<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 29, 1998
REGISTRATION NOS. 33-6745
811-4718
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SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM N-1A
<TABLE>
<CAPTION>
<S> <C>
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933 [X]
Post-Effective Amendment No. 16 [X]
and
REGISTRATION STATEMENT UNDER
THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 17 [X]
</TABLE>
VAN KAMPEN
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) (Zip Code)
(630) 684-6000
Registrant's Telephone Number, Including Area Code
RONALD A. NYBERG, ESQ.
Executive Vice President, General Counsel and Secretary
Van Kampen Investments 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 (Illinois)
333 West Wacker Drive
Chicago, Illinois 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:
[ ] IMMEDIATELY UPON FILING PURSUANT TO PARAGRAPH (B)
[X] ON SEPTEMBER 30, 1998 PURSUANT TO PARAGRAPH (B)
[ ] 60 DAYS AFTER FILING PURSUANT TO PARAGRAPH (A)(I)
[ ] ON (DATE) PURSUANT TO PARAGRAPH (A)(I)
[ ] 75 DAYS AFTER FILING PURSUANT TO PARAGRAPH (A)(II)
[ ] ON (DATE) PURSUANT TO PARAGRAPH (A)(II) OF RULE 485.
IF APPROPRIATE CHECK THE FOLLOWING BOX:
[ ] THIS POST-EFFECTIVE AMENDMENT DESIGNATES A NEW EFFECTIVE DATE FOR
A PREVIOUSLY FILED POST-EFFECTIVE AMENDMENT.
TITLE OF SECURITIES BEING REGISTERED: SHARES OF BENEFICIAL INTEREST, PAR
VALUE $0.01 PER SHARE.
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<PAGE> 2
VAN KAMPEN TAX FREE MONEY FUND
CROSS REFERENCE SHEET
(AS REQUIRED BY ITEM 501(B) OF REGULATION S-K)
<TABLE>
<CAPTION>
ITEM NUMBER OF LOCATION OR CAPTION
FORM N-1A -------------------
<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
Item 14. Management of the Fund.... Trustees and Officers
Item 15. Control Persons and
Principal Holders of
Securities................ Trustees and Officers
Item 16. Investment Advisory and
Other Services............ Contained in Prospectus under captions: PURCHASE OF
SHARES; INVESTMENT ADVISORY SERVICES; THE DISTRIBUTION AND
SERVICE PLANS; Trustees and Officers; Legal Counsel;
Investment Advisory and Other Services; Custodian and
Independent Accountants; The Distributor
</TABLE>
(i.)
<PAGE> 3
<TABLE>
<CAPTION>
ITEM NUMBER OF LOCATION OR CAPTION
FORM N-1A -------------------
<S> <C> <C>
Item 17. Brokerage Allocation and
Other Practices............. Portfolio Transactions and Brokerage Allocations
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. Calculation of Performance
Data........................ Yield Information; Dividends
Item 23. Financial Statements........ Contained in the Prospectus under caption: FINANCIAL
HIGHLIGHTS; Independent Accountants' Report; Financial
Statements; Notes to Financial Statements; Trustees and
Officers
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
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VAN KAMPEN TAX FREE MONEY FUND
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Van Kampen Tax Free Money Fund (the "Fund") is a diversified, open-end
management investment company, commonly known as a mutual fund. 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 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 Fund is managed by Van Kampen 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 sets forth certain information about the Fund that a
prospective investor should know before investing in the Fund. Please read it
carefully and retain it for future reference. The address of the Fund is One
Parkview Plaza, Oakbrook Terrace, Illinois 60181, and its telephone number is
(800) 341-2911.
------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE REGULATORS NOR HAS THE SECURITIES AND EXCHANGE
COMMISSION OR ANY STATE REGULATORS 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 30, 1998, containing
additional information about the Fund is hereby incorporated by reference in its
entirety into this Prospectus. A copy of the Fund's Statement of Additional
Information may be obtained without charge by calling (800) 341-2911 or for
Telecommunications Device for the Deaf at (800) 421-2833. The Statement of
Additional Information has been filed with the Securities and Exchange
Commission ("SEC") and is available along with other related materials at the
SEC's internet web site (http://www.sec.gov).
VAN KAMPEN FUNDS LOGO
THIS PROSPECTUS IS DATED SEPTEMBER 30, 1998.
<PAGE> 5
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TABLE OF CONTENTS
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<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Shareholder Transaction Expenses............................ 3
Annual Fund Operating Expenses and Example.................. 3
Financial Highlights........................................ 4
The Fund.................................................... 5
Investment Objective and Policies........................... 5
Investment Practices........................................ 6
Investment Advisory Services................................ 7
Purchase of Shares.......................................... 8
Shareholder Services........................................ 9
Redemption of Shares........................................ 12
Distribution and Service Plans.............................. 13
Distributions from the Fund................................. 14
Net Asset Value............................................. 14
Tax Status.................................................. 14
Description of Shares of the Fund........................... 15
Additional Information...................................... 16
</TABLE>
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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.
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2
<PAGE> 6
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SHAREHOLDER TRANSACTION EXPENSES
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<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 or redemption proceeds)............................. None
Redemption fees (as a percentage of amount redeemed)........ None
Exchange fees............................................... None
</TABLE>
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ANNUAL FUND OPERATING EXPENSES AND EXAMPLE
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Management Fees(1) (as a percentage of average daily net
assets
after fee waiver)......................................... 0.00%
12b-1 Fees(2) (as a percentage of average daily net
assets)................................................... 0.25%
Other Expenses(1) (as a percentage of average daily net
assets after expense reimbursement)....................... 0.58%
Total Expenses(1) (as a percentage of average daily net
assets
after fee waiver and expense reimbursement)............... 0.83%
</TABLE>
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(1) The expenses indicated above are based on the Fund's fiscal year ended June
30, 1998. "Management Fees," "Other Expenses" and "Total Expenses" indicated
above reflect a waiver of management fees and reimbursement of certain other
expenses by the Adviser. Without such waiver or reimbursement, "Management
Fees," "Other Expenses" and "Total Expenses" were 0.50%, 0.65% and 1.40%,
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. See "Distribution and Service Plans."
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 5.00% annual
return and an operating expense ratio of 0.83%. The Fund
does not charge a fee
for redemptions............................................. $8 $26 $46 $103
</TABLE>
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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 and is
included to provide a means for the investor to compare expense levels of funds
with different fee structures over varying investment periods. To facilitate
such comparison, all funds are required by the SEC to utilize a 5.00% annual
return assumption. 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 "Distribution and Service Plans."
3
<PAGE> 7
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FINANCIAL HIGHLIGHTS (for one share outstanding throughout the periods
indicated)
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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 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,
-------------------------------------------------------------------------------------------------
1998 1997 1996 1995 1994 1993 1992 1991 1990 1989
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of
Period....................... $1.00... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Net Investment Income........ 0.029.. 0.028 0.029 0.027 0.017 0.019 0.035 0.052 0.057 0.053
Less Distributions from and
in Excess of Net Investment
Income..................... (0.029) (0.028) (0.029) (0.027) (0.017) (0.019) (0.035) (0.052) (0.057) (0.053)
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Net Asset Value, End of
Period....................... $1.00... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======= ======= ======= ======= ======= ======= ======= ======= ======= =======
Total Return*................. 2.93%.. 2.82% 2.93% 2.73% 1.70% 1.93% 3.56% 5.29% 5.93% 5.50%
Net Assets at End of Period
(In millions)................ $32.0... $ 33.1 $ 35.6 $ 33.2 $ 37.4 $ 43.1 $ 70.8 $ 81.5 $ 59.8 $ 43.6
Ratio of Expenses to Average
Net Assets*.................. 0.83%.. 0.85% 0.85% 0.89% 0.81% 0.72% 0.57% 0.56% 0.55% 0.78%
Ratio of Net Investment Income
to Average Net Assets*....... 2.89%.. 2.78% 2.89% 2.68% 1.69% 1.92% 3.56% 5.01% 5.69% 5.34%
- ----------------
* If certain expenses had not been assumed by the Adviser, 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% .97% 1.18% 1.20% 1.25% 1.17%
Ratio of Net Investment
Income to Average Net
Assets........................ 2.32%.. 2.17% 2.21% 2.20% 1.20% 1.67% 2.96% 4.37% 4.98% 4.96%
</TABLE>
See Financial Statements and Notes Thereto.
------------------------------
The "current yield" of the Fund for the seven days ended June 30, 1998 was 2.81%
and its "compounded effective yield" for that period was 2.85%. The method of
calculating these yields is described in the Statement of Additional
Information.
4
<PAGE> 8
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THE FUND
- --------------------------------------------------------------------------------
Van Kampen Tax Free Money Fund (the "Fund") is a mutual fund. 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. The Fund is organized as a Delaware
business trust.
Van Kampen Investment Advisory Corp. (the "Adviser") provides investment
advisory and administrative services to the Fund. The Adviser and its affiliates
also act as investment adviser to other mutual funds distributed by Van Kampen
Funds 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.
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
5
<PAGE> 9
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 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.
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.
YEAR 2000 RISKS. Like other mutual funds, financial and business
organizations and individuals around the world, the Fund could be adversely
affected if the computer systems used by the Fund's Adviser and other service
providers do not properly process and calculate date-related information and
data from and after January 1, 2000. This is commonly known as the "Year 2000
Problem." The Adviser is taking steps that it believes are reasonably designed
to address the Year 2000 Problem with respect to computer systems that it uses
and to obtain reasonable assurances that comparable steps are being taken by the
Fund's other major service providers. At this time, there can be no assurance
that these steps will be sufficient to avoid any adverse impact to the Fund. In
addition, the Year 2000 Problem may adversely affect the issuers of securities
in which the Fund may invest which, in turn, may adversely affect the net asset
value of the Fund.
- --------------------------------------------------------------------------------
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. 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. The Fund's policy is to enter into these
transactions only with issuers, banks, or broker-dealers that are determined by
the Adviser to present 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.
6
<PAGE> 10
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 Investment Advisory Corp. (the "Adviser") is the
investment adviser for the Fund. The Adviser is a wholly-owned subsidiary of Van
Kampen Investments Inc. ("Van Kampen"). Van Kampen is a diversified asset
management company with more than two million retail investor accounts,
extensive capabilities for managing institutional portfolios, and more than $65
billion under management or supervision. Van Kampen's more than 50 open-end and
39 closed-end funds and more than 2,500 unit investment trusts are
professionally distributed by leading financial advisers nationwide. Van Kampen
Funds Inc., the distributor of the Fund and sponsor of the funds mentioned
above, is a wholly-owned subsidiary of Van Kampen. Van Kampen is an indirect
wholly-owned subsidiary of Morgan Stanley Dean Witter & Co. The Adviser's
principal office is located at One Parkview Plaza, Oakbrook Terrace, Illinois
60181.
Morgan Stanley Dean Witter & Co. and various of its directly or indirectly
owned subsidiaries, including Morgan Stanley Asset Management Inc., an
investment adviser, Morgan Stanley & Co. Incorporated, a registered
broker-dealer and investment adviser, and Morgan Stanley International are
engaged in a wide range of financial services. Their principal businesses
include securities underwriting, distribution and trading; merger, acquisition,
restructuring and other corporate finance advisory activities; merchant banking;
stock brokerage and research services; credit services; asset management;
trading of futures, options, foreign exchange, commodities and swaps (involving
foreign exchange, commodities, indices and interest rates); real estate advice,
financing and investing; and global custody, securities clearance services and
securities lending.
ADVISORY AGREEMENT. The business and affairs of the Fund are managed under the
direction of the Board of Trustees of the Fund. Subject to the Trustees'
authority, the Adviser and the officers of the Fund supervise and implement the
Fund's investment activities and are responsible for overall management of the
Fund's business affairs. The Fund pays the Adviser
7
<PAGE> 11
a fee (accrued daily and paid monthly) computed based on an annual rate applied
to 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>
Under its investment advisory agreement, the Fund has agreed to assume and pay
the charges and expenses of the Fund's operations, including the 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), the
charges and expenses of independent accountants, legal counsel, transfer agent
(Van Kampen Investor Services Inc. ("Investor Services"), a wholly-owned
subsidiary of Van Kampen) 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,
costs of reports and notices to shareholders, costs of registering shares of the
Fund under federal and state securities laws, miscellaneous expenses and all
taxes and fees to federal, state or other governmental agencies. The Adviser
reserves the right in its sole discretion from time to time to charge all or a
portion of its management fee or to reimburse the Fund for all or a portion of
its other expenses.
PERSONAL INVESTING POLICIES. 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
certain restrictions. Persons with access to certain sensitive information are
subject to preclearance and other procedures designed to prevent conflicts of
interest.
- --------------------------------------------------------------------------------
PURCHASE OF SHARES
- --------------------------------------------------------------------------------
Shares of the Fund are continuously offered through Van Kampen Funds 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:
INITIAL INVESTMENT BY BANK WIRE. To open an account by wire an investor should
telephone Investor Services at (800) 421-6714 and provide the account
registration, the address, tax identification number, the amount being wired and
the name of the wiring bank. Investor Services furnishes the investor with an
account number. The investor's bank should wire the specified amount along with
the account number and registration to the Fund's custodian: State Street Bank
and Trust Company ("State Street Bank"), 225 Franklin Street, Boston,
Massachusetts 02102, ABA-011000028, attention Van Kampen Investor Services
Inc./Van Kampen Fund Account No. 9900-446-7. The investor should then
immediately complete and mail the account application form accompanying this
Prospectus to Investor Services at Van Kampen Tax Free Money Fund, c/o Van
Kampen Investor Services Inc., P.O. Box 418256, Kansas City, MO 64141-9256. To
receive same day credit to an account, the investor must call Investor Services,
at the telephone number listed above, by 11:00 a.m. Kansas City time with the
intent to wire funds and State Street Bank must then receive such funds by 4:00
p.m. Boston time.
8
<PAGE> 12
INITIAL INVESTMENT BY MAIL. To open an account by mail an investor should send
a check payable to the Fund along with a completed account application form to
Investor Services at Van Kampen Tax Free Money Fund, c/o Van Kampen Investor
Services Inc., P.O. Box 418256, Kansas City, MO 64141-9256.
SUBSEQUENT INVESTMENTS BY BANK WIRE. The investor's bank should wire the
specified amount along with the account number and registration to State Street
Bank. To receive same day credit to an account, the investor must call Investor
Services at (800) 421-6714 by 11:00 a.m. Kansas City time with the intent to
wire funds and State Street Bank must then receive such funds by 4:00 p.m.
Boston time.
SUBSEQUENT INVESTMENTS BY MAIL. Subsequent investments in the amount of $25 or
more may be sent by mail to Investor Services, indicating the account
registration and account number.
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.
UNIT INVESTMENT 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 Investor
Services with appropriate backup data for each participating investor in a
computerized format fully compatible with Investor Services' 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 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.
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. 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.
Account statements are prepared and mailed to you monthly, quarterly in the
case of a participant in a "Unit Investment 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. The
following 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 certain open-end
investment companies advised by the Adviser or Van Kampen Asset Management Inc.
and distributed by the Distributor as determined from time to time by the Fund's
Board of Trustees.
INVESTMENT ACCOUNT. Investor Services, transfer agent for the Fund and a
wholly-owned subsidiary of Van Kampen, performs bookkeeping, data processing and
administration services relative to the maintenance of shareholder accounts.
Each shareholder has an investment account under which the investor's shares of
the Fund are held by Investor Services. Except as described in this Prospectus,
after each share transaction in an account, the shareholder receives a statement
showing the activity in the account. Each shareholder who has an account in any
of the Participating Funds will receive statements at least quarterly from
Investor Services 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
9
<PAGE> 13
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 Investor Services.
AUTOMATIC INVESTMENT PLAN. An automatic investment plan is available under
which a shareholder can authorize Investor Services 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.
DIVIDEND DIVERSIFICATION. A shareholder may, upon written request or by
completing the appropriate section of the application form accompanying this
Prospectus or by calling (800) 341-2911 (or (800) 421-2833 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 shares without a sales charge of the Van Kampen
Reserve Fund (the "Reserve Fund"), so long as the investor has a pre-existing
account for such class of shares of the other fund. Both accounts must be of the
same type, either non-retirement or retirement. If the accounts are retirement
accounts, they must both be for the same class and of the same type of
retirement plan (e.g. IRA, 403 (b)(7), 401(k) or Keogh) and for the benefit of
the same individual. 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.
EXCHANGE PRIVILEGE. Shares of the Fund may be exchanged for shares sold
subject to an initial sales charge of any other Participating Fund or for shares
without a sales charge of the Reserve Fund subject to certain limitations herein
or in such other fund's prospectus. Shares of the Fund are exchanged for shares
of the Participating Fund or the Reserve Fund based on the next computed net
asset value per share of each fund after requesting the exchange. Shares of the
Fund may be exchanged for shares of any Participating Fund or the Reserve Fund
only if shares of such fund are available for sale; however, during periods of
suspensions of sales, shares of a Participating Fund or the Reserve Fund may be
available for sale only to existing shareholders of such fund. Shareholders
seeking an exchange with a Participating Fund or the Reserve Fund should obtain
and read the current prospectus for such fund.
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 a Participating
Fund. Exchanges of shares of the Fund that previously have been charged a sales
charge lower than the sales charge applicable to the Participating Fund will
also have the sales charge differential imposed upon the exchange into such
fund.
To be eligible for exchange, shares of the Fund must have been registered in
the shareholder's name for at least 30 days. Shares of the Fund registered in a
shareholder's name for less than 30 days may be exchanged only upon receipt of
prior approval of the Adviser. It is the policy of the Adviser, under normal
circumstances, not to approve such requests.
Exchanges of shares are sales and may result in a gain or loss for federal
income tax purposes.
A shareholder wishing to make an exchange may do so by sending a written
request to Investor Services or by contacting the telephone transaction line at
(800) 421-5684 (or (800) 421-2833 for the hearing impaired). A shareholder
automatically has telephone exchange privileges unless otherwise designated in
the application form accompanying this Prospectus. Van Kampen and its
subsidiaries, including Investor Services (collectively, "VK"), 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, neither VK nor the Fund will be liable for following
telephone instructions which it reasonably believes to be genuine. VK 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 reinvest dividends from the
new account into another Fund, 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 modify, restrict or terminate
the exchange privilege at any time on 60 days' notice to its shareholders of any
termination or material amendment.
10
<PAGE> 14
A prospectus of any of these mutual funds may be obtained from any broker,
dealer or financial intermediary or the Distributor. An investor considering an
exchange to one of such funds should refer to the prospectus for additional
information regarding such fund prior to investing.
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. Any investor whose shares in a single account total $5,000 or
more at the offering price next computed after receipt of instructions may
establish a 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 per share. 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 Investor
Services 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 application to Investor Services. 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 Investor Services at the next determined net asset
value per share. 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 ACH. 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 Investor Services 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 Investor Services.
INTERNET TRANSACTIONS. In addition to performing transactions on your account
through written instruction or by telephone, you may also perform certain
transactions through the internet. Please refer to our web site at
www.van-kampen.com for further instruction. VK and the Fund employ procedures
considered by them to be reasonable to confirm that instructions communicated
through the internet are genuine. Such procedures include requiring use of a
personal identification number prior to acting upon internet instructions and
providing written confirmation of instructions communicated through the
internet. If reasonable procedures are employed neither VK nor the Fund will be
liable for following instructions through the internet which it reasonably
believes to be genuine. If an account has multiple owners, Investor Services may
rely on the instructions of any one owner.
11
<PAGE> 15
- --------------------------------------------------------------------------------
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 Van
Kampen Investor Services Inc., 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 Investor Services, the redemption request should indicate the number of
shares to be redeemed, the account number and be signed exactly as the shares
are registered. 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 120 days must accompany the redemption
request. The redemption price is the net asset value per share next determined
after the request is received by Investor Services in proper form. Payment for
shares redeemed will ordinarily be made by check mailed within three business
days after acceptance by Investor Services of the request and any other
necessary documents in proper order.
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 per share
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 accompanying this Prospectus or call the Fund at (800) 341-2911 (or
(800) 421-2833 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. VK 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,
neither VK nor the Fund will be liable for following instructions which it
reasonably believes to be genuine. VK 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 Investor Services 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
Investor Services 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 Investor Services 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 an
account has multiple owners, Investor Services 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 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. The proceeds must be payable to the shareholder(s) of record and sent
to the address of record or directly to their predesignated bank account. This
privilege is not available if the address of record has been changed within 30
days prior
12
<PAGE> 16
to a telephone redemption request. 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 on the next business day following the date of redemption to the
shareholder's bank account of record. This service is also not available with
respect to shares held in an individual retirement account (IRA) for which Van
Kampen Trust Company acts as custodian. 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 initial investment as specified in this Prospectus. At least 60 days
advance written notice of any such involuntary redemption will be given and the
shareholder will be given an opportunity to purchase the required value of
additional shares at the next determined net asset value per share without sales
charge. Any involuntary redemption may only occur if the shareholder account is
less than the minimum initial investment due to shareholder redemptions.
- --------------------------------------------------------------------------------
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
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.
13
<PAGE> 17
- --------------------------------------------------------------------------------
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 per share 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 elected and qualified, and intends to continue to qualify each
year, to be treated 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 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 31st of each year, at least an amount equal to the sum of (i) 98% of
its ordinary income (not including tax-exempt income) for such year and (ii) 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 31st of such year), together with
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). The Fund will designate
exempt-interest dividends in a written notice mailed to shareholders not later
than 60 days after the close of its taxable year. 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.
14
<PAGE> 18
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). See the discussion
below for a summary of the tax rates applicable to capital gains. 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 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 to certain "related persons" of such
substantial users.
Redemption or sale 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 or
sold shares of the Fund and the amount received. The gain or loss will be a
capital gain or loss if the shares are held as a capital asset. See the
discussion below for a summary of the tax rates applicable to capital gains. 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.
The maximum tax rate applicable to net capital gains recognized by individuals
and other noncorporate taxpayers is (i) the same as the maximum ordinary income
rate for capital assets held for one year or less or (ii) 20% for capital assets
held for more than one year. A special 28% tax rate may apply to a portion of
the capital gain dividends paid by the Fund with respect to its taxable year
ended June 30, 1998.
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 31st 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. Foreign shareholders, including shareholders who are
non-resident aliens, may be subject to United States withholding tax on certain
distributions (whether received in cash or in shares) at a rate of 30% on such
lower rate as prescribed by an applicable treaty.
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 purchasing, 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.
On July 14, 1998, the Trust adopted its current name. The Fund is registered
under the 1940 Act as an open-end, diversified management investment company.
The Fund's Declaration of Trust
15
<PAGE> 19
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, par
value $0.01 per share. Each share represents an equal proportionate interest in
the assets of the Fund.
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.
The Trust's Declaration of Trust provides that no Trustee, officer or
shareholder of the Fund shall be held to any personal liability, nor shall
resort be had to his or her private property for the satisfaction of any
obligation or liability of the Fund but the assets of the Fund only shall be
liable.
- --------------------------------------------------------------------------------
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 fiscal year end of the Fund is 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 accountants, 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.
16
<PAGE> 20
EXISTING SHAREHOLDERS--
FOR INFORMATION ON YOUR
EXISTING ACCOUNT PLEASE CALL
THE FUND'S TOLL-FREE
NUMBER--(800) 341-2911.
PROSPECTIVE INVESTORS--CALL
YOUR BROKER OR (800) 341-2911.
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 1-800-421-2833.
FOR AUTOMATED TELEPHONE
SERVICES DIAL (800) 847-2424.
VAN KAMPEN TAX FREE
MONEY FUND
One Parkview Plaza
Oakbrook Terrace, IL 60181
Investment Adviser
VAN KAMPEN INVESTMENT
ADVISORY CORP.
One Parkview Plaza
Oakbrook Terrace, IL 60181
Distributor
VAN KAMPEN FUNDS INC.
One Parkview Plaza
Oakbrook Terrace, IL 60181
Transfer Agent
VAN KAMPEN INVESTOR
SERVICES INC.
P.O. Box 418256
Kansas City, MO 64141-9256
Attn: Van Kampen Tax Free
Money Fund
Custodian
STATE STREET BANK AND
TRUST COMPANY
225 West Franklin Street, P.O. Box 1912
Boston, MA 02105
Attn: Van Kampen Tax Free
Money Fund
Legal Counsel
SKADDEN, ARPS, SLATE,
MEAGHER & FLOM (ILLINOIS)
333 West Wacker Drive
Chicago, IL 60606
Independent Accountants
KPMG PEAT MARWICK LLP
Peat Marwick Plaza
303 East Wacker Drive
Chicago, IL 60601
<PAGE> 21
- --------------------------------------------------------------------------------
TAX FREE
MONEY FUND
- --------------------------------------------------------------------------------
P R O S P E C T U S
SEPTEMBER 30, 1998
VAN KAMPEN FUNDS LOGO
TFMM PRO 9/98
<PAGE> 22
STATEMENT OF ADDITIONAL INFORMATION
VAN KAMPEN TAX FREE MONEY FUND
Van Kampen Tax Free Money Fund (the "Fund") seeks 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 is no assurance that the Fund will achieve its investment objective.
This Statement of Additional Information is not a prospectus but should be
read in conjunction with the current Prospectus for the Fund dated the date
hereof (the "Prospectus"). This Statement of Additional Information does not
include all the 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 writing the Fund at Van Kampen Funds Inc., One Parkview Plaza,
Oakbrook Terrace, Illinois 60181 or calling the Fund at (800) 341-2911 ((800)
421-2833 for the hearing impaired). 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
Trustees and Officers....................................... B-4
Legal Counsel............................................... B-11
Transfer Agency............................................. B-11
Investment Advisory and Other Services...................... B-12
Custodian and Independent Accountants....................... B-13
Portfolio Transactions and Brokerage Allocation............. B-13
Tax Status of the Fund...................................... B-13
The Distributor............................................. B-13
Distribution and Service Plans.............................. B-14
Yield Information........................................... B-14
Dividends................................................... B-15
Appendix.................................................... B-16
Report of Independent Accountants........................... B-18
Financial Statements........................................ B-19
Notes to Financial Statements............................... B-25
</TABLE>
THIS STATEMENT OF ADDITIONAL INFORMATION IS DATED SEPTEMBER 30, 1998.
<PAGE> 23
THE FUND AND THE TRUST
Van Kampen Tax Free Money Fund (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 under the
name Van Kampen American Capital Tax Free Money Fund as a Delaware business
trust as of July 31, 1995. On July 14, 1998, the Trust adopted its current name.
The Fund can issue an unlimited number of shares of beneficial interest, par
value $0.01 per share.
Van Kampen Investment Advisory Corp. (the "Adviser"), Van Kampen Funds Inc.
(the "Distributor") and Van Kampen Investor Services Inc. ("Investor Services")
are wholly-owned subsidiaries of Van Kampen Investments Inc. ("Van Kampen"),
which is an indirect wholly-owned subsidiary of Morgan Stanley Dean Witter & Co.
The principal office of the Fund, the Adviser, the Distributor and Van Kampen is
located at One Parkview Plaza, Oakbrook Terrace, Illinois 60181.
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. Except as described in the Prospectus, 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 Fund will assist such holders in communicating with other
shareholders of the Fund to the extent required by the Investment Company Act of
1940, as amended (the "1940 Act").
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 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 a 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 that will mature within 12 months of the date of purchase. The Fund
generally will invest only in the municipal securities denominated in U.S.
dollars and all of the Fund's investments 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 and except that the
Fund may purchase securities of other investment companies without regard
to such limitation to the extent permitted by
B-2
<PAGE> 24
(i) the 1940 Act, as amended from time to time, (ii) the rules and
regulations promulgated by the SEC under the 1940 Act, as amended from
time to time, or (iii) an exemption or other relief from the provisions of
the 1940 Act.
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
except that the Fund may purchase securities of other investment companies
to the extent permitted by (i) the 1940 Act, as amended from time to time,
(ii) the rules and regulations promulgated by the SEC under the 1940 Act,
as amended from time to time, or (iii) an exemption or other relief from
the provisions of the 1940 Act.
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 except that the Fund may
purchase securities of other investment companies to the extent permitted
by (i) the 1940 Act, as amended from time to time, (ii) the rules and
regulations promulgated by the SEC under the 1940 Act, as amended from
time to time, or (iii) an exemption or other relief from the provisions of
the 1940 Act.
6. Investment in securities issued by other investment companies except as
part of a merger, reorganization or other acquisition and extent permitted
by (i) the 1940 Act, as amended from time to time, (ii) the rules and
regulations promulgated by the SEC under the 1940 Act, as amended from
time to time, or (iii) an exemption or other relief from the provisions of
the 1940 Act.
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. It is currently the operating policy of the Fund to limit the
purchase of illiquid securities to 10% of its net assets. 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.
B-3
<PAGE> 25
TRUSTEES AND OFFICERS
The tables below list the trustees and officers of the Fund and executive
officers of the Fund's investment adviser and their principal occupations for
the last five years and their affiliations, if any, with Van Kampen Investments
Inc ("Van Kampen"), Van Kampen Investment Advisory Corp. ("Advisory Corp."), Van
Kampen Asset Management Inc. ("Asset Management"), Van Kampen Funds Inc., the
distributor of the Fund's shares (the "Distributor"), Van Kampen Management
Inc., Van Kampen Advisors Corp., Van Kampen Insurance Agency of Illinois Inc.,
Van Kampen Insurance Agency of Texas Inc., Van Kampen System Inc., Van Kampen
Recordkeeping Services Inc., American Capital Contractual Services, Inc., Van
Kampen Trust Company, Van Kampen Exchange Corp. and Van Kampen Investor Services
Inc., the Fund's transfer agent ("Investor Services"). Advisory Corp. and Asset
Management sometimes are referred to herein collectively as the "Advisers". For
purposes hereof, the term "Fund Complex" includes each of the open-end
investment companies advised by the Advisers (excluding the Van Kampen American
Capital Exchange Fund).
TRUSTEES
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATIONS OR
NAME, ADDRESS AND AGE EMPLOYMENT IN PAST 5 YEARS
--------------------- --------------------------
<S> <C>
J. Miles Branagan......................... Private investor. Co-founder, and prior to August 1996,
1632 Morning Mountain Road Chairman, Chief Executive Officer and President, MDT
Raleigh, NC 27614 Corporation (now known as Getinge/Castle, Inc., a
Date of Birth: 07/14/32 subsidiary of Getinge Industrier AB), a company which
develops, manufactures, markets and services medical and
scientific equipment. Trustee/Director of each of the
funds in the Fund Complex.
Richard M. DeMartini*..................... President and Chief Operating Officer, Individual Asset
Two World Trade Center Management Group, a division of Morgan Stanley Dean
66th Floor Witter & Co. Mr. DeMartini is a Director of InterCapital
New York, NY 10048 Funds, Dean Witter Distributors, Inc. and Dean Witter
Date of Birth: 10/12/52 Trust Company. Trustee of the TCW/DW Funds. Director of
the National Healthcare Resources, Inc. Formerly Vice
Chairman of the Board of the National Association of
Securities Dealers, Inc. and Chairman of the Board of the
Nasdaq Stock Market, Inc. Trustee/Director of each of the
funds in the Fund Complex.
Linda Hutton Heagy........................ Managing Partner of Heidrick & Stuggles, an executive
Sears Tower search firm. Prior to 1997, Partner, Ray & Berndtson,
233 South Wacker Drive Inc., an executive recruiting and management consulting
Suite 7000 firm. Formerly, Executive Vice President of ABN AMRO,
Chicago, IL 60606 N.A., a Dutch bank holding company. Prior to 1992,
Date of Birth: 06/03/48 Executive Vice President of La Salle National Bank.
Trustee on the University of Chicago Hospitals Board, The
International House Board and the Women's Board of the
University of Chicago. Trustee/Director of each of the
funds in the Fund Complex.
R. Craig Kennedy.......................... President and Director, German Marshall Fund of the
11 DuPont Circle, N.W. United States. Formerly, advisor to the Dennis Trading
Washington, D.C. 20036 Group Inc. Prior to 1992, President and Chief Executive
Date of Birth: 02/29/52 Officer, Director and Member of the Investment Committee
of the Joyce Foundation, a private foundation.
Trustee/Director of each of the funds in the Fund
Complex.
</TABLE>
B-4
<PAGE> 26
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATIONS OR
NAME, ADDRESS AND AGE EMPLOYMENT IN PAST 5 YEARS
--------------------- --------------------------
<S> <C>
Jack E. Nelson............................ President, Nelson Investment Planning Services, Inc., a
423 Country Club Drive financial planning company and registered investment
Winter Park, FL 32789 adviser. President, Nelson Ivest Brokerage Services Inc.,
Date of Birth: 02/13/36 a member of the National Association of Securities
Dealers, Inc. ("NASD") and Securities Investors
Protection Corp. ("SIPC"). Trustee/Director of each of
the funds in the Fund Complex.
Don G. Powell*............................ Chairman and a Director of Van Kampen. Chairman and a
2800 Post Oak Blvd. Director of the Advisers and the Distributor. Chairman
Houston, TX 77056 and a Director of Investor Services. Director or officer
Date of Birth: 10/19/39 of certain other subsidiaries of Van Kampen. Chairman of
the Board of Governors and the Executive Committee of the
Investment Company Institute. Prior to July of 1998,
Director and Chairman of VK/AC Holding, Inc. Prior to
November 1996, President, Chief Executive Officer and a
Director of VK/AC Holding, Inc. Trustee/Director of each
of the funds in the Fund Complex and Trustee of other
funds advised by the Advisers or Van Kampen Management
Inc.
Phillip B. Rooney......................... Vice Chairman and Director of The ServiceMaster Company,
One ServiceMaster Way a business and consumer services company. Director of
Downers Grove, IL 60515 Illinois Tool Works, Inc., a manufacturing company; the
Date of Birth: 07/08/44 Urban Shopping Centers Inc., a retail mall management
company; and Stone Container Corp., a paper manufacturing
company. Trustee, University of Notre Dame. Formerly,
President and Chief Executive Officer, Waste Management,
Inc., an environmental services company, and prior to
that President and Chief Operating Officer, Waste
Management, Inc. Trustee/Director of each of the funds in
the Fund Complex.
Fernando Sisto............................ Professor Emeritus and, prior to 1995, Dean of the
155 Hickory Lane Graduate School, Stevens Institute of Technology.
Closter, NJ 07624 Director, Dynalysis of Princeton, a firm engaged in
Date of Birth: 08/02/24 engineering research. Trustee/Director of each of the
funds in the Fund Complex.
Wayne W. Whalen*.......................... Partner in the law firm of Skadden, Arps, Slate, Meagher
333 West Wacker Drive & Flom (Illinois), legal counsel to the funds in the Fund
Chicago, IL 60606 Complex, and other open-end and closed-end funds advised
Date of Birth: 08/22/39 by the Advisers or Van Kampen Management Inc.
Trustee/Director of each of the funds in the Fund
Complex, and Trustee/Managing General Partner of other
open-end and closed-end funds advised by the Advisers or
Van Kampen Management Inc.
</TABLE>
- ---------------
* Such trustee is an "interested person" (within the meaning of Section 2(a)(19)
of the 1940 Act). Mr. Whalen is an interested person of the Fund by reason of
his firm currently acting as legal counsel to the Fund. Messrs. DeMartini and
Powell are interested persons of the Fund and the Advisers by reason of their
positions with Morgan Stanley Dean Witter & Co. or its affiliates.
B-5
<PAGE> 27
OFFICERS
Messrs. McDonnell, Hegel, Nyberg, Wood, Sullivan, Dalmaso, Martin, Wetherell
and Hill are located at One Parkview Plaza, Oakbrook Terrace, IL 60181. The
Fund's other officers are located at 2800 Post Oak Blvd., Houston, TX 77056.
<TABLE>
<CAPTION>
NAME, AGE, POSITIONS AND PRINCIPAL OCCUPATIONS
OFFICES WITH FUND DURING PAST 5 YEARS
------------------------ ---------------------
<S> <C>
Dennis J. McDonnell.................. Executive Vice President and a Director of Van Kampen.
Date of Birth: 05/20/42 President, Chief Operating Officer and a Director of the
President Advisers, Van Kampen Advisors Inc., and Van Kampen
Management Inc. Prior to July of 1998, Director and
Executive Vice President of VK/AC Holding, Inc. Prior to
April of 1998, President and a Director of Van Kampen
Merritt Equity Advisors Corp. Prior to April of 1997, Mr.
McDonnell was a Director of Van Kampen Merritt Equity
Holdings Corp. Prior to September of 1996, Mr. McDonnell was
Chief Executive Officer and Director of MCM Group, Inc.,
McCarthy, Crisanti & Maffei, Inc. and Chairman and Director
of MCM Asia Pacific Company, Limited and MCM (Europe)
Limited. Prior to July of 1996, Mr. McDonnell was President,
Chief Operating Officer and Trustee of VSM Inc. and VCJ Inc.
President of each of the funds in the Fund Complex.
President, Chairman of the Board and Trustee/Managing
General Partner of other investment companies advised by the
Advisers or their affiliates.
Peter W. Hegel....................... Executive Vice President of the Advisers, Van Kampen
Date of Birth: 06/25/56 Management Inc. and Van Kampen Advisors Inc. Prior to July
Vice President of 1996, Mr. Hegel was a Director of VSM Inc. Prior to
September of 1996, he was a Director of McCarthy, Crisanti &
Maffei, Inc. Vice President of each of the funds in the Fund
Complex and certain other investment companies advised by
the Advisers or their affiliates.
Curtis W. Morell..................... Senior Vice President of the Advisers, Vice President and
Date of Birth: 08/04/46 Chief Accounting Officer of each of the funds in the Fund
Vice President and Chief Accounting Complex and certain other investment companies advised by
Officer the Advisers or their affiliates.
</TABLE>
B-6
<PAGE> 28
<TABLE>
<CAPTION>
NAME, AGE, POSITIONS AND PRINCIPAL OCCUPATIONS
OFFICES WITH FUND DURING PAST 5 YEARS
------------------------ ---------------------
<S> <C>
Ronald A. Nyberg..................... Executive Vice President, General Counsel, Secretary and
Date of Birth: 07/29/53 Director of Van Kampen. Mr. Nyberg is Executive Vice
Vice President and Secretary President, General Counsel, Assistant Secretary and a
Director of the Advisers and the Distributor, Van Kampen
Advisors Inc., Van Kampen Management Inc., Van Kampen
Exchange Corp., American Capital Contractual Services, Inc.
and Van Kampen Trust Company. Executive Vice President,
General Counsel and Assistant Secretary of Investor
Services. Director or officer of certain other subsidiaries
of Van Kampen. Director of ICI Mutual Insurance Co., a
provider of insurance to members of the Investment Company
Institute. Prior to July of 1998, Director and Executive
Vice President, General Counsel and Secretary of VK/AC
Holding, Inc. Prior to April of 1998, Executive Vice
President, General Counsel and Director of Van Kampen
Merritt Equity Advisors Corp. Prior to April of 1997, he was
Executive Vice President, General Counsel and a Director of
Van Kampen Merritt Equity Holdings Corp. Prior to September
of 1996, he was General Counsel of McCarthy, Crisanti &
Maffei, Inc. Prior to July of 1996, Mr. Nyberg was Executive
Vice President and General Counsel of VSM Inc. and Executive
Vice President and General Counsel of VCJ Inc. Vice
President and Secretary of each of the funds in the Fund
Complex and certain other investment companies advised by
the Advisers or their affiliates.
Paul R. Wolkenberg................... Executive Vice President and Director of Van Kampen.
Date of Birth: 11/10/44 Executive Vice President of the AC Adviser and the
Vice President Distributor. President and a Director of Investor Services.
President and Chief Operating Officer of Van Kampen
Recordkeeping Services, Inc. Prior to July of 1998, Director
and Executive Vice President of VK/AC Holding, Inc. Vice
President of each of the funds in the Fund Complex and
certain other investment companies advised by the Advisers
or their affiliates.
Edward C. Wood III................... Senior Vice President of the Advisers, Van Kampen and Van
Date of Birth: 01/11/56 Kampen Management Inc. Senior Vice President and Chief
Vice President and Chief Financial Operating Officer of the Distributor. Vice President and
Officer Chief Financial Officer of each of the funds in the Fund
Complex and certain other investment companies advised by
the Advisers or their affiliates.
John L. Sullivan..................... First Vice President of Van Kampen and the Advisers.
Date of Birth: 08/20/55 Treasurer of each of the funds in the Fund Complex and
Treasurer certain other investment companies advised by the Advisers
or their affiliates.
Tanya M. Loden....................... Vice President of Van Kampen and the Advisers. Controller of
Date of Birth: 11/19/59 each of the funds in the Fund Complex and other investment
Controller companies advised by the Advisers or their affiliates.
Nicholas Dalmaso..................... Associate General Counsel and Assistant Secretary of Van
Date of Birth: 03/01/65 Kampen. Vice President, Associate General Counsel and
Assistant Secretary Assistant Secretary of the Advisers, the Distributor, Van
Kampen Advisors Inc. and Van Kampen Management Inc.
Assistant Secretary of each of the funds in the Fund Complex
and other investment companies advised by the Advisers or
their affiliates.
</TABLE>
B-7
<PAGE> 29
<TABLE>
<CAPTION>
NAME, AGE, POSITIONS AND PRINCIPAL OCCUPATIONS
OFFICES WITH FUND DURING PAST 5 YEARS
------------------------ ---------------------
<S> <C>
Huey P. Falgout, Jr.................. Vice President, Assistant Secretary and Senior Attorney of
Date of Birth: 11/15/63 Van Kampen. Vice President, Assistant Secretary and Senior
Assistant Secretary Attorney of the Advisers, the Distributor, Investor
Services, Van Kampen Management Inc., American Capital
Contractual Services, Inc., Van Kampen Exchange Corp. and
Van Kampen Advisors Inc. Assistant Secretary of each of the
funds in the Fund Complex and other investment companies
advised by the Advisers or their affiliates.
Scott E. Martin...................... Senior Vice President, Deputy General Counsel and Assistant
Date of Birth: 08/20/56 Secretary of Van Kampen. Senior Vice President, Deputy
Assistant Secretary General Counsel and Secretary of the Advisers, the
Distributor, Investor Services, American Capital Contractual
Services, Inc., Van Kampen Management Inc., Van Kampen
Exchange Corp., Van Kampen Advisors Inc., Van Kampen
Insurance Agency of Illinois Inc., Van Kampen System Inc.
and Van Kampen Recordkeeping Services Inc. Prior to July of
1998, Senior Vice President, Deputy General Counsel and
Assistant Secretary of VK/AC Holding, Inc. Prior to April of
1998, Van Kampen Merritt Equity Advisors Corp. Prior to
April of 1997, Senior Vice President, Deputy General Counsel
and Secretary of Van Kampen American Capital Services, Inc.
and Van Kampen Merritt Holdings Corp. Prior to September of
1996, Mr. Martin was Deputy General Counsel and Secretary of
McCarthy, Crisanti & Maffei, Inc., and prior to July of
1996, he was Senior Vice President, Deputy General Counsel
and Secretary of VSM Inc. and VCJ Inc. Assistant Secretary
of each of the funds in the Fund Complex and other
investment companies advised by the Advisers or their
affiliates.
Weston B. Wetherell.................. Vice President, Associate General Counsel and Assistant
Date of Birth: 06/15/56 Secretary of Van Kampen, the Advisers, the Distributor, Van
Assistant Secretary Kampen Management Inc. and Van Kampen Advisors Inc. Prior to
September of 1996, Mr. Wetherell was Assistant Secretary of
McCarthy, Crisanti & Maffei, Inc. Assistant Secretary of
each of the funds in the Fund Complex and other investment
companies advised by the Advisers or their affiliates.
Steven M. Hill....................... Vice President of Van Kampen and the Advisers. Assistant
Date of Birth: 10/16/64 Treasurer of each of the funds in the Fund Complex and other
Assistant Treasurer investment companies advised by the Advisers or their
affiliates.
Michael Robert Sullivan.............. Assistant Vice President of the Advisers. Assistant
Date of Birth: 03/30/33 Controller of each of the funds in the Fund Complex and
Assistant Controller other investment companies advised by the Advisers or their
affiliates.
</TABLE>
Each trustee/director holds the same position with each of the funds in the
Fund Complex. As of the date of this Statement of Additional Information, there
are 64 operating funds in the Fund Complex. For purposes of the following
compensation and benefits discussion, the Fund Complex is divided into the
following three groups: the funds advised by Asset Management (the "AC Funds"),
the funds advised by Advisory Corp. excluding funds organized as series of the
Van Kampen Series Fund, Inc. (the "VK Funds") and the funds advised by Advisory
Corp. organized as series of the Van Kampen Series Fund, Inc. (the "MS Funds").
Each trustee/director who is not an affiliated person of the Advisers, the
Distributor, Van Kampen or Morgan Stanley Dean Witter & Co. (each a
"Non-Affiliated Trustee") is compensated by an annual retainer and meeting fees
for services to the funds in the Fund Complex. Each fund in the Fund Complex
(except the money market series of the MS Funds) provides a deferred
compensation plan to its Non-Affiliated Trustees that allows trustees/directors
to defer receipt of their compensation and earn a return on such deferred
amounts. Deferring compensation has the economic effect as if the Non-Affiliated
Trustee reinvested his or
B-8
<PAGE> 30
her compensation into the funds. Each fund in the Fund Complex (except the money
market series of the MS Funds) provides a retirement plan to its Non-Affiliated
Trustees that provides Non-Affiliated Trustees with compensation after
retirement, provided that certain eligibility requirements are met as more fully
described below.
The trustees recently reviewed and adopted a standardized compensation and
benefits program for each fund in the Fund Complex. Effective January 1, 1998,
the compensation of each Non-Affiliated Trustee includes an annual retainer in
an amount equal to $50,000 per calendar year, due in four quarterly installments
on the first business day of each quarter. Payment of the annual retainer is
allocated among the funds in the Fund Complex (except the money market series of
the MS Funds) on the basis of the relative net assets of each fund as of the
last business day of the preceding calendar quarter. Effective January 1, 1998,
the compensation of each Non-Affiliated Trustee includes a per meeting fee from
each fund in the Fund Complex (except the money market series of the MS Funds)
in the amount of $200 per quarterly or special meeting attended by the
Non-Affiliated Trustee, due on the date of the meeting, plus reasonable expenses
incurred by the Non-Affiliated Trustee in connection with his or her services as
a trustee, provided that no compensation will be paid in connection with certain
telephonic special meetings.
For each AC Fund's last fiscal year and the period up to and including
December 31, 1997, the compensation of each Non-Affiliated Trustee from the AC
Funds includes an annual retainer in an amount equal to $35,000 per calendar
year, due in four quarterly installments on the first business day of each
calendar quarter. The AC Funds pay each Non-Affiliated Trustee a per meeting fee
in the amount of $2,000 per regular quarterly meeting attended by the
Non-Affiliated Trustee, due on the date of such meeting, plus reasonable
expenses incurred by the Non-Affiliated Trustee in connection with his or her
services as a trustee. Payment of the annual retainer and the regular meeting
fee is allocated among the AC Funds (i) 50% on the basis of the relative net
assets of each AC Fund to the aggregate net assets of all the AC Funds and (ii)
50% equally to each AC Fund, in each case as of the last business day of the
preceding calendar quarter. Each AC Fund which is the subject of a special
meeting of the trustees generally pays each Non-Affiliated Trustee a per meeting
fee in the amount of $125 per special meeting attended by the Non-Affiliated
Trustee, due on the date of such meeting, plus reasonable expenses incurred by
the Non-Affiliated Trustee in connection with his or her services as a trustee,
provided that no compensation will be paid in connection with certain telephonic
special meetings.
For each VK Fund's last fiscal year and the period up to and including
December 31, 1997, the compensation of each Non-Affiliated Trustee from each VK
Fund includes an annual retainer in an amount equal to $2,500 per calendar year,
due in four quarterly installments on the first business day of each calendar
quarter. Each Non-Affiliated Trustee receives a per meeting fee from each VK
Fund in the amount of $125 per regular quarterly meeting attended by the
Non-Affiliated Trustee, due on the date of such meeting, plus reasonable
expenses incurred by the Non-Affiliated Trustee in connection with his or her
services as a trustee. Each Non-Affiliated Trustee receives a per meeting fee
from each VK Fund in the amount of $125 per special meeting attended by the
Non-Affiliated Trustee, due on the date of such meeting, plus reasonable
expenses incurred by the Non-Affiliated Trustee in connection with his or her
services as a trustee, provided that no compensation will be paid in connection
with certain telephonic special meetings.
For the period from July 2, 1997 up to and including December 31, 1997, the
compensation of each Non-Affiliated Trustee from the MS Funds was based
generally on the compensation amounts and methodology used by such funds prior
to their joining the current Fund Complex on July 2, 1997. Each trustee/director
was elected as a director of the MS Funds on July 2, 1997. Prior to July 2,
1997, the MS Funds were part of another fund complex (the "Prior Complex") and
the former directors of the MS Funds were paid an aggregate fee allocated among
the funds in the Prior Complex that resulted in individual directors receiving
total compensation between approximately $8,000 to $10,000 from the MS Funds
during such funds' last fiscal year.
Under the deferred compensation plan, each Non-Affiliated Trustee generally
can elect to defer receipt of all or a portion of the compensation earned by
such Non-Affiliated Trustee until retirement. Amounts deferred are retained by
the Fund and earn a rate of return determined by reference to the return on the
common shares of such Fund or other funds in the Fund Complex as selected by the
respective Non-Affiliated Trustee, with
B-9
<PAGE> 31
the same economic effect as if such Non-Affiliated Trustee had invested in one
or more funds in the Fund Complex. To the extent permitted by the 1940 Act, the
Fund may invest in securities of those funds selected by the Non-Affiliated
Trustees in order to match the deferred compensation obligation. The deferred
compensation plan is not funded and obligations thereunder represent general
unsecured claims against the general assets of the Fund.
Under the retirement plan, a Non-Affiliated Trustee who is receiving
compensation from such Fund prior to such Non-Affiliated Trustee's retirement,
has at least 10 years of service (including years of service prior to adoption
of the retirement plan) and retires at or after attaining the age of 60, is
eligible to receive a retirement benefit equal to $2,500 per year for each of
the ten years following such retirement from such Fund. Non-Affiliated Trustees
retiring prior to the age of 60 or with fewer than 10 years but more than 5
years of service may receive reduced retirement benefits from such Fund. Each
trustee/director has served as a member of the Board of Trustees of the Fund
since he or she was first appointed or elected in the year set forth below. The
retirement plan contains a Fund Complex retirement benefit cap of $60,000 per
year.
Additional information regarding compensation and benefits for trustees is set
forth below for the periods described in the notes accompanying the table.
COMPENSATION TABLE
<TABLE>
<CAPTION>
FUND COMPLEX
----------------------------------------------------------
AGGREGATE AGGREGATE TOTAL
YEAR FIRST PENSION OR ESTIMATED MAXIMUM COMPENSATION
APPOINTED OR AGGREGATE COMPENSATION RETIREMENT BENEFITS ANNUAL BENEFITS BEFORE DEFERRAL
ELECTED TO THE BEFORE DEFERRAL FROM THE ACCRUED AS PART OF FROM THE FUND UPON FROM FUND
NAME(1) BOARD FUND(2) EXPENSES(3) RETIREMENT(4) COMPLEX(5)
------- -------------- ------------------------ ------------------- ------------------ ---------------
<S> <C> <C> <C> <C> <C>
J. Miles Branagan* 1995 $2,376 $30,328 $60,000 $111,197
Linda Hutton Heagy* 1995 2,176 3,141 60,000 111,197
R. Craig Kennedy* 1993 2,376 2,229 60,000 111,197
Jack E. Nelson* 1988 2,376 15,820 60,000 104,322
Jerome L. Robinson 1988 0 32,020 15,750 107,947
Phillip B. Rooney* 1997 2,376 0 60,000 74,697
Dr. Fernando Sisto* 1995 2,376 60,208 60,000 111,197
Wayne W. Whalen* 1988 2,376 10,788 60,000 111,197
</TABLE>
- ---------------
* Currently a member of the Board of Trustees.
(1) Persons not designated by an asterisk are not currently members of the Board
of Trustees, but were members of the Board of Trustees during the Fund's
most recently completed fiscal year. Mr. Robinson retired from the Board of
Trustees on December 31, 1997. Trustees not eligible for compensation are
not included in the compensation table.
(2) The amounts shown in this column represent the Aggregate Compensation before
Deferral with respect to the Fund's fiscal year ended June 30, 1998. The
following trustees deferred compensation from the Fund during the fiscal
year ended June 30, 1998: Mr. Branagan, $2,126; Ms. Heagy, $1,926; Mr.
Kennedy, $1,063; Mr. Nelson, $2,126; Mr. Rooney, $2,126; Dr. Sisto, $1,663;
and Mr. Whalen, $2,126. Amounts deferred are retained by the Fund and earn a
rate of return determined by reference to either the return on the common
shares of the Fund or other funds in the Fund Complex as selected by the
respective Non-Affiliated Trustee, with the same economic effect as if such
Non-Affiliated Trustee had invested in one or more funds in the Fund
Complex. To the extent permitted by the 1940 Act, each Fund may invest in
securities of those funds selected by the Non-Affiliated Trustees in order
to match the deferred compensation obligation. The cumulative deferred
compensation (including interest) accrued with respect to each trustee,
including former trustees, from the Fund as of June 30, 1998 is as follows:
Mr. Branagan, $5,655; Mr. Gaughan, $2,653; Ms. Heagy, $7,805; Mr. Kennedy,
$13,338; Mr. Miller, $10,410; Mr. Nelson, $18,391; Mr. Rooney, $2,444; Dr.
Sisto, $2,089; and Mr. Whalen, $15,518. The deferred compensation plan is
described above the Compensation Table.
B-10
<PAGE> 32
(3) The amounts shown in this column represent the sum of the retirement
benefits expected to be accrued by the operating investment companies in the
Fund Complex for each of the current trustees for the Funds' respective
fiscal years ended in 1997. The retirement plan is described above the
Compensation Table.
(4) For Mr. Robinson, this is the sum of the actual annual benefits payable by
the operating investment companies in the Fund Complex as of the date of his
retirement for each year of the 10-year period since his retirement. For the
remaining trustees, this is the sum of the estimated maximum annual benefits
payable by the operating investment companies in the Fund Complex for each
year of the 10-year period commencing in the year of such trustee's
anticipated retirement. The Retirement Plan is described above the
Compensation Table.
(5) The amounts shown in this column represent the aggregate compensation paid
by all operating investment companies in the Fund Complex as of December 31,
1997 before deferral by the trustees under the deferred compensation plan.
Because the funds in the Fund Complex have different fiscal year ends, the
amounts shown in this column are presented on a calendar year basis. Certain
trustees deferred all or a portion of their aggregate compensation from the
Fund Complex during the calendar year ended December 31, 1997. The deferred
compensation earns a rate of return determined by reference to the return on
the shares of the funds in the Fund Complex as selected by the respective
Non-Affiliated Trustee, with the same economic effect as if such
Non-Affiliated Trustee had invested in one or more funds in the Fund
Complex. To the extent permitted by the 1940 Act, the Fund may invest in
securities of those investment companies selected by the Non-Affiliated
Trustees in order to match the deferred compensation obligation. The
Advisers and their affiliates also serve as investment adviser for other
investment companies; however, with the exception of Mr. Whalen, the
Non-Affiliated Trustees were not trustees of such investment companies.
Combining the Fund Complex with other investment companies advised by the
Advisers and their affiliates, Mr. Whalen received Total Compensation of
$268,447 during the calendar year ended December 31, 1997.
Excluding Mr. Robinson, a former Trustee, as of September 3, 1998, the
trustees and officers of the Fund as a group owned less than 1% of the shares of
the Fund.
As of September 3, 1998, no person was known by the Fund to own beneficially
or to hold of record as much as 5% of the outstanding Class A Shares, Class B
Shares or Class C Shares of the Fund, except as follows:
<TABLE>
<CAPTION>
AMOUNT OF
OWNERSHIP AT PERCENTAGE
NAME AND ADDRESS OF HOLDER SEPTEMBER 3, 1998 OWNERSHIP
-------------------------- ----------------- ----------
<S> <C> <C>
Jerome L. Robinson................................... 4,812,555 13.39%
145 Kent Road
Tenafly, NJ 07670-2305
Richard H. Baxter.................................... 3,004,578 8.36%
Baxter Capital Investors LP
812 Goshen Road Apt. A-6
West Chester, PA 19380-4353
</TABLE>
LEGAL COUNSEL
Counsel to the Fund is Skadden, Arps, Slate, Meagher & Flom (Illinois).
TRANSFER AGENCY
During the fiscal periods ended June 30, 1998, 1997 and 1996, Investor
Services, shareholder service agent and dividend disbursing agent for the Fund,
received fees aggregating $45,000, $42,900, and $45,900, respectively, for these
services. Beginning in 1998, the transfer agency prices are determined through
negotiations with the Fund's Board of Trustees and are based on competitive
market benchmarks. Prior to 1998, the transfer agency prices were determined on
a cost plus profit basis.
B-11
<PAGE> 33
INVESTMENT ADVISORY AND OTHER SERVICES
Van Kampen Investment Advisory Corp. (the "Adviser") is the Fund's investment
adviser. 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 Investments Inc. which
is an indirect wholly-owned subsidiary of Morgan Stanley Dean Witter & Co.
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 agreement remains 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. 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, 1998, 1997 and 1996, the Fund recognized advisory
expenses of $0, $0 and $0, respectively.
OTHER AGREEMENTS
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 funds advised by the Adviser or its
affiliates 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 based proportionally on their respective net assets per fund.
For the years ended June 30, 1998, 1997 and 1996, the Fund recognized expenses
of approximately $20,200, $1,800 and $0, respectively, representing the
Adviser's cost of providing accounting services.
LEGAL SERVICES AGREEMENT. The Fund and other funds advised by the Adviser and
distributed by the Distributor have entered into Legal Services Agreements
pursuant to which Van Kampen 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. 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, 1998, 1997 and 1996, the Fund recognized expenses
of approximately $7,200, $8,100 and $8,200, respectively, representing Van
Kampen's cost of providing legal services.
B-12
<PAGE> 34
CUSTODIAN AND INDEPENDENT ACCOUNTANTS
State Street Bank and Trust Company, 225 West 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 accountants for the Fund are KPMG Peat Marwick LLP, Chicago,
Illinois. The selection of independent accountants will be subject to
ratification by the shareholders of the Fund at any annual meeting of
shareholders.
PORTFOLIO TRANSACTIONS AND BROKERAGE ALLOCATION
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 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.
TAX STATUS OF THE FUND
The Fund has elected and qualified, and intends to continue to qualify each
year, to be treated as a regulated investment company under the Internal Revenue
Code of 1986, as amended (the "Code"). If the Fund complies with certain
requirements of the Code relating to, among other things, the source of its
income and the diversification of its assets, the Fund will not be subject to
federal income tax on any income distributed to shareholders. The Fund will be
subject to tax if, among other things, it fails to distribute net capital gains,
or if its annual distributions, as a percentage of its income, are less than the
distributions required by tax laws.
THE DISTRIBUTOR
The Distributor offers one of the industry's broadest lines of investments --
encompassing mutual funds, closed-end funds and unit investment trusts -- assets
which have been entrusted to Van Kampen in more than 2 million investor
accounts. Van Kampen has one of the largest research teams (outside of the
rating agencies) in the country.
B-13
<PAGE> 35
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 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 sub-agreements with the Distributor and
sell shares of the Fund are referred to herein as "financial intermediaries."
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, 1998, 1997 and 1996, the Fund has recognized
expenses under the Plans of $79,308, $87,203 and $88,120, respectively, of which
$78,583, $87,019 and $70,558, respectively, representing payments to financial
intermediaries under the Selling Agreements. For the years ended June 30, 1998,
1997 and 1996, the Fund has reimbursed the Distributor for $0, $0 and $0,
respectively, for advertising expenses, and $0, $0 and $0, 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. or nationally recognized financial
publications.
B-14
<PAGE> 36
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-15
<PAGE> 37
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-16
<PAGE> 38
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-17
<PAGE> 39
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
B-18
<PAGE> 40
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
B-19
<PAGE> 41
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
B-20
<PAGE> 42
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
B-21
<PAGE> 43
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
B-22
<PAGE> 44
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
B-23
<PAGE> 45
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
B-24
<PAGE> 46
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.
B-25
<PAGE> 47
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.
B-26
<PAGE> 48
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.
B-27
<PAGE> 49
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 Registration Statement:
Financial Highlights
Included in Part B of Registration Statement:
Independent Accountants' Report
Financial Statements
Notes to Financial Statements
(B) EXHIBITS:
(1)(a) Declaration of Trust(14)
(b) Certificate of Amendment+
(2) By-Laws(14)
(5) Investment Advisory Agreement(15)
(6)(a) Distribution and Service Agreement(15)
(b) Form of Dealer Agreement(12)
(c) Form of Broker Fully Disclosed Selling Agreement(12)
(d) Form of Bank Fully Disclosed Selling Agreement(12)
(8)(a) Custodian Contract(15)
(b) Transfer Agency and Service Agreement(15)
(9)(a) Fund Accounting Agreement(15)
(b) Amended and Restated Legal Services Agreement(15)
(10) Opinion and Consent of Skadden, Arps, Slate Meagher & Flom
(Illinois)(12)
(11) Opinion and Consent of KPMG Peat Marwick LLP+
(13) Letter of Understanding relating to initial capital(14)
(15)(a) Plan of Distribution Pursuant to Rule 12b-1(14)
(b) Form of Shareholder Assistance Agreement(14)
(c) Form of Administrative Services Agreement(14)
(d) Service Plan(14)
(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 Funds Inc. in
response to Item 29(b)+
(18) Amended Multi-Class Plan(15)
(24) Power of Attorney+
(27) Financial Data Schedule+
- ---------------
(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.
(14) Incorporated herein by reference to Post-Effective Amendment No. 14 to
Registrant's Registration Statement on Form N-1A, file number 33-6745,
filed October 28, 1996.
(15) Incorporated herein by reference to Post-Effective Amendment No. 15 to
Registrant's Registration Statement on Form N-1A, file number 33-6745,
filed October 27, 1997.
+ Filed herewith.
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT.
See the Statement of Additional Information.
ITEM 26. NUMBER OF HOLDERS OF SECURITIES.
As of September 3, 1998:
<TABLE>
<CAPTION>
(1) (2)
NUMBER OF
RECORD
TITLE OF CLASS HOLDERS
-------------- ---------
<S> <C>
Shares of Beneficial Interest, $0.01 par
value.................................... 1,895
-----
</TABLE>
C-1
<PAGE> 50
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 (i) not
acting in good faith in the reasonable belief that such person's actions were
not in the best interest of the Trust, (ii) willful misfeasance, bad faith,
gross negligence or reckless disregard of the duties involved in the conduct of
his or her office or (iii) for a criminal proceeding, not having a reasonable
cause to believe that such conduct was unlawful (collectively, "Disabling
Conduct"). Absent a court determination that an officer or trustee seeking
indemnification was not liable on the merits or guilty of Disabling Conduct 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 Disabling Conduct 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 such
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 such 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 "Trustees and
Officers" 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 Investment Advisory Corp., reference is made to the
Adviser's current Form ADV (File No. 801-18161) filed under the Investment
Advisers Act of 1940, as amended, incorporated herein by reference.
C-2
<PAGE> 51
ITEM 29. PRINCIPAL UNDERWRITERS.
(a) The sole principal underwriter is Van Kampen Funds Inc., which acts as
principal underwriter for certain investment companies and unit investment
trusts set forth in Exhibit 17(a) incorporated by reference herein.
(b) Van Kampen Funds 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 Funds
Inc. of each of the directors and officers thereof are set forth in Exhibit
17(b). Except as disclosed under the heading "Trustees and Officers" 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, Van Kampen 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 Funds 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) Registrant undertakes, if requested to do so by the holders of at least
10% of the shareholders of a series of the Registrant, to call a
meeting of such shareholders for the purpose of voting upon the
question of removal of a trustee or trustees, and to assist in
communications with other shareholders to the extent required by
Section 16(c) of the Investment Company Act of 1940, as amended.
C-3
<PAGE> 52
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933 AND THE
INVESTMENT COMPANY ACT OF 1940, THE REGISTRANT, VAN KAMPEN TAX FREE MONEY FUND,
CERTIFIES THAT IT MEETS ALL OF THE REQUIREMENTS FOR EFFECTIVENESS OF THIS
AMENDMENT TO THE REGISTRATION STATEMENT PURSUANT TO RULE 485(B) UNDER THE
SECURITIES ACT OF 1933 AND HAS DULY CAUSED THIS AMENDMENT TO THE REGISTRATION
STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY
AUTHORIZED, IN THE CITY OF OAKBROOK TERRACE AND THE STATE OF ILLINOIS ON THE
29TH DAY OF SEPTEMBER, 1998.
VAN KAMPEN 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 SEPTEMBER 29, 1998 BY THE
FOLLOWING PERSONS IN THE CAPACITIES INDICATED:
<TABLE>
<CAPTION>
SIGNATURES
---------- TITLE
<C> <S>
Principal Executive Officer:
/s/ DENNIS J. McDONNELL* President
- -----------------------------------------------------
Dennis J. McDonnell
Principal Financial Officer:
/s/ EDWARD C. WOOD, III* Vice President and Chief Financial Officer
- -----------------------------------------------------
Edward C. Wood, III
Trustees:
/s/ J. MILES BRANAGAN* Trustee
- -----------------------------------------------------
J. Miles Branagan
/s/ RICHARD M. DeMARTINI* Trustee
- -----------------------------------------------------
Richard M. DeMartini
/s/ LINDA HUTTON HEAGY* Trustee
- -----------------------------------------------------
Linda Hutton Heagy
/s/ R. CRAIG KENNEDY* Trustee
- -----------------------------------------------------
R. Craig Kennedy
/s/ JACK E. NELSON* Trustee
- -----------------------------------------------------
Jack E. Nelson
/s/ DON G. POWELL* Trustee
- -----------------------------------------------------
Don G. Powell
/s/ PHILLIP B. ROONEY* Trustee
- -----------------------------------------------------
Phillip B. Rooney
/s/ FERNANDO SISTO* Trustee
- -----------------------------------------------------
Fernando Sisto
/s/ WAYNE W. WHALEN* Trustee
- -----------------------------------------------------
Wayne W. Whalen
</TABLE>
- ---------------
* Signed by Ronald A. Nyberg pursuant to a power of attorney filed herewith.
<TABLE>
<C> <S>
/s/ RONALD A. NYBERG September 29, 1998
- -----------------------------------------------------
Ronald A. Nyberg
Attorney-in-Fact
</TABLE>
C-4
<PAGE> 53
SCHEDULE OF EXHIBITS TO
POST-EFFECTIVE AMENDMENT NUMBER 16 TO FORM N-1A AS
SUBMITTED TO THE SECURITIES AND EXCHANGE COMMISSION
ON SEPTEMBER 29, 1998
<TABLE>
<CAPTION>
EXHIBIT
NUMBER
------- EXHIBIT
<S> <C> <C> <C>
(1) (b) Certificate of Amendment
(11) Opinion and Consent of KPMG Peat Marwick LLP
(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 Funds Inc. in
response to Item 29(b)
(24) Power of Attorney
(27) Financial Data Schedule
</TABLE>
C-5
<PAGE> 1
Exhibit 1(b)
CERTIFICATE OF AMENDMENT DATED JULY 14, 1998
TO
FIRST AMENDED AND RESTATED AGREEMENT
AND DECLARATION OF TRUST DATED MAY 10, 1995
WHEREAS, the Trustees of Van Kampen American Capital Tax Free Money Fund, a
Delaware business trust (the "Trust") have approved the amendment of the Trust's
First Amended and Restated Agreement and Declaration of Trust dated May 10, 1995
("Declaration of Trust") in accordance with Section 9.5 thereof;
WHEREAS, the Trustees have authorized the proper officers of the Trust,
including the officer whose name appears below, to effect such amendment;
NOW, THEREFORE, the Declaration of Trust is amended as follows:
1. The first sentence of Section 1.1 is amended and restated in its entirety
to read as follows:
1.1 Name. The name of the Trust shall be
"VAN KAMPEN TAX FREE MONEY FUND"
and so far as may be practicable, the Trustees shall conduct the Trust's
activities, execute all documents and sue or be sued under that name, which
name (and the word "Trust" wherever used in this Agreement and Declaration
of Trust, except where the context otherwise requires) shall refer to the
Trustees in their capacity as Trustees, and not individually or personally,
and shall not refer to the officers, agents or employees of the Trust or of
such Trustees, or to the holders of the Shares of Beneficial Interest of
the Trust or any Series. If the Trustees determine that the use of such
name is not practicable, legal or convenient at any time or in any
jurisdiction, or if the Trust is required to discontinue the use of such
name pursuant to Section 10.7 hereof, then subject to that Section, the
Trustees may use such other designation, or they may adopt such other name
for the Trust as they deem proper, and the Trust may hold property and
conduct its activities under such designation or name.
EXECUTED, to be effective as of July 14, 1998
/s/ Ronald A. Nyberg
------------------------------
Ronald A. Nyberg,
Secretary
<PAGE> 1
EXHIBIT 11
CONSENT OF INDEPENDENT ACCOUNTANTS
The Board of Trustees and Shareholders
Van Kampen 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 Accountants" in the Statement of
Additional Information.
KPMG Peat Marwick LLP
/s/ KPMG Peat Marwick LLP
Chicago, Illinois
September 23, 1998
<PAGE> 1
EXHIBIT 16
TAX FREE MONEY FUND
COMPUTATION OF PERFORMANCE QUOTATIONS
PERIOD ENDED JUNE 30, 1998
(a) Calculation of Current Yield:
Formula (EV-BV) + BV * 365 / 7 = CY
Ending Value 1.000539163 = EV
Beginning Value 1.00 = BV
Current Yield 2.81% = CY
(b) Calculation of Compound Effective Yield: 365/7
Formula (UBR + 1) - 1 = CEY
Unannualized Base Return 1.000539163 = UBR
Compound Effective Yield 2.85% = CEY
<PAGE> 1
EXHIBIT 17(a)
INVESTMENT COMPANIES FOR WHICH
VAN KAMPEN FUNDS INC.
ACTS AS PRINCIPAL UNDERWRITER OR DEPOSITOR
AUGUST 27, 1998
Van Kampen U.S. Government Trust
Van Kampen U.S. Government Fund
Van Kampen Tax Free Trust
Van Kampen Insured Tax Free Income Fund
Van Kampen Tax Free High Income Fund
Van Kampen California Insured Tax Free Fund
Van Kampen Municipal Income Fund
Van Kampen Intermediate Term Municipal Income Fund
Van Kampen Florida Insured Tax Free Income Fund
Van Kampen New York Tax Free Income Fund
Van Kampen Trust
Van Kampen High Yield Fund
Van Kampen Short-Term Global Income Fund
Van Kampen Strategic Income Fund
Van Kampen Equity Trust
Van Kampen Utility Fund
Van Kampen American Capital Value Fund
Van Kampen Great American Companies Fund
Van Kampen Growth Fund
Van Kampen Prospector Fund
Van Kampen Aggressive Growth Fund
Van Kampen Foreign Securities Fund
Van Kampen Pennsylvania Tax Free Income Fund
Van Kampen Tax Free Money Fund
Van Kampen Prime Rate Income Trust
Van Kampen Senior Floating Rate Fund
Van Kampen Comstock Fund
Van Kampen Corporate Bond Fund
Van Kampen Emerging Growth Fund
Van Kampen Enterprise Fund
Van Kampen Equity Income Fund
Van Kampen Limited Maturity Government Fund
Van Kampen Global Managed Assets Fund
Van Kampen Government Securities Fund
Van Kampen Growth and Income Fund
Van Kampen Harbor Fund
Van Kampen High Income Corporate Bond Fund
Van Kampen Life Investment Trust
Asset Allocation Portfolio
Domestic Income Portfolio
Emerging Growth Portfolio
Enterprise Portfolio
Global Equity Portfolio
Government Portfolio
Growth and Income Portfolio
Money Market Portfolio
Strategic Stock Portfolio
Morgan Stanley Real Estate Securities Portfolio
Comstock Portfolio
<PAGE> 2
Van Kampen Small Capitalization Fund
Van Kampen Pace Fund
Van Kampen Real Estate Securities Fund
Van Kampen Reserve Fund
Van Kampen Tax -Exempt Trust
Van Kampen High Yield Municipal Fund
Van Kampen American Capital U.S. Government Trust for Income
Van Kampen American Capital World Portfolio Series Trust
Van Kampen Global Government Securities Fund
Van Kampen Series Fund, Inc.
Van Kampen Aggressive Equity Fund
Van Kampen American Value Fund
Van Kampen Asian Growth Fund
Van Kampen Emerging Markets Fund
Van Kampen Emerging Markets Debt Fund
Van Kampen Equity Growth Fund
Van Kampen Global Equity Fund
Van Kampen Global Equity Allocation Fund
Van Kampen Global Fixed Income Fund
Van Kampen Global Franchise Fund
Morgan Stanley Government Obligations Money Market Fund
Van Kampen Growth and Income Fund II
Van Kampen High Yield & Total Return Fund
Van Kampen International Magnum Fund
Van Kampen Japanese Equity Fund
Van Kampen Latin American Fund
Van Kampen MidCap Growth Fund
Morgan Stanley Money Market Fund
Morgan Stanley Tax-Free Money Market Fund
Van Kampen U.S. Real Estate Fund
Van Kampen Value Fund
Van Kampen Worldwide High Income Fund
<PAGE> 3
<TABLE>
<CAPTION>
<S> <C>
Insured Municipals Income Trust..........................................................................Series 401
Arizona Insured Municipals Income Trust................................................................. Series 18
California Insured Municipals Income Trust.............................................................. Series 174
Colorado Insured Municipals Income Trust................................................................ Series 87
Connecticut Insured Municipals Income Trust ............................................................ Series 37
Florida Insured Municipals Income Trust................................................................. Series 120
Georgia Insured Municipals Income Trust................................................................. Series 86
Kentucky Investors' Quality Tax-Exempt Trust............................................................ Series 60
Maryland Investors' Quality Tax-Exempt Trust............................................................ Series 86
Massachusetts Insured Municipals Income Trust........................................................... Series 35
Michigan Insured Municipals Income Trust................................................................ Series 151
Minnesota Insured Municipals Income Trust............................................................... Series 62
Missouri Insured Municipals Income Trust................................................................ Series 107
New Jersey Insured Municipals Income Trust.............................................................. Series 123
New York Insured Municipals Income Trust................................................................ Series 146
North Carolina Investors' Quality Tax-Exempt Trust...................................................... Series 95
Ohio Insured Municipals Income Trust.................................................................... Series 110
Pennsylvania Insured Municipals Income Trust............................................................ Series 237
South Carolina Investors' Quality Tax-Exempt Trust...................................................... Series 86
Tennessee Insured Municipals Income Trust............................................................... Series 41
Virginia Investors' Quality Tax-Exempt Trust............................................................ Series 81
Van Kampen American Capital Insured Income Trust........................................................ Series 71
Internet Trust.......................................................................................... Series 11
Strategic Ten Trust, United States Portfolio............................................................ August 1998 Series
Strategic Ten Trust, United States Portfolio............................................................ August 1998
Traditional Series
Strategic Five Trust, United States Portfoliio.......................................................... August 1998 Series
Strategic Five Trust, United States Portfolio........................................................... August 1998
Traditional Series
EAFE Strategic 20 Trust................................................................................. August 1998 Series
EURO Strategic 20 Trust................................................................................. August 1998 Series
Strategic Picks Opportunity Trust....................................................................... August 1998 Series
Strategic Fifteen Trust Global Portfolio................................................................ July 1998 Series
Strategic Thirty Trust Global Portfolio................................................................. July 1998 Series
Great International Firms Trust......................................................................... Series 5
Blue Chip Opportunity and Treasury Trust................................................................ Series 6
Blue Chip Opportunity Trust............................................................................. Sereis 4
Baby Boomer Opportunity Trust........................................................................... Series 4
Global Energy Trust..................................................................................... Series 6
Brand Name Equity Trust................................................................................. Series 6
Edward Jones Select Growth Trust........................................................................ July 1998 Series
Banking Trust........................................................................................... Series 3
Morgan Stanley High-Technology 35 Index Trust........................................................... Series 3
Health Care Trust....................................................................................... Series 3
Telecommunications Trust................................................................................ Series 3
Utility Trust........................................................................................... Series 3
Financial Services Trust................................................................................ Series 1
Natcity Investments, Inc. Great American Equities Trust................................................. Series 1
First Albany Banking Growth Trust....................................................................... Series 1
Gruntal Global Transport Trust.......................................................................... Series 1
</TABLE>
<PAGE> 1
EXHIBIT 17 (b)
Officers
Van Kampen Funds Inc.
<TABLE>
<CAPTION>
NAME OFFICE LOCATION
- ---- ------ --------
<S> <C> <C>
Don G. Powell Chairman Houston, TX
Richard F. Powers, III Chief Executive Officer Oakbrook Terrace, IL
John H. Zimmerman President Oakbrook Terrace, IL
Douglas B. Gehrman Executive Vice President Houston, TX
Ronald A. Nyberg Executive Vice President, General Oakbrook Terrace, IL
Counsel & Assistant Secretary
William R. Rybak Executive Vice President & Chief Oakbrook Terrace, IL
Financial Officer
Paul R. Wolkenberg Executive Vice President Houston, TX
Laurence J. Althoff Sr. Vice President & Controller Oakbrook Terrace, IL
John. E. Doyle Sr. Vice President Oakbrook Terrace, IL
Gary R. DeMoss Sr. Vice President Oakbrook Terrace, IL
Richard G. Gold Sr. Vice President Annapolis, MD
Scott E. Martin Sr. Vice President, Deputy General Oakbrook Terrace, IL
Counsel & Secretary
Mark T. McGannon Sr. Vice President Oakbrook Terrace, IL
Charles G. Millington Sr. Vice President & Treasurer Oakbrook Terrace, IL
Walter E. Rein Sr. Vice President Oakbrook Terrace, IL
Colette M. Saucedo Sr. Vice President Houston, TX
Frederick Shepherd Sr. Vice President Houston, TX
Steven P. Sorenson Sr. Vice President Oakbrook Terrace, IL
Michael L. Stallard Sr. Vice President Oakbrook Terrace, IL
Robert S. West Sr. Vice President Oakbrook Terrace, IL
Edward C. Wood Sr. Vice President and Oakbrook Terrace, IL
Chief Operating Officer
Glenn M. Cackovic 1st Vice President Laguna Nigel, CA
Eric J. Hargens 1st Vice President Orlando, FL
David B. Hogaboom 1st Vice President Oakbrook Terrace, IL
Dominic C. Martellaro 1st Vice President Danville, CA
Carl Mayfield 1st Vice President Oakbrook Terrace, IL
Mark R. McClure 1st Vice President Oakbrook Terrace, IL
James J. Ryan 1st Vice President Oakbrook Terrace, IL
George J. Vogel 1st Vice President Oakbrook Terrace, IL
Patrick J. Woelfel 1st Vice President Oakbrook Terrace, IL
Robert J. Abreu Vice President New York, NY
James K. Ambrosio Vice President Massapequa, NY
Brian P. Arcara Vice President Buffalo, NY
Sheldon Barker Vice President Moon, PA
Patricia A. Bettlach Vice President Chesterfield, MO
Carol S. Biegel Vice President Oakbrook Terrace, IL
Christopher M. Bisaillon Vice President Oakbrook Terrace, IL
Michael P. Boos Vice President Oakbrook Terrace, IL
James J. Boyne Vice President, Associate General Oakbrook Terrace, IL
Counsel & Assistant Secretary
Robert C. Brooks Vice President Oakbrook Terrace, IL
William F Burke, Jr. Vice President Mendham, NJ
Loren Burket Vice President Plymouth, MN
Christine Cleary Byrum Vice President Tampa, FL
Joseph N. Caggiano Vice President New York, NY
</TABLE>
<PAGE> 2
<TABLE>
<S> <C> <C>
Daniel R. Chambers Vice President Austin, TX
Richard J. Charlino Vice President Houston, TX
Deanna Margaret Chiaro Vice President Oakbrook Terrace, IL
Scott A. Chriske Vice President Plano, TX
German Clavijo Vice President Atlanta, GA
Eleanor M. Cloud Vice President Oakbrook Terrace, IL
Dominick Cogliandro Vice President & Asst. Treasurer New York, NY
Michael Colston Vice President Louisville, KY
Suzanne Cummings Vice President Oakbrook Terrace, IL
Nicholas Dalmaso Vice President, Associate Oakbrook Terrace, IL
General Counsel & Asst. Secretary
Tracey M. DeLusant Vice President New York, NY
Michael E. Eccleston Vice President Oakbrook Terrace, IL
Jonathan Eckard Vice President Tampa, FL
Huey P. Falgout, Jr. Vice President, Assistant Houston, TX
Secretary and Senior Attorney
Charles Edward Fisher Vice President Naperville, IL
William J. Fow Vice President Redding, CT
Nicholas J. Foxhoven Vice President Englewood, CO
Charles Friday Vice President Gibsonia, PA
Timothy D. Griffith Vice President Kirkland, WA
Kyle D. Haas Vice President Oakbrook Terrace, IL
Daniel Hamilton Vice President Austin, TX
John G. Hansen Vice President Oakbrook Terrace, IL
Joseph Hays Vice President Cherry Hill, NJ
Daniel M. Hazard Vice President Huntington Beach, CA
Gregory Heffington Vice President Ft. Collins, CO
Susan J. Hill Vice President and Senior Attorney Oakbrook Terrace, IL
Thomas R. Hindelang Vice President Gilbert, AZ
Bryn M. Hoggard Vice President Houston, TX
Robert S. Hunt Vice President Phoenix, MD
Lowell Jackson Vice President Norcross, GA
Kevin G. Jajuga Vice President Baltimore, MD
Jeffrey S. Kinney Vice President Overland Park, KS
Dana R. Klein Vice President Oakbrook Terrace, IL
Frederick Kohly Vice President Miami, FL
David R. Kowalski Vice President & Director Oakbrook Terrace, IL
of Compliance
Richard D. Kozlowski Vice President Atlanta, GA
Bradford N. Langs Vice President Oakbrook Terrace, IL
Patricia D. Lathrop Vice President Tampa, FL
Brian Laux Vice President Staten Island, NY
Tony E. Leal Vice President Daphne, AL
S. William Lehew III Vice President Charlotte, NC
Eric Levinson Vice President San Francisco, CA
Jonathan Linstra Vice President Oakbrook Terrace, IL
Richard M. Lundgren Vice President Oakbrook Terrace, IL
Walter Lynn Vice President Flower Mound, TX
Kevin S. Marsh Vice President Bellevue, WA
Linda S. MacAyeal Vice President and Senior Attorney Oakbrook Terrace, IL
Brooks D. McCartney Vice President Puyallup, WA
Anne Therese McGrath Vice President Los Gatos, CA
Maura A. McGrath Vice President New York, NY
John Mills Vice President Kenner, LA
</TABLE>
<PAGE> 3
<TABLE>
<S> <C> <C>
Ted Morrow Vice President Dallas, TX
Robert Muller, Jr. Vice President Cypress, TX
Peter Nicholas Vice President Beverly, MA
Michael D. Ossmen Vice President Oakbrook Terrace, IL
Todd W. Page Vice President Oakbrook Terrace, IL
Gregory S. Parker Vice President Houston, TX
Christopher Petrungaro Vice President Oakbrook Terrace, IL
Anthony Piazza Vice President Old Bridge, NJ
Ronald E. Pratt Vice President Marietta, GA
Craig S. Prichard Vice President Fairlawn, OH
Daniel D. Reams Vice President Royal Oak, MI
Michael W. Rohr Vice President Oakbrook Terrace, IL
Jeffrey L. Rose Vice President Houston, TX
Suzette N. Rothberg Vice President Plymouth, MN
Jeffrey Rourke Vice President Oakbrook Terrace, IL
Thomas Rowley Vice President St. Louis, MO
Heather R. Sabo Vice President Richmond, VA
Stephanie Scarlata Vice President Bedford Corners, NY
Andrew J. Scherer Vice President Oakbrook Terrace, IL
Ronald J. Schuster Vice President Tampa, FL
Gwen L. Shaneyfelt Vice President Oakbrook Terrace, IL
Jeffrey C. Shirk Vice President Swampscott, MA
Traci T. Sorensen Vice President Oakbrook Terrace, IL
Kimberly M. Spangler Vice President Fairfax, VA
Darren D. Stabler Vice President Phoenix, AZ
Christopher J. Staniforth Vice President Leawood, KS
Gary R. Steele Vice President Philadelphia, PA
Richard Stefanec Vice President Los Angeles, CA
James D. Stevens Vice President North Andover, MA
William C. Strafford Vice President Granger, IN
Mark A. Syswerda Vice President Oakbrook Terrace, IL
David A. Tabone Vice President Scottsdale, AZ
James C. Taylor Vice President Naperville, IL
John F. Tierney Vice President Oakbrook Terrace, IL
Curtis L. Ulvestad Vice President Red Wing, MN
Todd Volkman Vice President Austin, TX
Daniel B. Waldron Vice President Oakbrook Terrace, IL
Jeff Warland Vice President Oakbrook Terrace, IL
Weston B. Wetherell Vice President, Assoc. General Oakbrook Terrace, IL
Counsel & Asst. Secretary
Harold Whitworth, III Vice President Oakbrook Terrace, IL
Thomas M. Wilson Vice President Oakbrook Terrace, IL
Barbara A. Withers Vice President Oakbrook Terrace, IL
David M. Wynn Vice President Phoenix, AZ
James R. Yount Vice President Mercer Island, WA
Patrick M. Zacchea Vice President Oakbrook Terrace, IL
Scott F. Becker Asst. Vice President Oakbrook Terrace, IL
Brian E. Binder Asst. Vice President Oakbrook Terrace, IL
Joan E. Blackwood Asst. Vice President Oakbrook Terrace, IL
Billie J. Bronaugh Asst. Vice President Houston, TX
Gregory T. Brunk Asst. Vice President Oakbrook Terrace, IL
Gina Costello Asst. Vice President & Asst. Secretary Oakbrook Terrace, IL
Sarah K. Gieser Asst. Vice President Oakbrook Terrace, IL
Walter C. Gray Asst. Vice President Houston, TX
Valri G. Hamilton Asst. Vice President Houston, TX
Laurie L. Jones Asst. Vice President Houston, TX
</TABLE>
<PAGE> 4
<TABLE>
<S> <C> <C>
Robin R. Jordan Asst. Vice President Oakbrook Terrace, IL
Ivan R. Lowe Asst. Vice President Houston, TX
Pamela D. Meyer Asst. Vice President Phoenix, AZ
Stuart R. Moehlman Asst. Vice President Houston, TX
Cathy Napoli Asst. Vice President Oakbrook Terrace, IL
Steven R. Norvid Asst. Vice President Oakbrook Terrace, IL
Vincent M. Pellegrini Asst. Vice President Oakbrook Terrace, IL
Christine K. Putong Asst. Vice President & Asst. Secretary Oakbrook Terrace, IL
David P. Robbins Asst. Vice President Oakbrook Terrace, IL
Regina Rosen Asst. Vice President Oakbrook Terrace, IL
Pamela S. Salley Asst. Vice President Houston, TX
Vanessa M. Sanchez Asst. Vice President Oakbrook Terrace, IL
Thomas J. Sauerborn Asst. Vice President New York, NY
Bruce Saxon Asst. Vice President Oakbrook Terrace, IL
David T. Saylor Asst. Vice President Oakbrook Terrace, IL
Christina L. Schmieder Asst. Vice President Oakbrook Terrace, IL
Lauren B. Sinai Asst. Vice President Oakbrook Terrace, IL
Kristen L. Transier Asst. Vice President Houston, TX
David H. Villarreal Asst. Vice President Oakbrook Terrace, IL
Sharon M. C. Wells Asst. Vice President Oakbrook Terrace, IL
Elizabeth M. Brown Officer Houston, TX
John Browning Officer Oakbrook Terrace, IL
Leticia George Officer Houston, TX
William D. McLaughlin Officer Houston, TX
Rebecca Newman Officer Houston, TX
Theresa M. Renn Officer Oakbrook Terrace, IL
Larry Vickrey Officer Houston, TX
John Yovanovic Officer Houston, TX
</TABLE>
<PAGE> 5
DIRECTORS
VAN KAMPEN FUNDS INC.
<TABLE>
<CAPTION>
NAME OFFICE LOCATION
- ------------------- ------------------------ ----------------------------
<S> <C> <C>
Don G. Powell Chairman 2800 Post Oak Blvd.
Houston, TX 77056
Richard F. Powers, III Chief Executive Officer One Parkview Plaza
Oakbrook Terrace, IL 60181
John H. Zimmerman President One Parkview Plaza
Oakbrook Terrace, IL 60181
Ronald A. Nyberg Executive Vice President, One Parkview Plaza
General Counsel Oakbrook Terrace, IL 60181
& Assistant Secretary
William R. Rybak Executive Vice President One Parkview Plaza
& Chief Financial Officer Oakbrook Terrace, IL 60181
</TABLE>
<PAGE> 1
EXHIBIT (24)
POWER OF ATTORNEY
The undersigned, being officers and trustees of each of the Van Kampen
American Capital Open End Trusts (individually, a "Trust") as indicated on
Schedule 1 attached hereto and incorporated by reference, each a Delaware
business trust except for the Van Kampen American Capital Pennsylvania Tax Free
Income Fund being a Pennsylvania business trust, and being officers and
directors of the Morgan Stanley Fund, Inc. (the "Corporation"), a Maryland
corporation, 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 filed by each Trust or the Corporation 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: April 24, 1998
<TABLE>
<CAPTION>
<S> <C>
Signature Title
--------- -----
/s/ Dennis J. McDonnell President and Trustee/Director
- ---------------------------
Dennis J. McDonnell
/s/ Edward C. Wood III Vice/President and Chief Financial Officer
- ---------------------------
Edward C. Wood III
/s/ J. Miles Branagan Trustee/Director
- ---------------------------
J. Miles Branagan
/s/ Richard M. DeMartini Trustee/Director
- ---------------------------
Richard M. DeMartini
/s/ Linda Hutton Heagy Trustee/Director
- ---------------------------
Linda Hutton Heagy
/s/ R. Craig Kennedy Trustee/Director
- ---------------------------
R. Craig Kennedy
/s/ Jack E. Nelson Trustee/Director
- ---------------------------
Jack E. Nelson
/s/ Don G. Powell Trustee/Director
- ---------------------------
Don G. Powell
/s/ Phillip B. Rooney Trustee/Director
- ---------------------------
Phillip B. Rooney
/s/ Fernando Sisto, Sc.D. Trustee/Director
- ---------------------------
Fernando Sisto, Sc. D.
/s/ Wayne W. Whalen Trustee/Director and Chairman
- ---------------------------
Wayne W. Whalen
</TABLE>
<PAGE> 2
SCHEDULE 1
VAN KAMPEN AMERICAN CAPITAL U.S. GOVERNMENT TRUST
VAN KAMPEN AMERICAN CAPITAL TAX FREE TRUST
VAN KAMPEN AMERICAN CAPITAL TRUST
VAN KAMPEN AMERICAN CAPITAL EQUITY TRUST
VAN KAMPEN AMERICAN CAPITAL PENNSYLVANIA TAX FREE INCOME FUND
VAN KAMPEN AMERICAN CAPITAL TAX FREE MONEY FUND
VAN KAMPEN AMERICAN CAPITAL COMSTOCK FUND
VAN KAMPEN AMERICAN CAPITAL CORPORATE BOND FUND
VAN KAMPEN AMERICAN CAPITAL EMERGING GROWTH FUND
VAN KAMPEN AMERICAN CAPITAL ENTERPRISE FUND
VAN KAMPEN AMERICAN CAPITAL EQUITY INCOME FUND
VAN KAMPEN AMERICAN CAPITAL LIMITED MATURITY GOVERNMENT FUND
VAN KAMPEN AMERICAN CAPITAL GLOBAL MANAGED ASSETS FUND
VAN KAMPEN AMERICAN CAPITAL GOVERNMENT SECURITIES FUND
VAN KAMPEN AMERICAN CAPITAL GROWTH AND INCOME FUND
VAN KAMPEN AMERICAN CAPITAL HARBOR FUND
VAN KAMPEN AMERICAN CAPITAL HIGH INCOME CORPORATE BOND FUND
VAN KAMPEN AMERICAN CAPITAL LIFE INVESTMENT TRUST
VAN KAMPEN AMERICAN CAPITAL PACE FUND
VAN KAMPEN AMERICAN CAPITAL REAL ESTATE SECURITIES FUND
VAN KAMPEN AMERICAN CAPITAL RESERVE FUND
VAN KAMPEN AMERICAN CAPITAL SMALL CAPITALIZATION FUND
VAN KAMPEN AMERICAN CAPITAL TAX-EXEMPT TRUST
VAN KAMPEN AMERICAN CAPITAL U.S. GOVERNMENT TRUST FOR INCOME
VAN KAMPEN AMERICAN CAPITAL WORLD PORTFOLIO SERIES TRUST
VAN KAMPEN AMERICAN CAPITAL FOREIGN SECURITIES FUND
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 11
<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
<INVESTMENTS-AT-COST> 31,967,464
<INVESTMENTS-AT-VALUE> 31,967,464
<RECEIVABLES> 258,931
<ASSETS-OTHER> 24,435
<OTHER-ITEMS-ASSETS> 56,861
<TOTAL-ASSETS> 32,307,691
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 302,800
<TOTAL-LIABILITIES> 302,800
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 32,023,224
<SHARES-COMMON-STOCK> 32,026,330
<SHARES-COMMON-PRIOR> 33,085,766
<ACCUMULATED-NII-CURRENT> (32)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (18,301)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 32,004,891
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 1,210,661
<OTHER-INCOME> 0
<EXPENSES-NET> (270,170)
<NET-INVESTMENT-INCOME> 940,491
<REALIZED-GAINS-CURRENT> 60
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 940,551
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (940,650)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 112,337,824
<NUMBER-OF-SHARES-REDEEMED> (114,337,910)
<SHARES-REINVESTED> 940,650
<NET-CHANGE-IN-ASSETS> (1,059,535)
<ACCUMULATED-NII-PRIOR> 127
<ACCUMULATED-GAINS-PRIOR> (21,467)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 162,059
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 456,123
<AVERAGE-NET-ASSETS> 32,528,225
<PER-SHARE-NAV-BEGIN> 1.000
<PER-SHARE-NII> 0.029
<PER-SHARE-GAIN-APPREC> 0.000
<PER-SHARE-DIVIDEND> (0.029)
<PER-SHARE-DISTRIBUTIONS> 0.000
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 1.000
<EXPENSE-RATIO> 0.83
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
