice President Houston, TX
Robert S. West Sr. Vice President Oakbrook Terrace, IL
John H. Zimmermann, III Sr. Vice President Oakbrook Terrace, IL
Timothy K. Brown 1st Vice President Laguna Niguel, CA
James S. Fosdick 1st Vice President Oakbrook Terrace, IL
Edward F. Lynch 1st Vice President Oakbrook Terrace, IL
Mark R. McClure 1st Vice President Oakbrook Terrace, IL
Mark T. McGannon 1st Vice President Oakbrook Terrace, IL
James J. Ryan 1st Vice President Oakbrook Terrace, IL
Michael L. Stallard 1st Vice President Oakbrook Terrace, IL
David M. Swanson 1st Vice President Oakbrook Terrace, IL
Laurence J. Althoff Vice President & Controller Oakbrook Terrace, IL
James K. Ambrosio Vice President Massapequa, NY
Patricia A. Bettlach Vice President St. Louis, MO
Carol S. Biegel Vice President Oakbrook Terrace, IL
Linda Mae Brown Vice President Oakbrook Terrace, IL
William F. Burke, Jr. Vice President Mendham, NJ
Loren Burket Vice President Plymouth, MN
Thomas M. Byron Vice President Oakbrook Terrace, IL
Glenn M. Cackovic Vice President Laguna Niguel, CA
Joseph N. Caggiano Vice President New York, NY
Richard J. Charlino Vice President Oakbrook Terrace, IL
Eleanor M. Cloud Vice President Oakbrook Terrace, IL
Dominick Cogliandro Vice President & Asst. Treasurer New York, NY
Michael Colston Vice President Louisville, KY
</TABLE>
<PAGE> 2
<TABLE>
<S> <C> <C>
Suzanne Cummings Vice President Houston, TX
David B. Dibo Vice President Oakbrook Terrace, IL
Howard A. Doss Vice President Tampa, FL
Jonathan Eckhard Vice President Boulder, CO
Charles Edward Fisher Vice President Oakbrook Terrace, IL
William J. Fow Vice President Redding, CT
Charles Friday Vice President Gibsonia, PA
Nori L. Gabert Vice President, Assoc. General Houston, TX
Counsel & Asst. Secretary
Erich P. Gerth Vice President Dallas, TX
Jack Glaw Vice President Fairhope, AL
Daniel Hamilton Vice President Houston, TX
John A. Hanhauser Vice President Philadelphia, PA
Eric J. Hargens Vice President Orlando, FL
J. Christopher Jackson Vice President, Assoc. General Oakbrook Terrace, IL
Counsel & Asst. Secretary
Lowell Jackson Vice President Norcross, GA
Dana R. Klein Vice President Oakbrook Terrace, IL
Ann Marie Klingenhagen Vice President Oakbrook Terrace, IL
Frederick Kohly Vice President Miami, FL
David R. Kowalski Vice President & Director Oakbrook Terrace, IL
of Compliance
S. William Lehew III Vice President Charlotte, NC
Robert C. Lodge Vice President Philadelphia, PA
Walter Lynn Vice President Flower Mound, TX
Michele L. Manley Vice President Oakbrook Terrace, IL
Kevin S. Marsh Vice President Bellevue, WA
Carl Mayfield Vice President Lakewood, CO
Ruth L. McKeel Vice President Oakbrook Terrace, IL
John Mills Vice President Kenner, LA
Robert Muller, Jr. Vice President Houston, TX
Gary Polson Vice President Overland Park, KS
Ronald E. Pratt Vice President Marietta, GA
Craig S. Prichard Vice President Oakbrook Terrace, IL
Walter E. Rein Vice President Oakbrook Terrace, IL
Michael W. Rohr Vice President Oakbrook Terrace, IL
James B. Ross Vice President Oakbrook Terrace, IL
Heather R. Sabo Vice President Richmond, VA
Colette Saucedo Vice President Houston, TX
Stephanie Scarlata Vice President Lynbrook, NY
Lisa A. Schomer Vice President Oakbrook Terrace, IL
Ronald J. Schuster Vice President Tampa, FL
Kimberly M. Spangler Vice President Atlanta, GA
Darren D. Stabler Vice President Phoenix, AZ
Christopher J. Staniforth Vice President Leawood, KS
William C. Strafford Vice President Granger, IN
James C. Taylor Vice President Oakbrook Terrace, IL
John F. Tierney Vice President Oakbrook Terrace, IL
Curtis L. Ulvestad Vice President Red Wing, MN
Sandra A. Waterworth Vice President and Assistant Oakbrook Terrace, IL
Secretary
Steven T. West Vice President Wayne, PA
Weston B. Wetherell Vice President, Assoc. General Oakbrook Terrace, IL
Counsel & Asst. Secretary
</TABLE>
<PAGE> 3
<TABLE>
<S> <C> <C>
James R. Yount Vice President Seattle, WA
Richard P. Zgonina Vice President Oakbrook Terrace, IL
James J. Boyne Asst. Vice President & Asst. Oakbrook Terrace, IL
Secretary
Eric J. Bridges Asst. Vice President Oakbrook Terrace, IL
Richard B. Callaghan Asst. Vice President Oakbrook Terrace, IL
Stephen M. Cutka Asst. Vice President Oakbrook Terrace, IL
Nicholas Dalmaso Asst. Vice President & Asst. Oakbrook Terrace, IL
Secretary
Gerald A. Davis Asst. Vice President Oakbrook Terrace, IL
Jerome M. Dybzinski Asst. Vice President Oakbrook Terrace, IL
Melissa B. Epstein Asst. Vice President Houston, TX
Huey P. Falgout, Jr. Asst. Vice President & Asst. Secretary Houston, TX
Rocco Fiordelisi III Asst. Vice President St. Louis, MO
Robert D. Gorski Asst. Vice President Oakbrook Terrace, IL
Joseph Hays Asst. Vice President Philadelphia, PA
Susan J. Hill Asst. Vice President Oakbrook Terrace, IL
Hunter Knapp Asst. Vice President Laguna, CA
Natalie N. Hurdle Asst. Vice President New York, NY
Laurie L. Jones Asst. Vice President Houston, TX
Brian T. Levinson Asst. Vice President Houston, TX
Peggy E. Moro Asst. Vice President Oakbrook Terrace, IL
David R. Niemi Asst. Vice President Oakbrook Terrace, IL
Daniel J. O'Keefe Asst. Vice President Oakbrook Terrace, IL
Allison Okun Asst. Vice President Oakbrook Terrace, IL
David B. Partain Asst. Vice President Oakbrook Terrace, IL
Scott M. Pulkrabek Asst. Vice President Oakbrook Terrace, IL
Christine K. Putong Asst. Vice President & Asst. Secretary Oakbrook Terrace, IL
Michael Quinn Asst. Vice President Oakbrook Terrace, IL
David P. Robbins Asst. Vice President Oakbrook Terrace, IL
Thomas J. Sauerborn Asst. Vice President New York, NY
Andrew J. Scherer Asst. Vice President Oakbrook Terrace, IL
Jeffrey C. Shirk Asst. Vice President Philadelphia, PA
Traci T. Sorensen Asst. Vice President Oakbrook Terrace, IL
Gary Steele Asst. Vice President Philadelphia, PA
David H. Villarreal Asst. Vice President Oakbrook Terrace, IL
Kathleen M. Wennerstrum Asst. Vice President Oakbrook Terrace, IL
Barbara A. Withers Asst. Vice President Oakbrook Terrace, IL
Melinda K. Yeager Asst. Vice President Houston, TX
David C. Goodwin Asst. Secretary Oakbrook Terrace, IL
Gina M. Scumaci Asst. Secretary Oakbrook Terrace, IL
</TABLE>
<PAGE> 4
DIRECTORS
VAN KAMPEN AMERICAN CAPITAL DISTRIBUTORS, INC.
<TABLE>
<CAPTION>
NAME OFFICE LOCATION
- ---- ------ --------
<S> <C> <C>
Don G. Powell Chairman & CEO 2800 Post Oak Blvd
Houston, TX 77056
William R. Molinari President & COO One Parkview Plaza
Oakbrook Terrace, IL 60181
Ronald A. Nyberg Executive Vice President One Parkview Plaza
& General Counsel Oakbrook Terrace, IL 60181
William R. Rybak Executive Vice President One Parkview Plaza
& CFO Oakbrook Terrace, IL 60181
</TABLE>
<PAGE> 1
EXHIBIT 24
POWER OF ATTORNEY
The undersigned, being officers and trustees of Van Kampen American
Capital Tax Free Money Fund, a Delaware business trust (the "Trust"), do
hereby, in the capacities shown below, individually appoint Dennis J. McDonnell
and Ronald A. Nyberg, each of Oakbrook Terrace, Illinois, and each of them, as
the agents and attorneys-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, any and all amendments to the Registration Statement
on Form N-1A filed by the Trust with the Securities and Exchange Commission
pursuant to the provisions of the Securities Act of 1933 and the Investment
Company Act of 1940.
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: July 25, 1995
Signature Title
/s/ J. Miles Branagan
- -------------------------- Trustee
J. Miles Branagan
<PAGE> 2
/s/ Richard E. Caruso
- ----------------------------- Trustee
Richard E. Caruso
/s/ Philip P. Gaughan
- ----------------------------- Trustee
Philip P. Gaughan
/s/ Roger Hilsman
- ------------------------ Trustee
Roger Hilsman
/s/ R. Craig Kennedy
- ------------------------ Trustee
R. Craig Kennedy
/s/ Dennis J. McDonnell
- ----------------------- President, Chief Executive Officer and Trustee
Dennis J. McDonnell
/s/ Donald C. Miller
- --------------------- Chairman and Trustee
Donald C. Miller
<PAGE> 3
/s/ Jack E. Nelson
- --------------------------- Trustee
Jack E. Nelson
/s/ Don G. Powell
- --------------------------- Trustee
Don G. Powell
/s/ David Rees
- --------------------- Trustee
David Rees
/s/ Jerome L. Robinson
- ----------------------- Trustee
Jerome L. Robinson
/s/ Lawrence J. Sheehan
- ------------------------- Trustee
Lawrence J. Sheehan
/s/ Fernando Sisto
- ------------------------- Trustee
Fernando Sisto
<PAGE> 4
/s/ Wayne W. Whalen
- -------------------- Trustee
Wayne W. Whalen
/s/ Edward C. Wood III
- ----------------------- Chief Financial and Accounting Officer
Edward C. Wood III
/s/ William S. Woodside
- ---------------------------- Trustee
William S. Woodside
<TABLE> <S> <C>
<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> 36,308,742
<INVESTMENTS-AT-VALUE> 36,308,742
<RECEIVABLES> 789,265
<ASSETS-OTHER> 5,213
<OTHER-ITEMS-ASSETS> 238,187
<TOTAL-ASSETS> 37,341,417
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 166,770
<TOTAL-LIABILITIES> 166,770
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 37,199,225
<SHARES-COMMON-STOCK> 37,199,225
<SHARES-COMMON-PRIOR> 37,408,151
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (24,578)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 37,174,647
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 586,390
<OTHER-INCOME> (5,238)
<EXPENSES-NET> 168,738
<NET-INVESTMENT-INCOME> 412,414
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 0
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (412,414)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 13,876,281
<NUMBER-OF-SHARES-REDEEMED> 14,386,894
<SHARES-REINVESTED> 301,687
<NET-CHANGE-IN-ASSETS> (208,926)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 91,371
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 253,666
<AVERAGE-NET-ASSETS> 36,458,003
<PER-SHARE-NAV-BEGIN> 1.000
<PER-SHARE-NII> .011
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> (.011)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.000
<EXPENSE-RATIO> 1
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-30-1995
<PERIOD-START> JUL-01-1994
<PERIOD-END> JUN-30-1995
<INVESTMENTS-AT-COST> 34054829
<INVESTMENTS-AT-VALUE> 34054829
<RECEIVABLES> 235283
<ASSETS-OTHER> 5064
<OTHER-ITEMS-ASSETS> 87339
<TOTAL-ASSETS> 34382515
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