<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
Report of Independent Accountants................ 13
</TABLE>
TFMM ANR 8/98
<PAGE> 2
LETTER TO SHAREHOLDERS
July 20, 1998
Dear Shareholder,
As you may know, Van Kampen
American Capital is consolidating all
of the retail mutual funds that we
distribute under the single name of
Van Kampen Funds. This move
accompanies the change in our legal
name to Van Kampen Funds Inc. [PHOTO]
You can be assured that the
change in your fund's name will not
affect its management or daily
operations. You will begin seeing the
application of this change with this DENNIS J. MCDONNELL AND DON G. POWELL
report. In addition, as of August 31,
your fund will be listed in the daily newspapers by share class under the
heading "Van Kampen Funds." For your convenience, we have enclosed a separate
brochure that covers additional details related to these changes.
ECONOMIC REVIEW
The U.S. economy continued to expand at a robust pace despite a deepening
recession in Asia. The nation's inflation-adjusted output of goods and services
ran at 5.4 percent during the first quarter, an annualized rate considered by
many economists to be virtually unsustainable without leading to inflation. As
the reporting period ended, however, there were indications that the Asian
financial crisis was finally having a moderating impact on the economy. Also,
the Conference Board's index of leading indicators has forecasted a slowdown in
economic growth for later this year.
Despite the generally solid pace of economic activity, inflation remained
benign. Consumer prices rose by 1.7 percent during the 12 months through June,
while producer prices actually declined during the same period. Falling
commodity prices and the impact of the strong dollar helped to offset the
inflationary implications of a tight labor market and strong consumer spending.
While the Federal Reserve kept short-term interest rates steady at 5.5
percent during the reporting period, minutes from the central bank's May policy
meeting indicated growing sentiment for tightening monetary policy if drag from
Asia does not slow the American economy on its own.
PORTFOLIO STRATEGY
Because of the seasonal nature of short-term municipal bond issuance, we
adjusted the Fund's average maturity to reflect our expectations of interest
rate changes and market supply. Availability of bonds increases annually in late
June and early July and the increased supply of municipal bonds caused interest
rates to peak. Our strategy was to extend our average maturity to the 70-day
mark to take advantage of the higher yields.
Continued on page two
1
<PAGE> 3
During the majority of the period we maintained an average maturity within a
neutral range between 45 and 50 days. However, we did lower that average
maturity during the December holiday period and at the end of the 1998 tax
season in April.
We have found opportunity to invest in variable interest rates when cash
exits the investment market--during tax and holiday seasons. For example, in
April we purchased short-term variable rate issues, known as demand obligations,
with rates that reset on a daily basis. As cash left the market, demand for the
issues would decrease and the issuers aggressively reset their yields. We have
found variable demand obligations attractive because they are liquid and have no
price fluctuation--only yield fluctuation.
At the end of the period we extended our average maturity toward the 70-day
mark to take advantage of the sharp rise in supply that typically occurs in late
June.
PERFORMANCE SUMMARY
As of June 30, 1998, the Fund's seven-day average yield was 2.70 percent.
Because income from the Fund is exempt from federal income tax, it is important
to compare its seven-day average yield to an equivalent taxable rate. For
example, shareholders in the 36 percent federal income tax bracket would need a
taxable equivalent rate of 4.22 percent to equal the tax-free yield earned by
this Fund.
The Fund posted a one-year total return of 2.93 percent. By comparison, the
average performance for tax-free money market funds, as calculated by Lipper
Analytical Services, Inc., was 3.07 percent for the 12-month period.
PORTFOLIO HOLDINGS BY INVESTMENT TYPE AS A PERCENTAGE OF TOTAL INVESTMENTS
<TABLE>
<CAPTION>
AS OF JUNE 30, 1998 AS OF DECEMBER 31, 1997
<S> <C> <S> <C>
7 Day Floaters..................... 42.8% 7 Day Floaters.................... 49.4%
Dates.............................. 32.2% Bonds/Notes....................... 28.7%
Bonds/Notes........................ 20.3% [PIE CHART] Dates............................. 17.1% [PIE CHART]
Commercial Paper................... 4.7% Commercial Paper.................. 4.8%
</TABLE>
OUTLOOK
We believe supply may be at a lower level this July, compared to that of the
past few years. Because of the strong economy and improved financial conditions,
many of the large issuers (e.g., states and large municipalities) will more than
likely reduce their amount of short-term borrowing. We expect this to reduce
yields, but we believe that the market will still provide favorable value.
As the situation in Asia continues, we expect the Fed to monitor
developments there before taking action regarding interest rates. Speculation
that the Fed would tighten rates
Continued on page three
2
<PAGE> 4
this year has decreased as the U.S. economy continues to operate with minimal
price appreciation or wage pressures.
Regardless of whether the Fed raises rates, we have positioned the Fund to
take advantage of the seasonal supply of note issuance. With this philosophy, we
will continue to seek the Fund's objective of relative stability, daily
liquidity, and a competitive level of income. We will look to add value through
careful security selection. Thank you for your confidence and trust in our
management team.
Sincerely,
[SIG]
Don G. Powell
Chairman
Van Kampen Investment Advisory Corp.
[SIG]
Dennis J. McDonnell
President
Van Kampen Investment Advisory Corp.
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.
3
<PAGE> 5
PORTFOLIO OF INVESTMENTS
June 30, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Discount
Par Yield on
Amount Maturity Date of Amortized
(000) Description Date Purchase Cost
- -----------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
MUNICIPAL BONDS
DATES 32.2%
$1,200 Brazos River Auth TX Utils Elec Co Proj Ser
1996 B (AMBAC Insd)........................... 07/01/98 3.900% $ 1,200,000
1,500 Chicago, IL O'Hare Intl Arpt Spl Fac Rev
American Airls Ser 1983 D (LOC: Royal Bank of
Canada)....................................... 07/01/98 4.000 1,500,000
1,400 Delaware Cnty, PA Indl Dev Auth Arpt Fac Rev
(Gtd: United Parcel Service).................. 07/01/98 3.900 1,400,000
1,500 Jackson Cnty, MS Port Fac Rev Chevron Inc Proj
Rfdg.......................................... 07/01/98 3.800 1,500,000
1,400 New York City Muni Wtr Fin Auth Wtr Swr Sys
Ser 1995 A (FGIC Insd)........................ 07/01/98 3.800 1,400,000
1,500 New York City Ser B (FGIC Insd)............... 07/01/98 4.100 1,500,000
1,500 Perry Cnty, MS Pollutn Ctl Rev Ser 1992 Rfdg
(LOC: Wachovia Bank).......................... 07/01/98 3.800 1,500,000
300 Port of Portland, OR Pollutn Ctl Rev (LOC:
Bank of Nova Scotia).......................... 07/01/98 4.000 300,000
-----------
TOTAL DATES....................................................... 10,300,000
-----------
7 DAY FLOATERS 42.8%
750 Calhoun Cnty, MI Econ Dev Corp Rev (LOC:
Comerica Bank)................................ 07/02/98 3.550 750,000
1,400 City of Chillicothe, IA Pollutn Ctl Rev
Midwest Pwr Sys Ser 1993 A Rfdg (Gtd: Midwest
Power Systems, Inc.).......................... 07/01/98 3.550 1,400,000
1,310 City of Sterling Heights, MI Econ Dev Corp Rev
Rfdg (LOC: First Chicago/NBD Corp)............ 07/02/98 3.700 1,310,000
900 Dade Cnty, FL Fltg Capital Asset Acquisition
Ser S (LOC: Sanwa Bank Ltd.).................. 07/01/98 3.950 900,000
1,110 Fort Bend, TX Indl Dev Corp Indl Dev Rev W.W.
Grainger Proj Rfdg (LOC: The Northern Trust
Company)...................................... 07/01/98 3.600 1,110,000
1,500 Gibson Cnty, IN Pollutn Ctl Rev Toyota Motor
Manufacturing Proj (LOC: Bank of Tokyo)....... 07/01/98 4.000 1,500,000
1,000 Illinois Dev Fin Auth Rev Roosevelt Univ Ser
1995 (LOC: Amer Nat'l Bank & Trust of
Chicago)...................................... 07/01/98 3.550 1,000,000
1,500 Illinois Hlth Fac Auth Rev Condell Mem Hosp
(LOC: Bank of Tokyo).......................... 07/01/98 3.450 1,500,000
1,000 Montgomery Cnty, MD Hsg Oppntys Commission Hsg
Rev (LOC: Keybank N.A.)....................... 07/01/98 3.700 1,000,000
500 Utah St Brd Regents Student Ln Rev Ser 1993 A
(Gtd: Student Ln Marketing Assn.)............. 07/01/98 3.500 500,000
</TABLE>
See Notes to Financial Statements
4
<PAGE> 6
PORTFOLIO OF INVESTMENTS (CONTINUED)
June 30, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Discount
Par Yield on
Amount Maturity Date of Amortized
(000) Description Date Purchase Cost
- -----------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
7 DAY FLOATERS (CONTINUED)
$1,225 Virginia Small Business Fin Auth Rev Indl Dev
Coral Graphic (LOC: Chase Manhattan Bank)..... 07/02/98 3.700% $ 1,225,000
1,500 Washington St Hsg Fin Comm Multi-Family Mtg
Rev Rfdg (LOC: Harris Trust & Savings Bank)... 07/07/98 3.400 1,500,000
-----------
TOTAL 7 DAY FLOATERS.............................................. 13,695,000
-----------
COMMERCIAL PAPER 4.7%
1,500 Wayne Cnty, MI Downriver Swr Disp Sys Ser 1994 B
(LOC: Comerica Bank).......................... 09/19/98 3.550 1,500,000
-----------
BONDS/NOTES 20.2%
1,000 Albuquerque, NM Hosp Rev Series A (MBIA
Insd)......................................... 08/01/98 5.400 1,001,523
1,000 Chicago, IL Mandatory Tender Nts Ser 1997
(LOC: Morgan Guaranty)........................ 10/29/98 3.550 1,000,000
1,010 City of Ashdown, AR Indl Dev Rev Ser 1981
(Gtd: Allied Signal Corp.).................... 11/01/98 4.050 1,010,000
500 Cook Cnty, IL Cmnty Consolidated Sch Dist 021
Wheeling Ctfs Partn (AMBAC Insd).............. 12/01/98 5.050 502,565
1,000 Greater Texas Student Ln Corp Ser 1996 A Rfdg
(Gtd: Student Ln Marketing Assn.)............. 03/01/99 3.700 1,000,000
155 Maricopa Cnty, AZ Indl Dev Auth Multi-Family
Hsg Rev (FSA Insd)............................ 01/01/99 3.900 155,000
1,500 Texas St Tax and Rev Anticipation Nts Ser A... 08/31/98 4.750 1,502,270
300 Westchester Cnty, NY.......................... 11/15/98 4.600 301,106
-----------
TOTAL BONDS/NOTES................................................. 6,472,464
-----------
TOTAL INVESTMENTS 99.9% (A)............................................... 31,967,464
OTHER ASSETS IN EXCESS OF LIABILITIES 0.1%................................ 37,427
-----------
NET ASSETS 100.0%......................................................... $32,004,891
===========
</TABLE>
(a) At June 30, 1998, 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, 1998
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Investments, at Amortized Cost which Approximates Market.... $31,967,464
Cash........................................................ 56,861
Receivables:
Interest.................................................. 223,582
Fund Shares Sold.......................................... 35,349
Other....................................................... 24,435
-----------
Total Assets.......................................... 32,307,691
-----------
LIABILITIES:
Payables:
Distributor and Affiliates................................ 42,360
Fund Shares Repurchased................................... 28,692
Income Distributions...................................... 17,797
Trustees' Deferred Compensation and Retirement Plans........ 127,457
Accrued Expenses............................................ 86,494
-----------
Total Liabilities..................................... 302,800
-----------
NET ASSETS.................................................. $32,004,891
===========
NET ASSETS CONSIST OF:
Capital..................................................... $32,023,224
Accumulated Distributions in Excess of Net Investment
Income.................................................... (32)
Accumulated Net Realized Loss............................... (18,301)
-----------
NET ASSETS (Equivalent to $1.00 per share for 32,026,330
shares outstanding)....................................... $32,004,891
===========
</TABLE>
See Notes to Financial Statements
6
<PAGE> 8
STATEMENT OF OPERATIONS
For the Year Ended June 30, 1998
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest.................................................... $1,210,661
----------
EXPENSES:
Investment Advisory Fee..................................... 162,059
Distribution (12b-1) and Service Fees....................... 81,303
Shareholder Services........................................ 64,275
Registration................................................ 34,975
Shareholder Reports......................................... 29,200
Audit....................................................... 24,455
Trustees' Fees and Expenses................................. 20,955
Accounting.................................................. 20,198
Legal....................................................... 8,149
Custody..................................................... 2,221
Other....................................................... 8,333
----------
Total Expenses.......................................... 456,123
Less Fees Waived and Expenses Reimbursed ($162,059 and
$23,894, respectively)................................ 185,953
----------
Net Expenses............................................ 270,170
----------
NET INVESTMENT INCOME....................................... $ 940,491
==========
NET REALIZED GAIN........................................... $ 60
==========
NET INCREASE IN NET ASSETS FROM OPERATIONS.................. $ 940,551
==========
</TABLE>
See Notes to Financial Statements
7
<PAGE> 9
STATEMENT OF CHANGES IN NET ASSETS
For the Years Ended June 30, 1998 and 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended Year Ended
June 30, 1998 June 30, 1997
- -------------------------------------------------------------------------------------------
<S> <C> <C>
FROM INVESTMENT ACTIVITIES:
Operations:
Net Investment Income.................................... $ 940,491 $ 978,816
Net Realized Gain........................................ 60 3,111
------------ ------------
Change in Net Assets from Operations..................... 940,551 981,927
------------ ------------
Distributions from Net Investment Income................. (940,618) (978,689)
Distributions in Excess of Net Investment Income......... (32) 0
------------ ------------
Distributions from and in Excess of Net Investment
Income................................................. (940,650) (978,689)
------------ ------------
NET CHANGE IN NET ASSETS FROM INVESTMENT ACTIVITIES...... (99) 3,238
------------ ------------
FROM CAPITAL TRANSACTIONS:
Proceeds from Shares Sold................................ 112,337,824 94,162,306
Net Asset Value of Shares Issued Through Dividend
Reinvestment........................................... 940,650 978,689
Cost of Shares Repurchased............................... (114,337,910) (97,712,684)
------------ ------------
NET CHANGE IN NET ASSETS FROM CAPITAL TRANSACTIONS....... (1,059,436) (2,571,689)
------------ ------------
TOTAL DECREASE IN NET ASSETS............................. (1,059,535) (2,568,451)
NET ASSETS:
Beginning of the Period.................................. 33,064,426 35,632,877
------------ ------------
End of the Period (Including accumulated undistributed
net investment income of ($32) and $127,
respectively).......................................... $ 32,004,891 $ 33,064,426
============ ============
</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,
------------------------------------------
1998 1997 1996 1995 1994
- -------------------------------------------------------------------------------------------------
<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 .028 .029 .027 .017
Less Distributions from and in Excess of Net
Investment Income.................................. .029 .028 .029 .027 .017
----- ----- ----- ----- -----
Net Asset Value, End of Period....................... $1.00 $1.00 $1.00 $1.00 $1.00
===== ===== ===== ===== =====
Total Return*........................................ 2.93% 2.82% 2.93% 2.73% 1.70%
Net Assets at End of Period (In millions)............ $32.0 $33.1 $35.6 $33.2 $37.4
Ratio of Expenses to Average Net Assets*............. .83% .85% .85% .89% .81%
Ratio of Net Investment Income to Average Net
Assets*............................................ 2.89% 2.78% 2.89% 2.68% 1.69%
* If certain expenses had not been assumed by Van
Kampen, total return would have been lower and the
ratios would have been as follows:
Ratio of Expenses to Average Net Assets.............. 1.40% 1.45% 1.53% 1.38% 1.29%
Ratio of Net Investment Income to Average Net
Assets............................................. 2.32% 2.17% 2.21% 2.20% 1.20%
</TABLE>
See Notes to Financial Statements
9
<PAGE> 11
NOTES TO FINANCIAL STATEMENTS
June 30, 1998
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
Van Kampen Tax Free Money Fund, formerly known as 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, 1998, the Fund had an accumulated capital loss carryforward
for tax purposes of $18,301 which will expire between June 30, 1999 and June 30,
2001. Of this amount, $4,541 will expire in 1999. Net realized gains or losses
differ for financial reporting and tax purposes primarily as a result of post-
October losses which may not be recognized for tax purposes until the first day
of the following fiscal year.
10
<PAGE> 12
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
June 30, 1998
- --------------------------------------------------------------------------------
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. Due to
inherent differences in the recognition of income, expenses and realized
gains/losses under generally accepted accounting principles and for federal
income tax purposes, permanent book and tax differences related to the
expiration of $3,106 of the tax basis capital loss carryforward during 1998 have
been reclassified from accumulated net realized loss to capital.
For Federal income tax purposes, the following information is furnished with
respect to the distributions paid by the Fund during its taxable year ended
1998. The Fund designated 100% of the income distributions as a tax-exempt
income distribution.
2. INVESTMENT ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
Under the terms of the Fund's Investment Advisory Agreement, Van Kampen
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>
For the year ended June 30, 1998, the Fund recognized expenses of
approximately $900, representing legal services provided by Skadden, Arps,
Slate, Meagher & Flom (Illinois), counsel to the Fund, of which a trustee of the
Fund is an affiliated person.
For the year ended June 30, 1998, the Fund recognized expenses of
approximately $27,400 representing Van Kampen Funds Inc's. or its affiliates'
(collectively "Van Kampen") cost of providing accounting and legal services to
the Fund.
Van Kampen Investor Services Inc. ("VKIS"), an affiliate of the Adviser,
serves as the shareholder servicing agent for the Fund. For the year ended June
30, 1998, the Fund recognized expenses of approximately $45,000. Beginning in
1998, the transfer agency fees are determined through negotiations with the
Fund's Board of Trustees and are based on competitive market benchmarks.
Certain officers and trustees of the Fund are also officers and directors of
Van Kampen. The Fund does not compensate its officers or trustees who are
officers of Van Kampen.
11
<PAGE> 13
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
June 30, 1998
- --------------------------------------------------------------------------------
The Fund provides deferred compensation and retirement plans for its
trustees who are not officers of Van Kampen. Under the deferred compensation
plan, trustees may elect to defer all or a portion of their compensation to a
later date. Benefits under the retirement plan are payable for a ten-year period
and are based upon each trustee's years of service to the Fund. The maximum
annual benefit per trustee under the plan is $2,500.
3. CAPITAL TRANSACTIONS
The Fund is authorized to issue an unlimited number of shares of beneficial
interest with a par value of $.01 per share. At June 30, 1998 and June 30, 1997,
capital aggregated $32,023,224 and $33,085,766, respectively. Transactions in
shares were as follows:
<TABLE>
<CAPTION>
Year Ended Year Ended
June 30, 1998 June 30, 1997
- ----------------------------------------------------------------------------
<S> <C> <C>
Beginning Shares.......................... 33,085,766 35,657,455
----------- -----------
Shares Sold............................... 112,337,824 94,162,306
Shares Issued Through Dividend
Reinvestment............................ 940,650 978,689
Shares Repurchased........................ (114,337,910) (97,712,684)
----------- -----------
Net Change in Shares Outstanding.......... (1,059,436) (2,571,689)
----------- -----------
Ending Shares............................. 32,026,330 33,085,766
=========== ===========
</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, 1998, are
payments retained by Van Kampen of approximately $30,500.
12
<PAGE> 14
REPORT OF INDEPENDENT ACCOUNTANTS
The Board of Trustees and Shareholders of
Van Kampen Tax Free Money Fund:
We have audited the accompanying statement of assets and liabilities of Van
Kampen Tax Free Money Fund (the "Fund"), including the portfolio of investments,
as of June 30, 1998, 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, 1998, 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 Tax Free Money Fund as of June 30, 1998, 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, 1998
13
<PAGE> 15
VAN KAMPEN FUNDS
EQUITY FUNDS
Domestic
Aggressive Equity
Aggressive Growth
American Value
Comstock
Emerging Growth
Enterprise
Equity Growth
Equity Income
Growth
Growth and Income
Harbor
Pace
Real Estate Securities
U.S. Real Estate
Utility
Value
International/Global
Asian Growth
Emerging Markets
Global Equity
Global Equity Allocation
Global Managed Assets
International Magnum
Latin American
FIXED-INCOME FUNDS
Income
Corporate Bond
Global Fixed Income
Global Government Securities
Government Securities
High Income Corporate Bond
High Yield
High Yield & Total Return
Limited Maturity Government
Short-Term Global Income
Strategic Income
U.S. Government
U.S. Government Trust for Income
Worldwide High Income
Tax Exempt Income
California Insured Tax Free
Florida Insured Tax Free Income
High Yield Municipal
Insured Tax Free Income
Intermediate Term Municipal Income
Municipal Income
New York Tax Free Income
Pennsylvania Tax Free Income
Tax Free High Income
Capital Preservation and
Senior Loan Fund
Prime Rate Income Trust
Reserve
Senior Floating Rate
Tax Free Money
To find out more about any of these funds, ask your financial adviser for a
prospectus, which contains more complete information, including sales
charges, risks, and expenses. Please read it carefully before you invest or
send money.
To view a current Van Kampen fund prospectus or to receive additional fund
information, choose from one of the following:
- visit our web site at
WWW.VAN-KAMPEN.COM -- to view prospectuses, select Investors' Place, then
Download a Prospectus
- call us at 1-800-341-2911 weekdays from 7:00 a.m. to 7:00 p.m. Central time
(Telecommunications Device for the Deaf users, call 1-800-421-2833)
- e-mail us by visiting
WWW.VAN-KAMPEN.COM and selecting Investors' Place
14
<PAGE> 16
VAN KAMPEN TAX FREE MONEY FUND
BOARD OF TRUSTEES
J. MILES BRANAGAN
RICHARD M. DEMARTINI*
LINDA HUTTON HEAGY
R. CRAIG KENNEDY
JACK E. NELSON
DON G. POWELL*
PHILLIP B. ROONEY
FERNANDO SISTO
WAYNE W. WHALEN*- Chairman
OFFICERS
DENNIS J. MCDONNELL*
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
PETER W. HEGEL*
PAUL R. WOLKENBERG*
Vice Presidents
INVESTMENT ADVISER
VAN KAMPEN
INVESTMENT ADVISORY CORP.
One Parkview Plaza
Oakbrook Terrace, Illinois 60181
DISTRIBUTOR
VAN KAMPEN FUNDS INC.
One Parkview Plaza
Oakbrook Terrace, Illinois 60181
SHAREHOLDER SERVICING AGENT
VAN KAMPEN 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 (ILLINOIS)
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 Funds Inc., 1998.
All rights reserved.
(SM) denotes a service mark of
Van Kampen Funds 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. After December 31, 1998, the report, if used with
prospective investors, must be accompanied by a quarterly performance update.
15
<PAGE> 17
VAN KAMPEN TAX FREE MONEY FUND
THIS PAGE INTENTIONALLY LEFT BLANK
16
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<NAME> TAX FREE MONEY A
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-START> JUL-01-1998
<PERIOD-END> JUN-30-1998
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<DISTRIBUTIONS-OF-INCOME> (940,650)
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<NUMBER-OF-SHARES-SOLD> 112,337,824
<NUMBER-OF-SHARES-REDEEMED> (114,337,910)
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