<PAGE> 1
- ---------------------------------------------------------------
TABLE OF CONTENTS
<TABLE>
<S> <C>
Letter to Shareholders........................... 1
Portfolio of Investments......................... 4
Statement of Assets and Liabilities.............. 6
Statement of Operations.......................... 7
Statement of Changes in Net Assets............... 8
Financial Highlights............................. 9
Notes to Financial Statements.................... 10
Independent Accountants' Report.................. 13
</TABLE>
TFMM ANR 8/96
<PAGE> 2
LETTER TO SHAREHOLDERS
August 1, 1996
Dear Shareholder,
As you may be aware, an agreement
was reached in late June for VK/AC
Holding, Inc., the parent company of
Van Kampen American Capital, Inc., to [PHOTO]
be acquired by the Morgan Stanley DENNIS J. MCDONNELL AND DON G. POWELL
Group Inc. While this announcement
may appear commonplace in an
ever-changing financial industry, we
believe it represents an exciting
opportunity for shareholders of our investment products.
With Morgan Stanley's global
leadership in investment banking and
asset management and Van Kampen American Capital's reputation for competitive
long-term performance and superior investor services, together we will offer a
broader range of investment opportunities and expertise.
The new ownership will not affect our commitment to pursuing excellence in
all aspects of our business. And, we expect very little change in the way your
mutual fund account is maintained and serviced.
A proxy will be mailed to you shortly explaining the acquisition and asking
for your vote of approval. Please read it carefully and return your response for
inclusion in the shareholder vote. We value our relationship with you and look
forward to communicating more details of this transaction, which is anticipated
to be completed in November.
ECONOMIC REVIEW AND OUTLOOK
The economy demonstrated an acceleration in growth during the last half of
the reporting period. After a nominal 0.3 percent growth rate in the last
quarter of 1995, GDP (the nation's gross domestic product) rose by 2.0 percent
in this year's first quarter. And, as anticipated, the economy grew by 4.2
percent in the second quarter, partly reflecting a recovery from the effects of
labor strikes earlier in the year and extreme weather conditions across the
country. Upward momentum has been assisted by consumer spending, as indicated by
a 5.6 percent rise in retail sales in the first five months of this year versus
the comparable 1995 period.
In the manufacturing sector, economic reports, such as the National
Association of Purchasing Managers Index, suggested a continued rebound in
production from last winter's lower levels. In June, this index reached its
highest level since early 1995. Strong levels of exports and a replenishing of
inventories have helped support this momentum.
Surprisingly healthy economic activity led to concerns that inflation may
rise and the Federal Reserve Board might tighten monetary policy. Inflation
remains modest, however, with consumer prices rising at about a 3 percent annual
rate over the past year. Meanwhile, the closely watched "core" Consumer Price
Index, which excludes volatile food and energy components, has risen year over
year at rates between 2.7 and 3.0 percent per year, with mid-1996 readings at a
moderate 2.7 percent. In general, recent reports have suggested an upward creep
in labor-related costs, while indicating that prices of many commodities have
begun to decline.
Continued on page two
1
<PAGE> 3
We anticipate that reasonably strong economic growth will continue during
the balance of 1996, albeit at more moderate rates than the second quarter's
swift pace. While we expect rates of inflation to remain near current levels,
the Fed may begin to lean toward greater restraint in its monetary policy in the
coming months. That suggests an upward bias for short-term interest rates and
for yields on long-term bonds to remain steady at current levels. In particular,
we expect 10-year Treasury yields to remain within a trading range of 6.50 and
7.25 percent.
PERFORMANCE SUMMARY
During the 12 months ended June 30, 1996, the Van Kampen American Capital
Tax Free Money Fund continued to provide shareholders with competitive returns
and a high degree of safety and liquidity, amidst a year that offered investment
challenges and opportunities.
On June 30, 1996, the Fund generated a seven-day average yield of 2.72
percent(1) and a one-year total return of 2.93 percent(2). In comparison, the
average performance for tax-free money market funds, as calculated by Lipper
Analytical Services, Inc., was 3.26 percent for the 12-month period. The Fund's
average maturity at the end of the reporting period was 43 days, a slightly
shorter maturity from the beginning of the period of 54 days.
PORTFOLIO HOLDINGS BY INVESTMENT TYPE
AS OF DECEMBER 31, 1995 AS OF JUNE 30, 1996
[PIE CHART] [PIE CHART]
Updates (Commercial Paper) 10.0% Updates (Commercial Paper) 11.3%
Bonds/Notes 26.4% Bonds/Notes 25.0%
Seven-Day Floaters 36.8% Seven-Day Floaters 40.1%
Dates 26.8% Dates 23.6%
Because income from the Fund is exempt from federal income tax, it is
important to compare its effective annual yield of 2.76 percent to an equivalent
taxable rate. For example, if you were in the 36 percent federal income tax
bracket, then you would have needed a taxable equivalent rate of 4.31 percent to
equal the tax-free yield of your Tax Free Money Fund.
Fund shares are not guaranteed or insured by the U.S. Government, and there is
no assurance that the Fund will be able to maintain a stable net asset value of
$1.00.
Past performance does not guarantee future results. Investment return and net
asset value will fluctuate with market conditions. Fund shares, when redeemed,
may be worth more or less than their original cost.
(1)Had certain expenses of the Fund not been assumed by the Adviser, the Fund's
seven-day yield would have been 2.22 percent and the total return would have
been lower.
(2)One-year total return assumes reinvestment of all distributions for the
period ended June 30, 1996.
Continued on page three
2
<PAGE> 4
The Fund's management team continues to incorporate a disciplined investment
approach that focuses on the highest quality securities, exempt from federal
income tax.
Additional details about your Fund are provided in this report. We
appreciate your continued confidence in your investment with Van Kampen American
Capital.
Sincerely,
[SIG]
Don G. Powell
Chairman
Van Kampen American Capital
Investment Advisory Corp.
[SIG]
Dennis J. McDonnell
President
Van Kampen American Capital
Investment Advisory Corp.
3
<PAGE> 5
PORTFOLIO OF INVESTMENTS
June 30, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Discount
Par Yield on
Amount Maturity Date of Amortized
(000) Security Description Date Purchase Cost
---------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
MUNICIPAL BONDS
DATES 23.6%
$1,800 Louisiana St Recovery Dist Sales Tax Rev Ser
1988 (FGIC Insd).............................. 07/01/96 3.650% $ 1,800,000
1,800 New York City Muni Wtr Fin Auth Wtr Swr Sys
Ser 95 A (FGIC Insd).......................... 07/01/96 3.750 1,800,000
1,200 New York City Ser B (FGIC Insd)............... 07/01/96 3.750 1,200,000
1,300 New York City Ser B (FGIC Insd)............... 07/01/96 3.750 1,300,000
2,300 New York City Ser B (FGIC Insd)............... 07/01/96 3.750 2,300,000
------------
Total Dates................................... 8,400,000
------------
7 DAY FLOATERS 40.0%
500 Utah St Brd Regents Student Ln Rev Ser 1993 A
(Gtd: Student Ln Marketing Assoc)............. 07/02/96 3.400 500,000
600 Washington St Hsg Fin Comm Multi Family Mtg
Rev Rfdg (LOC: Harris Trust & Savings Bank)... 07/02/96 3.400 600,000
1,400 City of Chillicothe, IA Pollutn Ctl Rev Ser
1993 A Rfdg (Gtd: Midwest Power Systems
Inc.)......................................... 07/03/96 3.400 1,400,000
1,600 Dade Cnty, FL Fltg Capital Asset Acquisition
Ser S (LOC: Sanwa Bank)....................... 07/03/96 3.600 1,600,000
1,110 Fort Bend, TX Indl Dev Corp Indl Dev Rev Rfdg
(Gtd: W.W. Grainger, Inc.).................... 07/03/96 3.400 1,110,000
1,100 Illinois Dev Fin Auth Indl Dev Rev Field
Container Corp Rfdg (LOC: Amer Nat'l Bank &
Trust of Chicago)............................. 07/03/96 3.400 1,100,000
1,000 Illinois Dev Fin Auth Rev Roosevelt Univ Ser
1995 (LOC: Amer Nat'l Bank & Trust of
Chicago)...................................... 07/03/96 3.400 1,000,000
1,100 Illinois Dev Fin Auth Rev Ser 1994 Lake Forest
Academy (LOC: The Northern Trust Company)..... 07/03/96 3.400 1,100,000
1,500 Iowa Hsg Fin Auth Small Bus Ln Proj Ser 1985 A
(LOC: Federal Home Loan Bank of Des Moines)... 07/03/96 3.550 1,500,000
1,000 Missouri St Hlth & Edl Fac Auth Hlth Fac Rev
Ser 1995 B (MBIA Insd)........................ 07/03/96 3.350 1,000,000
1,000 St Paul, MN Hsg & Redev Auth Rev Ser 1985 A
(LOC: Federal Home Loan Bank of Des Moines)... 07/03/96 3.500 1,000,000
1,000 Calhoun Cnty, MI Econ Dev Corp Rev (LOC:
Comerica Bank)................................ 07/04/96 3.300 1,000,000
955 City of Sterling Heights, MI Econ Dev Corp Rev
Rfdg (LOC: First Chicago/NBD Corp)............ 07/04/96 3.500 955,000
400 Minnesota St Higher Edl Coordinating Brd Ser
1995 A Rfdg (LOC: Norwest Bank)............... 07/04/96 3.450 400,000
------------
Total 7 Day Floaters.......................... 14,265,000
------------
UPDATES (COMMERCIAL PAPER) 11.2%
1,500 West Orange Mem Hosp Tax Dist FL Rev Updates
Ser 1991 A-2 (LOC: Robobank-Nederland)........ 07/22/96 3.600 1,500,000
</TABLE>
See Notes to Financial Statements
4
<PAGE> 6
PORTFOLIO OF INVESTMENTS (CONTINUED)
June 30, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Discount
Par Yield on
Amount Maturity Date of Amortized
(000) Security Description Date Purchase Cost
------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
UPDATES (COMMERCIAL PAPER) (CONTINUED)
$1,000 Wayne Cnty, MI Downriver Sewage Disp Sys
(LOC: Comerica Bank).......................... 08/02/96 3.700% $ 1,000,000
1,500 York Cnty, SC Pollutn Ctl Rev Ser 1990 Rfdg
(Gtd: Duke Power Co.)......................... 08/05/96 3.600 1,500,000
-----------
Total Updates (Commercial Paper).............. 4,000,000
-----------
BONDS/NOTES 24.9%
1,000 Illinois St (FGIC Insd)....................... 07/01/96 5.250 1,000,000
1,100 Texas St Tax & Rev Antic Nts Ser A............ 08/30/96 4.750 1,101,297
1,000 Michigan St Genl Oblig Nts.................... 09/30/96 4.000 1,002,449
1,000 City of Chicago Genl Oblig Tender Notes Ser
1995 A (LOC: Morgan Guaranty & Trust Co.)..... 10/31/96 3.650 1,000,000
910 City of Ashdown, AR Indl Dev Rev Ser 1981
(Gtd: Allied Signal Corp.).................... 11/01/96 4.100 910,000
1,000 Washoe Cnty, NV Ser A Rfdg (AMBAC Insd)....... 12/01/96 4.000 1,002,015
1,515 Port Seattle, WA Rev Ser 1995 A Rfdg (AMBAC
Insd)......................................... 02/01/97 5.500 1,530,930
325 Trenton, NJ Wtr Util Ser B (FSA Insd)......... 04/15/97 5.300 328,859
1,000 Washington St Hsg Fin Comm Single Family Prog
Ser 1A-S (FGIC Insd).......................... 06/01/97 3.800 1,000,000
-----------
Total Bonds/Notes............................. 8,875,550
-----------
TOTAL INVESTMENTS 99.7% (A)................................................. 35,540,550
OTHER ASSETS IN EXCESS OF LIABILITIES 0.3%.................................. 92,327
-----------
NET ASSETS 100.0%........................................................... $35,632,877
===========
</TABLE>
(a) At June 30, 1996, cost is identical for both book and federal income tax
purposes.
See Notes to Financial Statements
5
<PAGE> 7
STATEMENT OF ASSETS AND LIABILITIES
June 30, 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Investments, at Amortized Cost which Approximates Market (Note 1)........ $35,540,550
Cash..................................................................... 46,478
Receivables:
Interest............................................................... 222,275
Fund Shares Sold....................................................... 28,638
Other.................................................................... 5,993
-----------
Total Assets....................................................... 35,843,934
-----------
LIABILITIES:
Payables:
Distributor and Affiliates (Notes 2 and 4)............................. 47,219
Fund Shares Repurchased................................................ 23,373
Income Distributions................................................... 20,338
Accrued Expenses......................................................... 63,183
Deferred Compensation and Retirement Plans (Note 2)...................... 56,944
-----------
Total Liabilities.................................................. 211,057
-----------
NET ASSETS............................................................... $35,632,877
---------
NET ASSETS CONSIST OF:
Capital (Note 3)......................................................... $35,657,455
Accumulated Net Realized Loss on Investments............................. (24,578)
-----------
NET ASSETS (Equivalent to $1.00 per share for 35,657,455 shares
outstanding)........................................................... $35,632,877
===========
</TABLE>
See Notes to Financial Statements
6
<PAGE> 8
STATEMENT OF OPERATIONS
For the Year Ended June 30, 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest............................................................... $ 1,318,881
-------------
EXPENSES:
Investment Advisory Fee (Note 2)....................................... 176,240
Distribution (12b-1) and Service Fees (Note 4)......................... 88,120
Shareholder Services (Note 2).......................................... 77,414
Printing............................................................... 40,850
Registration........................................................... 39,952
Trustees Fees and Expenses (Note 2).................................... 37,218
Legal (Note 2)......................................................... 12,240
Other.................................................................. 66,196
-------------
Total Expenses..................................................... 538,230
Less Fees Waived and Expenses Reimbursed ($176,240 and $62,508,
respectively).................................................... 238,748
-------------
Net Expenses....................................................... 299,482
-------------
NET INVESTMENT INCOME.................................................. $ 1,019,399
=============
NET REALIZED GAIN ON SECURITIES........................................ $ -0-
-----------
NET INCREASE IN NET ASSETS FROM OPERATIONS............................. $ 1,019,399
=============
</TABLE>
See Notes to Financial Statements
7
<PAGE> 9
STATEMENT OF CHANGES IN NET ASSETS
For the Years Ended June 30, 1996 and 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended Year Ended
June 30, 1996 June 30, 1995
- -------------------------------------------------------------------------------------------
<S> <C> <C>
FROM INVESTMENT ACTIVITIES:
Operations:
Net Investment Income................................... $ 1,019,399 $ 938,971
Distributions from Net Investment Income................ (1,019,399) (938,971)
--------- ---------
NET CHANGE IN NET ASSETS FROM INVESTMENT ACTIVITIES..... -0- -0-
--------- ---------
FROM CAPITAL TRANSACTIONS (NOTE 3):
Proceeds from Shares Sold............................... 67,200,916 23,885,907
Net Asset Value of Shares Issued Through Dividend
Reinvestment.......................................... 762,564 685,467
Cost of Shares Repurchased.............................. (65,505,643) (28,779,907)
--------- ---------
NET CHANGE IN NET ASSETS FROM CAPITAL TRANSACTIONS...... 2,457,837 (4,208,533)
--------- ---------
TOTAL INCREASE/DECREASE IN NET ASSETS................... 2,457,837 (4,208,533)
NET ASSETS:
Beginning of the Period................................. 33,175,040 37,383,573
--------- ---------
End of the Period....................................... $35,632,877 $33,175,040
========= ==========
</TABLE>
See Notes to Financial Statements
8
<PAGE> 10
FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for one share
of the Fund outstanding throughout the periods indicated.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended June 30
--------------------------------------------
1996 1995 1994 1993 1992
<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....................... .029 .027 .017 .019 .035
Less Distributions from Net Investment
Income.................................... .029 .027 .017 .019 .035
---- ---- ---- ---- ----
Net Asset Value, End of Period.............. $1.00 $1.00 $1.00 $1.00 $1.00
==== ==== ==== ==== ====
Total Return*............................... 2.93% 2.73% 1.70% 1.93% 3.56%
Net Assets at End of Period (In millions)... $35.6 $33.2 $37.4 $43.1 $70.8
Ratio of Expenses to Average Net Assets*.... .85% .89% .81% .72% .57%
Ratio of Net Investment Income to Average
Net Assets*............................... 2.89% 2.68% 1.69% 1.92% 3.56%
* If certain expenses had not been assumed
by VKAC, total return would have been
lower and the ratios would have been as
follows:
Ratio of Expenses to Average Net Assets..... 1.53% 1.38% 1.29% .97% 1.18%
Ratio of Net Investment Income to Average
Net Assets................................ 2.21% 2.20% 1.20% 1.67% 2.96%
</TABLE>
See Notes to Financial Statements
9
<PAGE> 11
NOTES TO FINANCIAL STATEMENTS
June 30, 1996
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
Van Kampen American Capital Tax Free Money Fund (the "Fund") is organized as a
Delaware business trust. The Fund is an open-end diversified management
investment company registered under the Investment Company Act of 1940, as
amended. 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 investment in a broad range of municipal
securities that will mature within 12 months of the date of purchase. 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. The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
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, 1996, 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.
10
<PAGE> 12
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
June 30, 1996
- --------------------------------------------------------------------------------
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.
For the year ended June 30, 1996, 100% of the income distributions made by
the Fund were exempt from Federal income taxes. In January, 1997, the Fund will
provide tax information to shareholders for the 1996 calendar year.
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 facilities and
investment advice 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, 1996, the Fund recognized expenses of
approximately $14,800 representing Van Kampen American Capital Distributors,
Inc's. or its affiliates' (collectively "VKAC") cost of providing accounting,
cash management and legal services to the Fund. Of this amount, approximately
$4,800 has been assumed by VKAC.
In July, 1995, the Fund began using ACCESS Investor Services, Inc.
("ACCESS"), an affiliate of the Adviser, as the shareholder servicing agent for
the Fund. For the year ended June 30, 1996, the Fund recognized expenses of
approximately $48,200, representing ACCESS' cost of providing transfer agency
and shareholder services plus a profit. Of this amount, approximately $2,300 has
been assumed by VKAC.
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.
11
<PAGE> 13
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
June 30, 1996
- --------------------------------------------------------------------------------
3. CAPITAL TRANSACTIONS
The Fund is authorized to issue an unlimited number of shares of capital stock
with a par value of $.01 per share. At June 30, 1996 and 1995, capital
aggregated $35,657,455 and $33,199,618, respectively. Transactions in shares
were as follows:
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
JUNE 30, 1996 JUNE 30, 1995
- -----------------------------------------------------------------------------
<S> <C> <C>
Beginning Shares............................. 33,199,618 37,408,151
---------- ----------
Shares Sold.................................. 67,200,916 23,885,907
Shares Issued Through Dividend
Reinvestment............................... 762,564 685,467
Shares Repurchased........................... (65,505,643) (28,779,907)
---------- ----------
Net Change in Shares Outstanding............. 2,457,837 (4,208,533)
---------- ----------
Ending Shares................................ 35,657,455 33,199,618
========== ==========
</TABLE>
4. DISTRIBUTION AND SERVICE PLANS
The Fund and its shareholders have adopted a distribution plan pursuant to Rule
12b-1 under the Investment Company Act of 1940 and a 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. Included in these fees for the year ended June 30, 1996, are
payments to VKAC of approximately $24,800.
12
<PAGE> 14
INDEPENDENT ACCOUNTANTS' REPORT
The Board of Trustees and Shareholders of
Van Kampen American Capital Tax Free Money Fund:
We have audited the accompanying statement of assets and liabilities of Van
Kampen American Capital Tax Free Money Fund (the "Fund"), including the
portfolio of investments, as of June 30, 1996, 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, 1996, by correspondence with the custodian. An audit also includes assessing
the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of Van
Kampen American Capital Tax Free Money Fund as of June 30, 1996, 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
July 30, 1996
13
<PAGE> 15
FUNDS DISTRIBUTED BY VAN KAMPEN AMERICAN CAPITAL
GLOBAL AND
INTERNATIONAL
Global Equity Fund
Global Government Securities Fund
Global Managed Assets Fund
Short-Term Global Income Fund
Strategic Income Fund
EQUITY
Growth
Aggressive Growth Fund
Emerging Growth Fund
Enterprise Fund
Pace Fund
Growth & Income
Balanced Fund
Comstock Fund
Equity Income Fund
Growth and Income Fund
Harbor Fund
Real Estate Securities Fund
Utility Fund
FIXED INCOME
Corporate Bond Fund
Government Securities Fund
High Income Corporate Bond Fund
High Yield Fund
Limited Maturity Government Fund
Prime Rate Income Trust
Reserve Fund
U.S. Government Fund
U.S. Government Trust for Income
TAX-FREE
California Insured Tax Free Fund
Florida Insured Tax Free
Income Fund
High Yield Municipal Fund
Insured Tax Free Income Fund
Intermediate Term Municipal
Income Fund
Municipal Income Fund
New Jersey Tax Free Income Fund
New York Tax Free Income Fund
Pennsylvania Tax Free Income Fund
Tax Free High Income Fund
Tax Free Money Fund
Texas Tax Free Income Fund
THE GOVETT FUNDS
Emerging Markets Fund
Global Income Fund
International Equity Fund
Latin America Fund
Pacific Strategy Fund
Smaller Companies Fund
Ask your investment representative for a prospectus containing more complete
information, including sales charges and expenses. Please read it carefully
before you invest or send money. Or call us direct at 1-800-341-2911 weekdays
from 7:00 a.m. to 7:00 p.m. Central time.
14
<PAGE> 16
VAN KAMPEN AMERICAN CAPITAL TAX FREE MONEY FUND
BOARD OF TRUSTEES
J. MILES BRANAGAN
LINDA HUTTON HEAGY
ROGER HILSMAN
R. CRAIG KENNEDY
DENNIS J. MCDONNELL*
DONALD C. MILLER - Co-Chairman
JACK E. NELSON
DON G. POWELL*
JEROME L. ROBINSON*
FERNANDO SISTO - Co-Chairman
WAYNE W. WHALEN*
WILLIAM S. WOODSIDE
OFFICERS
DON G. POWELL*
President and Chief Executive Officer
DENNIS J. MCDONNELL*
Executive Vice President
RONALD A. NYBERG*
Vice President and Secretary
EDWARD C. WOOD, III*
Vice President and Chief Financial Officer
CURTIS W. MORELL*
Vice President and Chief Accounting Officer
JOHN L. SULLIVAN*
Treasurer
TANYA M. LODEN*
Controller
WILLIAM N. BROWN*
PETER W. HEGEL*
ROBERT C. PECK, JR.*
ALAN T. SACHTLEBEN*
PAUL R. WOLKENBERG*
Vice Presidents
INVESTMENT ADVISER
VAN KAMPEN AMERICAN CAPITAL
INVESTMENT ADVISORY CORP.
One Parkview Plaza
Oakbrook Terrace, Illinois 60181
DISTRIBUTOR
VAN KAMPEN AMERICAN CAPITAL
DISTRIBUTORS, INC.
One Parkview Plaza
Oakbrook Terrace, Illinois 60181
SHAREHOLDER SERVICING AGENT
ACCESS INVESTOR
SERVICES, INC.
P.O. Box 418256
Kansas City, Missouri 64141-9256
CUSTODIAN
STATE STREET BANK
AND TRUST COMPANY
225 Franklin Street
P.O. Box 1713
Boston, Massachusetts 02105
LEGAL COUNSEL
SKADDEN, ARPS, SLATE,
MEAGHER & FLOM
333 West Wacker Drive
Chicago, Illinois 60606
INDEPENDENT ACCOUNTANTS
KPMG PEAT MARWICK LLP
Peat Marwick Plaza
303 East Wacker Drive
Chicago, Illinois 60601
* "Interested" persons of the Fund, as defined in the
Investment Company Act of 1940.
(C) Van Kampen American Capital Distributors, Inc., 1996
All rights reserved.
(SM) denotes a service mark of
Van Kampen American Capital Distributors, Inc.
This report is submitted for the general information of the shareholders of the
Fund. It is not authorized for distribution to prospective investors unless it
has been preceded or is accompanied by an effective prospectus of the Fund which
contains additional information on how to purchase shares, the sales charge, and
other pertinent data.
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VAN KAMPEN AMERICAN CAPITAL TAX FREE MONEY FUND
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